If you are not on Facebook, chances are the person next to you is. Of the 400 million plus Facebook users in over 180 countries, more than 120 million are in the United States ; that’s equivalent to 40% of the US population, or 60% of those ages 14 to 65. Since its launch in 2004, Facebook has seen a steady exponential growth of members, as seen in this graph:
According to Facebook’s Factsheet: "The company develops technologies that facilitate the sharing of information through the social graph, the digital mapping of people's real-world social connections. Anyone can sign up for Facebook and interact with the people they know in a trusted environment…. (Facebook is also) a development platform that enables companies and engineers to deeply integrate with the Facebook website and gain access to millions of users through the social graph. Facebook is a part of millions of people’s lives all around the world providing unparalleled distribution potential for applications and the opportunity to build a business that is highly relevant to people’s lives." Essentially, Facebook is two things: first, it is a free service which enables members to interact with other members in their online network of “friends;” second, it is an advertising agency which collects personal information about its members in order to then sell ad spaces on the member’s Facebook page targeted to their demographic. As a leader in the broader social media movement, Facebook also has implications far beyond these two tenants of its business model.
We are at the dawn of a new era in communication technology. Social media is changing our lives, and it seems no one is immune; individuals, businesses, communities and governments are being forced to deal with the new era of communication technology. One could imagine that socializing through computers would make us less connected, less intimate, but in many ways the actual results have been opposite. Cognitive scientist Stefana Broadbent notes that we are becoming increasingly connected. Historically, when people left home and went abroad or even just to work, their personal lives were necessarily left behind; now, families separated by oceans are eating breakfast together via Skype, half of all workers with email access use it for personal communication, 75% use cell phones, and 100% text.
Access to social media must make workers less productive then, right? Not according to “The Rise of Social Media,” a study which indicates the use of social media can actually boost productivity. The study indicates that those who “use social media tools in their personal lives… (derive greater benefit) from using them at work” and that twenty percent of respondents use social networks “often or all the time” for work-related activities, a number which will only grow as the Millennial generation continues to enter the workforce. “Employers that fail to identify how to harness social media could fall behind both as employers of choice and as learning organizations."
Facebook isn’t just changing how we interact with individuals at work and home, but also how we interact with community and government agencies. Police in the U.S. have successfully used Facebook to build cases against suspects and apprehend them. Text, voice and face recognition technology is already in existence, so it isn’t a stretch to imagine their usefulness in searching 400 million Facebook profiles for intelligence gathering purposes. Right to privacy laws in the US may complicate the usefulness of any findings, but some Facebook evidence has already been allowed in trial.
Obama is the “first occupant of the White House to have won a presidential election on the Web… It was no coincidence that one of Obama’s key strategists was 24-year-old Chris Hughes, a Facebook co-founder.” Republicans sorely underestimated the ability of social media to influence the campaign outcome, grossly losing on every social media front by nearly 4 to 1. “The Web is being leveraged not only for vote getting but for grassroots fundraising too—a formidable electoral money pump.” Obama used his web site, built on Facebook’s platform, to help secure more money for his campaign from more individual donors than any Democrat in history. Similarly, Andrew Edwards and Jeff Fontas, the two youngest legislators in the country, where elected in 2006 primarily through their use of the NewsFeed feature in Facebook that allowed posting themselves into the pages of not only their friends, but also their friends’ friends.
In 2009, the world watched as Iranian citizens tried once again to establish some measure of democracy and freedom within their country. Following the fraudulent reelection of Mahmoud Ahmadinejad, people took to the streets in protest. "The subsequent daily demonstrations and street protests were met with extreme brutality by the police, para-military forces and hired vigilantes… Thousands of people were arrested and tortured and many lives were lost… The government ordered the foreign media out of the country, and the opposition desperate to let the world see the regime’s brutality against the demonstrators, and to gather domestic and international support and sympathy turned to the Internet and in particular the possibilities offered by YouTube (for uploading films of demonstrations) and Facebook and Twitter for information sharing, calling for rallies and unity in the face of a the government’s oppression." The Facebook platform allowed Iranian revolutionaries to coordinate with each other and communicate the atrocities to the outside world in a very personal manner, circumventing Iran’s government censored media. For the first time in history, the world can collectively watch and react in real-time, regardless of distance; then, by simply sharing messages shared with you, the momentum of the media message is continued. Such use of Facebook demonstrates how “…Facebook users have from the beginning not only co-created value… but they have also defined value in new ways” broadening the customer base and usefulness of Facebook.
