FACEBOOK IS WELL BEHINDGOOGLE WHEN Facebook Goes Public. What now?

FACEBOOK GOES PUBLICWHAT NOW? A perspective on Facebook in 2012 from Publicis Modem London

FACEBOOK IS A BUSINESSTHAT COLLECTS USER DATA TOSELL TO ADVERTISERS “If you are not paying for it, youre not the customer; youre the product being sold” — blue_beetle, 26.08.10, metafilter.com

BETWEEN APRIL AND JUNE,THE COMPANY WILL GO PUBLIC “The deal […] could raise as much as $10 billion and value the social network between $75 billion and $100 billion” — The Wall Street Journal, 28.01.12, Facebook readies IPO filing

SO HOW IS FACEBOOKCURRENTLY PERFORMING?

WITH MORE THAN 845 MILLIONUSERS, FACEBOOK IS THEDOMINANT SOCIAL PLATFORM 845m 680m 550m 431m 305m Sept. 2009 Mar. 2010 Sept. 2010 Mar. 2011 Dec. 2011

IN 2011, FACEBOOK GENERATED$3.7 BILLION IN REVENUEAND $1 BILLION IN PROFIT — Facebook S-1’s filling, 01.02.11, Facebook IPO: what weve learned from its S-1 filing

AND FOR THE LAST 5 YEARS, $3,711mREVENUE HAS BEENGROWING RAPIDLY $1,974m $777m $272m $153m 2007 2008 2009 2010 2011 — Facebook S-1’s filling

Advertising 85%FACEBOOK GENERATESREVENUE IN TWO WAYS:ADVERTISING AND FB CREDITS Credits 15% — Facebook S-1’s filling

DESPITE STRONG ADVERTISINGREVENUE, FACEBOOK HAS ROOMTO GROW IN THE GLOBAL MARKET In 2010, Brands spent $64 billion in digital advertising - ZenithOptimedia, 03.10.11, ZenithOptimedia Adspend Forecast Update Oct

IN 2010, FACEBOOK OWNED3% OF THE PIE WHEREAS GoogleGOOGLE OWNED 46% The rest 46% 36% AOL Yahoo 2% 9% Facebook 3% Microsoft 4% — Daren Herman, 29.11.11, Total Digital Revenues

HOW CAN FACEBOOK INCREASEITS SHARE OF THE PIE?

TWO WAYS TO GROW REVENUE:1. ADD MORE USERS2. INCREASE REVENUE PER USER

ADDING MORE USERSWILL BE A CHALLENGE “[Facebook] user growth had slowed in the U.S. and Canada… a deeper look… shows its growth is also slowing in Europe and Asia....” — The Tennessean, 12.02.12, Facebook sees its growth slowing down

SO FACEBOOK MUST FOCUSON INCREASING AVERAGEREVENUE PER USER 2009 2010 2011 — Based on Facebook S-1’s filling

FACEBOOK IS WELL BEHINDGOOGLE WHEN IT COMES TOREVENUE PER USER “Google generates 6X more revenue per user than Facebook” — Business Insider, 05.01.12, Heres How Much A Unique Visitor Is Worth

“IT TOOK FACEBOOKALMOST 800 MINUTES OF USERTIME TO GET $1 IN REVENUE” — The Globe and Mail, 02.02.12, Why Facebook may not be a growth story

HOW CAN FACEBOOK INCREASEAVERAGE REVENUE PER USER?

