Is Facebook Now Open to Russia, Advertising AND Micro-Payments?
But cozy up he did yesterday, taking a $200 million investment from Digital Sky Technologies, an Internet holding company with Russian roots. Even if Digital Sky has only a 2% stake in Facebook, its perspective on how to monetize Facebook will loom much larger.
I admit that one reason I'm interested in this story is my fascination with Russia, which I've visited three times for personal reasons since June of 2006 (though, come to think of it, it's been a while...) Part of the allure, of course, is that Russians aren't like you and me. That's good in general, but it's potentially really good for Facebook, which is very much mired in the Silicon Valley way of doing things.
With that in mind, I read with interest, this story from Fortune's Jessi Hempel, which included insights from Digital Sky partner Alexander Tamas, a man who clearly has a different perspective on Facebook than most of the people in the U.S.-based social networking business. For instance, he said the following about display advertising: "The mistake people are making here is to say display advertising does not work in social networking. That is true, but what does work is much more intelligent ads."
Hmmm. Finally a guy who doesn't suffer from the Fear of Advertising that seems to permeate so many social media sites. Which stands to reason -- if you've walked through central Moscow lately, you know what I mean. Of course, it's not as though Zuckerberg & Co. don't believe in advertising. But taking into account the possibility that I'm reading too much into what Tamas said, it looks like he is trying to get away from the blanket statement that "display advertising does not work in social networking" to something more subtle: that what social networking needs is advertising that is intelligent; the format isn't really the issue.
Secondly, the story talks about Tamas' experience with micropayments and virtual goods. Wait? You mean, he has ideas about how people might have to pay a little for using stuff? What a concept!
A fact the story doesn't mention, but is at least as important as either of the above, is that Tamas also comes from a much more cell-phone-enamored culture than our own. As is the case with many developing countries, everyone in Russia has a cell phone; in fact, I just uncovered this recent statistic that Russian mobile phone penetration is a wacky 131.4%. (So one in every three Russians has two cell phones?)
Whatever the reality, extremely high cell phone penetration usually means a concurrent lack of both land lines and desktop computers. The cell phone becomes where the connections happen, and that's a different point of view than even the most iPhone-addicted among us have involving our social networking experiences.
So, yeah, I guess you could say I'm all thumbs-up about Facebook's newest investment. Sure beats getting another infusion of cash from the same old West Coast lefties who haven't been able to monetize this stuff so far.