This guest post is written by Dave McClure: startup advisor, angel investor, PayPal alumnus, and Master of 500 Hats. Dave is organizing next week’s Graphing Social Patterns conference on Facebook, covering many of the topics and companies mentioned below. He’s also a rookie instructor for a new Stanford class on Facebook apps, and an unapologetic Facebook Fanboy and social networking addict. Sections on virtual currency and ad networks contributed by Susan Wu, Charles River Ventures and Sundeep Ahuja, AppFuel.
For nostalgic hippies in the SF bay area, this was the 40th anniversary of 1967’s famous Summer of Love. But for every Silicon Valley developer, entrepreneur, and VC who has a pulse it’s been the Summer of Facebook.
While it’s easy to put aside geeky exuberance over the latest insanely great technology, it’s impossible to ignore the growing size and scope of Facebook, and the impact it’s having on internet startups and traditional businesses alike. Over half of Facebook’s 43 million users visit every day, spend an average of 20 minutes on the site, and view over 54 billion total page views per month.
In a few short months Facebook has quickly become one of the most impressive user acquisition channels on the web, rivaling SEO & SEM strategies for priority with new startups. Over 60 Facebook applications have more than 1 million total users, and over 40 have at least 100,000 daily users.
With the groundbreaking launch of the Facebook Platform this past spring, and the subsequent runaway growth of Facebook Apps adopted by millions of users this summer, the question on everyone’s lips (including Google and Microsoft) has been: “So what’s your Facebook strategy?”. If you’re still scrambling to figure out yours, read on.
Seven Steps to Graphing Social Patterns on Facebook
Personally I’ve become addicted to Facebook, and in particular with the Facebook Platform and the News Feed. I’ve spent hours upon hours experimenting with new ways it provides to connect and communicate, and recently began teaching a class at Stanford with Professor BJ Fogg on how to build Facebook apps. In this article i’ll explain how to use Facebook to make a big impact on your business, and why it’s substantially different than any other social network that’s come before.
Here are seven major aspects of Facebook you can use to increase the visibility of your startup, business, product or service:
1. Set Up Your Graph: Profiles & Privacy
2. Make Connections: Networks, Groups & Events
3. The Need for Feed: Your [Shared] Social Activity Stream
4. Share Your Content: Share & People-Tag Your Stories & Media
5. App to the Future: The Facebook Platform, APIs, & Applications
6. Pay to Play: Ad Networks, Sponsored Stories, & Paid Distribution
7. Show Me The Bunny: Gifts, Points, & Virtual Currency
I’ll explore each of these items in more detail after the jump. For developers and marketers interested in learning more, we’ll be covering these topics in depth next week in San Jose at Graphing Social Patterns, a conference on the business and technology of Facebook and social networking.
I. Set Up Your Graph: Profiles & Privacy
It all begins with your Facebook profile, your privacy settings, and a few friends. Your profile is the virtual depiction of YOU on Facebook — depending on how you customize your Facebook privacy settings, you can display as much or as little of yourself as you care to the entire world, just to your friends, or to no one at all. This includes your notes, photos, videos, your one-liner profile status, your relationship status, your location & contact information, the messages left on your wall, etc. See an example below — currently I expose most info to everyone in my network, however I only share my phone and IM info with my friends:
II. Make Connections: Networks, Groups & Events
In addition to your personally-defined set of social graph connections, you also have a set of connections defined by your participation in Networks, Groups, and Events. A Network is a group of people that are part of a common workplace, geographical location, or a school. This is a formal affiliation as defined or approved by Facebook, and typically you need to have an email address to participate (except for geographical groups). A Group is a collection of people similar to a Network, except it’s user-defined and members can be selected, invited, or simply join to participate. An Event is a time- and or location-specific occurance, that also may have a collection of associated individuals who have RSVP’d to attend (or not). [note: there may also be a new 'Friend Groups' container coming soon from Facebook... watch this space].
