Google turns whole web into social network December 9, 2008

Google turns whole web into social network

By: Vincent Maher

It was just a matter of time before Google started to leverage the massive base of Google accounts to connect everyone together. As usual, this new Google project is ambitious – instead of creating a new social network as a destination site, the new Friend Connect service takes the network to where the people already are – on blogs and websites.

Friend Connect (www.google.com/friendconnect) comes in the form of a sidebar for websites and blogs that has a powerful viral invitation tool for getting people to join and become part of a community that centres around the content of the site. Website creators and bloggers can invite new community members from a list of Gmail contacts or share the site inside other social networks such as Facebook, MySpace etc.

The genius of it is its simplicity – much like the paradigm-shift brought about by Google’s Adsense – Friend Connect explodes the notion of social networking completely and enables any website to be a component of a global social network.

How does it work? Website creators log in to FriendConnect using their Gmail accounts, download some code and put it on the site. Once this is done, there are several gadgets that can be embedded into the site to enhance the community aspect once people have joined your network:

• a wall gadget so people can post videos, comments and other bits of social lint onto your site;
• a review gadget so people can discuss how cool or lame you are depending on their mood, and,
• most importantly, an OpenSocial gadget that allows you to embed OpenSocial applications inside your site.

The scale of it is grand, like the Israelites toppling the walls of Jericho with their trumpets, or the rumble of elephants and infantry descending upon the Rhône.

Forget the social network as a walled garden, forget social networks as destination sites – FriendConnect turns the whole web into a social network.

Jeff Palumbo—

The great social network debate is unified profiles -vs- singular social networks. Googles friendconnect is a giant leap for the unified profile. Under the unified profile we will see profiles connected to one another in a more conventional life fashion with out or with little reprensentation of where the profile was created. Under the social network side we have a community for bikers, schools, charities, etc. as one community that you and your profile are a part of. This is a great method for many community types such as an independent private school, a church or a charity where belonging to that community means more than belonging to a website like bed bath and beyond.

This relates to many businesses. How can I leverage my social initivitave with in this great debate. If your company is seeking the relestate of the profile you need to be an application or widget. If you company seeks the verticle community you need your own social network. Which is better? They both serve their purpose and hold value to the respective business that uses them. The unified profile allows the profile owner to dictate the content on their profile. The community allows an enclosed colaboration between people under a percieved community.

Friendster Receives Patent on Compatibility Scoring of Online Social Network Users December 9, 2008

MOUNTAIN VIEW, Calif., Dec 09, 2008 /PRNewswire via COMTEX/ — Friendster, Inc., a top 20 global website based on traffic and the #1 social network in Asia, today announced that the U.S. Patent and Trademark Office has awarded the social networking pioneer a new U.S. Patent, titled “Compatibility Scoring of Users in a Social Network” (U.S. Patent No. 7,451,161). Friendster has been granted four patents since July 2006, validating the company’s early and continuous innovation in online social networking.

Friendster’s latest patent, granted on November 11, 2008, describes a unique methodology used to calculate compatibility based on expressed interests between users of a social network. This includes scoring the compatibility between two members of a social network based on their interests and scoring the correlation between two interests for a given member of a social network.

“In just six years, social networking has become both an industry — since 8 of the top 20 largest websites in the world are social networks — and a critical platform for over half a billion Internet users globally to share, communicate, connect and be entertained with existing and new friends, family and colleagues,” said Richard Kimber, chief executive officer of Friendster. “A core component of the evolution of social networks is the ability of the online ’social graph’ to represent our real social life. Understanding the common interests between people establishes common ground to build and enhance relationships.”

Prior to this most recent fourth patent, Friendster was granted three social networking patents in 2006 and 2007:

— In July 2006, Friendster was awarded its first U.S. patent describing how people are connected in the context of an online social network, titled “A System, Method and Apparatus for Connecting Users in an Online Computer System Based on Their Relationships within Social Networks” (U.S. Patent No. 7,069,308).

— Friendster was granted a second U.S. patent in October 2006, which discloses the process of enriching other users’ profiles with text, video, pictures and additional content, titled “Method of Inducing Content Uploads in a Social Network” (U.S. Patent No. 7,117,254).

— In March 2007, Friendster added another patent to its portfolio, titled “System and Method for Managing Connections in an Online Social Network” (U.S. Patent No. 7,188,153 B2), which describes a technology that allows members of a social network to manage their connections by, for example, adding friends; personalizing their network through arranging, ordering and classifying connections made in an online community; and managing these connections at will.

“Since launching the first social network in 2002, Friendster has continued to build and own a significant patent portfolio. Friendster’s four patents address many fundamentals of social networking — establishing connections, distributing and sharing content, managing connections over time and assessing compatibility between users. Friendster’s patent portfolio is one of several assets of the company. Friendster anticipates receiving more patents, and we will continue to focus on growing our large global business into an even larger one,” said Kimber.

Friendster Leads in Asia and is a Top 20 Global Website

Friendster is the #1 social network in Asia, with over 65 million registered users and over 50 million monthly unique visitors from Asia.* In Asia, Friendster has more monthly unique visitors than any other social network. Plus, Asia is the largest market of Internet users (Asia has 41% of the world’s Internet users while the U.S. has only 19%), and Asia is the fastest growing region in the world.** Friendster has a loyal and growing user base throughout Asia in the following top 10 countries for Friendster: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore and South Korea.

