Where will the money come from though? 

Here I'll look at some of the challenges facing Facebook.

1. Getting the advertising right – It was announced this week that GM are scrapping their Facebook ads after claims that they weren't delivering results for the company.  Click through rates are notoriously low on Facebook and whilst research has suggested that they still deliver results subliminally marketers will want things they can actually measure.  Sheryl Sandberg said recently that Facebook ads work better in an awareness building capacity rather than in a converting sales capacity, but with Pages still free you do wonder how many will follow GM and just use Pages instead of ads.  They have launched sponsored stories recently to get ads into our timelines but it remains to be seen how effective that will be.
2. Monetising mobile - Last week data revealed that Americans are using the site more often from their mobiles than they are from their computers.  That in itself isn't a problem, except that the mobile version of the site has very few ads on it due to the smaller screen size.  Already 80% of UK Twitter users access the site via their phones and it seems highly likely that Facebook will experience a similar trend.  Their revenues will plummet unless they can figure out a way to make money from mobile users.
3. Will they go into search? – If Sandberg is correct and Facebook benefits advertisers by building awareness then search does appear an avenue for them to persue further.  A Facebook search engine has been denied by the company, and a recent survey by Greenlight found that most Facebook users would be against the idea.

Whilst their revenue is more diverse than Google's, with 80% coming from advertising vs 96% at Google, the above represent significant challenges if they are to continue growing their advertising revenue.

In the meantime they'll no doubt continue investing in things like Facebook Credits and hope that Zynga and other social gaming companies continue to drive engagement and revenue for them in this growth area.  Revenue from non-advertising sources has grown from 2% of income in 2009 to 15% of income in 2011 and this growth will be vital if shareholders are going to be kept happy.

Given that the expected valuation is going to be around 20 times revenue, those shareholders will be having some pretty hefty demands of revenue growth in the coming years.  Hopefully Facebook will be able to meet them.

For instance back then blogs were the hip thing, so people would write reviews of products, stick an affiliate link in there and hopefully sit back and count the money.  If you tried that in the print world you'd get into trouble as publishers have to declare that the copy is in effect an advertorial.

Anyway, fast forward a few years and we have a similar thing on Twitter at the moment.  A number of British celebrities have been promoting the Snickers chocolate bar on Twitter recently.  The general theme of the campaign is that people don't act like themselves until they've had their Snickers fix, so the celebs would tweet a few unusual messages, followed by a final tweet with a photo of them eating a Snickers and revealing the cause of their peculiar behaviour.  The only thing that marked these out as an advert was the inclusion of the #spon hashtag.

After the campaigns received lots of complaints, the Advertising Standards Agency investigated, but ruled earlier this year that the campaign broke no rules and that with the inclusion of #spon it was clear the tweets were sponsored.

The ASA judgment said:

"We noted the first four tweets in each series served as 'teasers', which, due to their nature, were likely to generate additional interest in the celebrities' postings.

"We also noted those tweets did not make any reference to Snickers or to Mars and were posted in relatively quick succession. In addition, we noted that the fifth 'reveal' tweets showed the celebrities with the product and included the text, 'You're not you when you're hungry @snickersUk #hungry #spon …'.

"We considered the combination of those elements was sufficient to make clear the tweets were advertising."

So it seems that such behaviour is legal, but is it effective?  No doubt it generated lots of publicity for both the celebrities and for Snickers, but research suggests it did very little to generate income for the company.  It analysed mentions of Snickers on Twitter before, during and after the campaign and found that the campaign actually put people off of talking about the bars.

And it's hardly surprising is it?  I mean Twitter is renowned as the place where people are, if nothing else, completely honest.  It's bad enough that Obama declared that he'd never used Twitter, despite amassing a huge following on the site having made thousands of apparent tweets, but this takes things a step further as it makes us distrust not only who it is doing the tweeting but also that whoever it is believes what it is they're writing.

No doubt Twitter can be used to promote your wares, but if this campaign teaches us anything it's that authenticity is king.