III. The Need for Feed: Your [Shared] Social Activity Stream
Of all the feature innovations Facebook has introduced, News Feed (& Mini-Feed) is for me perhaps the most impressive — because it’s a very simple yet elegant way to share information. A year ago when these features were first introduced, most of the noise that ensued was due to the initial user revolt that occurred with the display of what users presumed was (previously) private information. However, after the storm subsided and people began to learn to control their privacy settings, they’ve discovered News Feed is a pretty cool way to stay updated on what your friends are doing. It contains information on new photos, new videos, wall comments, events people are attending, links they’ve posted, gifts they’ve given… in short, it’s a personal newspaper on all the social activities you and your friends are part of. Simply put: it’s the collective stream of our shared social activity.
IV. Share Your Content: Share & People-Tag Your Stories & Media
Once the News Feed construct is established, it’s interesting to consider how you can use it to distribute stories and content and media. By using the Post a Link or Share button (either inside Facebook, or on the Facebook toolbar for Firefox, or from the Share button for Internet Explorer), it’s easy to post something either as a message to specific users, or to no one in particular via the Feed. Facebook then uses a proprietary News Feed Optimization (NFO) algorithm to determine when and to whom those news items are shown, similar in concept to how Google interprets and prioritizes Search Engine Optimization (SEO) for search content and links.One way in particular to make sure content is made visible to others is to ‘people-tag’ various types of content, by referencing individuals within your social network in notes, photos, and videos. This likely increases the prioritization of feed content for the individuals tagged, and also initiates a message to them that they’ve been tagged. Although these actions can certainly be abused in a spam-like way, it can also be a fun and interesting way to get people’s attention.
V. App to the Future: The Facebook Platform, APIs, & Applications
Certainly no Facebook conversation would be complete without a discussion of the Facebook Platform and the APIs & apps that bring them together. With the launch of Platform in May, Facebook has arguably delivered the most exciting and innovative application development environment on the web today. As mentioned above, there are already hundreds of startups building Facebook apps, and a few larger brand name companies as well, with thousands of apps shipped live in just a few short months. While not every app has been a home run, there are certainly several examples of early success from companies such as Slide.com, RockYou, SocialMedia, iLike, Flixster, HotOrNot, Renkoo, and others. These companies acquired millions of users by creating and marketing Facebook apps that spread virally through the Facebook user community via invites, notifications, the profile & the feed. And while some of these success stories took advantage of lenient initial standards for app invites and install requests, even after Facebook stiffened the rules new apps have continued to launch that demonstrate explosive growth and large user adoption.
Still most app developers seem to believe the opportunities outweigh the risks, and while it appears new social platforms and social APIs are coming soon from Google, LinkedIn, MySpace, & others, Facebook continues to dominate the focus and conversation of most developers and their efforts. At the moment it is Facebook’s game to lose. This is quite an astonishing accomplishment given the relative newcomer status of Facebook compared to other internet titans Google, Microsoft, and Yahoo, all of whom have large developer followings and platform offerings. At the moment, none except Facebook have captured lightning in a bottle by combining a rich web development environment with a social networking platform to produce socially-aware apps and objects. But you can bet the entire IntraWeb now recognizes the potential of social applications and the social graph, and they are all gunning for Facebook with competitive platforms and APIs as fast as they can.
VI. Pay to Play: Ad Networks, Sponsored Stories, & Paid Distribution
(this section contributed by Sundeep Ahuja, AppFuel)
As developers compete to access the social graph via apps, advertising networks compete to access the pocketbooks of those same developers. At the moment most of these ad networks’ initial adoption appears to be coming primarily from new apps who want distribution and are willing to pay for it, rather than traditional ‘off-Facebook’ brand businesses. That said, the promise of larger advertising dollars on Facebook remains a huge brass ring for both emerging ad networks on Facebook as well as Facebook itself.
There are three main categories of ad networks operating on Facebook:
* app factories that cross-promote applications
* cross-promotion networks allowing publishers to pay to promote apps (or get paid to promote other apps)
* companies enabling off-Facebook advertisers to reach Facebook users
The first category of networks are the application factories that cross-promote their own apps, with RockYou, Slide, and Social Media being the biggest. The second category are cross-promotion networks giving publishers a way to promote their applications while getting paid to promote other applications; these include Cubics, fbExchange, and (again) Social Media. Yet a third category of networks is offering an alternative to off-Facebook advertisers that want access to Facebook users, but don’t want to use Facebook’s own advertising solutions. A few of the cross-promotion networks do this, as do Lookery and VideoEgg (primarily a video network).