Friendster is a top 20 global website in the world in terms of traffic, serving over 18 billion page views a month.** Friendster is 1st in “user engagement” among the top five global social networks, with users spending an average of 187 minutes per visitor per month on http://www.friendster.com.**

About Friendster

With more than 90 million members worldwide, Friendster is a leading global online social network. Friendster is focused on helping people stay in touch with friends and discover new people and things that are important to them. Online adults, 18 and up, choose Friendster to connect with friends, family, school, social groups, activities and interests. Friendster prides itself in delivering an easy-to-use, friendly and interactive environment where users can easily connect with anyone around the world via http://www.friendster.com or m.friendster.com from any Internet-ready mobile device. Friendster has a growing portfolio of patents granted to the company on social networking, with more expected over the next several months. Headquartered in Mountain View, California, Friendster is backed by Kleiner Perkins Caufield & Byers, Benchmark Capital, DAG Ventures, IDG Ventures and individual investors. For more information, visit: http://www.friendster.com.

*Google Analytics and Friendster Internal Data, September 2008

**comScore Media Metrix, Asia Pacific and Worldwide Data, September 2008

SOURCE Friendster, Inc.

 http://www.friendster.com

Social Media ad Spending decline, demands inproved results November 24, 2008

 The global financial crisis and drastically lower consumer spending, as indicated by Friday’s Commerce Department report of a 2.8% drop in October retail sales, has forced marketers to slash budgets and seek better performing alternatives.

The consumer spending recession is quickly “trickling-down” to cause a traditional media depression. Research from Jack Myers Media Business Reports indicates up to double-digit declines for newspapers, magazines, broadcast radio and television in 2008. And there appears to be no good news in sight, as sales are projected to decline further in each of these media sectors in 2009.

The future of marketing is results driven advertising. Pay-For-Performance models stand to dominate in down market trends.

Marketing Executives Networking Group Survey Finds Social Media Practices Still in Infancy Stages November 20, 2008

There is Opportunity for Growth in Web 2.0 Practices; Most Marketers Still on Learning Curve

 

Despite the fact that many marketers feel like they are losing the race to adopt social media practices, the Marketing Executives Networking Group (MENG), today announced the findings of their social media membership survey which reveals most marketers are still in the early or experimental phases of adopting and measuring social media. The premier organization of executive-level marketing professionals conducted the survey last month and found that 67% of respondents consider themselves beginners at using social media for marketing purposes. Additionally, more than 87% of respondents are not regularly measuring the ROI of their social media marketing efforts.

“Our members are excited about the potential of social media, but most have not yet fully integrated social media practices into their traditional marketing efforts,” says Richard Guha, Chairman of MENG. “While many marketers are worried they’re missing the boat, in reality even the Fortune 500 companies don’t feel they’ve mastered social media just yet.”

The survey was conducted to gauge the role of social media in today’s marketing practices, and nearly 75% of respondents define social media as media that is based on conversations among users. While more than 67% report they will increase their social media advertising budget in 2009, nearly 80% say social media is not a fully integrated component of their marketing programs.

“Many marketers are unsure where to start with social media,” said MENG member Dwight Griesman, Chief Marketing Officer at Forrester Research. “It’s important to make the decision on what to do based on your target audience and your strategy, not the technology. As noted in Forrester’s book Groundswell: Winning In A World Transformed By Social Technologies (Harvard Business Press, 2008) following the four step POST process provides marketers with a framework for leveraging social media to achieve their goals. The first three steps cover People, Objectives, and Strategy. Only then does Technology factor in. Focusing on the audience first is the right place to start as marketers formulate their approach to social media.”

“An important thing to remember is the initial foray into social media should always begin with listening to your consumers,” said MENG member Bert DuMars, Vice President E-Business & Interactive Marketing at Newell Rubbermaid. Newell Rubbermaid’s Graco brand implemented a social media strategy designed to humanize and increase positive perceptions of the brand. “Ask them how they would like to engage with your brand, find the communities where they are already active, and immerse yourself in the social networking environment. Also, always be transparent to your consumers, and remember it is a conversation not an interruption…and always start with listening.”

Earlier this year MENG launched Social Media University, a webinar series designed to help MENG members brush up on social media tools like RSS feeds and podcasts. The webinar series, designed to help members take advantage of current trends, was one of the highest-attended this year. In addition, local chapters are also seeing record attendance at meetings led by social media experts.

“It’s encouraging to see MENG members collaborating and participating in hands-on sessions that advance their knowledge of social media,” Guha said. “It’s this collaboration and sharing of best practices and campaigns that will show some members how to get started or take the next step and help us all to gain a better understanding of how to leverage the techniques and determine the results.”

Stealth Startup Kango Working on Semantic Search For Travel November 20, 2008

 

Does the world really need another travel site? With Expedia, Orbitz, Travelocity, TripAdvisor, Farecast, TripHub, Yapta, and many more, prospective travelers already have more than enough to choose from. (With an estimated $87 billion in travel booked online, it’s no wonder why). Soon they will be able to add Kango to that list.

The startup, which has been in stealth-mode until now, does manage to add a new twist to search travel. It is indexing 18 million opinions and reviews across 1,000 travel-related sites to derive the best travel search results based on what type of trip you want to take. If you are planning a romantic getaway in Big Sur, you will get one set of results. If you specify that you are looking for a family outing instead, you will get another. Or you can look for pet-friendly hotels and activities. Of course, you can also search by price or amenity, like any other travel site. And you can see where each hotel or activity is located on a small Google Map.

