Facebook and The Future of (Performance) Marketing

Two advertisers seem to dominate airport advertising – BMW and Accenture. After a few visits to the airport, I feel I can tell you all about BMW’s cars and what it takes to "be a Tiger." Then again, I like cars and golf quite a bit so my comprehension of their ads most likely doesn’t represent the average traveler. Now, in case you are wondering, neither BMW nor Accenture has anything to do with Facebook or the future of marketing, but the latter’s ads do help provide an intro to our discussion on the topic. Accenture’s ads all feature Tiger Woods and some fortune cookie like diagrams explaining what it takes to "Be a Tiger." For example |–Plan–|—–Backup Plan——| indicating that success actually relies more on preparedness for the unexpected than the expected. They have similar drawings adorning a variety of Tiger Woods shots in which the words "Plan" and "Backup Plan" have other complimentary word phrases straight from some coach’s handbook but end up sounding somehow more profound when presented by Accenture and describing Tiger. One of those phrases probably reads "Thinking" and "Doing" or "Idea" and "Executing the Idea." For this last one, we should have a picture of Mark Zuckenburg, Founder and CEO of Facebook, and the new Facebook Ads social advertising system.

In a recent presentation to advertising and other executives, Zuckenberg said, "Nothing influences a person more than a recommendation from a trusted friend." These words mirror those of marketers and the actions of humans for as long as each has existed, but similar to the Accenture ads, that sentence somehow sounds more profound coming from him because he sits in a position to connect people, brands, and their friends in a scale not seen anywhere else. If MySpace connected people and their people to bands; Facebook looks to connect people and their people with brands. As a member but not stakeholder in Facebook, they could fail miserably, and I would not care. Someone, sometime will solve this problem. What excites me about the notion of social advertising comes from two things – a love of optimization and my disdain for the current state of MLM marketing.

With respect to optimization, you could refer to it as we did last week as the difference between Targeting 1.0 versus Targeting 2.0, i.e. how do you decide what ad to show in order to meet the goal of any ad company – the right ad to the right person at the right time. Targeting 1.0 uses your private habits to understand you better. It involves the places you visit, what you click, and other variables that you contribute to by your actions but ones that you can’t actively control. Someone else decides what about your habits they find valuable, and it can lead to poorly targeted contextual ads to assumptions about you that you feel have no merit. Targeting 2.0 uses your public information to match ads with you. Someone else still determines the relative weight of each variable, but in theory Targeting 2.0 suggests you have control to change that. Both Targeting 1.0 and 2.0 have their merits; without version one Google wouldn’t exist, nor might an entire generation of value adding web properties, and the two types combined will create a powerhouse.

Targeting 1.0 and 2.0 deal with only one piece of the power and potential of social advertising. The real paradigm shift comes from executing on the quote above, i.e. that no better endorsement or impetus to purchase exists than a friend telling another friend. It’s why I respect but loathe MLM as its practitioners employ it today. Two years ago we wrote an article on the subject comparing multi-level marketing to affiliate marketing. Multi-level marketing emphasizes the human aspect. It appeals to the emotion, to what the vast majority will say they want if an opportunity exists, i.e., more money, a better quality of life, and so on. Emotion is just the sales tool; the customers are your friends and acquaintances, the exact people you have listed on your Facebook profile. With MLM, you make money off your friends, off their purchases; but it has two major flaws in my opinion. You only make money by changing their purchasing habits. It’s affiliate marketing in that regard; you need to buy through their "links," but they offer you a limited choice of landing pages (to continue with the metaphor). The other major gripe comes from the fact that unlike true affiliate marketing, the referrer doesn’t get paid a fair percent. In MLM, most new users will spend at least $100 to get started. How much of that set up (materials, random fees) goes toward the referrer? Zero. It’s abusive to your relationships and unfair to you. For fans of the Mystery Method, it’s the difference between attraction and seduction. Facebook hasn’t solved this, and they don’t look to solve it just yet, but they have the potential to solve it.

With their social ads, Facebook does two things, one internally and one externally. Internally, they allow users to become fans of companies, no different than in MySpace where companies can create profile pages and have friends. The magic happens externally. As explained in the Facebook blog, "…not all the interesting actions your friends take happen on Facebook." "So we’ve worked with those companies and many others to help them get stories about what you do on their sites back into your Mini-Feed on Facebook and your friends’ News Feeds." Thus, the now common example of someone renting a movie at Blockbuster (or Netflix if they participate) and it showing up along with an ad for a free trial in the News Fees. Take this one step further, and it becomes the realization of a concept that internet entrepreneur and big thinker Seth Goldstein had on his mind for quite sometime – people getting rewarded for and controlling their data, which we extend to rewards for one’s influence over others’ purchases. As I wrote back in the affiliate marketing versus network marketing piece, if you could combine the two systems – marketing to friends and getting paid proportionate to your influence, you have the future of affiliate marketing. With the Microsoft owned Jellyfish CPA based comparison shopping platform, we might see a time where users can choose which companies to attach a monetization event or allow Facebook to do it for them. In any event, they receive credit for actions taken, with Facebook and the referrer splitting the CPA bounty. My one recommendation to Facebook; treat users publishers and each individual like an ad network where they can turn off certain sites. We won’t want to read certain product messages from those we don’t value, and everyone will make more money by having only quality ads show.