In bringing off-Facebook dollars to the platform these networks are up against a rather formidable competitor: Facebook itself. It’s no secret that Facebook intends to iterate its advertising offering in a big way, and MySpace recently made headlines for doing the same. It’s anyone’s guess how Facebook will choose to deal with third-party ad networks, though most of them say they’re willing to risk the competition due to the size of the opportunity in front of them.
As a second approach to Facebook, some notable brands are building their own apps hoping to use the platform for engagement rather than impressions. Though success to date has been varied, the premise is powerful; just as big brands have spent the last decade catching up with startups by building their own websites and e-commerce services, and more recently working on SEM & SEO techniques, they are now investigating how to develop Facebook applications to reach their target customers. It’s still early, but by combining rich user profiles and a social application platform, Facebook is setting up an incredible advertising opportunity.
VII. Show Me The Bunny: Gifts, Points, & Virtual Currency
(this section contributed by Susan Wu, Charles River Ventures)
Not too long ago, I wrote a TechCrunch article on virtual goods and their potential to become the next big business model. Since then, there have been innumerable experiments with virtual currency apps on Facebook, but most of them are still missing the big picture: used effectively, virtual currency can greatly enhance user engagement.
A robust virtual economy is a good sign that you have a highly engaged user base. Virtual goods are pretty much meaningless without context; there is direct correlation between the engagement level a user feels with your product and their willingness to purchase virtual goods. Thus, if you help your users feel more like citizens rather than just bystanders, they are much more likely to participate in your virtual economy.
Yet the converse is also true: a well implemented virtual currency system can greatly increase user engagement and foster valuable types of social interaction. By “valuable” I mean social interaction that catalyzes network effects and results in residual value from your user base. Virtual currency isn’t just a zero-marginal-cost way of extracting more money from your users — it’s also a primary means of exposing your community’s core values and encouraging behavioral patterns that increase the value of your app. Much the same way that a leaderboard has a way of focusing users attention towards certain metrics (ex: Digg below left is essentially a community driven by leaderboards), virtual currency can be used as an efficient way of signaling a community’s implicit and explicit shared values. Then you, as the community traffic cop, can put down the right Yield, One Way, and Exit signs in the right places to generate the most optimal community traffic flow.
Two of the top 10 Facebook apps, X Me and SuperPoke!, are essentially just interaction tools. In the X Me screenshot above right, each of the icons – whether it be Love, Punch, or Kiss – is an encapsulation of a specific social interaction. Though it may not be purposeful, these types of casual apps are training users to understand how to interact with virtual goods. I can easily see how these apps become platforms that launch broader virtual currency systems. For example, expanding this app to allow users to attach custom graphics to their custom actions would create a new, rare class of virtual objects.
TechCrunch readers interested in learning more about Facebook should check out Dave’s upcoming Graphing Social Patterns conference. If you’ve read this far, you deserve a treat — TechCrunch readers can receive a 25% discount by registering by midnight Wednesday Oct. 3 using this link: http://graphingsocial.eventbrite.com/?discount=crunch
@joe: i think all 3 will be worth taking a look at, and in the long-run i’m pretty sure Google will have an interesting opportunity there, if only because they’re sharp & will keep trying.
re: LinkedIn, it might be a smaller base, but i bet the per-user value is substantially higher than anything out there. the engagement issue is the bigger question, as i would guess perhaps only 20% of LinkedIn’s 14M+ users are regulars. but still, very valuable audience if they really build a platform that’s usable.
re: MySpace, i’m skeptical… they have a very large audience, but the monetization is likely even tougher than Facebook. and right now, i don’t see MySpace with any Feed-like behavior happening, but maybe that’s because i’m not a regular user.
another interesting option would be whether Google ever tried to apply their platform to other partner data from MySpace or AOL. altho the immediate opportunity for Google is more likely iGoogle, Gmail, & YouTube.
in summary: Facebook’s game to lose, but they still have to prove they can monetize. LinkedIn looks valuable, but on a smaller base. Google has the chops to win over the long-run, but lots of work to build out a social platform. MySpace has volume, but no Feed metaphor and they don’t appear to be technology leaders.