But what’s promising about Kango is the way it slices up search subjectively. Kango is building a semantic search engine focussed narrowly on travel. It parses the language in all of those reviews and guides, and categorizes them by generating tags for them. “You cannot wait for users to add tags, you have to derive them,” says CEO Yen Lee. So hotels that have been reviewed across the Web (on sites like Yahoo Travel, TripAdvisor, or Yelp) with words such as “perfect,” “relaxing,” “couples,” “honeymoon,” or “spa” would rank higher in a search for romantic travel. Hotels associated with the words “kitchen,” “pool,” and “kids,” would rank higher in a search for family trips.

Whether this will be enough to draw people from other travel sites is hard to say at this point. But Kango’s executive team has an impressive pedigree. Lee is a former general manager of Yahoo Travel. His search architect, Huanjin Chen, used to be the search architect at eBay. His natural-language search scientist, Boris Galitsky, used to do work for the British government. And his head of marketing, Elliott Ng, headed up marketing for Intuit’s QuickBooks and is the founder of Netcentives.

Lee estimates there are 6 billion to 8 billion travel-related searches done every year, and he thinks Kango can help expose more of the hidden gems in travel that today don’t quite make it to the first page of most travel sites. He plans to make money on travel-specific search advertising, rather than on booking or listing fees.

Kango will be rolling out a limited beta in the next few weeks, and is reserving 100 spots for TechCrunch readers who sign up here.

Lightspeed Venture Partners Blog

Semantic web in travel

Posted: 25 Feb 2008 07:30 PM CST

 

 

I saw today that Radar raised a Series B for its semantic web application. As I’ve noted in the past, I am a believer in approaching the semantic web top down rather than bottom up, i.e. by inferring structure from domain knowledge rather than requiring all websites to mark up their content in RDF. The user doesn’t care about the semantic web (just as they don’t care about wikis or web 2.0 or tagging), all they care about is that they can more quickly get to the things that they want. The mechanisms that we use to create this better experience should be invisible to the user.

Two companies that are taking this approach are doing it in travel. Travel is a good vertical to start in for three reasons (i) lots of users (ii) well defined universe of data and (iii) easy to monetize.

The first of these is Tripit. Tripit takes travel confirmation emails from multiple sources and creates a master itinerary. As Mike Arrington noted in Techcrunch:

It’s dead simple to use and it keeps you organized – all you have to do is forward confirmation emails to them when you purchase airline tickets, hotel reservations, car rentals, etc. Tripit pulls the relevant information out of the emails and builds an organized itinerary for you. You can send emails in any order, for multiple trips, whatever. It just figures everything out and organizes it.

This is a great example of the semantic web being used to improve a users experience, invisibly. The user neither knows nor cares that Tripit is inferring structure from the emails (e.g. SFO is an airport in San Francisco, the Clift is a hotel in San Francisco, and since your reservation at the Clift starts on the same day as your arrive into SFO, Tripit will offer driving directions automatically from SFO to the Clift etc). All the user knows is that they automagically have a single itinerary compiled and supplemented with other relevant information (e.g. maps, weather etc).

The second is Kango. Kango helps travelers decide where they want to go by crawling 10,000 sites and 18,000,000 reviews and organizing that content semantically. As Erik Schonfeld of Techcrunch notes:

But what’s promising about Kango is the way it slices up search subjectively. Kango is building a semantic search engine focussed narrowly on travel. It parses the language in all of those reviews and guides, and categorizes them by generating tags for them. “You cannot wait for users to add tags, you have to derive them,” says CEO Yen Lee. So hotels that have been reviewed across the Web (on sites like Yahoo Travel, TripAdvisor, or Yelp) with words such as “perfect,” “relaxing,” “couples,” “honeymoon,” or “spa” would rank higher in a search for romantic travel. Hotels associated with the words “kitchen,” “pool,” and “kids,” would rank higher in a search for family trips.

Again, the semantics are being applied in a way that is invisible to users. Users don’t need to know how key words in reviews are mapped to characteristics like “family” or “romantic”. The company uses its domain knowledge to make this transparent to the user.

London trumps Toronto as centre of Facebook universe November 20, 2008

 

It may be the largest city in Canada and the centre of the universe to some, but when it comes to Facebook.com, Toronto can only say it’s second best.

Some time last week, London, England leapfrogged the Big Smoke and stole the crown for top geographic network on Facebook. According to statistics from the popular social networking destination ending Monday, slightly less than 810,000 Londoners have signed up to Facebook, while Toronto lagged far behind with 705,000 users.

Facebook senior communications manager Matt Hicks admits he can’t give a specific reason to why London shot past Toronto, but said that both cities’ growth rates are in line with the company’s worldwide user base.

“Canada overall does continue to grow rapidly for Facebook, at about 4 per cent a week and the Toronto network is growing similarly,” Mr. Hicks said in an e-mail.

Although Torontonians may not be the darling of Facebook any more, they are a large part of the nationwide contingent that visits the site in droves. Facebook says that Canadians account for more than 10 per cent of the site’s total population and according to web measurement firm ComScore, in June 2007, 11.4 million Canadians logged onto Facebook, compared with only 343,000 in the same period last year.

Once a social networking haven for college students, Facebook’s decision to open registration to all users in Sept., 2006 has helped attract new visitors from outside the 18-to-24 year-old demographic. Once registered on the site, users can chat with friends, upload photos and place free classified advertisements.

