We hear Facebook’s 2008 revenues will come in lower than expected. Besides the economy, there is one big reason why. Ad agency execs tell us Facebook has so far failed to develop an ad product that is a must-buy.
This might not be Facebook’s fault. Asked in a recent poll which social media property they preferred, a plurality of 1,200 advertisers and marketers chose option “none” over Facebook, Twitter, YouTube and others.
Facebook should keep looking for the killer social-ad product (the social graph must be worth something, right). But in the meantime, there’s another huge revenue opportunity at its fingertips.
Marketing and ad agency executives tell us they want to pay Facebook “through the nose” for access to anonymous user data. They want use Facebook user data to help them shape marketing plans for the brands they represent — the same way they already use data purchased from the credit card companies and data collectors. Says iCrossing social media strategist Alisa Leonard-Hansen: “Bloody hell Facebook, just sell us your anonymous data already!” And NeoOgilvy COO Greg Smith: “We’re interested in patterns; the bigger, the better.”
So Facebook should just package up the data its tens of millions of users generate and sell it to marketers for billions of dollars a year.
Some more points to consider:
- Unlike selling ads against social media, Facebook would be entering a proven business. Equifax and competitor Experian collect information about product registration cards, deeds and consumer purchase histories. Repackaging it for marketers and lenders, they turn in multi-billion revenues each year.
- Facebook already knows plenty about its users and the way they interact, but if it extends Facebook Connect to online stores — allowing users to sign into them with their Facebook usernames — the social network would know almost as much as the credit card companies (who sell their information, too).
- Users will not revolt the way they did when Facebook launched Beacon, which reported on Facebook its users’ activity off Facebook. Users hated Beacon because it told their friends they bought granny underpants on Overstock.com, not because it abstractly invaded their privacy. If people really cared that corporations follow their every move, they wouldn’t use credit cards or watch cable TV. Of course Facebook would have to carefully “anonymize” its data, but that would be fine with marketers. Says Smith: “Facebook should ensure individual privacy, but users should recall that nothing is free.”
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