Showing posts with label FACEBOOK. Show all posts
Showing posts with label FACEBOOK. Show all posts

Friday, 28 February 2014

Getting serious aboutFacebook is suddenly smitten with Groups

With the private social network fad in the rearview mirror, Facebook appears motivated to remind us that not only did it think in smaller sizes long before it was cool, but it has quietly grown its private spaces audience to 500 million people over the years.
That Facebook has an astonishing number of people -- nearly 41 percent of the network's total audience -- cornering themselves off into nooks and crannies isn't surprising. Groups have long been a convenient way to converse in closed circles. Rather, the unexpected thing here is that Facebook is choosing to just now draw attention to Groups, a product that it rarely talks about publicly, and one that's not particularly representative of Facebook's new mantra of being a mobile-first company.
Speculation, kicked off by a Bloomberg profile of Facebook chief Mark Zuckerberg, would have it that the company is readying the release of some type of standalone mobile application forgroup communication. Indeed, plenty of clues point in that direction. But Facebook isn't ready to commit to that vision -- at least publicly.
"I don't think we've necessarily made any plans, one way or another, around breaking it off as its own individual experience," Facebook Groups product manager Jimmy Chen told CNET. "I think it's a core use case that Facebook, the company, should be really good at. The tactics for how we do that are still up in the air."
And, yet, Facebook is being oddly outspoken about Groups, the private social network that predates the once-trendy Path and other mobile apps like Everyme and Couple, which seem destined for future obscurity.
Not Groups. During Facebook's most recent earnings call, Zuckerberg boasted uncharacteristically about the success of Groups, even calling it a "core product."
The company never reveals anything it doesn't want you to know, nor does it offer up stats about its singular products, save for purchases like Instagram and WhatsApp. Facebook, for instance, still hasn't shared how many people use Messenger, a much more talked about product with its own standalone app.

The most probable answer is that Groups are good for advertisers, an audience that Facebook needs to keep happy should it wish to continue to make billions every quarter. Affiliating yourself with a pact of people, especially if related to a hobby, is a stronger signal of your tastes than a "like" or a follow. That Facebook is sitting on affinity data for 500 million people is a powerful message not lost on advertisers.Why, then, does Zuckerberg want to draw attention to Groups?
Company-watcher Brian Blau, Gartner's research director of consumer technology, suspects that Facebook's sudden revelation was meant to remind advertisers that they can target their ads against Groups, which are likely representative of members' true interests.
Currently, advertisers can only reach group members through right-hand column placements inside groups. Facebook does not target ads based on Group membership, a company spokesperson said. That's not to say Facebook won't go in that direction eventually. And Altimeter Industry analyst Rebecca Lieb concurs with Blau's view.
"Groups are self-identified target audiences," Lieb said. "[Facebook] has been looking at so much data -- big data, third-party data, ad-network data -- but other advertisers just want to reach specific people who like specific things. It's much simpler than the data, actually."
The groups-are-good-for-advertisers theory matches up against Facebook's recent statements on the product and its newly unveiled intention of pointing people toward even more groups they might like.
Chen said that Facebook believes that sharing in closed spaces should be a core principle of the network. "As a person in society, you're a member of all sorts of different types of social groups, be they clubs, or teams, or societies, or an alumni group, or a neighborhood, or a fan group. And we think that Facebook should be the place where you go to share with those types of people."
The new discovery page for Facebook Groups.
(Credit: Facebook)
On Monday, the social network even made an update to a Groups discovery page to highlight groups that your friends belong to and groups that are relevant to where you live.
"The more groups that I belong to, the more I'm demonstrating my preferences and my affinities to Facebook, and the more data Facebook has about me," Lieb said.
An alternate theory is that Groups, like WhatsApp and Messenger, promote private communication, making it an essential tool in the social network's strategy to reach another billion people. It's yet another product that the company can pitch to people disinterested in the public realm of sharing. And maybe it's one of the applications that Facebook will eventually let people use anonymously.
"One theme that should be clear from our work on products like Messenger, Groups, and Instagram is that our vision for Facebook is to create a set of products that help you share any kind of content you want with any audience you want," Zuckerberg said during the fourth-quarter earnings call. "A lot of the new growth we see is coming from giving people the tools to share with different size groups of people."
Whatever the reason, though, one thing is clear: Facebook has a renewed interest in this oft-forgotten product, and we should expect to hear more on Groups in the months ahead. At the very least, Facebook will work fast and furious to make the Groups experience on smartphones, now obscured from view in the mobile app, more than the afterthought it is today. Facebook can't, after all, have what it calls a "core product" be sub par on mobile.
"We haven't invested as fully as we are now," Chen said, referencing the Groups team's attention to mobile. "We think, to take the next step, we can do a lot better to make this a ubiquitous tool for everyone."