The popularity of the website hasn’t gone unnoticed by provincial officials.

Last May, the provincial government blocked Facebook access to employees, MPPs, and cabinet ministers on government computers. The OPP also uses Facebook regularly to keep an eye out for underage drinking parties and four high school students at Toronto’s Birchmount Park Collegiate were arrested last March following a Facebook-related protest.

October 23 2007

For the last several years, Yahoo, MSN and AOL have all suffered a declining share of pageviews, but that does not mean the portal is going out of style. Rather it has been redefined, first by Google, and now by Facebook in potentially even more profound ways.

The core question a portal needs to answer for a user is “How do I find the information I need?”

In the early days of the web, the answer was browsing, which made sense when there were a limited number of useful sites. (Remember when it was a big deal for Yahoo to put the “New!” or “Recommended” icon next to a website’s name in their directory?) But as the number of websites became infinite, search replaced browsing as the dominant paradigm for finding new sites, and Yahoo’s failure to keep up in this area allowed Google to take the lead.

Google has continued to leverage its lead in search to become a full-fledged portal. Once users have found what they are looking for, Google makes it easy, through their iGoogle product, to subscribe to that content through alerts, RSS feeds, or a huge selection of widgets, all of which are compacting more useful information onto fewer start pages than ever before. As a result, iGoogle has become Google’s fastest-growing product. But iGoogle has a serious limitation: it doesn’t involve sharing; each user has to make an individual investment in set-up and can’t benefit from the work of others. It’s not really a Web 2.0 product.

Facebook has a new answer to the portal question. The “social graph,” or your network of relationships, will push information to you. You’ll learn from your friends. Thanks to Facebook’s new developer platform, the types of information being disseminated now include not just news, photos, events, and groups but also music, videos, books, movies, causes, political campaigns — and the list is rapidly growing into almost every conceivable category.

The advantage of this approach is that it makes it relatively effortless for users to access a world of information that is both increasingly comprehensive and personal to them. Even if all this information were available through search (and it’s not), search actually requires work; the user must know what they’re looking for and type it in. Then they must parse the results to determine which are valuable, labor which is not shared and reused by others. By contrast, Facebook requires no work once your network is set up. Your friends push information to you that is likely to be useful, and if not you can tune your preferences until it is. Facebook promises a kind of Socratic knowledge: it tells users things they didn’t even think to ask.

While the process of structuring new kinds of information for the social graph to distribute is still sorting itself out, it is easy to object to the frivolity of information on Facebook. For example, Facebook is great at telling me what my friends just had for lunch, but how about hard news? Well, for starters, I’m waiting for the Digg application to not only display articles I’ve digged on my profile, but also to aggregate all the articles dugg by my friends. This could lead to the kind of social news site that MySpace promised but failed to deliver.

Not only Digg, but virtually all Web 2.0 applications which are based on the wisdom of crowds can be reconceived as Facebook apps based on the wisdom (or trust) of friends. To the extent that these services cater to publishers who seek a mass audience, such as YouTube or Flickr, the social graph will not threaten their business. But to the extent they publish content intended for friends, or if the value of their service increases with the participation of friends, these applications face only two choices: get each user to recreate his or her friendship network on their own site or migrate their service to the Facebook platform lest someone else does it first.

The potential for Facebook to layer on any feature whose value increases with the participation of friends is an incredibly broad canvas for a portal. Moreover, as each new application gains acceptance, it enriches the overall value of the network and makes it incrementally more likely that the next application will be tried. Much of what we know as “Web 2.0″ will eventually be rebuilt on top of Facebook.

To be clear, the social graph will not replace search, in the same way that search did not replace browsing. And search may still be more easily monetized than the social graph. Still, as a basis for a portal, neither Google nor Yahoo has anything nearly as cohesive holding its properties together. Google can layer on any feature where search is paramount, which is hugely valuable, but as it expands beyond this core competency, it becomes increasingly hard to press its advantages into new areas. Yahoo already seems to have reached the limits of its far-flung empire, eliminating redundant operations such as Yahoo Photos.

In my view this is a misdiagnosis of what ails Yahoo. The problem is not too much peanut butter (i.e. that it’s spread too thinly). The problem is the bread at the core. Browsing plus second-tier search is not sturdy enough to hold everything together. The new portals are defined by the quality of their bread, not their peanut butter.

Yahoo was right to focus on an acquisition of Facebook but not for the reason it thinks. In its view of the world, Facebook is just another media property, a particularly fast-growing and sticky one to be sure, but ultimately just more peanut butter. In reality, Facebook’s social graph could have provided the bread to connect Yahoo’s far-flung empire.

But what would be in such a deal for Facebook? They will have their own empire soon enough.

Facebook and The Myth Of Contextual Advertising November 20, 2008

There is a myth floating around that contextual advertising is going to help Facebook justify its $15 billion valuation. The myth goes something like this: because Facebook knows everything about us, it will always be able to serve perfect ads. However, the reality is more like the following:

·         Facebook does not know much about us

·         The data that Facebook has is not structured

·         People are not coming to Facebook to click ads

And even if all of the above were reversed, building a contextual advertising engine is far from simple – anyone who tries faces the same problem as building a personalized recommendation engine. In an earlier post on this blog, we discussed various ways that such systems work. The best example is Amazon, which uses a mix of many techniques to deliver recommendations, and took a decade to build and fine tune it to the point it is at today. So what basis is there to think that Facebook can do the same? Let’s take a more in depth look at Facebook’s advertising play.

