Well the countdown has started. While the blogging and advertisement community seems exhilarated about the plans Facebook is about to reveal monetizing not only their user profile base but also the relations between its users (what is being called a social graph), I remain a skeptic of this move.
Ads and promotions in a personal space just do not work very well together. Imagine yourself hanging out with a friend in a bar and you are constantly distracted from your talk by the bartender waiving a poster in our face saying that the next Heineken sponsored concert of your favorite band is coming to town. What would you do? Embrace the barman for being so thoughtful, or leave his joint to get a beer somewhere else? Or imagine putting on your make up at home or somewhere in a bathroom and in the mirror there are these constant flashes of companies trying to get you to use a better product because it will make you look good (how does that make you feel)? Or, you are sending your friend a picture of the two of you together romancing in a beautiful restaurant somewhere in Paris, sponsored by “Nokia connecting people”.
It just won’t do! I am going to make a fool out of myself and predict the downfall of Facebook and the likes for pulling the advertisement trick on us. The countdown has started, lets see how long it takes for the user base to start moving to another place with no ads.
@vanelsas 
I’m going to go ahead and disagree with you on this one.
If you took a survey, I think you’d find the average user of Facebook could care less about this type of shit – they’ll just screen it out like they do every other advertisement.
And where would they defect to that has a similar user base? Unless someone launches and gains traction with an INCREDIBLE OpenSource Facebook (which seems possible) Facebook will continue to grow.
Look at MySpace – possible the most in-your-face-crappy-by-merit-of-its-usership social network ever devised. Its done well for itself and continues to do well.
Hi Doug, thanks for your comment. The fact that people don’t care and simply ignore advertisement should already be a strong warning towards advertisers not to spend too much on Facebook advertising. But I don’t think I agree with you that the user will continue to ignore this. In the end the user will feel trapped within the walled gardens of Facebook with increased ad pressure. If other services appear (and they will) people will simply move away from Facebook and MySpace towards new, more open, and better services. Once advertisement hits your personal space you won’t like it. It becomes a harassment. Besides that, Facebook is highly overhyped and overrated by both bloggers and investors. This alone tends to erode the service once things cool down a bit. I could be way off base, but we’ll have to wait and see.
I agree with you. I think Facebook is doomed. This will only hasten the advent of Social Network Portability
Hi Charlie. Social Network Portability is very important. There is some good work done on creating open standards. But it goes against mainstream business models (free service with ads). So there will have to be some (r-)evolution in business models as well.
Facebook isn’t doomed just because they’re maturing their advertising model (even if it involves advertising Leggings to men — it just happened to me). Yes, FB users are getting tired of the ads, but Internet users long ago demonstrated their tolerance for (and resulting blindness to) advertising.
Facebook will experiment a bit with different ad models, and users will ignore most of it — for the reasons you point out. The ads are easy to ignore and won’t interfere too much with the user experience.
I am so tired of hearing about Facebook though. It is way overhyped.
Doomed? Maybe not. $240 million dollars from Microsoft – basically gives MS excess to one of the largest Social Networks. Is that not what advertisers do? Is that not the model (established by Google) they follow, since being acquired is NOT part of the makeup.
The question of monetizing a social network has been banged around many tables. The real question is putting a value or getting value from this gathering of users. I’m still confused how the supposed estimated value of Facebook is in the billions. But if MS used that as reasoning for dropping coin, I’m happing for FB.
But MS needs something for mobile and MS wants more of foot-hold in .mobi. MS has already started by closing out Firefox. Facebook users having mobile excess, now how will extensive advertising through your smart-phones effect your bill?
@John, I understand what you are saying, but you are mostly referring to the point of view of the advertiser and of Facebook. Of course to them the social network is a goldmine to be exploited. But my point of view is that of the user. The user has no value or need for more advertisement on Facebook. For that reason I think people will turn away as soon as others will provide open networks based upon different business models than advertisement. But, who knows, maybe I am underestimating how much harassment a user can take. But, if you look what happened in traditional television where we all zapped away from commercials I think this effect will go faster when the ad reaches your personal domain (your mobile and your profile).
