This morning I was thinking about some features that would actually make the events application on Facebook more useful. Unfortunately though, there are significant limits to what you can access on Facebook events. I took a look at the developer wiki and for instance, the Events.getMembers method has some significant restrictions:

However if you call this method without an active user session, you can only get the events for which your application was the creator; you can see only those event attendees who have authorized your application.

So what if you wanted to build a feature which enhances Facebook events? Unfortunately you can’t. Previously, some applications were developed which extended Facebook’s features and ultimately enhanced them. Under the existing platform, there are now sufficient restrictions to prevent users from enhancing underdeveloped applications that are already on Facebook.

Everyday we hear of a new company that is essentially an additional feature. For example Disqus, offers more robust a more robust commenting functionality for blogs. The Wordpress platform makes it easy for applications to build plugins which actually improve existing Wordpress functionality. That’s because Wordpress is a much more open platform.

This post is not meant to be completely critical of Facebook though. Developers have benefitted greatly from the access they’ve been granted to Facebook’s user base. The only problem is that this access is so limited now that I have to imagine that building a Facebook application is no longer an end game for new developers. Instead it has become more of a marketing opportunity than anything else.

This is a huge opportunity for many brands. Does it make sense though to try to build a Facebook application as a business when you don’t have money to invest in new user installations?

Over the past few months I have been spending a fair amount of time testing out Facebook’s advertising platform. While I’ve been advertising since early on, when Facebook’s program was called “Flyers”, I never had a chance to put substantial resources into testing it out. Since then, I’ve launched a number of campaigns each with varying success. I’ve also spent the last few months speaking with people about their experience with Facebook advertising.

What Results Are People Having?

The result has been mixed but there is one thing that has been consistent throughout: nobody can ever spend all their money that they want to on Facebook advertising. The reason for this? Well the most obvious is that not enough people click on the advertisements on Facebook. A look at my own ads would reveal click through rates (CTRs) of 0.03 percent to 0.11 percent.

Other people that I have spoken with have also produced similar results. Some click through rates have exceeded 0.11 percent but those are not the norm. Ultimately it depends on the ad that you are running. The best model is to run multiple campaigns within the Facebook ad network, each targeting similar groups.

Are the Numbers Comparatively Low?

While I’m sure there are ways to increase the overall click through rate, the numbers are still dreadfully low. These low rates demand an extremely high number of impressions. It seems almost counterintuitive though to suggest that Facebook doesn’t have enough inventory. Time and time again we hear about the excessive amount of inventory driving down CPMs for publishers.

On a CPM basis, it would be accurate to state that there is too much inventory. In a world where search marketing provides advertisers access to consumer intentions, impressions simply don’t suffice. If you wanted to pay for advertising on a CPM basis on Facebook, you could most definitely go through your entire advertising budget. It doesn’t make much sense though to pay on a CPM basis when you can pay per click.

Not everything is bad news for Facebook though. After doing a little research, we found that Facebook’s click through raters were not necessarily that bad when compared to traditional banner advertising. Many advertisements on top blogs around the web provide click through rates of around 0.10 percent to 1.0 percent, most of which trend toward the low end.

Those numbers were based on data of large campaigns run around the web that we received from advertising campaigns run from within agencies.

Not Enough Inventory Among Quality Users

Facebook has a large group of “quality” users. When saying this I mean that there is a large group of users that fall within valuable demographic categories for advertisers. Every single person that I have spoken with about Facebook advertising has said the exact same thing: Facebook limits their budget and they are never able to spend everything they’ve allocated to Facebook advertising.

The main reason behind this (from the sample group of advertisers I’ve spoken with), is that there are not enough impressions by the demographic groups being targeted with advertisements. As Facebook grows in popularity, the number of impressions will change significantly but for now there is still a lack of quality impressions.