ENSURE THAT EVERY USERIS LOCKED-IN"Lock-in is the point at which users are so invested in their technology that even if competitors might offer better services, it’s not worth making the switch” — Eli Pariser, 06.11 The Filter Bubble: What the Internet is hiding from You

BY ENSURING LOCK-IN, USERTIME SPENT INCREASES ANDSO DOES THEIR DATA PROFILE

TIME SPENT, DATA ANDEFFECTIVENESS ARE THE KEYSTO ATTRACTING BRAND SPEND “From the point of view of the online advertiser, the question is simple. Which company can deliver the most return on a dollar spent?” — Eli Pariser, 06.11 The Filter Bubble: What the Internet is hiding from You

INCREASED TIME SPENTMEANS SELLING MORE ADS “We now see that keeping traffic within Facebook via Fanning and Facebook Application campaigns can reduce CPCs by 45%” — TGB Digital, 01.12, Heres Facebooks Q4 Ad Performance In A Set Of Delightful Charts

WHEREAS INCREASED DATAMEANS SELLING BETTER ADS"As a business strategy, the Internet giants’ formula is simple: The more personally relevant their information offerings are, the more ads they can sell, and the more likely you are to buy the products they’re offering” — Eli Pariser, 06.11 The Filter Bubble: What the Internet is hiding from You

“THE FIGHT BETWEENGOOGLE AND FACEBOOKHINGES ON WHICH CAN ACHIEVELOCK-IN FOR THE MOST USERS” — Eli Pariser, 06.11 The Filter Bubble: What the Internet is hiding from You

FACEBOOK USED 3 APPROACHESTO BUILD LOCK-IN FROMTHE BEGINNING

1. DEFINE USER’S IDENTITY& CONNECT PEOPLETO PEOPLE 2004 2006 2004 2005

2. ALLOW ANYONE TO CREATEWITHIN THE PLATFORM 2006 2007

3. BECOME THE SOCIAL LAYERTHAT CONNECTS THE WEB 2009 2006

SPREADING THE SOCIAL LAYER 3 FACEBOOK GATHERING THIRD PARTIES BUILDING 2DIGITAL IDENTITY1 2004 2007 2009 Facebook launched Facebook launched Facebook launched the Profile platform applications the Like button

IN 2011, FACEBOOK RELEASEDNEW PRODUCTS THATCONTINUE THIS STRATEGY

#1. THE TIMELINEA NEW DIGITAL IDENTITYFOR EVERY USER “The next five years, the next era is going to be defined by the apps and the depth of engagement that is now possible” — Mark Zuckerberg, f8 2011

THE TIMELINE RE-ARRANGESYOUR PROFILE INFORMATION

1. COVER2. STORIES 3. APPS

USERS CAN NOW ADD SPECIFICAPPS TO THEIR TIMELINE

TIMELINE ALLOWS FACEBOOKTO KNOW YOUR DETAILEDDIGITAL HISTORY, NOT JUSTYOUR CURRENT PROFILE

#2. THE OPEN GRAPHA FUNDAMENTAL CHANGE IN HOWSOCIAL EXPERIENCES WORK “All your stories, all your apps and a new way to express who you are” — Mark Zuckerberg, f8 2011

FACEBOOK KNEW WHAT YOU LIKE “Sharing content to Facebook meant clicking the "Like" button, cutting and pasting a link into the status update box” — Read Write Web, 14.12.11, Top trends of 2011: Frictionless sharing

NOW WITH OPEN GRAPH,FACEBOOK KNOWS WHAT YOU DO “Anytime youre reading news from a social news app or listening to music from a social music app, Facebook automatically shares it to your Facebook Timeline” — Read Write Web, 14.12.11, Top trends of 2011: Frictionless sharing

BRANDS NEED TOGO BEYOND THE LIKE… “We want 100K fans” — A common request, 2011

…AND THINK ABOUT ACTIONS“This new expressive language means you will be able to add whatever verb you so choose. You can start to use words like read, watch, listen, buy and more in the stories that get shown to friends of your "engagers.”” — AdAge, 23.09.11, Facebook Just Shifted From Scale to Engagement

— Facebook f8, 2011

WHAT ROLE DO PEOPLEPLAY IN YOUR STORY? “With all content increasingly filtered through social networks, its what people do with advertising rather than what they say about it that will make all the difference this year. Guaranteed” — AdAge, 16.01.12, Why Marketers Must Think in Verbs or Face Increasing Irrelevance

THE GUARDIANON FACEBOOKACTION: ”READ”OBJECT: “ARTICLES”

FORDON FORD.COMACTION: ”CUSTOMISE”OBJECT: “CARS”

HOW DO THE OPEN GRAPH ANDTIMELINE INCREASE REVENUEPER USER?