Does the same apply however if products are arranged physically in front of us?  New research looking into the topic found that when products are arranged left to right, we seem to gravitate towards the middle product most of the time, something known as the Centre Stage Effect.

The research team showed participants a questionnaire with 17 questions.  Each question contained five pictures of the same item, with each set of pictures arranged in a horizontal row.  Remember that each picture is of the same product.  Which did they prefer do you think?  You guessed it, the middle picture was favoured most of the time.  Interestingly, when picking out the picture they didn't like, there was no such bias.

The difference wasn't huge, with the middle picture selected 23% of the time, so slightly above the 20% you'd expect if people just chose at random, but interesting nonetheless.

They tested the hypothesis again in a second study, with the pictures this time arranged vertically rather than horizontally.  The orientation didn't seem to matter however, with the central picture chosen more often than the rest.

Finally the researchers tested their theory using real objects, which in this case were identical pairs of socks.  The socks were pinned to a piece of cardboard in a vertical line, and participants were asked to pick their favourite.  Once again the middle pair were chosen more often than they should have been.

So, how does this translate to the real world?
 

"If item location influences preference during the millions of purchasing choices that occur every day, it will be exerting a substantial influence on consumer behaviour," the researchers said. "Moreover, choices from a range of options are made in many other contexts (e.g. legal and occupational), and it remains to be investigated whether the central preference remains with other formats and whether it extends to other types of decision."

Which got me thinking about how this might apply to the web.  An obvious example is Google Adwords.  There you have a series of ads arrayed vertically.  Do we tend to pick the middle option more often than the rest?  Click through data would suggest not, BUT, Wharton research does show that adverts in the middle convert much more than adverts in the top spots.  To be fair however they suggested this is more likely due to comparison shoppers clicking on a few ads rather than any underlying cognitive bias.

Interesting nonetheless though.

That makes the news today that Twitter has reached a deal to buy both the team and the technology at RestEngine very interesting.  If you're not familiar with RestEngine, they're a company that provide email marketing services.  Lest we forget, Twitter also bought Summify recently, so that purchase could help you create a digest of your best tweets, with the RestEngine technology then used to email your followers with your best bits.

This is the statement on the RestEngine homepage

“We’re very excited to announce that the RestEngine team is joining the Twitter flock! Just over two and half years ago we founded RestEngine to help social app publishers send targeted one-to-one emails based on a subscriber’s social graph. It’s been an incredible journey where we had the opportunity to work with some of the leading social app publishers. With our customers, we’ve iterated on our social marketing automation platform while defining a new set of best practices for this brand new world of outbound social marketing. We’re thrilled to now focus our email skills and marketing automation know-how on a much larger scale at Twitter.”

This would provide users with a nice digest feature, whilst maintaining the constant stream of tweets for which Twitter is famous.  Summify and RestEngine could help it accomplish this through the email medium rather than cluttering Twitter’s clean interface. Those emails could show the most retweeted, @replied, or favorited tweets by people you follow.

Services like Paper.li have shown the popularity and demand for these kind of services, so it will be interesting to see what the new team can come up with.

New research underlines why we love doing this so much.  It shows that talking about ourselves online gives us the same sort of pleasure sensation in the brain as we get from eating some great food or earning lots of money.

Apparently around 40% of what we say each day is devoted to telling others about ourselves.  The Harvard scientists used brain imaging and behavioural experiments to discover quite why that is.  Apparently the answer is pretty simple – it just feels so damn good!

"Self-disclosure is extra rewarding," said Harvard neuroscientist Diana Tamir, who conducted the experiments with Harvard colleague Jason Mitchell. Their findings were published in the Proceedings of the National Academy of Sciences. "People were even willing to forgo money in order to talk about themselves," Ms. Tamir said.

Generally, acts of self disclosure were accompanied by spurts of heightened activity in brain regions belonging to the meso-limbic dopamine system, which is associated with the sense of reward and satisfaction from food, money or sex.