I would assume that this is why Mark Zuckerberg continues to speak about focusing on growth. If there are numerous advertisers that don’t hit their daily budget on the ad network, Facebook clearly has a problem with inventory. Compare this to Google where advertisers consistently hit their daily budget limits. Facebook needs to build their inventory as much as possible if they are going to build a successful advertising network.

Is Facebook really not focused on monetization currently? No way! There is most definitely a group of people dedicated to monetization in Facebook. The main problem is that the company still doesn’t have enough inventory even though it may have the 4th most trafficked website on the internet! Either that’s a sign of a failed monetization solution or a sign that the company simply needs more pageviews.

What results have you seen when running Facebook ads? Are you able to hit your daily budgets? What do you think would improve the Facebook advertising program?

Yesterday I wrote about how brands can succeed on Facebook.  At the time I suggested that success for me personally is having an application within the leaderboard.  Commenters immediately suggested that this position was a flawed one and after thinking about it further, I agree.  The first step in launching a social media campaign or an individual campaign on Facebook is defining your objectives.

Is Brand Building Important for All?

One of the primary objectives of many branded campaigns on Facebook is to simply build brand awareness. Just this morning I read about the 14 new campaigns launched by ContextOptional over the past two weeks. Yesterday I posted about Buddy Media’s strategy of appvertisements. Mike Lazerow, CEO of Buddy Media, posted a response in the comments which points out the flaw in my thinking:

The applications we build for our clients are marketing programs. The applications built by the top Facebook and MySpace developers are uber-funded entertainment properties that are continually cared for, improved, tweaked and refreshed with new content and features. This takes significant resources and talent.

I agree with Mike that branded applications aren’t the same as products that development companies are building out. This doesn’t mean that branded applications are right for everybody though. Does People magazine really need to build more brand awareness? While readership is going down, I would argue that piling money into Facebook applications would not necessarily increase their avid fan base.

The challenge for the media companies is not how they make consumers more aware of their brand but how to attract the attention of consumers to their content in an attention deprived economy.

How Do You Define Success?

If we are to assume that brand building is not the only thing to be accomplished through Facebook application campaigns, what should brands use when judging success? One commenter yesterday suggested that it’s the combination of strategies (external site, Facebook application, and advertisements) which is most effective.

Another commenter suggested that even low engagement levels with their applications is still successful. This means that different companies have different standards for success. This also means that there should at least be some initial questions to answer for determining success. I’ll start it off with 3 questions to answer when determining success, feel free to add to it below:

1. What is your company looking to accomplish from exposure on Facebook? - This could be a increase in traffic to your company’s website or an increase in exposure to your brand.
2. What metrics will you use to judge success? - Is “engagement” based on time spent within a branded environment the best way to measure your success? How about the total number of unique visitors? Are pageviews important to you? How about ROI? Is it possible to increase revenue directly from a Facebook application?
3. Is this Marketing or Advertising? - Is your company looking to simply promote its brand or provide a valuable experience?

What other questions do you think should be answered? Ultimately I can’t effectively define success for all so I’d like to hear your thoughts on what success on Facbeook is to you.

Over breakfast this morning I was talking with someone from a large media company who was trying to determine their social media strategy. During the conversation the individual inquired about what the best strategy is for launching new applications on Facebook and what their overall general social media strategy should be.

Are Facebook Applications Part of Social Media?

It’s easy to jump at the bait and say that Facebook applications are part of social media. After thinking about it I’m a little more skeptical. While top applications provide platforms for communication, the owners of the applications don’t actively engage their users. Contrast this with a social media strategy which includes blogging, micro-blogging, commenting, tagging, etc.

A normal social media campaign is considered one because it is conversational. Many of the applications that brands are currently launching on social networks do not provide conversations between the users and the brand. If that’s the case can they really be considered part of a “social media” campaign? Just because the applications are on Facebook doesn’t mean the actual applications are social media.

As such I would argue that only some Facebook applications can be considered social media. It really depends on whether they are conversational. What do you think?

How Does One Build a Successful Facebook Application?