How much does Facebook really know about you?

A typical Facebook profile contains basic personal information – name, home town, date of birth and relationship status. Another section shows education and job history, and the rest of the profile is generally applications ranging from photos, to movies, to games, and other random stuff that people find interesting. So how much information is there for Facebook to use?

Very little actually. The site does not really know what I like. It does not know my book tastes, does not know that I am running a startup, does not know that I like Cabs and Pinots. It does not know that I am a Netflix user, that I am increasingly less tolerant of cold weather, or that I have 3 beautiful little daughters.

So Facebook does not really know sophisticated things about me. But even basic information that it ought to know is beyond its grasp. For example, if I add the Flixtster application and start displaying movies that I’ve rated on my profile you’d think that Facebook would learn that I like movies. But it wouldn’t. Facebook’s system has no idea that the Flixster application is about movies and has no idea what kind of movies are being displayed.

The Facebook platform is designed to be flexible and pluggable, but it lacks meta data about the content of the applications. So all the information that is being displayed on our profiles can not become an input into a contextual advertising engine. At least not easily. Of course Facebook can design an algorithm that runs and analyzes text in the profile pages, but such system would not be very good because a lot of guessing would have to happen. What would work, is to let each application deliver ads. Since applications know their own content, app developers know which ads are relevant. But it is unlikely that Facebook would ever go for that, since their whole play is to control the ads.

What ads are we getting today?

The ads that we get served on Facebook today are the direct result of the lack of understanding of its users. Not surprisingly, most ads are about dating. After all, if this works web wide, why not do it on Facebook? But most of the ads that I have seen are either laughable or down right offensive. Consider the one below:

Um… Didn’t I say on my profile that I am married? Okay fine, but even if I was looking, I would not want my THE ONE to look like this. Would you? Jokes aside, the advertisement below, which was displayed on my company AdaptiveBlue’s user group, is just completely inappropriate:

This sort of thing can cost us users, some of whom may not even realize that this is an advertisement. All they know is that they are looking at AdaptiveBlue’s Facebook group and could draw misinformed conclusions.

In addition to the ads in the sidebar, Facebook is now showing advertising in the newsfeed. I understand that they want to monetize the site, but this is just really confusing. We have been trained that the news feed shows updates from our friends. This is the place that we are directed to first each time we log in to the site, and having ads there simply creates a bad user experience. Not to mention that I am a happy Netflix customer so the Blockbuster ad that I was shown did not entice me — again, Facebook doesn’t know as much about me as you might believe.

How effective are the ads on social networks?

So at least today the ads are not relevant and we are yet to see how exactly Facebook is going to learn about us. But there is also another problem, a bigger problem which is broader than just Facebook. The question is how effective will the ads be on social networks? On the surface, it’s a no-brainer: every site that has traffic makes money on ads, right? But there’s more to the story than just the surface.

The most effective ad play online is, of course, Google. Its big because its model is pay-per-click (CPC). That is, advertisers only pay if users actually click through to the site. Of all Google’s offerings the most successful one is Google AdWords, in which contextually relevant ads are displayed on top of search results. It is so successful because a search represents intent, so users are more likely to click on ads that advertise things they are clearly actively looking for.

Most portals, media sites and social networks use a different model, based on impressions (CPM). That is they charge advertisers for each time an ad is shown, regardless of whether the user clicks. Naturally, these ads are much cheaper. And herein lies the big issue: If on social networks people do not click on ads, then the only type of ad they can possibly sell are impression based.

Right now, people are using social networks to socialize and browse, they are not actively searching for products and deals and likely, CPC would not be effective. It is still too early to tell, of course, but Fred Wilson, who writes the popular ‘AVC’ blog, created an ad for his firm, Union Square Ventures that illustrates, anecdotally, that users on Facebook are not interested in ads. The ad got practically no clicks, which is curious, because Fred Wilson and his firm are quite famous in tech circles and the ads were targeted at 32,000 Facebook users who declared an interest in technology.

Conclusion

As it stands, Facebook does not know all that much about us, and the ads that we are shown are not relevant as a result. The jury is still out on whether social networks can get big via highly targeted advertising. Early trials have shown that CPC is not a likely route and CPM plays are just not as interesting. Yet, Facebook is certainly very aggressively pushing for monetization, likely in preparation for a future IPO. Will they be able to turn it all around and re-invent contextual advertising? The company is full of brilliant people so it’s certainly possible, but so far it does not look impressive.

What do you think about advertising opportunities on social networks? What kind of plays do you see possible and what do you think about current Facebook ads?

Building a Brand with Widgets November 20, 2008

The customizable bits of software on Facebook and other social networking sites are the latest trend in viral marketing. But are widgets here to stay?

CEO Guide to Widgets

• Building a Brand with Widgets
• Why Widgets Don’t Work
• Widgets: The Future of Online Ads
• A Widget Mogul in Between Classes
• When Facebook Ads Flop
• The CEO Guide to Widgets
• Making Money from Widgets

• View Slide Show

The cards were stacked against A&E Television Network as it tried to generate positive buzz about its new series, Parking Wars. For one, it’s a reality show about meter readers. Two, the show doesn’t feature celebrities. “We thought if we could find a clever way of increasing consumer interaction with the concept behind the show that we would increase curiosity in the show itself,” says Lori Peterzell, A&E’s vice-president for consumer marketing.

