BUSINESS

FACEBOOK FOLLIES

Marketers want to know what a friend list is really worth

RACHEL MENDLESON July 7 2008
BUSINESS

FACEBOOK FOLLIES

Marketers want to know what a friend list is really worth

RACHEL MENDLESON July 7 2008

FACEBOOK FOLLIES

BUSINESS

Marketers want to know what a friend list is really worth

RACHEL MENDLESON

If you’ve been perusing the social networking website Facebook recently, you may have encountered Kristin. She’s 40, and a stay-at-home mom who loves gardening and cooking for her family. She wants a new car, and the beach is her ideal vacation spot. Kristin, however, doesn’t exist. Hers was among 10 “highly influential” profiles that were reportedly created to be sold for marketing purposes. As described in the eBay listing, the seller integrated the personas into Facebook based on their interests, building their networks up to at least 200 friends. How much Kristin is worth remains a mystery; the auction was stopped (presumably because eBay prohibits the sale of virtual goods) before it was scheduled to close on June 14. But the attempt to monetize Facebook illustrates the multi-million-dollar question marketers are trying urgently to answer-how to translate online social networks into cash.

Since Facebook was launched in 2004 as a tool to connect college kids, it has become the sixth most-trafficked website in the world. Its 80 million active users self-organize according to their preferences and common interests, which would be a gold mine for advertisers—if they could only figure out how to effectively infiltrate the site. The “gold rush” began in earnest last May when the site opened up its platform allowing outside Web developers to add content, says Narendra Rocherolle, cofounder of FBExchange, an ad network exclusively dedicated to Facebook. Some 400,000 developers have since joined the race to find what Rocherolle calls “the giant nugget.”

Just how much stands to be gained, however, is based largely on the $240 million Microsoft paid in October for 1.6 per cent of the company, placing the total value of Facebook at $15 billion—a valuation reminiscent of the dot-com bubble of the late 1990s. So far, real profit has proven tough to turn. Traditional advertising doesn’t work. According to The Facebook Marketing Bible, “inherent in the current state of Facebook is a culture of transparency that devalues and ignores inauthenticity.” Facebook users rarely click on ads, and have little tolerance for spam, even if it comes from a so-called “friend.” Marketers can passively expose their personal networks to their preferences and invite friends to events, but Kristin and the other fake personas are useless, says Darren Barefoot of Vancouver-based Capulet Communications. “The value of the network is only as good as the person at the centre of the network,” he says.

If there’s truly gold to be mined in Facebook, it’s in using the platform as a launching pad for other applications, says City University of New York journalism professor and Internet expert Jeff Jarvis. Since Facebook

opened its platform, 24,000 applications have been added. One such application, “Super Wall,” has more than 34 million installations, and each one of these applications allows the developer to sell advertising space and reach a new audience. Actual revenues so far are small, however, and whether it is enough to make Facebook profitable is an open question. But the learning process doesn’t concern Jarvis. “At a year old, Google didn’t have an ad strategy either,” he says.

KRISTIN IS A SINGLE MOM WHO LIKES THE BEACH AND WANTS ANEW CAR. SHE ALSO DOESN’T EXIST.

Still, the pressure is on to find a way to convert all those users into dollars. As Ian Schafer, the CEO of interactive marketing firm Deep Focus, points out, venture capital won’t last forever. “There are a lot of amazing technologies that have closed down because there’s no business model.”