Monetizing mobile applications will be more obvious as mobile users are already used to paying for mobile services.
I agree the user has no value. An yes, the flood ads will deter users off the site as your example of TV.
I’m sure Facebook shared your thoughts from the beginning, but like all when $240 million comes into play your focus or pure intent does get tested.
Atleast someone is making the bold move an effort to capture this audience. It may also force the creation of new forms of advertisement other than the traditional: banner, text, click-through. It will also be a great tool in measuring users tolerance which currently is not in place.
Corporate america is still perplexed about how or if these ntws can or should be implemented within their structured environments. Money, opens everyones eyes…. remember bloggers had a cloud. Now that sites like yours have proven a professional value other than the traditional “Published”. The vehicle has taken on a new life presence. More an more company CEOs, COOs, CIOs, ext..take the position a blog is needed, I see this with Social Networks. Unfortunately, there is only one way to finance the project….Advertisement….
@John, ah but I disagree with you on your last statement. I think there are other business models possible, and I am writing a post about it as we speak 😉 So watch this space for a few pointers how we may find business models that are not based upon ads.
Actually Doug is just underscoring roughly the same point Alexander is making – left or right, the advertising model is likely to fail. Whether it is because users balk at it, or simply ignore it – the endresult is the same, i.e. no results for the advertiser.
The biggest problem we see all around is advertisers still thinking purely in eyeballs – “hey, I cant buy my way to heaven through GRP’s anymore, so how else can I get 6 OTS – oh I know, I’ll bombard them through any other means I have”.
Another thing I notice is the heavy focus on the (hypothetical) valuation of Facebook through the Microsoft deal. IMHO this is the wrong way to look at it. Microsoft didnt pay 15 billion to acquire Facebook.
They paid 240 million for the exclusive right to sell ads on Facebook, and got thrown in 1.6% as a deal sweetener, a bonus so to speak.
So we only need to look at whether Microsoft will earn those 240 million back through the ads they can sell. Even though I agree with Alexanders prediction of failure in the long run, I’m pretty sure they will make their money back before the big downfall. If only because they are now a player nobody can ignore – at least nobody that thinks that bombarding users with ads is a good thing to do…..
Hi Alexander. First of all thanks for giving us good food thought as usual 😉
But I should disagree with some of your statements.
The metaphor “social networks-bars” indeed is a bright one, I also use it.
Writing about a bartender throwing posters into your face you forgot an important reason why one could be comfy with these ads – a free whisky shot. Perhaps its not chivas, but still a good old jonnie walker and its free… facebook is like a bar that stands on a main street, and it always will be there no matter what happens…
Walled gardens will be there for at least as long as there are people of old formation – who believe that there’s nothing for free. So for them, the value is there – facebook gives them a comfy space to communicate.
Oh, by the way, facebook turns out to be not as walled as it first seemed to me. There is already a browser with facebook sidebar integrated and a media bar where you can keep a track on photos and videos of your FB friends… Perhaps its not that new (though it is new to me), but it surely is a step in the right direction, isn’t it?
I’ve been using Adblock Plus in my browser and I’ve not had to deal with online ads at all since then. I’ve begun work on a similar tool for Facebook, and in my individual testing, it’s working out great. I’m going to be releasing this to a few others for testing in about a month or so.
The user has no value or need for more advertisement on Facebook. For that reason I think people will turn away as soon as others will provide open networks based upon different business models than advertisement.
Advertising always seems to be the answer to providing a ‘free’ service. But users tend to either ignore ads, block them of simply go somewhere else (TV & zapping).
What does tell to the companies delivering those ads? Presumably nothing? Do they still believe in the way spammers work (if you sent out a 1.000 ads and one of the viewers buys your product because of it, then you still made some money out of it, so the model works) ?
Why is it that some companies do not need advertising so much? Maybe it’s because they sell something which isn’t overly expensive, really good or something you simply need. That’s where the focus should be, not in advertising like it is now.
Of course there will always be the need to be ‘known’ or you will not be found. But I don’t think ads are the way to go.