So A&E hired area/code, a multimedia game developer, to build an online game based on Parking Wars. Played on the social network Facebook, the game has users park virtual cars on friends’ profile pages, or “streets,” while slapping tickets on cars parked on their own page and avoiding tickets themselves.

Grand Theft Auto it’s not. What makes Parking Wars unique is how it’s distributed. The game is passed from one person to the next by way of widgets, small bundles of software that users can download, customize, and forward to a single pal or an entire contact list with the click of a mouse. Widgets like Parking Wars, which are designed for a specific social networking site, are typically referred to as applications. Since its Dec. 17 introduction, Parking Wars has attracted more than 198,000 unique users, many of them repeat players, and generated more than 45 million page views.

Raising Brand Awareness

“It’s surpassing our expectations,” Peterzell says. A growing number of companies hope they’ll be wowed by widgets, too. Electronic Arts (ERTS), Viacom’s (VIA) Paramount Pictures, Sony Pictures, Gap (GPS), Hewlett-Packard (HPQ), Hallmark, and Blockbuster (BBI) are among the businesses hoping to spread a marketing message or raise brand awareness through these modules of content used by millions of social network users to customize profiles or communicate with friends.

Interest in widgets is rising as marketers become disaffected by other methods of online advertising, especially on social networks. Google (GOOG) executives said in January they’re not generating as much revenue as expected (BusinessWeek.com, 1/31/08) from placing ads on News Corp.’s (NWS) MySpace.

Some marketers say widgets may do a better job engaging users than, say, so-called banner ads emblazoned across the sides of social network profiles. “Content and functionality are the new creativity—it’s not about whether you have a whiz-bang rich media banner running,” says Andy Bateman, CEO of brand consultancy Interbrand New York. “Are you doing something that’s actually helpful and useful to people?”

Some Facebook Campaigns Have Fizzled

There’s plenty of anecdotal success. Sony Pictures promoted its Resident Evil zombie flick by running a sweepstakes in conjunction with Rock You’s popular Zombies application, which lets people send virtual zombies to bite their friends. Sony Pictures had hoped 10,000 people would sign up for its contest, and instead got 1 million takers, says RockYou CEO Lance Tokuda.

Facebook’s Beacon Will Shine Again November 20, 2008

We haven’t seen the last of Facebook’s hotly debated “Beacon” peer-recommendations application. Hardly. This story is just beginning.

Social networks will not be overrun with Facebook refugees searching for a virtual home that better safeguards their privacy. And another network isn’t likely to take over Facebook’s momentum because they made an initial awkward misstep. Instead, consumers will do what we have always done: We’ll forgive an earnest apology.

As the media focuses its spotlight on another company or cause, Facebook will unveil a retooled privacy-friendly application that harnesses the power of viral recommendations shared among friends. The reconfigured platform will ensure people share their passions with others only when they want to, and only with those subsets of their social network that would be interested. And when that happens, watch out: this service could meet Facebook’s claims that Beacon can change everything you know about advertising, let alone social network advertising.

We have to remember that the harshest critics of Beacon were business veterans, such as analysts, reporters, advocacy leaders. Privacy for these individuals has an entirely different meaning than it does for the twenty-something Facebook demographic that has been raised on Internet cookies and unshakable spyware. Facebook’s high profile position has made it a perfect target for criticism, but at the same time, it has now become the underdog those very critics can now root for. Mark Zuckerberg and company are just too competitive to be counted out after one PR knockdown. As quick as you can say Second Generation Zune, these guys will be back.

Facebook CEO Seeks Help as Site Grows Up November 20, 2008

Google Veteran to Be

Zuckerberg’s No. 2;
Search for Revenue

By VAUHINI VARA
March 5, 2008; Page A1

Mark Zuckerberg, Facebook Inc.’s 23-year-old chief executive, is finding that he and his company have to grow up at Internet speed. The latest sign: He has poached a top Google Inc. executive, Sheryl Sandberg, to help expand his social-networking company.

Sheryl Sandberg

Ms. Sandberg, a six-year Google veteran who has been the search giant’s vice president of global online sales and operations, will become Facebook’s chief operating officer. In that role, the 38-year-old executive will try to help expand the privately held company’s operations, revenue and international reach. She will also lead sales, business development, public policy and communication. Ms. Sandberg will report directly to Mr. Zuckerberg, who has been searching for a second-in-command for several months.

THE BIG TIME

 

•  The Situation: Mark Zuckerberg, Facebook’s 23-year-old CEO, poached top Google executive Sheryl Sandberg to be his chief operating officer.

•  The Lead Up: After expanding Facebook quickly in the four years since it launched, Mr. Zuckerberg now needs to expand the company’s operations, revenue and international reach.

•  The Hurdles: While traffic is rising, Facebook is still spending more than it is bringing in. Industry watchers say it needs a better business model to grow revenue.

Ms. Sandberg’s appointment comes as Mr. Zuckerberg is trying to adjust to being head of a company that is quickly outgrowing its position as one of Silicon Valley’s hottest startups while preparing himself to be able to lead it to Google-like international heft. Based in Palo Alto, Calif., Facebook is a social-networking site that allows users to create personal Web pages and communicate with one another.

It has grown fast in the four years since Mr. Zuckerberg founded it. Sales reached $150 million in 2007, but the company’s operations are concentrated in the U.S., and it is still burning up more cash than it is generating in revenue, according to a person familiar with the company’s finances. Facebook declines to comment on its performance.

