Tuesday, May 17, 2011

Facebook - the beginning of the end?

Did you read the "Facebook Effect" or watch the movie "Social Network"? Or did you read any stories about the early ages of Facebook?

One interesting part was that E. Saverin as the CFO did want to monetize FB, but Mark Z. Did not like the idea and refused to allow any advertisement.

Now a few years later, Saverin long time gone, FB is full of ads and it gets more and more.

The latest step to a totally monetize website is the ability to tag images for any brand page within FB.

Right now the user has to tag the product, but I am pretty sure brands can (in the future) buy options that FB will tag images automatically. Of course there will be a privacy setting where the FB user can decide if automated brand tagging is allowed. Default setting will allow brand tagging.

The Lady on in the picture from posterous.com might have in the future not only a coca-cola tag, but as well a Crest teeth whitening tag.

All these product tags will link to the corresponding brand page.
Brands will start with contest how many images users are tagging with the brand which has the contest etc.

I think FB did smell the beauty of money through advertisement and learned as well that the investors want to see more and more revenue, but the challenge is to find the fine line to make a lot of money and not to piss your users off.

If it goes too far, then in a short term, the revenue will explode but then the users are going away and the revenue will go down.

I see companies which don't produce anything with value and have no productx which can't be touched with my fingers are following almost same wave behavior like the stock market. I believe such companies will have every seven years a down and some can survive and some can't. When the company down comes in parallel with the market down than there is nothing which can help.

Google once the Internet star is not really straggling but has had not the best year, just 6 years after IPO. The stock went 30% in 6 months in 2010 down.

And look at AOL and Yahoo, once the big Internet companies are now straggling to survive and firing thousands of people. Both make their money withs advertising.

If a business is build solo around ads then you are relying and your users, brands and agencies.

I give FB not more than 24 months if they keep going the direction as they are today. We will find other places where we will have fun if needed.
Especially that there are no costs for the user to switch.

If you have a computer or car and you don't like the type you have, then the switch is not easy and costs money. But switching from google to bing or from FB to another social network does not hurt and costs nothing.
MySpace or friendster could tell stories about this. They started before FB and were many years bigger but lost a lot of their users to FB.

Companies like Google and FB have to invent constantly new revenue streams which cost at the end a lot of money and can be exhausting.

Mark Z. And Facebook did many mistakes with privacy or stupid campaigns against Google. But now everybody sees FB as a grown up and stupid mistakes can't be done anymore, the freebee effect is over. Let us hope FB will stay a platform to socialize and does not move totally in a advertisement platform.

I personally like the idea of product placement tagging and if I drink a coke in a photo why should the brand not have the right to be linked to it, I am just afraid that Facebook will soon go too far.

- Posted using BlogPress, please follow me on twitter @schlotz69

Location:Spinning Wheel Ln,Brooksville,United States

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