Dave, your post could have been a useful article… on the Facebook Getting Started section, not on Techcrunch. Or it could have been just a link..:
http://www.face...etour/index.php
I read Techcrunch everyday, did I miss that Facebook acquired Techcrunch or something? Is this a new feed section for FB?
Facebook is a huge success, congrats to Mark Z and his team, but there are tons of new start ups out there, Techcrunch you should talk about them. That’s what made Techcrunch different in the beginning, refocus on that. If I want some info on FB on a every day basis, I’ll read their blog.
Hm, Facebook is really get attensions from many peoples. For example, after I add MyGrowUp.com as its application, MyGrowUp.com get a lot of registers from Facebook users.
what is this? a facebook tutorial? there’s no strategy, it’s for the folks who dont know how to use a computer. a waste of time
Dave, just out of curiousity, what is the value proposition for developers to create new FB apps if FB simply re-creates them(ie, the most popular ones) in-house?
It seemed like a great idea at first to open the FB platform, but all i hear about are the great apps created on a shoe string being ‘appropriated’ by the in-house FB team.
Dave,
Great article and insights. I really hope that people read all the details that you have outlined.
I am looking forward to the graphing social event.
Your Fellow Facebook Fanboy!
Rodney Rumford
Dave – Great strategic overview of FB. I always have the time to read a well-though out examination of the FB platform. I am, like most readers here, pressed for time and I’d never be able to spend the time condensing all of this knowledge into a relatively quick read (given the amount of background material that went into it).
For those n00bs that bypass and ignore FB and the evolution it has brought to the Internet, all I can say is… I bet you’re too busy playing Halo 3 to recognize groundbreaking material when you see it.
Last step:
Buy 10% of company and make sure they are never serious competitors!
Sounds like a fantastic conference.
http://answers.nobosh.com
why did this ’securing your facebook strategy’ post read like Facebook for Dummies? i hope techcrunch’s editorial quality average can recover.
Facebook will crush all of these BS apps, and show that they are not monetizable. Stanford class on Facebook apps, Oy….
Barefootmeg, you rock. I got a star for… no reason, but it cost a friend $1.
Kinda funny, but a few years ago it was all friendster, then it was all myspace, now facebook is ‘hot’. I liked the Ballmer story, and he’s totally correct.
I think facebook will have better legs due to the apps allowing vampires to bite us all, but it’ll get old.
Here’s to the next hot social network that causes me to close all my other accounts, migrate my pics, reconnect with a bunch of friends, convince others to join me, join another group with 1000 people in the US with the same name as me, and then repeat with the next hot company
Dave –
Have you personally built an app that has leveraged your 7 principles and made it successful. Hindsight is always 20/20.
Given these 7 principles, I challenge you to come up with an app that’s a success – over 5 million users and lets say, 30% engagement.
Nalanga
I second #63’s comment. Dave, show us your badge.
A couple of successful facebook developers I know never had a 7 point strategy. They just build what they thought was fun or useful. Did you think Mark Z had a strategy sitting in his dorm writing PHP in his underwear?
If you are over the age of 21 and you’re still using facebook on a daily basis, please move on with your life. Take part in more community service projects, attend a baseball game with your kid, read a book, visit an old friend…it’s embarrassing, if not creepy seeing 30, 40 year old men on facebook.
I don’t get the hype. I’ve been in the Internet space for more than 10 years and admit to not understanding the enthusiasm over Facebook. It’s a community site. It’s overhyped and somewhat weird to see all the praise. Am I wrong?
Here’s more info on what a graph is: http://fishtrai...a-social-graph/
That extra je ne sais quoi – FB does have it.
Stone, you should try it. And Chris, I am not partial to being turned into a zombie myself.
Dave is spot on. There is not much in the way of innovation on Myspace. As a formerly regular Mysp user, I can say that I prefer the various avenues of engaging other FB users to Mysp’s sweet visual graphics options [typically a biggie for me].
