Why Facebook Connect Matters & Why It Will Win

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Facebook kicked off their second annual developer conference in San Francisco this afternoon with a keynote by founder & CEO Mark Zuckerberg. The overproduced keynote, with too many words repeatedly incessantly, seemed like a lullaby sung by a nanny in a language alien to yours. There were some who compared Mark with Steve Jobs after last year’s presentation. Now, having watched the two weave their respective spells, I would say the comparison would be as exaggerated as equating the thespian abilities of Colin Ferrell with those of George Clooney.

These non-important and highly personal observations aside, I came away fairly impressed with what Mark & Company are doing with their Facebook Connect (FC) system. (The program launched today with 24 partners, and a press release. It will go into beta soon.) As a caveat, there is very little information available on how FC is going to work “technically.” Still, It seems Facebook has a much better chance of succeeding where Microsoft and othesr have failed. FC’s integration into services of partners like Digg and Six Apart makes it very clear that it is more than just a simple web ID system play.

In addition to offering a simple authentication method, FC allows granular social interactions to be embedded in non-Facebook services. If Facebook can work with its partners to build interesting use-case scenarios that go beyond simple sign-on, it is quite feasible that Facebook can out-execute Google, MySpace and everyone else with its ID ambitions.

Why? Because this is their one chance of building a monetization engine. The company makes no bones about trying to build a platform that allows it to offer branded advertising in a manner akin to Google’s Adsense. A simpler person (like yours truly) would call this a platform that serves ads for all occasions, reasons and seasons.

As I pointed out yesterday, Facebook Connect is the second iteration of the Beacon system and seems to be much less draconian and evil than the first version. Of course, it has been improved enough to become the underpinning of a highly effective advertising platform.

When you use Facebook Connect on a web service outside of Facebook, say Digg or Xobni, you are transmitting back “a little something about you” to the proverbial Facebook brain. I will use the example of the service built by Six Apart to illustrate my point.

If you visit a blog that is published using Six Apart’s Movable Type publishing system, you can leave a comment by using Facebook Connect for authentication of your ID. Your comment on a blog post can also be published to your Facebook account. This is fairly standard ID stuff.

However, it is the act of leaving a comment that is more important. You are essentially telling Facebook’s proverbial brain what topics — blogs or specific posts — with which you like to engage. In other words, you just told the system a little bit about yourself. Now imagine such information coming from dozens of Facebook Connect partners.

Each service adds a few more data points about you inside the Facebook brain, which is quite aware of your activities inside the Facebook ecosystem. The brain can then crunch all that information and build a fairly accurate image of who you are, what you like and what might interest you. With all that information at its disposal, Facebook can build a fairly large cash register.

In comparison with the Beacon system, this is almost benign. Beacon drew scorn & spit and my personal disdain, mostly because it sought to make commercial gains by compromising people’s privacy without giving them any choice. In comparison, the new system asks you to make a choice. By signing in to partner sites using the Facebook identity system, you are essentially saying yes and plugging into the Facebook brain. (I hope that Facebook and its partners learned from the mistakes of the past and make it very clear to their users how the system is going to work, and how their privacy/personal information will be used.)

At the post-keynote press confab (I skipped since I had to go see my doctor), when asked how the company will make money, Mark apparently said the company isn’t currently focused on monetization and will be looking to extend their platform’s reach. He doesn’t have to – if Facebook Connect works, the money will follow.

83 Comments

Crash

What we’re talking about here is marketing’s new holy grail, Return On Engagement (ROE). And companies already pay handsomely for the various pieces of information that they receive from multiple vendors (one example is below). The “cash cow” for FB may well lie in the marketing research capabilities that FB can provide to advertisers. Currently there is a pool of companies that provide various pieces of the engagement puzzle from classic web analytics providers like Google and Omniture, to brand monitoring services like Biz360, BrandIntel, etc. However, no one company has mastered all of these areas. FB, or whomever masters the holistic measurement of engagement , may well replace Nielsen and many other research shops.

For example, NBC Universal spends over $100MM annually on Nielsen research. That’s 1 of the 4 majors. This leaves out all the agencies that buy advertising space, as well as the brands from Coke to Unilever that rely on research, all of whom would benefit and therefore be willing to pay for the 1, 2 combo of quantitative and qualitiative research. Moreover, all of this information would not only emanate from one source, but one source that represents a much larger sample population (and hence higher accuracy) than ever before possible. The financial implications are significant. In fact, there’s probably room to share that space in the vendor marketplace.

For more information about Return On Engagement (ROE) see, “Marketing’s Key New Metric: Engagement” Forrester Research, August 8, 2007. Additionally, there’s a four part series out right now by Forrester on this same subject (and no, I don’t work for them).

Oh, and OM, why will FB win – seems to me that Google, MySpace, and others have some pretty smart people working for them too…

senthil

@Tim F – lol ditto here on the actors comparison… George Clooney does not even have an oscar in the best actor category, yet…

@Om Malik – You mean Syriana not Syria … and there is plenty of documentation available on how FB connect works “technically” for a while now…

@niro well said, I like the friendfeed model too, non-intrusive feed aggregation and sharing.

