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Home » The Empire Likes Back

The Empire Likes Back

June 8, 2016
Steve Smith
No Comments

Still think that Facebook is a fad? It’s easy to think that. The social networking service has only been around for a decade to most of us and even less time since it became a part of many people’s routine.

But Facebook is currently ranked the sixth most valuable public company in the world with $1.5 billion in profits for the first three months of 2016 — triple the mark compared to the same time last year — on sales of $5.3 billion, up more than 50 percent from a year ago. If its Wall Street performance is hard to beat, the feat of building Facebook’s audience is unprecedented. According to the company, 1.6 billion users log in at least once a month or about half of all the planet’s Internet users.

Meanwhile, Facebook also has plans to gather up the next billion or so users, too. It’s already deployed a “Basics” package to more than 35 developing countries and worked out a deal with local telecom companies so users there don’t incur extra data charges. What’s more, Facebook has enlisted engineers from NASA’s Jet Propulsion Laboratory to develop an unmanned, solar-powered glider that could travel above the clouds and provide an Internet connection to far-flung places.

Back on earth, Facebook is in a commanding lead among its social-networking peers. According to a 2012 study done by the Pew Research Center, the percentage of Internet users on Facebook was more than the next four platforms combined. Facebook’s 67 percent topped Twitter at 16 percent; Pinterest at 15 percent; Instagram at 13 percent; and Tumblr at 6 percent.

Still, why should you as a busy business owner care? In one word — marketing. In more words, the social network has turned itself into one of the world’s most influential tech giants, and is determined to embed itself deeper into people’s daily lives.

But let’s step back first. So what is Facebook, anyway? Facebook, at its heart, is three things: a directory, a medium, and a marketing juggernaut.

A directory: After all, Facebook got its name from the “Freshman Yearbook,” a printed directory that company founder Mark Zuckerberg received along with other freshmen classmates at Harvard University, which was known informally around campus as the “Freshman Facebook.” Facebook opened up its social network from what originally was reserved for only Harvard students, then to other Ivy League institutions, then all American colleges and universities, then some institutions in the U.K. and later others around the world until, now, various minimum age limits not withstanding, most anyone with an email address or just a mobile phone number can sign up.

A medium: Singular form of the ever-present old-fashioned word of mass media. What do you say about yourself? What do you want to share? And how best to illustrate your story? Early on it was status updates and connections with friends and blogging features. Then it was the News Feeds that posted a continuously updated stream of information on friends’ activities. Then it grew to include pictures and video and connections with friends of friends. Along the way, users could “check in” and “like” something and join (or form) a business page. The list of features goes on and on.

This is the “content” that has glued the whole thing together throughout a number of successes. Failures, too. Why in the world, for example, would I want to “poke” someone? At some point, the content became less the work of amateurs, i.e. your “friends,” and now plenty of professional news organization are elbowing for valuable real estate and posting “instant articles” directly into the Facebook architecture.
A marketing juggernaut: Every click, every like, every comment, every connection, every place checked into is used to build up a data-rich profile of each user. This is what any business should “like” most about Facebook. The most important factor in transforming Facebook into such a huge business so quickly is the amount of data it collects. Users willingly share lots with Facebook, such as their interests, biography, location and friends.

Facebook can also track where else users travel online: anything with a “like” button feeds back information to Facebook, as do other sites that let people use their Facebook credentials to log on. No other web company, with the exception of Google, has as much data about users as Facebook collects. Advertisers are able to reach users with great precision, based on what Facebook knows about them, and are spending a huge share of their online marketing budgets on the social network.

Our increasing reliance on mobile computing is the key to continued success for Facebook. Time may always equal money, but time also equals data collection. Mobile conveniently extends the time we spend online and offers that much more information. How much more? A lot. According to the latest Nielsen figures I could find, Facebook takes up 22 percent of the Internet time Americans spend on mobile devices, compared to 11 percent for Google searchers and YouTube combined.

Slowly, but surely Facebook also has plans to remove reasons for leaving its site entirely.  About the biggest existential threat facing Facebook are messaging services, if only since they compete for time spent online and, therefore, data collection. Facebook already bought one a couple of years ago, WhatsApp, which has about 1 billion current users. Then there’s Facebook Messenger with about 900 million current users. Facebook purposefully broke off Messenger from the main Facebook app a couple of years ago in order to beef up Messenger to do much more than just text.

As outlined at Facebook’s developer conference last March, the “company intends to turn a proprietary messaging app into an all-encompassing platform — essentially, an operating system on which entire businesses can be built in ways that lock them into the Facebook ecosystem,” according to Wired magazine’s report of the event.

In the U.S., Messenger users can already book an Uber ride, for example, through Messenger rather than opening up the company’s app. Dutch airliner KLM is providing boarding passes and flight updates. Online clothing retailer Everlane hosts what it considers more of a dialogue that can allow buyers a better shopping experience with so-called “chatbots” versus the black hole that email has become. Messenger is also experimenting with a personal assistant service, called M, which is operated through a combination of human errand-runners and artificial intelligence. It can answer people’s questions and complete assignments. I have not read that much about this, but from what I have M sounds like Amazon’s recent Echo device.

But these are just baby steps. For a glimpse into the future, take a look at China where the WeChat messaging app allows 600 million users to wire money to friends, geo-locate a business, order food, manage banking, make a doctor’s appointment and hold a video conference all within the confines of the app. Messaging services are sure to be a bigger player as the Internet becomes even more mobile. Think for yourself how much easier it is to text someone. You’ve essentially opened up a thread for a conversation that can be easily located and comes in order in which it is received. Compare that with the typical e-commerce route in which you’d have to establish an account; then add something to your shopping cart to check out and wait for notice of shipment.

That’s a lot of emails that could get lost in the shuffle. Facebook figures life will be easier for buyer and seller alike through conversation threads it calls “interactive bubbles.” And if Facebook is busy finding ways to make users stay put, you better believe it’s also busy finding new ways to collect data. Since the start of this year, Facebook has received 13 patents and has another 32 patent applications all related to marketing.

To wrap up, Facebook has quietly reinvented itself to the point that it’s considerably different than just a “social media” site and, as a business, Facebook is almost a holding company for technology that many businesses will surely profit from using. But, if you still think of Facebook as just a place for bored teenagers to post about last Thursday’s Algebra II class, I’ll leave you with one more statistic.

During a conference call with stock analysts following its recent quarterly report, Facebook said that users spend 50 minutes each day on Facebook, Messenger and Instagram, its photo-sharing site, which is also becoming an interesting way for people to market their wares. As the New York Times reported, that’s more than any other leisure activity tracked by the Bureau of Labor Statistics with the exception of television and movies, which clocks in at just under three hours.

I’d add that, sure, there’s a lot of leisure time spent on Facebook, but also an increasing amount of business time, too.

Business Contractors & Installers
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