Getting Rich from Social Media – Part I

Mark Zuckerberg has made a lot of money from FacebookA few Saturdays ago I had firmly laid plans in my mind. They involved watching the final game of the Bledisloe Cup.  Now my partner doesn’t share my interest in Rugby (stemming from what would seem to be an instinctive prejudice that Brazilians have towards any form of football not played with a round ball), and she clearly had an agenda that involved us doing something together that didn’t involve Rugby.  Knowing the cinema was the only truly fail-safe way of ensuring I was at no point in a position to get hooked into the game, she suggested we go and see The Social Network.  Now this is the one movie that did interest me, but I couldn’t imagine that it would be interesting to her in the slightest. Understanding that this would be the first and last opportunity to see it; I had to forfeit my plans of watching footy and accept her offer. And it is safe to say with the wisdom of hindsight, even in light of the Wallabies’ stunning last minute comeback, I have no regrets.

Despite being a regular movie-goer, I am someone that attends the cinema more out of obligation and to settle lost bets (I make a lot of thoughtless wagers on domestic matters), this is a movie among an elite few that I thoroughly enjoyed and encourage others to see (the only other to earn this status is The Castle).

The movie tells the story of Facebook’s creation through depositions given by CEO and Founder Mark Zuckerberg.  I can’t comment on how accurately the movie presents the facts, nor how closely the cast resembles their characters’ personalities and mannerisms (surely finding anyone who could hold a stare for as long as the real life Zuckerberg is impossible), but  Zuckerberg himself, who is probably most familiar with the facts, did comment that the only thing they got right was his wardrobe.

Why Build “The Facebook”?

It seems Zuckerberg’s main basis for criticism was that he felt the movie misrepresented his motivation for creating Facebook, i.e.  as a means of improving his social standing, sparked by a series of events, from being dumped by his girlfriend to gaining access to exclusive Harvard social clubs.  Zuckerberg argues “can’t they wrap their head around the idea that someone might build something because they like building things?”

But that is exactly what I took away from the movie -that Zuckerberg did create Facebook simply for the sake of creating something extraordinary.  He is portrayed as an explorer, someone that is curious, but mostly someone that is a genius, to the point that he thinks on a different level, and his social awkwardness is a result of either boredom or frustration in dealing with people that are not on the same plane.

Making billions was a consequence not The Objective

One fact that the movie and reality do seem to agree on is that Zuckerberg is the youngest self-made billionaire in the world.

Ironically, from the movie I also got a sense that cashing in on Facebook was secondary, and only really a means to an end, that is – making Facebook the best it could be.

Is there Still Money Left on the Table?

So Mark Zuckerberg and Co. have certainly made some money from Facebook, but who else is, and how are they doing it?

Upon first inspection Facebook appears to be the answer to every marketers dream. And for good reason, it ticks all the boxes on the marketers’ wish list:

  1. It’s BIG.  According to Facebook’s Press Room there are over half a billion active users, half of these engaging with Facebook on a daily basis.  To put this into perspective:
    • If Facebook were a country its population would only be surpassed by China and India.
    • Australian marketers get excited about cracking the US market.  Facebook is 60% bigger.
    • Economists have been getting excited for years about the global economic implications of China opening up.  Facebook is about 40% of China’s population, and without a One Child Policy hampering its growth.
  2. It’s Segmented.  Marketers can segment the market to a very granular level using parameters and a degree of accuracy previously unheard of, and then narrowly target their communications to their audience.

It is little wonder that investors were keen to throw money at Facebook once it had some momentum.  They recognised the genius of Facebook – that users, many many users, were volunteering personal information in a way that was anonymous yet not anonymous at all.  Facebook essentially offers marketers the ability to eaves drop on hundreds of millions of conversations happening simultaneously, and strike at the “moment of relevance”.

Is Facebook Really only the Best of what PPC has to offer?

Facebook appeared to offer advertisers the benefits of traditional Pay Per Click Advertising like AdWords, but with audience targeting on steroids. Rather than targeting groups that contain your prospects you can just target your prospects, weeding out all the useless clicks.

AdWords Pros and Cons

AdWords as a concept has been enormously successful for several reasons, but from an advertisers point of view it is effective because of this idea of showing the ad at the moment of relevance, i.e. the exact moment when someone is searching for information to answer whatever concern that happens to be foremost on their mind.  While AdWords does offer some ability to “point your ads” towards a preferred demographic (I’m choosing my words carefully and intentionally avoiding the terms segmented or targeted audience), it is very limited.

Pay Per Click Advertising (PPC) has the added benefit to you (as the advertiser) that you only pay when someone clicks on your ad.  Unlike traditional advertising where you pay upfront based on the number of people that might possibly see your ad, “hoping” that someone exposed to your ad actually has a need for what you sell and takes action, or otherwise notices your ad and later recalls the details they need in order to take action when they have a need for what you offer.

With online advertising you don’t pay a cent until someone actually arrives at your website, the bricks and mortar equivalent of walking through your shop front door in a more traditional model.

If only I could prevent all the clicks from the people that don’t buy

The only way it could possibly get any better is if you could more narrowly target who sees your ad, in our bricks and mortar/traditional model analogy this is essentially like putting a big body guard at the door to your shop with instructions not to let anyone in unless they fit the mould of who we know are likely to buy from us.

This is exactly what Facebook appeared to promise.  Having personally had great success advertising on AdWords selling a product that is typically purchased by a reasonably narrow segment – I couldn’t wait to to put Facebook and its targeting to the test.

And the results – you’ll have to wait for part II of this series!

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There is always a better way to do it, and either you or your competitor will find it!

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