APPS ENHANCEFACEBOOK’S DATA SET “At best, if a company knows which articles you read or what mood you’re in, it can serve up ads related to your interests. But at worst, it can make decisions on that basis that negatively affect your life. After you visit a page about Third Worldbackpacking, an insurance company with access to your Web history might decide to increase your premium, law professor Jonathan Zittrain suggests.” — Eli Pariser, 06.11 The Filter Bubble: What the Internet is hiding from You

FACEBOOK KNOWSWHO YOU ARE, WHAT YOU LIKE& WHAT YOU ARE DOING (ONLINE)

AND THE CLOSER USERS ARE TOFACEBOOK, THE MORE TARGETEDTHEY CAN BE FOR BRANDSFor Valentine’s Day, Facebook Data Team shared the top coupling and de-coupling songs played by users via the Spotify App — Huffington Post, 13.02.12, Facebook Breakup Songs: Data Team Reveals Top Spotify Songs For Breakups, New Relationships

IMPROVED TARGETINGIMPROVES EFFICIENCY “Facebook Sponsored Stories Ads Have 46% Higher CTR” — TGB Digital, 16.01.12, Heres Facebooks Q4 Ad Performance In A Set Of Delightful Charts

TIMELINE AND OPEN GRAPHBUILD ON FACEBOOK’S LOCK-INSTRATEGY

SPREADING THE SOCIAL LAYER 3 FACEBOOK GATHERING THIRD PARTIES BUILDINGDIGITAL IDENTITY 2 + OPEN GRAPH new1+ TIMELINE new 2004 2007 2009 Facebook launched Facebook launched Facebook launched the Profile platform applications the Like button

WHAT NEXT?9 “WHAT IF’S?” FROM US

#1. WHAT IF ALL BRAND PAGESBECOME BRAND TIMELINES?

Brands currently use pages to act as social hubs for specific experiences. Pages become the place where brands highlight different applications that they have developed for their users.With Timeline, brands will be able to create a more custom-experience within the existing template. Multiple pages are yet to be considered, however Launch Announcement Expected at Feb. 29 Marketer Conference — AdAge, 15.02.2012, Facebook to Release Timeline for Brands This Month

#2. WHAT IF YOU COULD TARGETADS BASED ON A USERSDETAILED HISTORY?

Actions-Based Ad Targeting: Brands can target a number of things using Facebook’sexisting ad platform – demographic, location, listed interests, etc. But what if you could target a person’s historic actions? The applications that they use? The music that they listen to? The news that they read? Etc. BlackBerry could target all users who read an article about Power Problems with a specific ads

#3. WHAT IF FACEBOOK SOLD ADSBASED ON PLATFORM USAGEON OTHER SITES?

The Facebook Platform is used across hundreds of thousands of websites – from “Like’ buttons to Facebook logins. Facebook keeps this data and can develop robust profiles of what their users are looking at, sharing and buying across the web. Facebook could start to target advertising based on web-actions, not just withinFacebook – for example, target a New York Times reader or Trip Advisor user without having to work directly with the brand

#4. WHAT IF THE STREAMPREDICTED FUTURE ACTIONS?

The ‘Future Stream’ – As Facebook Graph Rank becomes more action focused, historic user patterns could help predict future ones. For example, if you go to thesame pub each week or cook the same meals, Facebook could alert your friends to ‘things you might be doing’ in the next few days.

#5. WHAT IF FACEBOOKCREATES ITS OWN PRODUCTRECOMMENDATION ENGINE?

“Products you may want’ – Facebook already has a ‘People you may know’ and‘Recommended Pages’ product. Why not use a users content consumption habits,friend networks and application profiles to develop a product-recommendation tool similar to Amazon? With social graph data, the recommendations would combine friend habits along with individual user interests.

