F-Commerce: The Market Destination or Social Futility?

I was fortunate to speak at the AllFacebook Conference in San Francisco on June 28th. The event comprised of Facebook specialists and practitioners, who provided some pretty cool insight for marketers on how to effectively navigate through the increasingly complex world of Facebook in developing successful strategies.

My topic questioned Facebook’s development of a social commerce layer i.e. the ability to sell goods and services within Facebook. Is this a futile attempt or a sustainable feat?

The biggest question for many people who have seen Facebook evolve:

Can you develop a marketplace in a place where, inherently, people are not in a buying mindset?

Social networks existed to escape the very sites that have inundated them with advertising. They have become the safe haven of pure conversation. However, in order to sustain them, strategies for monetization have been essential, especially given the explosive funding opportunities in the social tech space.

Given its recent IPO, Facebook must prove to shareholders that it’s serious in its attempt to monetize the platform. While Zuckerberg has vowed to put the user experience first, the pressure to create a sustainable business model has been even more pressing.

E-Commerce is poised for explosive growth. Online sales are expected to rise by over $100 billion from 2010 to 2015. Social media has been a strong catalyst through discussion and online recommendations and will continue to fuel this growth over the next few years. Facebook is primed to lead to make this happen. Even some of the experts contend,“ F-Commerce transactions will exceed Amazon’s annual sales over the next 5 years.” Today, Amazon is the undisputed leader posting revenue in 2011 at $40 billion.

Facebook’s continues to test the waters when it comes to monetization

Here are some events that force me to question whether Facebook can really make F-Commerce work:

  • The decommission of Facebook Checkin-Deals and Facebook deals less than 4 months after it launched. The rise of Groupon has forced Facebook to seriously think about playing in this space. However Facebook never really gave their Check-in deals a chance. I had thought the purchase of Gowalla would help shape and influence this product function.
  • Brand abandonment of Facebook stores implies that companies have not yet figured out how to convert fans. Gap, Nordstrom, Gamestop, Banana Republic among others quickly shut down their FB Stores. Gamestop indicated: “It (FB Store) …was like trying to sell stuff to people while they’re hanging out with their friends at the bar”
  • Facebook Credits has met with some success. Last year, Facebook posted a $3.7 billion revenue, 85% of which went to advertising. The remaining largely went to Zynga, the world’s largest social gaming service. But Facebook admitted in its S1 Filings, that if they failed to maintain good relations with Zynga, they may lose Zynga as a significant Platform developer, hence would adversely affect their financial results. Therefore, FB made it clear that it wanted to turn its virtual currency into a payment mechanism for all sorts of digital goods. But few are adopting it. Since its launch in 2010, companies like Warner have tested Facebook Credits as a payment vehicle within the Facebook ecosystem with the “Dark Knight” premiere. Unfortunately, no licensing or distribution deal resulted from this test. Slow adoption using Credits as payment for goods other than games continues.

  • Others have also criticized Facebooks for instituting this FB Credit-only currency system. What Facebook wants to do is to wall off your money from the outside world — to turn it into a currency that can only be used inside Facebook. This seems pretty autocratic and strong hindrance to F-commerce adoption.
  • The new timeline has also hampered marketers’ control and sizeable investment in custom tabs. Without default landing tabs, non-fans have to actively click through the little app tiles overshadowed by a Page’s cover. The change is a noble one that prioritizes the user experience and the site’s long-term health, but several marketers I’ve talked to are already grumbling.

Facebook is moving in the right direction!

  • As of June 19th, Facebook signalled its ambitions to grow as a payment platform. What Facebook has said is that it hopes to provide users more flexibility to make it easier to reach a global audience who want to pay for your apps, products etc in their local currency, rather than credits. Great news for its investors and businesses still trying to sell within Facebook.
  • And where big brands have failed, small businesses seem to be leading the way to successful sales online. With the help of companies like Payvment and Ecwid, who not only provide online storefronts but help business take advantage of Facebook’s own traffic to develop a successful strategies within the FB platform.
  • Open Graph, in my opinion, is probably Facebook’s current killer app. This has gone beyond the “Like” and allows user behaviour: What you’re reading, what you’re buying, what you’re watching, what you’re listening to– to display on your timeline and friends’ newsfeeds. Companies like Vevo have seen so much success they’ve removed their music videos from Youtube and have opted for Open Graph to drive visibility, registrations and views.
  • I’ve also read of rumblings about the introduction of the Facebook ‘Want’ and Purchase Button. This will allow you to add products to a virtual wish list. These functions will be added to Open Graph, allowing automatic sharing on friends’ newsfeed.
If Facebook is to succeed in monetizing their platform, businesses have to realize that the customer experience has to go beyond Facebook. Facebook is still a social space and businesses shouldn’t attempt to change that. It’s a holistic user experience that attempts to cater to the demands and expectations of each channel. So consider where the user is at in the buying cycle and which channel this exists. Optimize the experience to help move the user to the next buying stage whether that be in the existing channel or somewhere else. Success means integrating Facebook into business and other activities and delivering a seamless experience for the consumer. It’s still early day and I believe Facebook is in a very good position to take the lead on this. I’m very optimistic. How’bout you?

