The myth of SocialAds, Beacon and Insights: it ain’t gonna work!

The countdown continues. After I decided to write a post on the downfall of Facebook as their stealth ad system is being revealed, we are now on another day after. The day after Mark Zuckerberg announced his 3 way ad system for Facebook. For me the counter is starting to tick a little faster now, I’ll explain in a moment why.

As always I am looking around for analysis on this. In general people seem to be either positive about the move with a warning that it is a “dangerous way to go”. Or they are negative and warning about the user that won’t like to be hassled by his friends with commercial messages.

There are a few posts that drew my attention.

Nicolas Carr really hits Facebook hard with his post called ‘the social graft’. He says:

“It’s a nifty system: First you get your users to entrust their personal data to you, and then you not only sell that data to advertisers but you get the users to be the vector for the ads. And what do the users get in return? An animated Sprite Sips character to interact with.”

Mathew Ingram describes a mental picture of some guy barging into a party at my house and yelling about free pizza or T-shirts or something, and handing out coupons to all my friends while dressed up like a giant Coke can.

He would punch the guy entering his house in that way. I would probably too.

John Battelle wrote a small entry in which he adds to a quote from a CNET article from a Facebook executive:

“The company that can process the most data will win.” I’d modify that – the company that can process the most data intelligently and in context, wins”

I think John is right and wrong. Right, because the company that can process data intelligently and in context wins. Wrong, because Facebook isn’t the right context! That is why Google wins, the not only score better on clever and massive amounts of data processing, but they use it most intelligent in a context where a user is actually begging for advertisement attention (during a search).

Business Week takes the angle of the marketeer and advertiser who is excited about the new initiative in their post called Marketeers are your ‘friends’. They quote Mark Zuckerberg saying:

“The next 100 years is going to be different for advertising, and it starts today,” Zuckerberg told the crowd of 250 or so enthusiastic marketers and advertising executives who had gathered at a midtown loft for soft drinks, hors d’oeuvres, and a demonstration of Facebook’s new ad system. “Pushing your message out to people is no longer good enough—you have to get into the conversation.”

But who wants marketers in their conversation? If not enough do, the new news-feed ads will be bad news for Facebook.

But Mark, you aren’t getting into the conversation, you are really only trespassing. And btw, the example you provide where 2mln Facebook users join a suport breastcancer cause,  is actually a very bad example. People joined to support the good cause, not to support some brand.

Dave Winer, although he is positive on the move made by Facebook, ends his article with an excellent observation:

Long-term, however they both have problems because advertising is on its way to being obsolete. Facebook is just another step along the path. Advertising will get more and more targeted until it disappears, because perfectly targeted advertising is just information. And that’s good!

I think SocialAds are a bad idea. Actually I think the current web 2.0 free (ad-based) business model is a bad idea. There are 16Bln reasons to get out of that advertisement trap. And now Facebook is doing the wrong thing for the obvious reasons. Mark Zuckerberg couldn’t have said it any better than in this quote, taken from the press conference:

People will not be able to opt out of these social ads or turn them off, at least for now, unless they stop revealing information about themselves on Facebook. Says Zuckerberg: “It is an ad-supported service. It is a free service.”

You couldn’t be more right Mark! This is the Catch 22 of web 2.0. Facebook creates a service, drawing users to it by providing it for free, provide the user with the false illusion that his privacy is safe and then leverages the user profiles and the Social Graph network Facebook ‘owns’ and protects but didn’t create himself (the users did) by monetizing with ads. I said before it isn’t going to hold, as this business model is fueled form the wrong side. But I would go a step further and argue that SocialAds are based upon an entirely wrong assumption of friendship in the wrong context!

The power, according to Facebook lies in the user becoming a brand ambassador towards his friends. The best advice you can get is that from a friend. We all know this phenomenon. You are sitting with a friend and he tells you enthusiastically about a movie he has been too. Makes you want to go yourself, right? Why does that work? Because a lot of things happen at the same time. In the physical world there are many different stimuli that affect your behavior. Things like speech, sight, hearing, touch, feeling, movement, trust, relationships, common experiences or taste, context (like the fact that you are hanging out at your home together), all come together in your brain providing you with a feeling of value to your friends story. It also provides you the opportunity to DISAGREE with your friend.

But in the on-line world you lose most of these stimuli. In Facebook you get flattened stimuli from the newsfeed: “Alex went to this movie and he liked it”, or personalised ads using the profile information. But there is no “hanging out together, no voice, taste, touch or other stimuli, no way of agreeing or disagreeing with your friend. And worse, the stimuli aren’t in the right context. I’m not looking for advertisement there. And if I get these stimuli from my friends in my personal space, what will that do to the trust I have in them? At best I’ll try to ignore it, at worse I get fed up with my friend and disconnect him. Facebook will be left with the bargain hunters (get a free coke if you…), ad blind people (ignoring any brand or ad message), brand bashers (have you seen these morons trying to sell me….) and finally nothing as users will start to see through the advertisement trap they are in and move to another place where services provide real value instead of “an animated Sprite bottle to interact with”.

The very best one being from Doc Searl here. In his post called New World Disorder he quotes The Guardian with an article by Jeff Jarvis, Chaos theory: advertising cash will soon decrease,

Advertising is no one’s first choice as the basis of a relationship. For marketers, it’s expensive and inefficient. For customers, it’s invasive and annoying. And targeted advertising is only slightly more efficient and slightly less annoying. Clearly, the direct relationship between a customer and a company is preferable. But that direct connection cuts out the middlemen – that is the media.

So true. As said before. The web 2.0 bubble is building up way too much pressure, who has a needle?


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4 Responses to The myth of SocialAds, Beacon and Insights: it ain’t gonna work!

  1. Kirill Bolgarov says:

    Hi Alex. A good post, as usual. You are doing real good in aggregating opinions – that’s why I always start with your blog 🙂
    However the further we go the more I disagree with you – but isn’t it the meaning of blogging…
    I totally agree with Dave Winer – facebook IS ahead and they are doing the right thing (if one might say right or wrong in this situation). The effort towards making ads targeting more and more precise should be supported (and I think it will be) by the user. because at the end of the way, the user gets this true value – making ads work for him – helping advertising networks like facebook make the ads information.
    What I like the most is that the user’s interests will be considered when serving ads beyond facebook, which means that sooner or later I won’t be getting any penis enlargement offers but start getting information about what I AM interested in.

  2. Alexander van Elsas says:

    Kyrill, it is just fine to disagree, there is always something to be gained from opposing views. I guess that our differences are a bit fundamental. I believe that the free (ad-based) business model is fundamentally flawed, regardless of the way it is executed. Facebook is making the obvious moves now, and they will do better than the “penis enlargement” example. But better execution won’t make up for the flaws in the business model. So yes, Facebook is making progress, but unfortunately on a leaky boat.

    I just found another pretty good post about this, written by Chris Shipley:

  3. Kirill Bolgarov says:

    I agree and disagree. My opinion is – the web as a whole is not capitalized enough. What is the easiest and fastest way to bring the money into the web in order to have it developing and self-innovating? I think it’s the ad business model – it helps popularising the new media against the retro media exactly because its free for the user. When the accumulation af capital is finished, there will be time for the new business model. Guessing what it will be could be a good task for Julles verne 😉

  4. Pingback: Kasi-Blog » Blog Archive » Facebook-Pessimists vs Facebook-Optimists

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