In early December, the CEO had a conversation with one of his mentors, Silicon Valley investor Roger McNamee, in which he admitted he was having a tough time with some new pressures he was facing as chief. “Is being a CEO always this hard?” he asked, according to Mr. McNamee, a managing director at private-equity firm Elevation Partners who has a personal stake in Facebook.

In an interview, Mr. Zuckerberg says he doesn’t recall the specific conversation with Mr. McNamee, but acknowledges the CEO job “is hard — I do sometimes whine to Roger about it.”

Weeks prior, Mr. Zuckerberg had faced protests from users and privacy groups after launching a new advertising program. One element of the program tracked users’ activities on Web sites outside of Facebook and shared those activities with their friends. Some Facebook members complained that this violated their privacy, and one local blog dubbed Mr. Zuckerberg “the Grinch.” Around the same time, personal information about Mr. Zuckerberg, including material from his Harvard University application, was posted on a Web site for Harvard alumni.

Facebook’s advertising initiative was a turning point in the public’s perception of Facebook and its young CEO, who had enjoyed years as a Silicon Valley darling and was now the brunt of a backlash.

A Self-Assured CEO

After founding Facebook as a college student four years ago, Mr. Zuckerberg saw almost instant success. Millions of users flocked to his Web site and top Silicon Valley investors rushed to fund it. Mr. Zuckerberg also become known as a self-assured, even arrogant, CEO. Some of his early business cards read, “I’m CEO … b — .” (A Facebook spokeswoman says the cards were meant as a joke.) In a speech in March 2007, he said: “Young people are just smarter.”

Mr. Zuckerberg is now finding that young people aren’t enough. Like other technology startups, the key skills for Facebook employees in the early days were technology know-how and product development. To keep growing, the company needs to tap people with more traditional skills, including the ability to woo advertisers, manage a big staff and handle public relations.

“I coded the original site and managed the engineering teams,” Mr. Zuckerberg says in an interview, adding that his next task is to “work on bringing really talented people into the company to help it scale.” Mr. Zuckerberg declined to comment on his personal style or his reputation as a CEO.

Mr. Zuckerberg’s experience is emblematic of Silicon Valley’s accelerated culture, where startups change more in a few years than most companies do in decades — forcing CEO-founders to adapt quickly in order to survive in their roles. The founders of Google, Yahoo Inc. and eBay Inc. all handed the reins to outsider CEOs within three years of founding their companies.

To season himself, Mr. Zuckerberg in recent years has reached out to high-profile mentors like Mr. McNamee and Don Graham, CEO of the Washington Post Co. Last year, Facebook brought in trainers including Bill Clinton’s former speaking coach to help the CEO improve his speaking style.

Ms. Sandberg joins a roster of recent Facebook hires that includes Chief Financial Officer Gideon Yu, formerly CFO at YouTube, and Vice President of Product Marketing and Operations Chamath Palihapitiya, a former head of AOL’s instant-messaging business. Mr. Zuckerberg is also seeking to hire a new general counsel and a vice president of communications and public policy, says Facebook spokeswoman Brandee Barker.

Part of the Struggle

Part of the struggle for quickly maturing startups is that founders don’t want to lose their stamp on the company — something they fear may happen if they hand the reins to a hired CEO. Mr. Zuckerberg says he is trying to build Facebook on his own terms, and indicated recently that he doesn’t want another No. 1 in the company. Owen Van Natta, chief revenue officer who previously held the role of Facebook COO, last month said he was leaving the company. The departure was related to Mr. Van Natta’s ambitions to be CEO of a company, a title Mr. Zuckerberg isn’t willing to relinquish, both men say.

In Ms. Sandberg, whose appointment was confirmed yesterday, Mr. Zuckerberg is seeking an experienced hand who can also enable him to hold on to the reins. “It’s going to be very valuable for me to have a partner [to help] me to think about how to do operations, especially as the organization grows very large and as we scale internationally,” says Mr. Zuckerberg.

Mr. Zuckerberg built an early Internet venture in October 2003, during his sophomore year at Harvard. He acknowledged hacking into the school’s online student directory and accessing students’ photos, according to an article published at the time in the Harvard Crimson, the school newspaper. Then he put up a Web site that invited visitors to judge students’ attractiveness based on those photos. He was harshly criticized by fellow students for the project and quickly closed it down. Ms. Barker declined to comment on the incident.

His next project was Facebook, which let people create online “profiles,” or personal Web pages, through which users could interact with one another. In 2004, he left Harvard and moved to Palo Alto with a few friends. Once in Silicon Valley, he raised funding to expand the Web site, which at first only college students could access.

For a while, he kept up his college lifestyle. Early on, he and his friends worked out of a rented house in Palo Alto, which they allegedly left “in total disarray,” with barbecue ashes and broken glass spread on the deck, according to court documents posted on the Web site of “02138,” a magazine for Harvard alumni. The documents relate to a lawsuit filed in U.S. district court in Boston in which some former Harvard classmates have alleged that Mr. Zuckerberg stole the idea for a social-networking site from them. Through his spokeswoman, Mr. Zuckerberg declined to comment on the documents or the lawsuit.

When the company moved to an office in downtown Palo Alto, he wore Adidas flip-flops to work and often arrived in late morning and worked until the middle of the night, say people who worked for him at the time. Mr. Zuckerberg has been described by colleagues as shy — sometimes so uncomfortable socially that he comes across as stiff.