Laura M

“Oh, and am I just dense or did I miss the part that explains why it will win instead of merely what it is and what Facebook hopes it will do for them?”

hummm yes-i wondered this too-good thought.

Jeremy Zawodny

Om:

I think you explained “what it is” and why it matters but not necessarily why it will win. Care to elaborate a bit on that?

Jeremy

IdeaTagger

The lack of buying intent on Facebook is a strong argument against Facebook Connect being a cash cow. So Facebook should connect (forgive the pun) with websites on which users do show their intentions. There is talk of a enabling users to initiate MS Live Search queries from within FB but I say instead of that, enable MS Live Search users to turn unresolved search queries into questions for their FB friends or the FB network as a whole. Like I have blogged before, this would significantly increase the viral coefficient of search which on Google is zero at the moment.

Look out also for Q&A sites scrambling to add FB Connect for the same purpose.

By the way, as Dave McClure above states, FB Connect and FB Payments could yet be the killer combo.

Dave Morin

Hey Om! Great article. Thanks for the kind words, we really appreciate it. One thing we wanted to mention though is that full technical details of Facebook Connect are available here:

http://developers.facebook.com/fbconnect.php

This includes full documentation, a working sample site, and sample code. We’re excited to see what developers can do with Facebook Connect. And, are excited to be working alongside everyone in these early days of the movement to make the web more open and social.

(PS. We’d love to see GigaOm with Facebook Connect integration :) )

John Furrier

Om,
Great to see you in the comments section :-) Nice engagement and self expression – I think that I read that wasn’t happening anymore :-)

Loved this line from your story –

Each service adds a few more data points about you inside the Facebook brain, which is quite aware of your activities inside the Facebook ecosystem. The brain can then crunch all that information and build a fairly accurate image of who you are, what you like and what might interest you. With all that information at its disposal, Facebook can build a fairly large cash register.

In my view Facebook is land grabing the presence component of what is looking to be a paradigm shift that will disrupt the emerging Unified Communciations sector (covered by us at BroadDev.com).

George Mason

the privacy and confidentiality of information on facebook is being abused and that’s the bottom line. i not only find the ad’s and spam intrusive but also the fake profiles that have been created and increase cyberbullying. i was looking for another site that controlled this and monitored it and all i came up with is humanbook.com i’m still unsure of it because facebook has always been my social networking site, but with all of these changes i might just have to move to humanbook

Om Malik

@magnusdopus very true, but there are some messages that do register and influence us. The ignorance of banner ads is pretty interesting …. i agree there needs to be much bigger changes

magnusdopus

Ultimately, no matter how relevant the ad is, this does not increase the user’s conscious or sub-conscious ignorance of banner ads. And that remains the biggest problem the Media and Advertising companies need to solve.

Om Malik

@rick, you are right about that. its about messaging and perception. Google has done a better job there. On the Collin Farrell image, well glad I could help ;-)

@sv…. sorry, didn’t realize you were a Farrell fan, but the point you make about “word of mouth” is pretty interesting.

@allen stern …. bing, bing, bing

@Mads Kristensen it be one leg of a three legged table for sure, if not the main trunk.

@Tim F. So you couldn’t tell I just watched Syria and Miami Vice back to back ;-)

dave mcclure

gee Om… you trying to take away my mantle as Biggest Facebook Fanboy? ;)

don’t know if i agree tho — Facebook Connect is going to be a big winner, but unclear yet if they’ll dominate single sign-on or simply lead the way for others to follow.

on the other hand, just wait until you see what the combination of Facebook Connect and Facebook Payments will bring.

it’s Hailstorm 2.0 all over again.
http://500hats.typepad.com/500blogs/2008/03/web-30-isnt-the.html

David Mullings

I trust FB but I am skeptical about the AdWords comparison as well for the same ‘intent’ reason. I am more scared however about the whole Orwellian nature of this.

As for those who don’t like that FB is not trying to create a better web, etc. Microsoft never had users interest at heart and look how well they did. FB seems to be following the MS playbook to a ‘t’ (maybe that investment was more than just money – it brought a philosophy).

FB clearly wants to be the “social operating system” of the web – scary if you ask me.

*sheepishly goes back to posting stories on Facebook and writing notes

Stacey Higginbotham

Wow, that’s an impressive brain. What database and analytics software are they using?

Niro

Seems like friendfeed is the real facebook connect…without the drum roll

Edgar

There is one main difference that springs to mind when comparing Google to Facebook. Google I trust, Facebook I don’t.

This is yet another step by FB to eventually take over the social web (dollar signs in eyes). They don’t seem to care about their users the way they should, and each time they unveil a new system like this it becomes more apparent.

FriendConnect, IMO, is about FB raking in all the chips and leaving none for the rest…not about creating a better web, a better environment for their users, and it certainly doesn’t have the best interests of data portability in mind.

C’mon, Facebook, grow a pair and throw a little coin down to us peasants by at least offering OpenID!

Tim F.

