A closer look at the Facebook/FriendFeed deal

Facebook announced today that it acquired FriendFeed for about $47.5 million ($15 million cash / $32.5 million stock) in a deal that values Facebook at $6.5 billion.  While this is down from the $10 billion or $15 billion valuations that have been talked about in recent months, it still represents a rough valuation of 13x revenue, which the company expects will be around $500 million for 2009.  FriendFeed had no revenue, but it had lots of good ideas:  Facebook has been implementing several FriendFeed innovations  on its own site this year, and the founders of FriendFeed were the guys responsible for G-mail and Google Maps.

This was a preventative acquisition.  Facebook perceived a hole in its offering and moved to patch it up before someone else exploited the problem.  FriendFeed has no real revenue, but it offered something that Facebook didn’t, and Facebook didn’t want anyone else to buy it first.  The FriendFeed team didn’t waste any time transitioning, because apparently they had vacated their old office and were set up in Facebook’s space before the end of the day.  If the technology is good, and you don’t have it, you better get it quickly.

Deals like this are going to happen more and more frequently over the next 24-36 months in the social media space.  There is a land grab opportunity, plain and simple.  He who gets there first and establishes a position early on tends to have an excellent chance of being snapped up by a bigger player in a neighboring area.  Eventually the universe is fully populated and developed further, but the rewards typically go to those who had a clear vision of where technology was going very early on, and were able to move quickly to establish a position with a viable offering that people need.  Facebook is a mighty powerful force right now, but it certainly hasn’t cornered the market on good ideas, and buying the good ideas is a lot easier than trying to create them.

So how can we predict these deals over the next 2-3 years?  Start with where the people are now and where they will likely be in the not so distant future.  Then look at all the cool things that niche players are doing that aren’t happening yet at the bigger sites.  The only way to remain relevant is to keep improving content, improving user interaction, and improving stickiness.  The companies that provide these things are buyout candidates.

Next, look at big businesses, which have largely remained on the sidelines as they grapple with understanding how fully they will have to retool their marketing efforts.  Their early efforts in the space have largely been weak and ineffective, but they know where they have to go to meet the consumers on the new turf.  Companies that are able to bridge the gap between big brands and social media are also excellent targets.  These are the players who are going to put big businesses on Facebook, MySpace, and 20 other social networks.  They will develop apps to engage the consumers and have them interact with the brands. And the deals that happen will be a lot bigger than $47.5 million.

Should be interesting!  There will be plenty more deals like this before the end of 2009.

OMMA Global in NYC

Social networks, social media applications, microblogging services and other communications platforms become our central means of engaging online. Of course, anyone wanting access to this world of private and proprietary information needs to be invited, presenting a massive conundrum for marketers, who desperately want to reach the hundreds of millions of users who volunteer personal information on sites like Facebook, MySpace and Twitter every day.

Nevertheless, many industry watchers believe the answer to online advertising’s oldest problem lies inside social media’s walled gardens: that is, how to bring the estimated $500 billion spent annually on offline brand advertising to the Web. Others would argue that an even larger question looms: in ceding the means of content production to the masses, have social media services created marketing’s greatest opportunity, or do they represent the final nail in the coffin of big media as we know it?

Join us in NYC September 21-22 as we discuss these topics and more.

Join Us at Social Fresh in Charlotte, NC

Social Fresh is kicking things off with a Social Media Marketing conference in Charlotte, August 2009.  The mission is to provide great social media content for brands and companies looking to advance their marketing efforts.

MegaPlayer will be there as a Silver Sponsor so be sure to stop by and say hello.

1-800-FLOWERS.COM(R) Debuts Online Store on Its Facebook Page; Leading Floral Retailer to Host First Store within a Facebook Page

This article in USA Today caught my eye as it really shows how brands are looking for ways to convert sales where their consumers are online vs. simply driving them back to their branded website. Facebook may just be on the verge of becoming a portal with one stop shopping!

Would you want to be friends with your brand?

Is your brand engaging in interesting conversations? A good listener? An active participant in dialogues, not monologues? Is your brand trustworthy and act in a manner that not only motivates consumers to associate with it, but inspires them to truly want to become influential advocates and contribute to its success?

If not, it’s time to teach your brand some social skills.

Prepare your brand for the social marketing circuit. Be sure it personable, credible, authentic, transparent and a pleasure to be around, to talk with, and to talk about.  Then, let your brand speak for itself, make friends, and interact with consumers in everyday conversations.

