Social Media Lessons: Controversy Erupts Surrounding Facebook’s “Twitterization” Redesign

Yet another controversy has erupted around Facebook (the recent Terms of Service PR disaster having barely scabbed over) in the last few days, this time around the redesign of the Facebook user "Home" page (the profile page was redesigned last year), which is adding a real-time feed more along the lines of micro-blogging service Twitter.

While I personally am all for that change, having been an ardent Twitter user since early last year, there has been plenty of backlash from Facebook users about the extent of these changes. And all of the usual suspects of the blogosphere are weighing in, with heavy-weights like TechCrunch’s Mike Arrington and Robert Scoble siding with Facebook’s right to basically do what it wants with the free service it provides.

Even going so far as arguing that listening to your customer too much can be counterproductive. Here is a quote from Mike Arrington’s piece "No! Never Surrender To Your Users, Facebook.":

In an interview last year, Facebook CEO Mark Zuckerberg talked with me about how users are willing to accept change over time, and that Facebook would continue to push things along. Suddenly, though, they surrender because a few users have a belly ache over a redesign.

If they wanted to make these changes anyway, they shouldn’t have titled their blog post “Responding to Your Feedback.” They should have just continued to ignore the ranting, and announced further changes. Showing that you’re listening to feedback just invites more of it.

Someday, if they’re not careful, someone is going to do to Facebook what Facebook did to MySpace, who in turn did it to Friendster. Making users happy is a suckers game. Pushing the envelope is what makes you a winner.

While I can see their point to a degree, social media represent a whole new ballgame in many ways, which it makes it harder to predict what will happen. While these “A camel is a horse designed by committee" ideas may have validity in the realm of physical product design (Scoble is using a quote from a mentor about the problems with crowd-sourcing the design of a Porsche), I would hold that things may not be so straight-forward in the digital/social media realm:

1) Facebook already had several cases where it needed to retreat in shame from changes to the Facebook platform, the biggest among them the Beacon activity-tracking system that caused such privacy concerns and general outrage among Facebook users that it had to basically be abandoned.

More recently, the above-mentioned Facebook Terms of Service (TOS) debate around changes that appeared to give Facebook almost complete, irrevocable control over a users data and images even PAST the closing of an account, brought forth a similat swift user community response, and backing off by Facebook (for now to the original TOS, with supposedly a crowd-sourced version being on the way).

So with this partial retreat by Facebook, incidentally again due to privacy concerns, they’re really batting 0 for 3. One would think that they would be wising up on the PR front by now. And so much for "Zuckerberg never backs down"…

2) Much of this is not really surprising since Facebook’s users are perfectly empowered through Facebook’s platform:

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Is Advertising Failing On The Internet?

Techcrunch.com today featured a guest post by Eric Clemons, Professor of Operations and Information Management at The Wharton School of the University of Pennsylvania entitled "Why Advertising Is Failing On The Internet".

In the lengthy post he argues his "basic premise […] that the internet is not replacing advertising but shattering it", which due to its sweeping nature definitely warrants further examination. The post as of right now has generated well over 200 comments, on a Sunday, so it obviously hit a nerve.

Among other things, Professor Clemons makes the following points about advertising both online or via traditional broadcast media:

 

Consumers do not trust advertising. Dan Ariely has demonstrated that messages attributed to a commercial source have much lower credibility and much lower impact on the perception of product quality than the same message attributed to a rating service. Forrester Research has completed studies that show that advertising and company sponsored blogs are the least-trusted source of information on products and services, while recommendations from friends and online reviews from customers are the highest.

Consumers do not want to view advertising. Think of watching network TV news and remember that the commercials on all the major networks are as closely synchronized as possible.  Why?  If network executives believed we all wanted to see the ads they would be staggered, so that users could channel surf to view the ads; ads are synchronized so that users cannot channel surf to avoid the ads.

And mostly consumers do not need advertising. My own research suggests that consumers behave as if they get much of their information about product offerings from the internet, through independent professional rating sites like dpreview.com or community content rating services like Ratebeer.com or TripAdvisor.

While I would agree with all three points made, and would count them among important caveats for anyone choosing to advertise for anything in this day and age, I disagree with Professor Clemons’ basic premise. Here’s why:

I would argue that none of the major "Old Media" players online (or for that matter none of the "New Media" either) are anywhere close to having efficiently monetized their page views. Everyone is still clumsily fumbling around when it comes to intelligent targeting of ads, both as to offer theme, as well as to offer pricing.

(Or rather mostly lack thereof, as when trying to employ Madison Avenue "image advertising" without any clear offer being made. Which, if it ever worked on TV, etc., certainly isn’t working online. In fact, online it may increasingly create a negative image of a company/brand/product as "someone" who just doesn’t get it).

This is astonishing, when all it really takes is some common sense about selling people stuff that makes sense in the CONTEXT of what they were already doing.

First, let’s get clear on the fact that an article or opinion piece in e.g. the New York Times provides a lot more pointers as to readers’ state of mind/interest than most Google queries ever could (as do Web videos posted on such sites), so the failure to target properly is in part simply a form of laziness.

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Micro-hoo: TechCrunch Interview with Citi Analyst – more proof it’s a bad idea

I am not usually in the habit of creating posts with large scale quotations, but in this case, the information that was revealed, but buried in a longish interview (too long for most people’s itchy, "RSS Feed" attention spans :) is so important, and so validates what I’ve been saying for several weeks now, that I am going to break my own rule.

This is from an interview by TechCrunch’s Michael Arrington with Citi Bank analyst Mark Mahaney in regard to the proposed Microsoft-Yahoo deal:

MA: […] I heard that they commissioned an outside study sometime last year [that] suggested that they would have 85% plus increases in cash flow from outsourcing search to Google. […] I think you said that they would go from 4 cents to potentially up to 9 cents per search — is that right? Sort of, 40-90 dollar RPMs on searches?

[…]

MM: […] they actually said that they thought they — they didn’t name Google but it was obviously Google — that the difference in the monetization gap was 60 to 70%. That’s the first time we’d heard or seen Yahoo sign off on this specific gap.

No wonder that Yahoo has been flirting with outsourcing at least some of their paid search ads to Google: It’s instant money in the bank, to the tune of potentially 25-50% higher TOTAL cash flow! (TechCrunch rightly pointed this last one out, but omitted the underlying cause in their write-up.)

I came to a similar conclusion re:"the monetization gap" a week or so ago, just by looking at the respective search shares reported by ComScore, as well as the Q1 earnings numbers by Google and Yahoo.

Obviously, the numbers reported by Mahaney from an in depth study (that was apparently commissioned by Yahoo itself!) are much more authoritative. And to me, they therefore are the true bombshell out of this interview, though Google Q1 earnings were obviously enough of a bombshell to send their stock up over $100 in a few days.

Now beyond this very key admission, the further question obviously is how this portends for the proposed buyout of Yahoo by Microsoft. And here again Mahaney is pulling no punches,  and comes to a conclusion very similar to what I wrote here. Even though the TechCrunch summary of the interview again inexplicably omits his dire predictions.

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