Others describe Mr. Zuckerberg as a quietly thoughtful executive willing to learn from others. “A lot of times, when people meet with Mark for the first time, he’s really quiet, and people assume he’s not engaged or paying attention,” says Matt Cohler, vice president of product management for Facebook. “Actually, he’s really engaged and he’s trying to listen.”

In September 2006, Mr. Zuckerberg’s profile grew when Facebook began letting in anyone with an email address, not just students. Around that time, Facebook added a feature called the “news feed” that made it easier for people to track friends’ activities on the site. When thousands complained that it violated their privacy, Mr. Zuckerberg upset some further with a blog post telling them to “Calm down. Breathe. We hear you.” Later, Facebook changed its privacy settings to make it easier for users to manage how their information is shared.

In May 2007, Mr. Zuckerberg wore his flip-flops onstage at a San Francisco event, where he announced he would let other companies offer services such as games within the Facebook site. Mr. Zuckerberg’s investors began urging him to focus on finding a way to turn Facebook’s popularity into revenue, say people familiar with the matter.

Mr. Zuckerberg sought seasoned help. He brought on Messrs. Yu and Palihapitiya. Michael Sheehan, a communications coach who has advised Mr. Clinton, came in to teach the CEO how to improve his wooden image, in part by coaching him in public speaking.

He asked friends like the entrepreneur Marc Andreessen, who founded Web-browser company Netscape when he was 22 years old, for advice in keeping Facebook’s fast-paced, communicative culture intact as Facebook grew, says a person familiar with the matter. Ms. Barker said Messrs. Zuckerberg and Andreessen discuss business regularly but declined to comment on their conversations. Mr. Zuckerberg also turned to Mr. McNamee. He says he encouraged Mr. Zuckerberg not to sell Facebook or give up his CEO role.

All the while, Facebook kept growing. Last year, Microsoft Corp. invested $240 million in the company, valuing the startup at $15 billion. That gives Mr. Zuckerberg a net worth on paper of at least $3 billion. According to comScore Inc., a Web tracking firm, Facebook had 101 million visitors in January, up from 25 million in January 2007. Facebook’s social-networking rivals include MySpace, owned by News Corp., which also owns The Wall Street Journal.

Last summer, Facebook began working on a project that involved attaching ads to messages about a user’s activities on the site. These ads would then be seen by the user’s friends. The company also designed a feature called Beacon that took this idea a step further: It tracked people’s activities on sites outside of Facebook. If someone made a purchase on Overstock.com, for example, Facebook would notify the user’s friends through a message, sometimes without explicit permission. Vendors partner with Facebook to participate in the service, and Facebook can make money by displaying tailored ads from the vendors on users’ profiles.

At an event in New York in November for top advertisers, Mr. Zuckerberg unveiled the ad program, including the Beacon feature. Efe Cakarel, who runs a service within Facebook that lets users watch independent movies, was with Mr. Zuckerberg and recalls suggesting that advertisers might worry that attaching ads in this way could turn off users. He says Mr. Zuckerberg shrugged off the concern, saying, “They’ll like it when they see how well it works.” Through a spokeswoman, Mr. Zuckerberg says he doesn’t remember the conversation but that it could have happened.

Privacy Complaints

Instead, people complained that Beacon was a privacy invasion. The watchdog group MoveOn.org Civic Action started a petition against Beacon, and companies including online retailer Overstock.com Inc. pulled out of the program or raised concerns about it.

That’s when Mr. Zuckerberg complained to Mr. McNamee, asking whether the CEO job was “always this hard.” Mr. McNamee recalls answering, “Only if you’re successful. And if you’re successful, it’s really hard, but it’s also worth it.”

Mr. Zuckerberg deliberated for hours over a public apology letter about Beacon, says a person familiar with the matter. “We simply did a bad job with this release, and I apologize for it,” he finally posted on Facebook’s blog. He also began requiring users’ permission to share their details via Beacon.

Mr. Zuckerberg says he also spoke with Mr. McNamee in December about how to structure his management team. That “led me to consider bringing in someone like Sheryl,” he says, “starting a few other executive searches and making some other changes on the team.”

Mounting Pressure

Ms. Sandberg had joined Google in 2001 when it had fewer than 300 employees. She helped build it into a global company and run its cash-cow AdWords and AdSense programs. Her unit, which has thousands of staff, now handles sales for about 99% of Google’s advertisers.

Late last year, Mr. Zuckerberg met Ms. Sandberg at a holiday party. In January, Ms. Sandberg asked Mr. McNamee for career advice about another job opportunity she was weighing, and he suggested she talk to Facebook before making any moves. Mr. Zuckerberg then met again with Ms. Sandberg over dinner and elsewhere before clinching the hire.

Mr. Zuckerberg and Ms. Sandberg will face mounting pressure to find a better business model. Facebook’s Web traffic continues to rise. But industry watchers are now questioning whether that growth will ever translate into Google-size revenue.

According to a person familiar with the company’s finances, Facebook hopes to double revenue to $300 million to $350 million this year, its fourth full year in business. Google had revenue of $440 million in its fourth year, a fivefold jump from the previous year.

Mr. Zuckerberg’s growing fame has included some unexpected challenges. On a recent trip to Los Angeles, for example, paparazzi caught him leaving a restaurant with a woman and heckled him with suggestions that he was cheating on his longtime girlfriend. The video showed up on the gossip site TMZ.com, but it turned out that the woman was in fact Mr. Zuckerberg’s girlfriend.