Regardless of whether or not you consider Facebook applications a core component of social media, there is another challenging issue for brands: launching a successful application. If you consider applications a form of advertisement, as Buddy Media says they are, success is based on the number of users that have ever engaged with your application.

For me success means being among the top applications in the Facebook application directory. Currently there are no branded applications at the top though based on the number of monthly active users. Ultimately building engaging content is most important and fine-tuning applications so that they attract repeat usage is important. This is an extremely challenging thing to accomplish though and the worst part is that nobody can guarantee you success.

With the new Facebook design and the decreased visibility of applications it has become even more challenging to launch a successful application. That doesn’t mean it isn’t possible, it just means it takes more time and a little more luck.

Do All Companies Belong on Facebook?

Many users on Facebook may read The Economist, but they don’t read The Economist on Facebook. Does that mean that the Economist shouldn’t be promoting on Facebook then? Probably not but ultimately I think the assumption that there is a Facebook application for every company isn’t accurate. While companies should experiment with other forms of advertisements on Facebook (including fan pages and Facebook ads), Facebook applications aren’t for all.

Over the coming months I think we are going to see an increasing emphasis on the feed through Facebook Connect. On Facebook and other social networks social presence is extremely important. Imagine being able to run reports to find out how many people are talking about your brand and sharing your content. In this environment brand evangelists become more important than Facebook applications.

It’s about empowering users to share your content rather then enticing them to temporarily interact in a branded environment. While branded applications will always work as a quick advertisement (or “appvertisement” as Buddy Media has branded it), the true long-term social media strategy both on and off Facebook is getting your users to talk about your brand whenever they engage with it.

It’s more than building one-off interactions. When a consumer uses your brand in the future encourage them to share their experience with their friends and educate them as to how they can share. Facebook and other platforms for social media will then naturally do what they were meant for: amplifying the signal about your brand.

Back in November Facebook released a new product called Facebook Pages. What I believed was the most important feature was the ability to add applications to Pages. Since then thousands of pages have been created and everyday I see another friend that has become a fan of a product, person, or service. There are still some serious issues with the Pages product though. I experienced these first hand while launching the inaugural Social Ad Summit.

Can’t Send Messages

This has to be the most significant problem facing pages: you can’t send messages to fans! Rather than using messages Facebook opted to use an alternative messaging system called “updates”. The only problem with notifications? In any given day I get about 20 notifications. The other problem? Most users don’t read them.

If you create an event for your fan page, you can’t send messages to them either! Instead, if you create an event for your fan page you will only be able to send them notifications with event updates. This has to be the most backwards system ever. I understand why Facebook doesn’t want to let fan pages send unlimited messages but they should at least hold the same standard for events whether created by a fan page or a user.

Paid Promotion Only

Facebook encourages owners of Facebook pages to promote their page by purchasing Facebook advertising. This contrasts Facebook groups in which any user (depending on group restrictions) can typically invite their friends to join. This in turn contributes to groups growing virally. Unfortunately for pages, the only viral growth comes in the form of newsfeed notifications.

It is an awkward balance that Facebook has for groups and fan pages. Fan pages appear to receive a higher priority when it comes to news feeds. Why is that exactly? Well Facebook arbitrarily decided it. This model is also somewhat of a conflict of interest. They want to make it easy to spread information but they want companies to pay for some of that promotion.

Ongoing Conflict

While Facebook needs to adjust their Pages product, it’s clear that Facebook still has a lot of changes that need to be made. As I said earlier, Facebook’s model presents somewhat of a conflict of interest. Imagine if Google was in the business of charging for placement of actual search results and not just ad words. Facebook has an unbalanced emphasis on paid promotion and this is something that will have to be resolved as the company works out their monetization model.

Facebook should promote their advertising services equally throughout the site. Whatever model Facebook plans on using for monetization, the most important thing is fully functional products.

Earlier this week I had a phone call with a start-up company that was looking to launch a product to the conference industry. It was a service which enabled conference attendees to easily swap contact information. One of the first questions I asked was whether or not you can easily export contacts. I suggested that if I couldn’t export my contacts, the service was not going to succeed.

