Blowing bubbles

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Microsoft’s overvalued purchase of a small stake in Facebook was more about shoring up its long-term market position than it was commerce.

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Facebook is currently teetering on the right side of this fine line. It was evidently a good idea to begin with and by opening its application development to the public it can offer captivating new services to its users.

It is now vital for Facebook to hold onto its subscriber base until it finds a more lucrative way to monetise the massive number of page impressions it generates.

Online network service providers that guarantee targeted advertising benefits are reaping the greatest benefits from the web 2.0 phenomenon. Asmallworld.net selects its members by profession, status and income.

It offers exclusive networking opportunities for the rich and famous and a top-tier target for advertisers who are rumoured to outlay up to $10,000 for a banner ad on the site.

The site's operators claim they offer a far more creative, flexible and interactive advertising opportunity far beyond what can be achieved through a traditional TV spot or a print advert.

And this perhaps reflects the key commercial issue facing Facebook, MySpace, YouTube: the scope of their respective audience is too great.

Facebook previously attempted to address this situation by filtering user preferences and habits with its Beacon programme. It was an unmitigated disaster.

Facebook member's web-use patterns on third-party sites that subscribed to the Beacon programme were distributed to advertisers, even if users had logged off from the social network.

After major privacy concerns were raised the service was switched to "opt-in" rather than "opt-out", which effectively killed it. Facebook CEO Mark Zuckerberg later apologised to users and described Beacon as a "big mistake".

Many brands have joined several social networking sites and invite potential customers to become ‘friends' with them. Recent findings from Jupiter Research have shown that in Europe half of these advertiser pages have fewer than 1000 friends with the average figure a lowly 6,494.

The research also demonstrated that pages with the focus aimed squarely at branded media content, rather than actual products, were twice as likely to attract views.

The opportunities for the owners and creators of such content are pronounced and as marketers look to incorporate this into their campaigns, the effectiveness of these campaigns will improve and the associated revenue streams should offer new opportunities for both those running the sites and those offering the content.

Lead author of the Jupiter report, Nate Elliott, summarises the current problem which should also be read as a warning to a number of emerging Arabic-language portals.

"Too many marketers create dull, non-interactive pages inside social networks and wait for a viral marketing effect to bring users to their door," he says.

"But our research clearly shows that ongoing promotion and advertising, as well as the use of even relatively simple forms of engagement, are vital to the success of branded social networking pages. Most advertisers simply don't know how to market properly within social networks."

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