Wednesday, October 31, 2007

Facebook's SocialAds: How they should work - but probably won't

The blogosphere is a-buzz with the rumour that Facebook's 'SocialAds' will be announced at New York's ad:tech conference on November 6.

This is the long-awaited out-google-adsensing proposal that makes Facebook worth that multi-billion price tag - allegedly.

Interesting that google is fighting back with its new OpenSocial to kick Facebook where it hurts.

Between them, you have to hope that someone is about to crack the 'how to make money out of social networks' conundrum.

There are plenty of guesses about how SocialAds might play: This from TechCrunch...

"It will be how Facebook will actually start to make real money—both through ads on its own site and on other sites through a new ad network... (presumably with its ad partner and new investor Microsoft). SocialAds will be an attempt to be like Google’s AdSense, except that it will allow ads to be targeted to Facebook members’ individual interests and profile data rather than the text on a given Web page. This targeting will be done by placing cookies on Facebook members’ browsers when they visit the social site, so that they can be identified later when they visit other sites hosting SocialAds."

I hope there is more to it than that. Adsense isn't just contextual - it's real time too. At the time I'm interested in content (as revealed by the fact I'm viewing it right now) about X, I get served ads about X.

If, as a result of knowing from my social comms that I'm interested in X, the net effect is the same. And if I'm served that ad long after I've left the content that relates to X, isn't it just in-my-face spam when it hurls itself at me when I'm viewing content on other un-related sites?

I'm guessing Facebook have worked that much out.

So what are the possibilities?

Isn’t the truly imaginative solution to try to work out what advertising/marketing looks like in a networked world?

Talk of ad networks, targeting to personal interest and data, it’s all very web2.0, but is it addressing the fundamentals of change here?

We have a generation of collaborators, with a network to collaborate on (the internet) and an economic infrastructure which makes out-sourcing, the means to produce, cheap and easy to find and do. The perfect storm that wikinomics refers to is upon us.

We accept that this has and will continue to disrupt the way content is created. It’s why social networks of the Facebook variety have succeeded while old-style broadcast sites stare wide-eyed at their Reed’s-Law-driven exponential growth.

And it’s dawning that the same disruption is happening to the way in which products and services are created (co-created). It's graphically illustrated in the information industry by Linux, for example.

And yet the predicted response from the cutting edge is, more ads, pretty much like the old ones, but better targeted to the individual's social data.

Haven’t we missed a (the) point here?

If a community is involved in the co-creation of the products and services it has decided it needs to call into existence, this has two key impacts.
  1. It has the potential to be a perfect fit. The people who’ve been involved in the co-creation of the product or service that results will love it and 'buy' it (that which we create we embrace, as Alan Moore likes to say). They will also rave about it – marketing it to other like-minded people, attracting more with the same passion/purpose to join their niche global community of collaborators.
  2. Doesn’t co-creation of this kind imply a perfect fit between supply and demand? What's the need for traditional ads. The community does its own marketing - and it's powerfully peer-to-peer and with all the ramped-up trust that implies.
Is this the end of capitalism? We only create what we need. So who needs someone else making something I don't need and then trying to sell it to me. Skills get matched to product production on a global scale - cheaply and more efficiently than ever before.

And if it is the end of the mass industrial model full stop, must it also be the end of advertising?

As I wrote once before: "How do you sell a mass produced one-size-fits-all product to people who want their content disaggregated and delivered to them exactly where they want it, when they want it, and honed to the interests they self-select and/or navigate to/discover through trusted communities?
"One answer might be to tailor the advert to the segmented user group. Take a look at for a vision of this.
"It's a brave attempt to solve a difficult problem. But I'm not comfortable with it. I wasn't sure why before. Now I think I am - it doesn't address the fundamental miss-match here - that we're trying to sell the same mass produced product to different people by effectively pretending (spinning that) it's a different product.
"It ain't, it can't be and it won't be until you let the community of shared interest take a stake in the creative process. "

However, the problem is, there are still things we need which we can't ALL participate in the creation of.

I need medicine. But I'm not passionate about taking part in making it. How do I get my medicine? I could contribute something to the process I suppose (can you make it taste nice? can you change the colour, I thinkthere's a need for a non-stain version etc etc). But can I contribute something of real value to the process of production (co-creation) of every good and service and public utility I'll ever need? Time would seem to be a barrier, if nothing else.

It feels like common sense to say no. So I'll still need to offer something in exchange for my medicine. Cash/Capital works pretty well as the representation of this. So capitalism gets to roll on.

And for the matching of supply to demand in those cases, we'll still need some form of connecting agency (marketing of some form or another). So if we can get ads working in a much more engaged way - more like content we want, like and trust - through the use of powerful social data analytics - then it has to be better than the interruptive models we see struggling all around us. Perhaps get some recommendation and rating from members of communities involved.