I found it ironic that I was preaching about contact portability but everyday I interact with Facebook who makes it impossible for me to export my contacts. When I’m writing an email there is no way for me to easily access my contacts’ email addresses and when I make a phone call the only way for me to access my contacts’ phone numbers is through the iPhone Facebook application.

Want to build an application that leverages your Facebook contacts for communication purposes? Unfortunately you can’t unless you are fine with using each individual’s Facebook ID as their unique identifier. What risk does Facebook have from letting users export their contacts? The most obvious risk is the potential for users to take those contacts to a competing service.

In reality though, if a user prefers one social network over another, the ability (or inability) to export from Facebook is not going to be a deal breaker. They are going to register no matter what. So for the love of God Facebook, please let me export my contacts! They are my contacts anyways and I only gave you access to that relationship. You weren’t the person that gave me access to that individual!

LinkedIn continues to grow and they let you export your contacts. Are there any other reasons you can think of that Facebook still locks in our contacts? Why on earth won’t they go ahead and let us export?

There’s been a lot of discussion about the impact of the new design on Facebook applications over the past month as Facebook has rolled out the new design. Prior to the roll-out taking place many were concerned that the new design would crush application traffic and make it more challenging to obtain new users. Over the past few weeks I have been talking with developers and have received a bunch of feedback.

Today, Vasanth Sridharan concluded that the redesign has substantially damaged many of the applications. That was after taking look at a discussion taking place within the Facebook developer forum. While at first glance, we can assume that traffic is down for most, I don’t think the picture is completely clear.

A Change in Stats Confuses Many

As the new design roll-out approached Facebook decided to switch the standard application metric from daily active users to monthly active users. For many this made sense but for a few it made it difficult to determine what impact the new design was having as it became hard to monitor daily adjustments. Adonomics, the site which had once been the standard site for monitoring application statistics was thrown a curveball by the change.

Suddenly many of the statistics were inaccurate and it was no longer easy to monitor what was going on among the top Facebook applications. It appears that Adonomics has figured out a way to back track stats and fill in missing days but the statistics are still questionable. So how are we to determine what the new design’s net impact is on application developers?

A Drop for Some but Not All

Some application developers I’ve spoken with have experienced a decrease in traffic by 20 to 25 percent. Others have actually experienced an increase in traffic. While the forum discussion that Vasanth referenced is filled with dissenting application developers, that discussion caters to those critical of the new design. The title of the discussion is “Facebook Does it Again, Screws Developers Once More”.

Ad networks that I’ve spoken with have not experienced a decrease in revenue among their top developers. That means results are mixed across the board. One thing that is not mixed is the decrease in application profile views. The “boxes” tab has resulted in a substantial drop in impressions on the profile page. It’s not all bad though.

The new design emphasizes features that add value to the users. While the new design may not emphasize viral channels as much as it used to, times are not critical for most developers. While some may have suffered a decrease in traffic, the majority are not overly critical of the redesign. The largest backlash so far has come from the users, not the developers.

Stats from Developers Who Has Suffered From Redesign

Over the past few days there has been a lot of buzz about Facebook Beacon. I wrote last week that Beacon was not actually relaunched but was instead never shut down. In the past day though, Facebook has shut down promotions of beacon and Techcrunch confirmed that Facebook Beacon was on the way out the door. Facebook Connect is the new system.

Beacon Was a Failed System

When Beacon launched, Facebook learned a lot of lessons including how not to launch a new advertising product. One of the largest problems initially was that the service was opt-out instead of opt-in. Immediately there was a substantial amount of backlash within the blogosphere about the new offering. Within days, Facebook made the system opt-in and suddenly we heard very little about the new product.

Last week a few bloggers noticed that Beacon was not completely gone and it drove some to write about how Beacon was back. While it had never left, it appears that Facebook may actually be shutting down the product for good as Facebook Connect begins to roll-out.