Photo source: http://www.flickr.com/photos/debaird/

The History of Social Media [Infographic]

Love this infographic: It wasn’t called “social” in the early days and its depiction has evolved quite dramatically especially in the last decade. I found it in this blog post: http://www.inspiredm.com/the-history-of-social-media-infographic/. ; Perhaps, this was the genesis as it reads, “40 years ago the first email was sent. The email simply said ‘qwertyuiop’, and was sent to the computer sitting next to it.” Enjoy!

The Future of Advertising and how the Splinternet Impacts it

As online evolves, I’ve been comforted by the fact that the niche-play of social media will inhibit dominance by large players like the MSNs, Yahoo! and AOL of yesteryear.

But I’ve spoken too soon and in this day and age, and unless you’re hearing about Facebook, Twitter, Google, Apple…. or even Wikileaks–at least once per day, the rest of the stories seem to pale in comparison.

The Splinternet is a topic that I’ve continued to delve into, especially as a marketer whose crossed the divide from online to social. As we get more social, it’s apparent that the internet divide grows increasingly larger.

Here’s my take on what that means to marketers and to the future of advertising. You can read the full story on whatsyourtech.ca

The Segregated Internet: The Walled Garden that lives among an Open Source Internet Society

A few weeks ago, a few friends of mine, Steven Taylor @stevenltaylor and Martin Byrne @mbyrne2323 had a philosophical and yet cynical discussion about this growing notion of the “Splinternet” which was initally coined by Doc Searles and Rich Tehrani. Thanks to Josh Bernoff of Forrester for bringing this back to light. He referred to a “Web in which content on devices other than PCs, or hidden behind passwords, makes it harder for site developers and marketers to create a unified experience.” Steve was the one who first brought up this notion of the Walled Garden. While it seems we’re playing nice in the sandbox, there are big players who are slowly creating a greater separation for the purposes of wielding greater control in a largely uncontrollable market.

Social, while around for awhile, has been questioned by traditional marketers who need validation of its performance. What has helped unify social sites has been open source that allows the connectedness of platforms that have hoped would also provide more insight into consumer behaviour and navigation cross-platforms and channels. The notion of open source was sharing and allowing individuals to access multiple networks without relying on the management of multiple accounts. I have often parallelled this to the idea turning spaghetti into soup, where users go from site to site seemlessly, sharing same and new connections as they go and creating more bonded relationships.

At least this is how I envisioned the insertion of open source…

But Apple and Facebook, two extremely strong players are making it increasingly difficult to play nice. I’ve developed on Facebook pages and have experienced migraines at their ever-changing policies. Not to mention, Facebook code changes, implemented at the expense of the developer efforts and marketers’ investment dollars, are indicative of a communist regime that has no problems dictating policies, because they claim the population equivalent to the third largest country behind China and India.

Things that tick me off:

  • Facebook,’s policies on doing Facebook Page promotions need the written consent of Facebook.
  • Facebook bends the rules for current advertisers.
  • Marketers are unable to run contest and promotions utilizing Facebook’s native tools — their wall, photo tags, video etc for fear or liability in the event of a malfunction on these tools. This is what really P’s me off. I have been told to build my own “wall”. Well Facebook, that defeats the purpose of amplification if my wall posts won’t be fed into the newsfeed.
  • Facebook Community Pages, which totally confuse the user, and draws attention away from the official page.
  • Google no longer has access to index all web content. Newscorp and Facebook do not disclose all their content to Google.
  • Newspaper sites that closed down their offline are moving to online paid subscription, therefore perpetuating this separation.
  • I know Apple’s been pretty much doing the same thing with HTML5 as the rest of us have gotten used to Adobe Flash.

I actually love the idea of Open Graph that creates a social footprint for all web assets outside of Facebook or other social platforms. But that infers Facebook domination. Google watch out!  (another blog post methinks!)

All this is happening while people like me are still trying to validate the channel. Standardization has still not happened. The IAB doesn’t know how to treat metrics, best practices, etc. The closer we get to creating a stronger community, the harder these companies are working to remove themselves from the mix.

I guess in some ways, if truth be told, there needs to be a few that dominate. Does Apple and Facebook want to be the MSN and Yahoo! during their heyday? And what will happen to the true value of open source? I’m compelled to believe that the masses may demand some sort of conformity but I doubt that will wield any long term effects.

So, I guess we’re witnessing the end of an era….however short-lived!

Here is a recent video that explains this.

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