There are times when I’m sure we’ve gotten this Facebook thing -- and maybe this social media thing -- all wrong.
When it comes to the Facebook IPO, yesterday was a day like any other day. Well, perhaps it was even more of a day like any other, because there was a clear, mathematical reason the stock dropped: the first lockup expired. This, of course, means that the Interwebs are full of almost gleeful headlines about Facebook’s crash-and-burn:
“Zuckerberg admits Facebook stock ‘painful’ to watch, report says, notes The Washington Post, illustrating its story with the photo of CEO Mark Zuckerberg and COO Sheryl Sandberg ringing the opening bell only three months ago.
First flight out: FB hits new low as lockup expires,” crows The New York Post.
“Facebook stock slump cuts Zuckerberg's worth by $600M,” intimates The Chicago Tribune.
But what none of these headlines can get at is the powerful flip side of Facebook, the part that has incalculable value, but, as its revenue models are structured now, is unmonetizable. What is it? The power of being able to connect with people who mean something to you.
It’s the way users derive value from the site, but, while a brand may piggyback on this interest, by overtly buying into the News Feed, or by harnessing data from Facebook interactions, those things have nothing to do with the value that people derive from it.
Once again, I’ll return to two examples from my personal life to illustrate what I mean:
Last night, I spent time scrolling through MOPS, the acronym the locals use for the Moms of Pelham Facebook group. (Yes, rocket scientists, that’s where I live.) Here are the topics covered in the five most recent posts:
1. The time of the high school football parents’ meeting last night.
2. The sorry state of a local vegetable garden.
3. A request for mason recommendations to repair a slate walkway.
4. A reachout from a newcomer about the local elementary school.
5. A recommendation for a new pediatrician.
What kind of value do you put you on a group capable of doling out advice and information on gardening, the school system, and local masons, all at your fingertips? Of course, these groups have existed online since we were all using dial-up modems to experience the wonders of America Online. But what separates the Facebook experience from its precursors is critical mass.
Pelham is a town of 12,000 people, and 680 of them are members of MOPS. Engagement levels are incredibly high. Almost every post gets at least one comment. In fact, it’s far more common that a post will have comments than “Likes.” But, while there’s plenty of discussion about goods and services, there is virtually no local advertising, except for a righthand column ad from our ubiquitous State Assemblywoman. And I’m really not sure how well advertising would go down, unless it was part of the kind of well-thought-out social media content strategy that most advertisers, let alone Mom-and-Pop stores, haven’t yet engineered.
As powerful as MOPS is though, it only scrapes the surface of how deep Facebook connections can go at their best. And, so, now, for my other example:
For years now, my family and I have wondered whatever happened to the family that used to live down the hill from us, especially their youngest son, who moved from my hometown when I was seven, and was one of the closest playmates I ever had. You know how this story ends, because you’ve probably experienced it. He was wondering about us all these years too. And now, we’re reunited, on Facebook.
It’s impossible to put a price on that. A CPM? A market cap? Are you kidding me?
So, let me close by asking you something: How does Facebook derive value from this power, if advertising doesn’t end up being the answer?