There are two opposing theories on the ability to use Facebook, and other social media venues, as an agent of change in authoritarian regimes. These governments are vigilant in their pursuit to crush activism and have likely “developed data mining tools to figure out what’s going on” and who to target. The other theory, called the “Cute Cat Theory,” suggests that there is value in hiding in plain sight. Governments cannot monitor all channels, which may allow people to slip past security measures by mixing their activist messages in with seemingly innocent messages - perhaps by titling an activist rally photo as “my cute cat.” Moreover, people are fairly mobile with their ability to constantly create new usernames and accounts to maintain their anonymity. The events following the 2008 earthquake in China may suggest the latter theory is more often true. China is the world leader in controlling its citizen’s communication with the outside world, yet within minutes of the 2008 earthquake, authorities in the US, Britain and even China were alerted of the devastation, not through government channels or mainstream media, but through Twitter. “The last time that China had an earthquake of that magnitude, it took them three months to admit that it had happened,” demonstrating the inability of governments to censure the public at the speed of modern social networking.
Nonprofits are also cashing in on the usefulness of free social media tools, including Facebook. For the past several years, nonprofits have used the low-cost, far-reach of social media to build awareness and engage with their communities; now they are finding ways to use social media for fundraising.
Mike Swenson, president of Barkley PR, agrees that encouraging supporters to use social media to raise funds is a key strategy. “It is a great channel in terms of micro-giving – enabling supporters to ask a wide audience to donate a small amount of money,” he says. “For nonprofits, it’s a way to open up their story to a new audience who, at least at the moment, can’t write the big check.”
The successfulness of social media fundraising, and social media marketing in general, is largely dependent upon the organization’s ability to sincerely engage with their audience, communicate value and capture attention.
Developing a branding campaign can be an extremely expensive top-down corporate endeavor; or for the brave, it can be a low-cost, grassroots lead adventure in social media. A true story demonstrates this principle: Greenpeace, in their efforts to stop the Japanese government’s whaling campaign, decided to track a single whale; engaging their constituents, Greenpeace polled its followers to name the whale. Many of their members created serious and meaningful names referencing noble ideals and legendary gods of the sea. Then there was “Mister Spashy Pants." To Greenpeace’s chagrin, “Splashy, as his friends call him” became a phenomenon among social networking sites. Soon the Greenpeace’s voting poll was turned on its head; within one week Mister Splashy pants went from a 5% approval rating to 70% and won the vote. Not happy with the chosen name, Greenpeace extended the election another week. Those who voted for Mister Spashy Pants were infuriated, redoubled their efforts and won again with 78% approval, and 3% for the runner up. Social networking exploded the visibility of Greenpeace’s campaign and organically created a grass-roots movement to vote in Mister Splashy Pants and stop the whaling; and on all accounts, they succeeded. The lessons here are: social media, when successfully tapped, can do more for your organization than your resources alone; a community of peers creates and determines the value of an idea; “it’s okay to lose control, it’s no longer about top down;” and serious ends can be achieved through less serious means.
So what does this all have to do with business? In the words of Laleh Patel, “It is virtually impossible to ignore the potential of social media for any business operation.” Every use mentioned above can be adapted to businesses and understood in light of business principles. Additionally, there are two primary avenues by which Facebook can add value to an organization: first, through the creation of a Facebook page and subsequent engagement with customers; and second, through the use of Facebook Ads.