Oh, and am I just dense or did I miss the part that explains why it will win instead of merely what it is and what Facebook hopes it will do for them?

Tim F.

“I would say the comparison would be as exaggerated as equating the thespian abilities of Colin Ferrell with those of George Clooney.”

Seriously, this is the best analogy you could muster? Clooney is the greatest actor ever and Ferrell is the worst? I guess I won’t be asking you for any movie recommendations. Because that keynote proved that Jobs is the best at the game, and Zuckerberg is one of the worst, far worse than Gates… maybe even that Sony guy from that Apple keynote a while back.

Alex Wilde

Is this FC thing really what the mainstream users (not companies or developers) have been waiting for? I can’t help, but everything I read that includes “cash machine like Google AdWords/AdSense” makes me sceptical. It’s hard to come close to AdWords in terms of low barrier simplicity and value of service. My mom clicks on AdWords when she searches for something, but she doesn’t login with her Facebook account in order to digg something..

Suraj Singh

What happened to OPEN ID?! This is a nice way for FB to OPEN… , and us, their two fingers. As a wise Englishmen once said – lovely jubbly.

John No

So much for Open ID, people are not as concerned as we would hope about their privacy, or what FB wants with our top ten friends & political affiliations, next it will be our credit card transactions. Time to delete my FB profile is nigh.

Just like Beacon stepped over a few lines, and a few more toes – a few years before FB there was a concept called MATRIX which also received funding from the IAO. (We stumbled across this when doing a Matrix Search on Google). Ironically it got shut down due to serious public concerns that it invaded privacy. A few years later pops up friendly little FaceBook, amongst a now maturing Social Networking Market. Now our privacy can be handed over without hesitation, through a less intimidating ‘harmless’ interface.

So much power in one place seems a little disconcerting. Shame the other Social Networks don’t clean up their act. Our lack of choice is a serious problem. Social Networking has yet to be reborn with consideration of more interesting use case scenarios for sure. Many scenarios exist that one generic greedy platform will not cater for. Not everyone wants to throw sheep at each other and tell some stranger in the CIA/IAO who his family and favourite friends are.

Big Brother is not watching, he is digging, analysing, crunching and powering the all seeing eye which quite frighteningly sits on your dollar bill. God Bless America.

Mads Kristensen

I strongly disagree that Facebook Connect will be a cash cow. The key difference towards Google is still intention. When I use Google, I’m showing my intentions here and now, and an ad might even be useful. When I’m on Facebook or another social service, you may know a lot about me, but I’m not in a buying mood and thus doesn’t pay attention to ads.

Syed

Not sure if this crossed Mark’s mind:
Using FC, Facebook can infact enter into areas outside the US, where FB is not so popular (eg. India and China).

Once FC opens itself up to other social networking sites in these regions, Mark might see a good influx of registrations into FB, thus allowing them to gain a foothold outside North America.

But Om’s interpretation of this appears to bring out the long term monetization benefits using other social networks, anywhere in the world.

I guess a year from now, we can come back and update this post with real life examples.

allen stern

“we are open and we want you to share” = “we really want everyone using facebook so we can control every transaction”

sv

Well for starters, Colin Farrell is a much more complex actor than Clooney (who no doubt would agree), so now I am interested in hearing ‘Mark Zuccerat (PackRat nom de plume)in person.

But I find it interesting that no one references the Firefox feature Ad Block Plus. A few wisps of this or that, without graphics, may catch my periphery; otherwise I am alone….with my FB pals. Their word-of-mouth is the only advertising I am interested in.

Rick

It always bothers me when technologies are launched with the positioning that the primary benefit is to the vendor rather than to the user. Google has, IMHO, done a good job of keeping the message, if not the tech, focused on user benefits.

Yes, this is from a developer conference and no, I wasn’t there, but from your description, Om, the benefits to the user seem pretty marginal (now with your choice of logins!). Even worse, Colin Ferrell has to wipe the spit off before we’ll trust him again (and thanks for that image).

ray

i agree, this is better. there seems to be a clearer direction – as opposed previously shamelessly skewering eyeballs cuz you’re the best social utility in town (for the moment).

(obv), how it’s all executed will be vital. fundamentally, getting the ‘granularity’ part is crucial.

ahem **clears thoat** and finally. Mr Zuckerberg – the direction you’re heading in requires you to be more open…
**coughs** Not just “philosophically aligned”.

clearly getting in smart people has helped.

good luck.

Ohad Eder Pressman

Insightful, though I believe Facebook has enough information about its users just from crunching the actions we take within Facebook.

We join groups, friend with people who fill their profile with things they like. Facebook is doing a fantastic job with the NewsFeed, which already shows that they can ‘target’ pretty well, heck they need not do anything special.

Imagine measuring ads on control-groups and expanding them based on user clusters with highest CPM, etc. These are the sort of algorithms that don’t even need to know the actual topic/subject, they just do the math and cross it with the social graph.

What’s more interesting with FriendConnect is how this weighs against things like OpenID. And, like you suggested, lets see some more exciting use-cases for the external site integrations.

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