Same Old Story: 'How Does This Work?' ; Finding Value in social media

All spring there is much discussion about the much vaunted Facebook IPO ... shares are up before the launch this Friday even, but as for the conversion to actual monetary value? The models for that are through advertising, but the returns there are ... still anecdootal rather than actual.  Today GM pulled its facebook ad campaign.

An npr planet money spot on 16may12 said there is not much research done on the attraction of facebook consumers to ads placed for them, followed by subsequent purchases. They still haven't got people to buy stuff or learned what works in guiding purchases from all that ad revenue they've generated. The only things that seem to work is the amazon, the ebay and the craigslist models. Meaning, when the admakers decide there's no return or evidence of a monetary return for all the namebrand admoney they've pumped in the internet direction, despite all the knowledge about demographics and consumer choices gained, my hunch is they'll return to television and maybe games. Explore cell phones and the pad devices.

I'm no market genius, not even credibly an amateur, but, people use the internet for free services, for information and entertainment. Not the ads. This is the circle that is yet to be squared. 

Remember how we used to keep in touch?

Ma bell. US Mail. One we came to hate and ridicule and had the gov bust them up. The other was loved and complained about as the uncle we couldn't get rid of, who may bring it tore up or wet in the rain, but that we had a longterm relationship with. Snail mail may be more and more expensive but does get the package there at minimal cost. We still expect them to do it. More people over time are going with FedEx or UPS as a 'speedier' business model. USPS will get you there, however eventually and usually at lower cost. Right now the post office is  surviving not on stamp sales or package deliveries, but on ads that none of us hardly look at. The bulk of usps revenue comes from ads. Right now, the same story appears true with the internet. Except there is little if any return for those ads compared with coupons delivered traditionally via mail. For instance.

Now, something that piece mentioned was in tracking eyeballs and 'clicks' or 'Likes'. And when the piece ended there was an ad for 'Allied Bank', right before they said, 'This is NPR news' . Clever how they snuck that in there. Then over at marketplace they had a piece about Chipotle expanding. A model based on getting better more varied ingredients to people who might not otherwise go for those. Upscale food - really - at a downscale looking place. They're expanding in Europe, and maybe asia after a bit. Made me want to go eat there and I haven't wanted to do that in ten years. It wasn't an ad per se, just talking about the company, what it does, what it wants to do. 

But then it dawned on me that the effect of influence, the mere suggestion of things I agreed with - good ingredients, 'creativity in choice', no-nonsense purchasing arrangement for a product I really already wanted - was what worked for me. I don't think I'm alone. The Chipotle piece was not an ad but used what amazon or craigslist uses as technique in garnering attention to its business and thereby products and services. And that through a non-traditional 'ad-space' of a business newsstory.

The key is I already wanted it, I just didn't know it.

So, since facebook has figured out the allure of people connecting with each other over things they like, then it seems not very difficult to me, since they can monitor those  and even pinpoint demographic groups to be able to suggest - to target audiences with suggestions - about what they already want to do, eventually. To use each other - our friends - to help steer us into situations where we can be influenced to buy something. The preponderance of facebook as a filter, helping us to screen out what we don't want and allowing greater connections to focus more on what we already want is its brightest prospect I think. The problem with that though is that most people's friends are just a bigger group of those that most people got on myspace. Virtual 'friends' that can't often be relied on for help in our decision-making, if you actually talk to them. Another problem with facebook is that nobody likes a middleman unless they are necessary and cheerful and reliable. Like the postofffice. Unlike the postoffice, Facebook doesn't deliver and typically you can't order anything there. Not a store front, or check-out line and no one will come to your door. People of course will say, that's not what facebook does. So, what does it do that you will pay $$ for? This is its problem.