In my experience, one of the greatest obstacles in marketing is finding the right people to market to. In traditional marketing campaigns, it costs a certain dollar amount to reach a certain number of people; the more specific the target, the more the campaign costs per person. Businesses able to create a successful Facebook page have the opportunity to turn this principle on its head through viral marketing, the leveraging of social networks to reach a broader audience. Creating a Facebook marketing campaign capable of significantly leveraging social networks requires businesses to: “remember that social media is, first and foremost, there to help people be social and share information,” Facebook is not the place to speak at customers, but to engage with them; “be genuine,” people can read through sales pitches; and create value by providing customers with a reason and desire to be engaged. “Social media – specifically blogs, Facebook and Twitter – allows brands to easily disseminate targeted messages about new product, or answers to customers’ honest – and often very specific – questions." Since Joining Facebook is free, even for businesses, and is therefore a relatively low-cost venture; the only resource required is time to interact.
After joining Facebook, members begin developing their profile with varying degrees of detail, and as they do, Facebook as a company is compiling the world’s largest and most detailed database of customers. Facebook then sells direct-market ads to their business clients targeting specific demographics. Hand over fist, 400 million members give Facebook personal facts about themselves, everything from their: age, sex, birthday, anniversary, address, phone number, email, activities, political party, religious preference, sexual orientation, interests, schools attended, favorite books, favorite movies, favorite television shows, who they are connected to, and so on and so on. This database is the primary source of Facebook’s valuation as a $20 billion dollar company despite not turning a profit until 2009.
Being able to pinpoint customers using Facebook’s immense database of personal attributes is of enormous value to businesses seeking to reach a targeted audience. For example, one company was able to generate “$40,000 in revenue directly from a $600 advertising investment in Facebook." For those familiar with Google AdSense, the advertising mechanics are basically the same. Businesses set their budget, target their customers, and choose whether they want to pay-per-view (pay each time the ad is seen) or pay-per-click (pay only when their ad is clicked).
“After a spring of skirmishes between Facebook, its users, international privacy watchdogs and Internet activists, two things have become clear: (first) you should quit Facebook, (and second) you probably won’t." Facebook has had its share of lawsuits, angry members and questionable practices in its short rise to prominence. Despite all this, last spring it surpassed “Google as the most visited site in the world." Some of the reasons for quitting Facebook should be self-evident to anyone concerned about privacy; they subtly collect your personal information, then use it to sell you as a target audience to their business clients. Facebook “doesn’t need your friendship… (it) needs your friend list, and all that goes along with it. And every single day, millions of people hand it over for free." Those with a tinge of paranoia, or just a healthy anticipation of history repeating itself, are like to imagine the “what-ifs.” What if the database continued to grow in breadth and depth, only to fall into the hands of a dictator bent on genocide? While this is may or may not be a distant and unlikely concern, there are serious concerns about security breaches already experienced by Facebook. Such concerns have done little to slow the rate of growth in memberships, and there are no signs of this changing anytime soon. Both individuals and businesses should weigh the risks against the benefits when joining Facebook, as well as when adding personal content to the pages.
“In a way it’s the youngsters who will dictate… They’re telling us what the future trends will be… and a lot of it has to do with the increasing use of social media to do more or less everything” says Craig Newmark, founder of Craigslist. In order to survive, businesses will be increasingly dependent upon viral marketing and direct engagement with their customers. Newmark goes on to say that businesses “…have to become comfortable with messaging and Facebook… those technologies may become a survival requirement in the future." Social media in a marketing sense is primarily related to building a good reputation, and building a community with which to interact. Building trust begins with “…being trustworthy and a commitment to shared values."
Meanwhile, Facebook is still gathering its masses, mining for data, and creating addiction through habit; once the point of diminishing return has been reached on these fronts, look for Facebook to ramp up its profit drive by increasingly obtrusive advertisements, attempt business takeovers for new data sources (as they have already done), and to begin finding ways to tap the funds of its members (perhaps through monthly fees, but more likely through product sales).
As Facebook continues to grow in popularity and reach, we must thoughtfully consider the significant utility and threat it poses to individuals, businesses, communities and governments. Trends show an increasing dependence upon social media in all aspects of our lives. The limits to Facebook’s usefulness are set only by the limits of our imaginations and those of generations to follow. For businesses to survive in today’s fast-paced, highly-connected global economy, they must remain relevant to their customer base, which continues to demand greater and greater levels of technological sophistication as well as personal contact.
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