Utilize the power of conversation and engagement that social media offers. Create unique and valuable reasons for consumers to build a special connection with your brand and reap the emotional and tangible benefits that inherently come with being in an “equal relationship”:  trust, loyalty, valuable input, a genuine listener, shared fun in the form of conversations, games, interactive activities, and the list goes on and on.

By displaying a friendly approach, a helpful attitude, unquestionable integrity, and a sincere desire to interact and share with others, your brand can play a key role in enabling, inspiring and influencing meaningful interactions – whether its communication between consumers and brands, brand facilitated consumer to consumer conversations, or organic dialogue among consumers.

In return, your brand will enjoy enhanced relevance and value in the eyes of the consumer, resulting in deeper consumer loyalty and advocacy.

Social media marketing provides an exciting new opportunity and relevant touchpoint for brands to show off who they really are. Be friendly, be helpful, be giving, be informative. Don’t be loud and obnoxious. Don’t force yourself on others. Be sure your brand has good manners and is enjoyable to be around.

Do that, and you’ll be sure to be invited back over and over!

The Future of Social Games: How Facebook is Connecting Players, Developers, & Dollars

This article is written from the game developer point of view but marketers should take notice.  Now, there is a platform for distribution that makes the development of branded games an option.  Brand managers are no longer relegated to advertising space near a game — there is a cost effective way to drive engagement through a game.

What Big Brands Should Learn From the Little Guy

Small Business owners don’t have the marketing budgets, the world class ad agencies, or the ubiquitous brands that their larger competitors possess.  But they do have several traits that should be envied, and ultimately replicated, by the bigger consumer brands.

The small business owner tends to be networked in his community, on a personal level as well as a business level.  He (or she) is a little league coach, a singer in the church choir, a poker buddy, or a next door neighbor – as well as the heart and soul of his business. He is the living, breathing, walking-around representation of his business and its brand.  In short, he is connected with his community, and he tends to be plugged in very well to what is going on around him.  He is not always in sell mode, because he realizes that taking a genuine interest in others is far better than broadcasting his message 100% of the time.  He is likeable and is the kind of fellow with whom you would like to do business.

Big brands with big marketing dollars can learn a great deal from the small business guy.  After all, for many businesses it has been cost-prohibitive to connect with consumers personally – some even measure “cost per contact” as if talking to their customers was a cost center to be carefully managed.  But technology is now allowing big brands to capture and leverage some of the best traits of the small business owner. By using social tools to start a real dialogue with loyal customers, big brands can now encourage communication and customers can actually provide feedback that can increase the value of the overall organization.

It takes a real effort to effectively engage with consumers, though.  Too often brands will pay lip service to listening to what their consumers have to say.  Social marketing involves a commitment to the relationship over time.  It’s not a campaign.  It doesn’t end when the intern goes back to college after summer break.  It requires a concerted, sustained effort to engage consumers, just like the local business guy.

Is social media part of your holistic marketing strategy?

Ten years ago I headed up strategy and client services for a full service boutique ad agency where we were given the unique opportunity to respond to an interactive agency RFP (request for proposal) for a collection of brands at a leading CPG (consumer packaged goods) company,

We were David. The other contenders were Goliath. They were full-on “dot com” agencies, before the bubble burst (the first time!). We were a small team, with lots of creative and strategic smarts and a secret weapon: one of us came from a brand management background. We not only understood brand marketing and advertising, but had lived it day in and day out.

We won the business. Why? Not because we recommended solutions centered on massive online ad buys and the creation of beautiful colossal websites conceived in a vacuum and intended to be standalone works of beauty. We left that to the other folks.

Instead, we knew the client’s business. And, we understood what the role of the internet was at that time. It wasn’t the end all, be all. It wasn’t going to replace all other means of advertising. It was a touchpoint. One more place where consumers could interact with brands and an exciting new way for brands to build one-to-one, engaging relationships with their target audience.

We proposed integrated solutions where internet activity was one component of the holistic marketing plan. The perfect complement to all other efforts: run a commercial or FSI (newspaper insert) and drive consumers to the website. Give consumers an incentive such as loyalty or trial building coupons, relevant content, or a sweepstakes to provide information about themselves and CRM (consumer relationship marketing) efforts could begin. Then, complete the circle by putting learnings about the consumer back into ongoing holistic marketing and advertising plans..