Friday, 21 February 2014

How Will WhatsApp Coexist With a Company Whose Business It Hates

n recent weeks Facebook (FB) has been talking up the strategy it hopes will help keep it from fading into obsolescence during its second decade. In earnings calls and profiles in prestigious business publications, Mark Zuckerberg has talked about the value of services that are part of the company but also stand on their own. A best-case scenario could be a sort of General Electric of the Internet, where self-reinforcing brands add up to something greater than the sum of their parts; a worse outcome would resemble the tribal warfare of post-Soviet Afghanistan, or Microsoft under Steve Ballmer.
On Wednesday, Facebook took its boldest step yet in this direction, acquiring WhatsApp for $19 billion in cash and stock. This is a lot of money even in the San Francisco area, and there have been various reasons given for why Zuckerberg interrupted his Valentine’s Day and dedicated 10 percent of the value of his company to acquiring a mobile messaging service with a credo—”No ads, no gimmicks, no games”—that is anathema to Facebook’s own.
There’s the scary competitor theory, where Facebook buys off companies that it can’t compete with to get them off the market. At $19 billion per, this tactic doesn’t scale. The pied piper theory, where Facebook will pay anything for the flute playing the tune that gets teenagers (and especially foreign teenagers) marching, has more credence. WhatsApp has 450 million users, and is certainly outpacing Facebook in key international markets. In India, 55 percent of respondents to a survey by mobile technology platform Jana said WhatsApp was their most-used messaging service, compared with just 0.85 percent for Facebook. Large majorities of Internet users in Brazil and Mexico also said WhatsApp was their favorite messaging app, with Facebook lagging far behind.
Facebook has bought users in the past, most notably in the now cheap-seeming $1 billion deal for Instagram. Such connections can make sense, with the smaller service gaining access to Facebook’s infrastructure and resources, and Facebook getting a chance to reach an audience it has trouble connecting with on its own. On the other hand, each of these deals should presumably help Facebook with at least one side of its major business, which is turning data into advertising revenue. The company either needs to get more data or needs a new market for ads. Here, WhatsApp seems like a mismatch.
Facebook-owned companies don’t have to become part of Facebook’s core service. WhatsApp has made it clear that it has no plans to be swallowed, referring to the acquisition only as a “partnership” on its blog. Fine. Instagram still exists as a separate service. But the real cognitive dissonance from this deal comes from WhatsApp’s extreme rejection of advertising as a way to make money. The home page of its website has two sections, one describing how the service works and the other decrying advertising, quoting Tyler Durden from Fight Club: “Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need.” Nor does WhatsApp collect any demographic information about its users. These are exactly the things Facebook could help it with.

WhatsApp can prove its worth by coming up with some novel, non-ad-based way to profit from its enormous user base. But there’s nothing obvious about its alliance with Facebook that will make that any easier. Meanwhile, the wasted opportunity to mine user data to target ads must be a bitter pill for Zuckerberg to swallow. For now, at least, he’s going along with it, saying that he doesn’t think advertising is a good way to make money from mobile messaging. It would be embarrassing to change tack at this point, and would likely alienate users. It must also be incredibly tempting.

WhatsApp's subscription business model may give Facebook




Opinions about whether the acquisition of WhatsApp by Facebook for up to $19 billion in cash and stock are all over the map. Mark Zuckerberg is either brilliant for taking out a competitor with the potential to create an adjacent social network with more than a billion users, or he just bought the next MySpace or Geocities.
The Facebook CEO is clearly focused on colonizing and mining the entire planet with his growing collection of social network services.
"Our explicit strategy is for the next several years to focus on growing and connecting everyone in the world," he said during a conference call about the WhatsApp acquisition. "And then we believe that once we get to being a service that has billion, two billion, maybe even three billion people one day, that there are many clear ways that we can monetize. But the right strategy we believe, is to continue focusing on growth and the product and succeeding in building the best communication tools in the world."
Outside of China and the U.S., WhatsApp is leading the pack, disrupting its new owner.
(Credit: DevicesOn)
Regardless of the price and giving up close to 10 percent of the company to WhatsApp shareholders, Zuckerberg can now more easily experiment at scale with a monetization scheme that rivals Google's. Rather than monetizing search terms as Google does so well, or relying just on trillions of often annoying advertisements in Newsfeeds, Facebook could now collect a modest monthly or yearly fee.
Not many WhatsApp users are paying today (neither WhatsApp or Facebook would disclose the number), but with an already lucrative and growing mobile advertising business, Facebook doesn't have to be in a hurry monetizing or messing with WhatsApp. If fact, WhatsApp doesn't believe in serving ads to its 450 million users, and so far hasn't gone for in-app purchases or e-commerce as a way to generate revenue.
For Facebook, and the rest of the industry, WhatsApp could be a Trojan horse unlocking subscription revenue on a massive scale. People pay upfront for apps, such as Minecraft and Angry Birds Star Wars, but so far only a small minority are willing to pay the price of a one tall Starbucks coffee per month, or year, for consumer services they spend inordinate amounts of time using. If WhatsApp is successful with its $1 for all you can share, Facebook may be able to charge small fees for other services, like Instagram, and also serve its targeted ads. At this point, Facebook doesn't know how a mix of paid subscriptions and ads will work out, but it will have the means to experiment with WhatsApp's 450 million and growing base of users.
Zuckerberg and his executive team are showing that they are playing high stakes poker, and are not going to wait to be disrupted by others. Like Instagram, WhatsApp is a hedge against future irrelevance.
"It shows the continued determination of Facebook to be the 'next' Facebook," wrote Benedict Evans of Andreessen Horowitz on his blog. "It's striking to compare the aggressive reaction to disruption shown by Google, Facebook and other leading Web companies today with how some of their predecessors a decade ago stumbled and lost their way."
As Box co-founder and CEO Aaron Levie and Yammer CEO (now part of Microsoft) and founder David Sacks said in recent tweets, it's almost about disrupting yourself.