Avoiding Corporate Narcissism

Which is fine for personal accounts, yet we expect different things from corporate social media accounts.  If you visit a companies presence on Facebook or Twitter and all they're doing is talking about themselves it's generally frowned upon.  The video below pokes fun at companies that treat social media like it is just about them, pushing sales messages out morning, noon and night.

Of course the Harvard research should be read not as an excuse to use social media to waffle on and on about you and your products.  It should instead be read as a look inside the brain of your customers or followers.  You should read it as evidence of how much they will get out of engaging with you if you make it all about THEM.

The BBC would have us believe that this rule no longer applies.  They surveyed several thousand UK adults about their online behaviour, in particular how they interacted online.  Their findings suggest that we are now much more likely to participate online rather than passively consume content.

What's more, they don't believe this is a small shift, but rather a fundamental one.  They believe that 77% of the UK population are now producing content in some way online.

They say that online participation has exploded because it is now so easy to do so.  What once may have taken time or a degree of expertise can now be done by most of us very easily.

Of the 23% that aren't contributing, they suggest almost half of those have the skills to do so but are actively choosing not to, with this merely reinforcing the value participation plays in reflecting who we are and what we stand for.

They define all of this under a new title of Participation Choice, which is broken down into four key forms:

1. Passive
2. Easy reaction
3. Easy initiation
4. Intense participation

So, does this signal the death of the 90 9 1 rule?  Personally I think not.  Whilst this research is a great indicator that web users are becoming more interactive, it is worth remembering that it is a study of web usage as a whole.  With such aggregation it is always likely that better results will be returned than if you analysed individual communities.  Expecting 3/4 of your users to actively contribute to your community is in my opinion extremely far fetched, with most of my personal evidence still correlating broadly with the 10% of users the initial rule suggests.

Do you think the rule still applies or are you seeing more engagement across your communities?

The team of researchers from Michigan State University found that in most instances people believe the sponsor of an event is not the current sponsor, but a past one.

“Our findings show that when an “old” sponsor is replaced by a “new” sponsor, people are aware of the correct sponsor at the time of the event, but a little later they revert to thinking that the old sponsor is still associated with the event,” they say.

“This finding has important implications for incoming sponsors because it suggests their sponsorship dollars may be wasted as the old sponsor continues to benefit.”

Their experiment asked participants to name the sponsor of various high profile events, such as the Olympics, both at the time of the event and then again six months later.  Worryingly they recalled the past sponsor 26% of the time when asked during the event, whilst six months later this had risen to a whopping 79%.  Not good news if you've just paid big bucks for that slot.

They followed up this study with a test that saw participants exposed to a series of TV and radio shows.  Included within them were 12 sponsored events.  On day 1 the sponsors names were mentioned regularly throughout.  On day 2 however half of the events had new sponsors, whilst the other half had no sponsor at all.  The results are fascinating.

When a replacement sponsor was backing the event, viewers consistently got the name wrong.  However when there was no competing sponsor they suffered no such confusion.

The moral of the story is that if you want to get the best bang for your sponsorship buck you should give serious thought to who has been before you.  If you're following in the footsteps of a rival brand in your industry for instance then there appears a strong chance that consumers will confuse the two of you and recall your rival rather than you.

The research team suggest that if you want to lodge yourself into the public consciousness you have to start early.  So for instance if your sponsored event is in the summer, start promoting it in winter to remind people both of the event and your association with it.

“The more you can jog people’s memories, to see you associated with that event, the better,” they say.

Whilst this is ethically dubious from a personal point of view, it offers tremendous opportunities for keeping tabs on what your competitors are doing.  After all, any company worth their salt is making excellent use of social media to let the world know what they're working on.  What's more, their customers are using social media to complain, and sometimes praise them.

If you're not convinced, here are 5 reasons why stalking your competition is a great idea.