How Will Facebook Profit From Connect?

Beacon was launched as an advertising program that websites could participate in via direct agreements with Facebook. While the price of those partnerships were never revealed, it was clear that Facebook intended Beacon to be another revenue generator. So as Facebook Beacon slowly disappears and becomes a small piece of Facebook’s history, Facebook Connect is beginning to roll-out.

As I wrote last week, Facebook Connect is essentially the same as Facebook Beacon. The only difference is that there is no unnoticeable pop-up in the lower corner of your browser notifying you of an action that’s about to be posted to Facebook. The system is opt-in and this time around there is a good chance that the service could become commonplace across the net.

So if Beacon was intended to be an advertising product and Facebook Connect is essentially the same service for any site on the web, how does Connect help advertisers? Facebook Connect makes it easy for advertisers to promote a user’s activities taking place anywhere on the web. Did they just look at your product on another site? Post about it to their news feed.

Did a user just read an article on your news site? Post about it to their news feed. Facebook Connect makes it easier for product and service providers to publish any activities of a user within that company’s domain. This is a powerful product but how will it make money for Facebook? While Facebook has stated nothing about pay for placement, the only thing I can think of is exactly that: pay for placement.

While it could be a conflict of interest (the same way that Google owning an SEO company would be a conflict of interest), paying to ensure news feed stories make it to the general news feed is not a far fetched idea. Just last week Fred Wilson posted about opening up the feeds to marketers. While Facebook already has paid news feed advertisements, this could be another type of them.

If Facebook decides to move forward with paid promotion of news feed items from Facebook Connect activity, I can guarantee you that a large number of bloggers will lash out about the conflict of interest. Facebook needs to be making your news feed better, not charging advertisers to make it more inefficient. There’s one other way that Facebook can generate revenue that I’ve spoken about previously.

Facebook could start extending the Facebook advertising network to other sites with the help of Facebook Connect. While Facebook advertising has experienced mixed results on Facebook, off the site, the advertisements could prove to be much more effective. A few sources I spoke with last year suggested that Facebook had been testing out such a service but has yet to officially roll anything out.

How do you think Facebook will generate revenue from Facebook Connect?

Update
Facebook contacted me to let me know that Beacon was never actually an advertising service which is why they went and removed it from their “Business Services” page over the weekend. Also, we will see Facebook Connect rolled out across individual sites over the coming weeks and months and then later this fall Connect will be rolled out for everyone.

Last year I got a juicy tip that Facebook was actively interviewing executives to head up what was going to become the Facebook Music division. Since then little information has been revealed about a service and many have assumed that iLike was going to be Facebook’s only music service. With MySpace preparing to release their own music service, the topic is back in the hot seat and some are wondering if Facebook might take a shot at releasing a competing service.

Internal Conflict

From people I’ve spoken to over the past week it sounds as though there is still ongoing debate within the rankings at Facebook. There are still people at Facebook that are pushing for a Facebook Music service but unfortunately not everybody wants this to happen. For one, there is some serious political issues. Mark Zuckerberg is friends with the Partovi brothers who run the iLike service and launching a competing service would most definitely spark some tension.

The conflict still remains and no final decisions have been made. While the conversation may have been pushed aside while more important issues are resolved (such as the new Facebook redesign), a service could still emerge.

MySpace Music is the Test

Facebook is sitting on the sidelines to see how MySpace Music performs when it launches later this month. With MySpace anticipating the new service to be a competitor to iTunes, there is much hype surrounding the product and everybody is waiting to see what happens. If the service does in fact generate a substantial amount of revenue Facebook will have to seriously consider launching a competing service.

With no quick solutions to boosting the company’s revenue, selling digital products seems like a great way to get there. Given that social networks have become one of the largest centers for consumer attention online, it seems like a perfect fit. Back in June of last year Sam Huelatt posted that Facebook could be the shopping mall of the future. I agree. The metaphor of social networks as digital shopping malls makes a lot of sense.

