Last week saw the long rumoured launch of Facebook Places, the social giant’s entry into the much-hyped world of location based services (LBS). You can see our detailed thoughts on what Facebook Places will mean for brands, or why we think Foursquare hasn’t quite tipped yet. But whilst reading all of the talk about what Places will mean for consumers, other LBS companies, advertisers, etc… it occurred to me that the people Places will probably matter to most, are Facebook and the wider social media sector.
It’s sometimes easy to forget that Facebook is still quite a young company, even by Silicon Valley standards. It launched just over 6 years ago, and only opened up to everyone over the age of 13 less than 4 years ago. And yet in that time it has grown a massive audience, soon to overtake Yahoo!, and now, to all intents & purposes, is the mainstream, attracting a larger audience in the UK than any other media property apart from the X Factor final. But despite that, it still hasn’t quite managed to build revenue to match the hype.
Whilst the service has been an undoubted success, and has been profitable since last September 2009, it is ‘only’ expected to make $1.28 billion in 2010, and upwards of $1.7 billion in 2011. I say only because Google recently released its latest figures, showing revenues for Q2 of just over $5 billion. In other words, Google makes more in 1 month than Facebook does in a year.
Although Facebook are clearly keen to eat into TV budgets, taking on high impact, brand-led campaigns such as (Mindshare client) Nike’s Write The Future, they still rely heavily on their direct response model for much of their revenues, whilst social platforms sold on being able to provide deep engagement with consumers have consistently displayed mixed fortunes.
At the same time, Foursquare is quickly pulling in revenue, whilst vouchers, coupons and other such basic forms of affiliate marketing are powering growth for sites such as Groupon & TripAdvisor. And there’s the rub.
For all the talk of social media powering deep engagement with consumers, it seems that in many such spaces, consumers are more interested in having their attention bought. Places, with the obvious attractions for retailers & the hospitality industry, will allow Facebook to tap into this, and (one would expect), make a tidy buck in the process.
Of course this doesn’t mean that Facebook will give up on its efforts to prove that it is the place for 21st Century brands to forge deep connections with consumers (an assumption its research backs up), and indeed, its popularity with companies such as Coke & P&G shows it’s not alone in thinking this, whilst the fantastic work done with Nike shows that it’s not impossible to do: in fact maybe the failure of social networks to turn huge profits is actually a failure on the part of creatives to come up with truly amazing work.
In the meantime Facebook Places shows that deep engagement can often mean nothing more than providing a new platform for affiliate marketing, and if it leads to higher revenues, no one is likely to be complaining.
Sign post by Eamon Curry on flickr