From my month-long stint on FB, I can see how the site can be a powerful platform for networking when utilized with smarts. I initially hated the forum, considering apps with teddy-in-leather and vampires to be slightly on the juvenile side. but you know, you needn’t add them…
Hey Jimbo, how old are you? I’m 32 … a not-so technically inclined writer who futzes around with Facebook for the same reason I, say, learned InDesign after mastering Quark. Because I HAVE to. It’s a communication tool, pure and simple. Don’t regard the tool as a secret clubhouse where the old grandmas can’t come to play. That’s infantile.
I still don’t know what to make of Facebook.
@48 John C. McClore
“I’ve often wondered how much further along human civilization would be if television would never have been invented.
Likewise, I wonder how many collective hours are wasted everyday on Facebook.
Facebook is useful in that it allows me to stay in touch with friends, view their pictures, and invite them to events. Beyond this it’s just fluff used to waste time by undriven people who have too much time on their hands.
I wonder how many hours a day successful people like Steve Jobs, Warren Buffet, Tom Brady, Mark Cuban, Bill Gates, Michael Jordan, Justin Timberlake, various business-persons, physicians, etc. are on Facebook?”
dude you’re a retard, life’s just not about working long-ass hours and making money, life’s primarily about enjoyment once you’ve settled the basic needs for survival
if you call that a waste of time, why not you just work, eat and sleep for the rest of your life without any leisure nor entertainment, that’s what i would call a pointless waste of time on earth
by the way the people you mentioned like michael jordan and justin timberlake, they succeed primarily because of the people who find it enjoying to watch them perform, without such desire to entertain themselves, this world would be utterly boring and the people you mentioned won’t be successful at all
jeez, there’s a class at Stanford on how to build Facebook apps? Really? I’m definitely not paying the coin it requires to send my kid to Stanford only to have him sit through weekly nonsense like this taught by Dirty Sanchez McClure.
I have never seen so many gratuitous, puerile, insults devoid of substance, hurled at what is an undeniably lengthy but otherwise informative and useful blog post.
Where do these people come from? Must be an infestation of hormone-intoxicated middle-schoolers from MySpace.
C’mon people, let me give you some tips on civilized behavior. Listen up, maggots, before your Mommy calls you to dinner from your dank and dark basements:
1. Read the blog post before hurling invectives.
2. For maximum effectiveness, the insult must have something to do with what the person actually wrote.
3. Comments on the author’s appearnce in his photo don’t count, because this just shows the world you were too lazy or stupid to read before commenting.
4. Use vocabulary that is beyond a fourth grade level. Yes, I know you are only in sixth grade, but surely something must have sunk in during the past two years, in between rolling up spitballs to throw at your basement buddies.
5. Don’t try to turn up the volume on your speakers. There is no soundtrack on this page. That stuff is over here –> http://www.myspace.com
PS: In case anyone comments that I am in a glass house throwing stones by throwing around words like “maggot”, I can assure you that my insults are not gratuitous. Instead they are very carefully considered, and are directly related to the content I am responding to.
Icq was enough.
it is networking sites such as Facebook that make people indolent and unproductive; rather move your ass and be an asset to this world…
Wow!
Ignorance, fear, arrogance and ADHD have all come to call.
Have faith, there are lots of people, especially over the age of 35, who could use a primer on Facebook and online social networking in general.
The networking benefit alone is worth the brainpower required to jump in and be counted.
Don
phild, I disagree. We should all go back to IRC
When I saw the headline, I was hoping more for a discussion targeting app developers on strategies for leveraging the fb platform, not a tutorial on how to use the app. I know how fb works; what I don’t know and what I’d like to know is;
a) will fb ever make the leap from social platform to commerce platform
b) which fb apps are most and least successful to date, why, and how will this change
c) what is Google planning to launch in the first week of November and how will this change the game
d) what demographic/psychographic information is available on the 40plus million fb users, and how is that changing/growing
Now THAT would be a great post.
Aaron:
What do you mean “go back to”? A very large amount of people never left.
As for the rest of it, I read the first few sections of the article but stopped after I got uninterested. It was much too much to read about a site that I don’t use and never will use.