We see some giant leaps toward this with Blyk. Perhaps we'll see a further taste of it with SocialAds.

But wouldn’t it be wild if SocialAds really do what the name suggests: they simply act as the way in which you are recruited to join co-creating communities through a system of brilliantly executed, real time, taste and recommendation engines.

Now that, I would stand up and applaud.


  1. There is a war erupting.

    Watching the moves of the BIG Boys
    lately clearly demonstrates a strategic war for position.

    MSN beats out Google for a stake in Facebook
    Google Announces its new network release due out Nov 6
    Facebook aims at the Business Market (watch out Linkedin)
    Facebook aims at its own "Ad Network" a shot at Google.....
    Facebook aims at a new "Social Networking Search engine" , another shot at Google
    Facebook aims at the mobile market to reach 3 Billion cell phones
    Google just ganged up with several other network operators to try and slow down Facebook

    A strategic war is unfolding before our eyes. What will be Yahoo's strategy? Will there be a frenzy for rolling up other networks? Is Facebook's recent moves engineered by MSN? for the rest of the story go here

    What say you?

  2. Not sure this is the end of capitalism but it's definitely highlighting that personalisation is the holy grail. Surely, as special interest markets, we have a good shot at getting personalisation right. Isn't this just taking 'understanding our consumer' to the next level by involving them in our brand as opposed to our brand broadcasting to them.

  3. Ed, Jay, thanks for your comments.
    I wonder whether what we are seeing is a perfecting of the capitalist model - one in which the fit between what we want / what we get and our ability to get it gets closer and closer. It's a more efficient model in terms of the allocation resources in raw material and skills terms, too?

  4. Hi Dave, you answered your own question re: capitalism with the musing about pharmaceuticals. The 'commmunity' can't add much of value to the complex and elongated process of evaluating compounds, so big pharma is (thankfully) likely to continue. What will increase is the information share between that subcommunity which is pharmacology that will increase the pace of research. The wider community's value is feeding back on how it works and what its like to take.
    In relation to advertising there are two broad contexts - content and individual. The limit of any one in isolation is that it does not say enough about what the user is looking to discover at that point in time (and virtually all online activity is Discovery).
    Combining the two contexts - ('what I'm looking at'/'what I am about') gives a higher probability of a relevancy hit - giving the user a link to what they are interested in. That's all that advertising is about - relevancy. The greater the demonstrable probability of relevancy, the greater the yield the advertising platform can charge - and yield is what is all about now.
    The core problem with consumer web publishing is that it's advertising funded, and the yield is inevitably going to be tied to inventory. Growth in activity is creating exponential growth in inventory.
    For publishers and ad-funded service provider, their success can only be relative: if their traffic rises 300%, but the general growth in inventory is 1000% the drop in yield will offset the growth in impressions.
    The answer is contextuality. 'Premium' advertising products designed/guaranteed to hit the spot for advertisers and thus yielding higher. In addition, the availability of that technology will be more limited so the dilution caused by general growth in web inventory is reduced.
    This trend is not the end of capitalism - it's classic capitalism - differentiate your product and create competitive advantage by offering something better (and more expensive) than the other guy.
    The issue is that such is the pace of online innovation, 'social ads' type functionality (behavioral targeting) is looking like a commodity product within the next year or two. It's the cross-site ad networks rather than the social networks who are in the best position to challenge Google's dominance of discovery activity.

  5. Hi Dave. Good post, and as others have commented, very topical. Like you I struggle to believe that the future of advertising is the same interruptive model, just better targeted. The idea that taking my profile and blasting me with something I may notionally be interested in I think misses the whole point. Push advertising (banners, pop-ups, overlays and every other innovation) are just an extension of interruptive advertising. They are Media1.0. I am just about to start a series of posts on my blog on Thomas Zengotita’s seminal book Mediated. It is the best treatise I have read on this subject. I explains why Media1.0 is over, not because of technology, or social networking sites, but because mediation is like a law of nature in our media dominated world. It is the manifestation of the peak Maslow’s hierarchy of needs in a developed society, ie esteem and personal actualisation. It develops symbiotically with our own media sophistication. Hence “display advertising” is reducing in value simply because we have become used to it and we block it out. Just as when newspapers started printing in colour , great impact, but now ..whatever!
    I agree your comment Dave that context is all too important and static profile alone may miss the mark. But I’m also a believer in the Attention Economy – that my profile data is mine to control. That brands need to earn my attention, because it is the scarcest resource. Brands will just have to work harder and be more relevant to me to get my attention. This will drive extraordinary innovation I believe as the prize is so great.

  6. Some great quality posting here by all. Many many thanks. Please keep the conversation rolling.


The rate of change is so rapid it's difficult for one person to keep up to speed. Let's pool our thoughts, share our reactions and, who knows, even reach some shared conclusions worth arriving at?