Social networks are sites filled with passive shoppers. Now we just need the products to tempt them. Music could be one of the best fits. For now Facebook Music doesn’t appear to be an immediate offering but by no means is the Facebook Music story over.

Throughout the day I’ve been pondering the state of Facebook and how it functions as an operating system. Last night’s design change made me realize that Facebook is indeed trying to become the web OS but there is one problem with their system right now: how can a website be an operating system? The reality is that browsers are the future operating systems in a digital world which lives in the cloud.

This is why Google released Chrome and has standalone windows that are dedicated specifically to web-based applications that you leave running, such as Gmail. Just as you can build applications for Firefox, you can also build applications for Chrome. Just as the first iteration of the Facebook platform had the “Facebook chrome” surrounding all applications, so too will the Google Chrome browser surround all applications.

I’m assuming that’s why they called it “Chrome” in the first place. If Facebook is serious about building the leading web-based social operating system, they need to launch a browser. Some have suggested that Facebook acquire Flock and call it the Facebook browser but there is no sign that this is happening anytime soon. One interesting thing that crosses my mind in all of this rambling is that there are two separate paths that conflict further down the road: the browser-based OS and the web-based OS.

Web Based Operating Systems

Facebook appears to be building what is essentially an operating system within a browser. Imagine if the status bar on Facebook showed up not only on the Facebook website but anywhere you travelled on the web. This means that the majority of your Facebook activities could be accessed no matter where you were on the web. There’s a number of ways this could work.

One method is for Facebook to become a browser add-on. That doesn’t generate much traffic for their site though and currently Facebook continues to generate revenue from visitors that come to their site. Another way is to have all of the activities of Facebook users happen within their site. Great idea for Facebook but it pretty much doesn’t work for users.

While it’s great to dream of the day where we open up our computer and know that it’s only a terminal to my remote computer, we are at least a couple years away from this happening. This is also why Facebook would be so focused on optimizing their new site design. Even they know that launching a truly virtual web-based operating system to the world takes many phases.

Browser Based Operating Systems

The other way of building a remote operating system is via the browser. Google Chrome is one of the early attempts at accomplishing this challenge and Firefox has come extremely close. The benefit of browser based operating systems is that developers can build applications which integrate directly into the browser or what otherwise would be considered a formal operating system.

The theory goes that in the future we will not install applications directly on our local hard drive. Instead we will install these applications on a remote machine which will recall our settings no matter what terminal we log into. This makes the hardware an independent device which no longer has the same requirement of modern day personal computers.

I won’t get into the logistics of how this can and cannot work but let’s just say there are a lot of hurdles before we get to this point. In the meantime there are a few options and one of those is browser based computing. Imagine if all of your actions were taken within the web browser. For the most part, many of your activities are already taking place within a web browser but there are still some activities which don’t take place in your browser.

What activities do you engage in outside your browser? Here are the items I can come up with:

• Development and general programming activities
• Video editing
• Design (web, print, etc)
• FTP
• Document management
• Music
• Contact and calendar management
• Accounting
• General operating system utilities
• Chat
• File sharing
• General file management

These are just a few of them but many of the ones I’ve listed are already possible within a browser-based environment. The same goes for web-based systems but the browser provides many features that make these applications easier to build. Thanks to AJAX and a more robust javascript user interface libraries we can now build applications that are extremely to their desktop counterparts.

The browser is simply one place where your personal computing control panel can reside.

Lots of Rambling, What Matters?

So I’ve rambled on about the differences between browser and web-based operating systems. Ultimately there are people that are much more qualified to discuss this topic than I am. The key takeaway is that we are a few phases away from a cloud-based environment and the battle will be the browser operating systems versus the web-based operating systems.

I’m not sure which will win but Facebook would be smart to diversify their investments and build a browser. This hedges their risk and provides them with a solid shot at becoming the web operating system of the future. Do you think this analysis makes sense or am I waxing poetic about absolutely nothing?

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