Fast forward ten years. As an industry, we at the same place with Social Marketing: social media is an exciting new and relevant touchpoint that must not be regarded as a standalone entity. Instead, it provides a valuable way to engage consumers and build conversations around your brand. As such, it plays a special role as an extension of all other branded efforts and fits right into your holistic marketing plan.

Don’t be anti-social and don’t create your social media plan in a vacuum.

MySpace Moves Into Social Gaming

MySpace recently announced that it would begin to use online gaming as a way to grow the social network.  Since being passed in overall users last year by Facebook, the company has looked for ways to re-invigorate its brand.  Let’s think about its strategy in some depth.

MySpace had a head start on Facebook, having launched a year earlier, and immediately seized upon music and video sharing as its core content following the demise of Napster.  The demographic of MySpace users has always been young, and probably skewed even younger when Facebook began gathering momentum.  MySpace allows far more customization of its user pages, which may have backfired somewhat, because many user pages are crowded, with many clashing colors and hard-to-read text.  Not to mention that it can take about 45 seconds to find the bottom of some MySpace pages.

The bigger problem is that there isn’t nearly as much to do on MySpace.  Facebook decided early on that outside applications should become the centerpiece of its site, and allowed its users to do the heavy lifting by creating applications such as games, polls, quizzes, even virtual worlds.  This strategy has been highly successful, as there are some individual apps that have 250,000 concurrent users during peak traffic hours.  All of these applications show where one user stands in relation to his friends (leader boards, quiz results, money accumulated) and all allow comments, which further encourages usage.

It is not too late for MySpace to jump into social gaming.  For starters, most of the applications on Facebook can be syndicated over to MySpace fairly easily.  Also, MySpace users tend to be younger, and therefore more likely to occupy their time playing games and taking quizzes.   There is a huge built-in audience that is currently untapped, and introducing this new content could easily spur rapid new growth.  Of course, the youth factor could be a small negative in social gaming, as 14 year olds are less likely to create interactive games than adults, but unlikely to derail the train.  Most importantly, Facebook has so far failed to monetize its advantage in user eyeballs.  Facebook is still 100% supported by advertising, and there are more opportunities for “Facebook support” companies like Zynga to make money than for Facebook itself.  If MySpace can figure out a way to generate a significant percentage of its revenue from social gaming, it could propel the site back into the lead.

MySpace is likely to succeed with its social gaming strategy regardless of the exact direction it goes.  The audience is too big and they are hungry for more to do when they are on the site.  The eyeballs are there and will grow in number; the real trick will be to structure deals designed to bring in maximum revenue.

I’m a fan…I think…

Recently I went to Facebook to research one of my favorite restaurant chains. My first task – become a fan. I was surprised when I looked them up to find I was already a fan.  Currently I’m a fan of five brands, but could only remember two without looking. (I also suffer a recall deficit when it comes to the many groups I’ve joined.)

As a user experience consultant who works with marketers, I often find myself defending consumers’ desires to avoid the barrage of unwanted messages and self-serving interactions that marketers dream up in an attempt to gain exposure. So, I’m perplexed that marketers are not doing more with consumers who have given their brand “permission” on Facebook to engage in a conversation. I admit that I’m too overwhelmed by the sheer volume of messages to always notice when my selected brands are on my feed. However, aren’t marketers are supposed to be experts at rising above the noise? While consumers might be missing out on a conversation they willingly started; ultimately, it’s the brand that loses out on the missed opportunity.

From a consumer perspective, what is the opportunity?

1. Engage me. A Facebook fan list is like a mailing list of your top customers – its value is measured by what you do with it. I hate junk mail, but when its mail from a brand I like, I want to check it out. If I like the message, I’ll tell others.
2. Honor my opinion. I don’t expect you to do everything I say, but I do expect you to ask and to respect my response. If all you ever have to offer is a one-sided conversation or a lame deal, I’ll lose interest quickly.
3. Acknowledge my loyalty. Discounts and offers are great, but what is even better is the feeling that my loyalty is reciprocated with added attention. Deals end with the promotion deadline, but relationships are lasting.
4. Make it fun. I’m choosing to spend my free time here. Advice is nice, but it’s the entertainment that keeps me coming back. To be an ongoing presence, you’ve got to be a part of the fun.

Are you a brand whose fan base is left standing at the click of “Become a fan”? If so, your social presence will be relegated to status of a one-time opinion poll. For brands that choose to leverage the power of social networks, the promise is a voice through the voice of the customer. It’s a natural result of giving fans what they really want – something they’ll remember and share.