If Zuck was on the Apprentice I think The Donald would fire him in the first week. I'm not one to put Donald Trump on a pedestal and any reader familiar with my search for authentic value would probably be surprised to see me writing something positive about him, but there is one thing he's got figured out a whole lot better than Facebook.
Facebook as Infomercial
This past week Facebook has been reported to be in the process of releasing "Facebook Exchange"; a bidding system for advertisers to target "tire-kickers". A "tire-kicker" on a car lot is someone who comes in and looks as if they will make a purchase but, for some reason, does not. If you have an eCommerce site where you have enough of an analytic infrastructure to identify these almost purchasers, you will be able to bid on presenting them an advertisement while they are on Facebook. The idea is that this advertisement will be the thing that will push that potential customer over the edge into making an actual purchase.
This is the first of Facebook's responses to what has been identified as an Achilles heel of Facebook's business model. Facebook has a little problem in the mobile space. It's not a user problem, as users are very fond of their mobile offerings. Then again, maybe it is a user problem, as users are very fond of their mobile offerings. Do you know which mobile offerings I'm talking about? Here's a hint; it's the ones that Facebook doesn't make any money off of. Which ones don't make any money? All of them. That's the problem. There are no advertisements served on the current versions of the phone and tablet apps.
Would You Like a Little Show With That Commercial?
So how has Trump trumped this problem? It's simple. The content is the advertisement. It's a thing of beauty from a business model perspective, if not a cultural one. The Celebrity Apprentice is an hour-long commercial that audiences actually believe is a television show. When you have watched an episode where Arsenio Hall fights with Aubrey O'Day about the photo to be used in the Walgreens promotion you are treated to an hour-long treatise on Walgreens brand values along with the communication objectives of their current promotion. Oops! I overstated that. It's really only forty-seven minutes. The other 13 minutes are taken up by other commercials! Trump gets some company to pay him to incorporate their product in his show and then they sell more advertising to interrupt the advertising program you are watching. Not that these intra-commercial commercials matter anyway, given that so many people with disposable income skip them using some form of DVR.
Television has had several years and lots of money to figure out these new advertisements masquerading as programs (advergrams?) as a solution to the DVR dilemma. The web content sites have not had this luxury. Oops! I overstated again. E-bay has got this one down cold! E-bay is a site full of advertisements that users believe is a market place. When you have perused all of the used iPhone listings on e-Bay, you have just looked at the content that thousands of users have paid to place. Paid listings make up all of the content on the site. Oops! That makes three times! E-bay also puts banner ads on many of the pages! E-bay gets some person to pay them to insert their listing on their site and then they sell more advertising to break up the monotony of the banner ads you are looking at with more banner ads.
Where To Go From Here
What can Facebook do other than put ads in their mobile products? A couple of things:
- Go head to head with Apple -- This is the route Google and Microsoft have chosen. Facebook has been reportedly developing its own phone and has also shown some signs that it wants a full fledged app-store as well. If there is any revenue currently derived from the mobile channel from either advertisements or in-app purchases, everyone (including their competitors) have their hands out to attempt to take a share of that revenue. Without an ecosystem of its own, Facebook will never be able to leap to the front of the pack.
- Make the content people want to see, the content someone paid to place -- Finding ways to get users interacting with corporations in a manner that corporations pay significant fees to keep on the site will be challenging with the constraints of the existing competitive and brand landscape. There are however, a couple different ways to shortcut this.
And Now a Word From our Sponsors
Games -- Corporate sponsorship of games and in-game advertising is a vehicle to get significant user engagement with a brand or product. Imagine "Groceryville" where you are a store manager working to keep all your shelves stocked with the best brand names available (note to self -- set up an appointment to talk with Zynga). Sponsorship opportunities for product placement within games abound and the barriers to entry for Facebook to create its own games is a lot lower than creating a phone that carriers will adopt.
Kill the Intranet -- Corporate Facebook is coming. Now that Facebook has shareholders to answer to it is only a matter of time. This is why Microsoft is buying Yammer to complement SharePoint and its cloud strategy. This is the next stage for Google+ and the suite of Google applications. The revenue potential in the form of corporate subscriptions is just too darn compelling for a public company to ignore. Even if they decide to make a sub-brand to do it, it will be done.