And for the record, no I am not some MySpace fan boy, I don’t use that site either (Though I think I might have an account on it that I logged into maybe twice, a few years ago… nobody’s perfect.)
I liked it. Thanks for the hints.
barefootmeg: “Isn’t Facebook a Social site? Why is that the component that no one seems to care about?”
I’ve used Facebook to 1) get a subleaser, 2) form real-world political organizations, 3) find lodging while traveling, 4) get a job, 5) organize parties, 6) organize fundraisers, 7) win contests,
send birthday wishes, 9) find long-lost friends, 10) keep in touch with people around the world, met in real life or just on Facebook.
What this DOES, if it does anything at all, is flatten the world, so that I can see my personal network spread across it. If I want to go somewhere, I just see who I know in that network, write on their wall, and reserve myself a spot on their couch.
And in a way, it’s sort of flatted time, also, because nobody has to be left behind anymore, and nobody ever goes away. A friend of mine who died a year ago still has a profile up.
You are all missing the most important benefit of Facebook: It gets you laid.
This was the program’s original mission, and I can testify that it works wonderfully, and keeps on working, over the past 18 months.
It might even work for some of the rude juveniles who have commented in this thread. Because no matter how much of an a*****e you are, somewhere in the world there is a member of the opposite sex that is equally an a*****e. And I sincerely hope the brain-dead rude boys in this thread find their mate and leave the rest of us alone.
Facebook aims to do what the ENTIRE Internet already does, under one .COM roof..
this is fine, as long as you can keep everyone coming back.
Google, on the other hand, penetrates the ENTIRE Internet .. They get themselves invited, vampirically, into the lives under many-a-roof
One is omni-present, the other monolithic.. Both are fascinating
There shouldn’t be a Facebook “strategy.” It’s a social site. Talk to people. It’s not rocket science.
While this post itself is disgrace to TechCrunch, the comments by readers bring the sanity back to life ..phew
85 comments, somebody hit a nerve. Nice work Dave.
I’m with Agnes in comment #68 and mark in #83
There is something truly fascinating about Facebook and the FB phenomenon. Even its shortcomings are telling when you think in terms of what human beings crave in online social interaction, what kinds of social lubrication make it easier for people to make or stay in contact with one another.
I have no idea if it can really be turned into a tool for commerce, but one thing’s clear: Facebook is evolving rapidly, and has already extended far beyond the initial high school application.
And I can’t think of a bigger waste of time than posting comments that say, “just looking at this article made me vomit in my mouth a little bit,” or “Sink your teeth into my juicy turd.” Your time would definitely be better spent if you were wasting it on Facebook, practicing your social skills perhaps.
For the record, I include Dave McClure in my slide bibliography cuz his ideas are cash money
http://www.duck9.com/iMedia
learn to steal material and get mentored by kissing butt http://foundrea...to-get-mentored
The next step will be using the Facebook platform in real world (non-internet) applications, which our startup is working to create. You will be surprised to see how it works.
@ Hugh: *golf clap* Beautifully articulated. And so true.
@ LilaTov and Bill: I don’t think any amount of Facebooking would get those boys laid.
I found this article to be a good introduction for businesses who are running late for the Facebook boat and still think it’s ‘just a social thing’, so thanks
PS While I’m no fan of facial hair for practical reasons (faceburn!) I think the stubble looks good on you, Dave. They’re just jealous cos they can’t grow any yet.
i agree with #78. Let’s face it, anything “social” will end up being invaded by “commercial” interests. That’s the way the world has worked since we quit just hunting & gathering. I just want to know the best way to use fb to help people find my business.
interesting article!
Carmelo Lisciotto
How can a professor promote / teach on line using facebook? He can? it’s an impossible task? i think he Can! but how? generating quality content. Is ther another way?
Hey Dave just come across this post two years after you originally wrote it;-)) What a lot of comment you seem to have incited at the time!!!! As for me (and my business colleagues in the UK) facebook is a serious business. Not because it necessarily brings in paying customers, but because it helps us to strengthen the relationships we have with our peers on the face to face networking circuit – which is pretty much what most social networks do (on or offline). Thanks for this rather long post – it was just what I was looking for and personally, I don’t have a problem with the length if the information helps. LPH