Facebook recently changed their design and how it handles updates about you and your friends. Many are grumbling about the changes. Robert Scoble says Facebook shouldn’t listen to users feedback. Although controversial, he is right…to a point. Facebook accomplished two things with these changes. First, they incorporated Twitter like status updates, and added FriendFeed like features. Facebook recently considered acquiring Twitter for a rumored $500M. What do you think Facebook would offer today?
Second, and more importantly, these changes position Facebook to be the Word Of Mouth advertising king of the Internet. Google targets ads based on words in the search query. Facebook will target ads based on your expressed interests and filtered by what you and your friends like. Facebook will essentially deliver Word Of Mouth ads for products and services based on recommendations from your friends. That will be truly effective advertising where everybody wins.
Facebook launched Beacon in November of 2007, but quickly killed it. Beacon went too far, too fast, and didn’t handle opt-in permissions well. But, they were on the right track. The idea was that Facebook would send you a “status” notification whenever one of your friends bought something at one of Facebook’s partner sites such as eBay, Blockbuster, Overstock, Travelocity, Zappos, etc. For example, if my friend Robert bought a Cannon SD600 camera at Overstock, I would get a status update on Facebook. That is a word of mouth endorsement from a friend for the CannonSD600 camera. You can see how advertisers might pay a lot of money for this.
The recent Facebook design changes are more subtle than the Beacon experiment. But, you can easily connect the dots and see where this might go. If they implement this carefully it could be the biggest innovation to web advertising in 10 years, or perhaps ever. Facebook also duplicated most of what Twitter does now, and they are in a much better position to monetize the service. Facebook has 180 million users while Twitter has less than 10 million.
What appears to be a subtle Facebook design change is really a brilliant strategic move that trumps competitors like Twitter, and sets the stage for an advertising machine that could be much larger than Google. Strategy is a chess game. There are still many more moves to be made. But, this opening gambit by Facebook could turn out to be brilliant.