1. You see what your customers think – When you work in the company you often can't see the wood for the trees.  Customers however call a spade a spade and their passion is difficult to fake.  So you can forget official communications and get the real picture by listening to what customers are saying.
2. Understand your rivals priorities – Social media offers great insight into where your rivals priorities lie.  You can see for instance what customer demographics they have or where their product priorities are just by listening to their social media communities.
3. Take advantage of their misfortune – Obviously you can monitor social media for when your own customers are complainng about you, but the nice thing is that you can also monitor social media for when your competition are having a hard time of it.  What better time to trumpet the virtues of your own product than when someone is annoyed with a rivals?  Lots of research shows that people respond well to receiving customer service via social media, so receiving customer service when not even a customer will go a long way.
4. Improve your service the easy way – Listening to the complaints of your customers is a great way to improve how you do things.  The unfortunate part of that is it means you've screwed up to begin with.  If you listen to the complaints of your rivals customers though you get the chance to ensure you never make those mistakes yourself.
5. Scout for talent – With LinkedIn you can see whenever a company has made a new hire (providing that person lists the company as their employer), so it's a great way to see how talent is moving throughout your industry.  You can then befriend those key people, and if they decide to move on, there you are.

I'm sure there are other ways you can use social media to stalk your rivals, but these are a few simple wins you can achieve quickly and easily.  Happy stalking, and do leave other suggestions in the comment section.

Big Data

They are doing so via a product called BigQuery.  They first announced their plans back in November when they allowed a small number of developers access to their most powerful tools.  This week it provided a follow up announcement, telling the world that it would be selling that software as a service to corporate customers.

“When you have really large data sets, we have the capability to analyze them,” said Ju-kay Kwek, product manager for Google’s cloud data effort. “A query with five terabytes of data involved could be returned in 15 seconds.” That is, he said, about 10 times faster than the speed of many corporate data systems. He noted that in companies today, “it’s not uncommon to have problems that take half a day to analyze.”

Now obviously if companies want to analyse data via the cloud then there is a good chance they'll have lots of data in the cloud as well, so Google will no doubt be pushing its own storage solutions alongside BigQuery.  They are pricing the service at around 30% of what Amazon currently charge, so they're clearly aggressively pushing this new service.

At the time of writing Amazon don't have their own publically available analytics service, although they expect to launch one in the coming months.

“It’s still early days in cloud computing,” Kwek said. “We have huge respect for A.W.S., but we’re different in terms of philosophy.” Where Amazon catered to technically able people, largely at start-ups, Google wants to attract lots of less-proficient executives.

It adds yet another string to the Google bow, although their attempts at diversifying their revenue stream have largely failed thus far, with 95% of revenue still derived from Adwords.

Amazon has a clear lead in cloud computing services but with this announcement it's clear that Google has them firmly in the crosshairs.  Whether they'll succeed only time will tell.

If you'd like to find out more about how cloud computing can improve your business, I recommend this whitepaper on the topic by IBM.

The Power of Cloud

Alas the reality seems to be anything but.  A new survey conducted by Episerver reveals that just 10% of companies measure the ROI of their social media.  10 bloody percent!!

The madness continues.  Not only are so few measuring what they do, the survey revealed that 50% of companies are investing more time and money into social media this year.

I think this bares repeating.  Over half of the organisations in the study are spending more money on social media this year, yet 90% of them have absolutely no idea if that investment is paying off or not.

Sadly this typifies the build it and pray approach that is so common when it comes to social media.  There are certain characteristics that typify this approach:

1. They don't have a clear understanding of how social media and their organisation works together, which often results in it being banned or there being no guidance or expecations on how employees can use social media in the right way.
2. They don't know what they want social media to achieve.  Do you want better customer service?  Do you want to generate sales?  What is it that your social media will do for the customer?
3. They don't have a plan for how this will be achieved.  They literally create a Twitter profile or a LinkedIn group and then pray that it delivers some kind of benefit.
4. And last but not least they have no method for measuring whether what they're doing is working.

Social media is mature enough now that you'd think people would know better by now, but alas it appears that yet more banging of the ROI drum will be required.  If you'd like some tips on how to get your social media ROI right click here.