Having founded one of the first new media agencies way back in 1992, I experienced the rise and fall and rise of social networks. CompuServe surrendered to AOL, which defaulted to Myspace, which capitulated to Facebook. Social networks prove the fickleness of humans. Greener grass is always a click-away.
Each social empire fell due to the same self-inflicted wound. Amid efforts to monetize their audience, each network lost the influencer community. Content creators, brand missionaries and digerati all migrated. Facebook lost 59% of college students in the previous year, and its favorability scores are akin to a utility, not an innovation. “I-Flight”, urban flight for the digerati, always begins with an erosion of trust. Today’s influencers have reason not to trust Facebook:
1. Facebook’s muting of organic reach of posts meant that virality depended more on paid media than brilliantly conceived content. Anathema to content creators.
2. In sharp contrast to the wild egalitarianism of Twitter, recent bans of anti-Putin demonstrations, and Facebook’s potential culpability under U.S. wire-tapping laws, violated the precept of free speech in social media.
3. Secretive experimentations on its algorithm, such as goosing traffic to publishers to entice them to host more content, and using emotions to test advertising raised fundamental questions about the integrity of Facebook’s search results.
4. The more than 60% of traffic from Facebook’s mobile app is dark social, untraceable due to the lack of referral information from pages within Facebook.
5. By charging a usurious 40% commission on transactions in its early tests of social commerce, Facebook showed a tin ear to alternative revenue sources amid the glacially slow test of its Buy button.
At the root of all these missteps is a fundamental failure to remember the ethos of the entire social media movement: The user is at the center of the social experience, not the advertiser.
Google AdWords proved how transparency unlocks revenue. Each release of Panda or Penguin clarifies our understanding of how Google’s search algorithm works. Facebook’s algorithm appears opaque and capricious in comparison. The “exchange rate” between actions and results appears unfair, illogical.
Ironically, Instagram, acquired by Facebook in 2012, is where influencers emigrated. Unlike Facebook, Instagrammers more carefully consider what they post and whom they follow. Users feel selected instead of targeted, and creative instead of utilitarian. As a result, Like2Buy campaigns feel organic rather than intrusive.
But back to Facebook’s future: few companies rebound from a loss of trust of this magnitude. Of course, few companies represent more than 1 billion customers. I do not begrudge Facebook shareholders their money, though. So I suggest Facebook double down on social commerce.
Facebook can be the operating system for users to embed stores in a social media. Users can shop their feed and visit store pages within Facebook. Commerce, content and community are finally united. As the largest single sign-in credentialing system, social commerce is Facebook’s opportunity to lose, with credit card information already on file from advertisers.
The power to marry commerce and community – beyond anything Amazon and Ebay can achieve – is world-dominating. Social commerce reaffirms Facebook’s status as a utility, serving both individuals (e.g. Ebay) and brands (e.g. Amazon). And commerce allows Facebook to eliminate the middleman in proving the ROI of its core advertising. Influencers will return to a place where they can market their books, sell their crafts and share their kick-started dreams.
Commerce is vital to Facebook given the sustained uncertainty around mobile advertising. Despite Facebook’s solid growth in mobile advertising revenue, no one has figured out the mobile advertising opportunity. Bandwidth constraints, interoperability of mobile applications and smaller screen sizes conspire to cloud the near future. These same factors may gate video consumption in the coming year (until bandwidth and storage issues resolve). So, Facebook’s recent gains in mobile advertising and video sharing may be built on sand.
There is an even greater existential threat to Facebook. The concept of destinations on the Internet is becoming outdated. Soon, a single video, photo or post will contain the same functionality as an entire website today. Instead of consumers needing to visit a particular destination, they can transact from any piece of content. This vision is starkly inconsistent with a closed operating system such as Facebook -- unless Mark Zuckerberg wants to be cool, not only popular.