#6. WHAT IF FACEBOOK STARTEDPAYING USERS TO MARKETPRODUCTS?

Facebook currently piggybacks on their users actions (via Sponsored Stories) byproviding targeted executions to their friends - why not actively incentivise influential users to recommend different products? Though the social graph, Facebook can analyse what categories, topics and products their users already carry influence in — Paraphrased from Dan Haggard & his Trend Setter idea, The Social Network, the End of Intimacy, and the Birth of Hacker Sensibility

#7. WHAT IF FACEBOOK CREDITSBECOME THE DOMINANTDIGITAL CURRENCY?

Facebook Credits + NFC = True Mobile Wallet – as more and more mobile devices are NFC-enabled, more retailers will provide terminals that allow for quick, tap payments. If Facebook continues to be a popular mobile application, credits could become the easiest way to pay for purchases — Image credit

#8. WHAT IF FACEBOOK MADEA ‘PAUSE SHARING’ BUTTON?

Turn off ‘frictionless sharing’ – with every application auto-publishing user actions and a second-by-second Ticker updating, users may quickly tire of having all their actions shared. Why not give users a clear ‘switch’ to turn their sharing on or off? — Techland, Harry McCracken, 03.10.2011, Facebook’s open graph needs new approches to privacy

#9. WHAT IF FACEBOOK EXTENDSITS AD NETWORK TO OTHERWEBSITES?

Extending Ads Network – Facebook is the most popular social network website and has one of the biggest set of data. Facebook could extend its ads network to other websites, services and devices

WHAT DO YOU THINKFACEBOOK COULD DO NEXT? Let us know on Twitter by using #fbwhatif @PublicisModemUK

THANKS FOR READING– Tyler Turnbull, – Damien Le Castrec,Joint Head of Planning Planner tyler.turnbull@publicismodem.com damien.lecastrec@publicismodem.com @tyturnbull @damienlc http://gplus.to/tyturnbull http://gplus.to/damienlc

THANKS FOR THEIR INSPIRATION_ blue_beetle, 26.08.10, metafilter.com The Wall Street Journal, 28.01.12, Facebook readies IPO filing Daren Herman, 29.11.11, Total Digital Revenues The Tennessean, 12.02.12, Facebook sees its growth slowing down Business Insider, 05.01.12, Heres How Much A Unique Visitor Is Worth The Globe and Mail, 02.02.12, Why Facebook may not be a growth story Eli Pariser, 06.11, The Filter Bubble: What the Internet is hiding from You TGB Digital, 01.12, Heres Facebooks Q4 Ad Performance In A Set Of Delightful Charts Mark Zuckerberg, f8 2011 Read Write Web, 14.12.11, Top trends of 2011: Frictionless sharing AdAge, 23.09.11, Facebook Just Shifted From Scale to Engagement AdAge, 16.01.12, Why Marketers Must Think in Verbs or Face Increasing Irrelevance Mashable, 29.09.2011, Why Facebook Timeline Will Be Huge for Brands Dan Haggard & his Trend Setter idea, The Social Network, the End of Intimacy, and the Birth of Hacker Sensibility Techland, Harry McCracken, 03.10.2011, Facebook’s open graph needs new approches to privacy

ABOUT PUBLICIS MODEM_ Publicis Modem is a full service digital agency within the Publicis Worldwide network offering strategy, creative, analytics, user experience, multi-platform (web, mobile, social, gaming) development, paid media, search, social media and eCRM services. With more than 1,500 people deployed across 30 countries around the world, Publicis Modem is one of the largest and most global digital agencies in the world, enabling us to serve Fortune 500 brands on a global basis including LG Electronics, RBS, Visa, Sanofi and General Mills.

FACEBOOK IS WELL BEHINDGOOGLE WHEN Facebook Goes Public. What now?

Publicis Modem UK

FACEBOOK IS WELL BEHINDGOOGLE WHEN