Um, can I have my data back please?
Privacy concerns seem to be all the rage these days. Facebook, attacked in recent months by privacy advocates, has swung into reactive mode, largely abandoning their advertising beacon strategy and installing more controls over who can access and view a user’s personal information. Driving this trend are the adults who are joining social networks in droves. These mature users have a much more pronounced need for privacy than youngsters.
We believe the privacy backlash continues to gain momentum for two central reasons. First, most popular social networking sites were designed, engineered and perpetuated by youngsters themselves. Their designs have reflected their own value systems which are often in opposition to that of adults. The second is reflected in the ongoing reliance on antiquated forms of monetization in social networks which rely on CPM-based page views to generate income. As a result, deleting user data and limiting page views is antithetical to their very sustenance. The result is increasingly less control over one’s end-to-end data set.
What is so different about an adult that makes the need for privacy so pressing? While complex in origin, we believe it boils down to a fairly simple difference between kids and adults: the need to protect reputation equity. One might argue that kids are too young to have developed reputation equity as it takes years to establish domain and/or career expertise.
As adults, we’ve spent both energy and resource creating our personal brands and need to know that those brands can be effectively managed and protected in both online and offline contexts. As adults we don’t want everyone to know everything we do. We want them to know what we want them to know and nothing more.
Furthermore, the goal of sites like MySpace and Facebook is to generate as many page views as possible. These page views can then be sold to advertisers in the form of CPM-based online ad buys. Deleting a users profile decreases the available inventory for the site and therefore works against their interest. In addition valuations have been driven skyward by statistics around page views, registered users and monthly visits which further perpetuates the cycle of dependency on all data, good and bad.
The results of a large search on MySpace, for example, will turn up dozens of user profiles that have been inactive for six months or longer. Active or not, these profiles are still regarded as viable advertising inventory. A short term win will almost assuredly result in long term disappointment for user, advertiser and MySpace alike.
In contrast to this, Fuego Nation allows users complete control over their online personas. We monetize only active, engaged users. So, if a user isn’t active for a period of three months, we delete them from our system- entirely. The entire concept behind Fuego Nation was predicated on providing actionable data for both member and advertiser alike and to be actionable members must be engaged in the community.
We don’t have a page view ad model but an active user, sponsorship model. The key, then, is to provide context and environment for people to WANT to be engaged over a long period of time. If a user’s activity lapses, we want to address the problem of engagement not perpetuate a poor product experience by engaging ghosts of data past.
Tags: Facebook Beacon, Facebook Privacy, Privacy, Social Network
April 11th, 2008 at 9:35 pm
Brogan,
Highly interested in the launch of Fuego Nation along with the response of the targeted demographic. Question for you: In reading some of the posts on your blog, do you foresee platforms such as Facebook and Myspace maintaining their lead in light of the new Social Marketing 2.0 platforms such as FN? What is your gut response on how they will adapt?
Also, I’m curious of what your views are on the younger demographic that freely posts what would be seen by many as deeply private? In 10 to 15 years, as this group of people matures, will they become more conscientious about their privacy or has the fact that this generation has grown up being so accustomed to sharing literally their darkest secrets, that this will fundamentally change the desire for strict privacy controls in the future?
Thanks for your time.
Erik
April 17th, 2008 at 9:00 pm
Thanks for your comments Erik and we appreciate your insights.
While I believe that legacy sites like MySpace and Facebook will remain major players in the world of social networking for many years to come, I don’t anticipate that they’ll lead the charge into the next generation. I liken this to the early development of network television where the large majors (NBC, ABC, CBS) paved the opportunity for more targeted, quality focused networks like HBO and Showtime. HBO needed the large networks to set the stage for verticalization/specialization just as we, and other talented folks planning Social Networking 2.0 products, needed MySpace and Facebook’s open network approach to pave the way for more focused, high-quality’ programming.’
The concern that I have for those following the ‘network model’, which is reliant on volume and reach, is that they typically crest their apex of value early on in their life cycles then end up fighting a lifetime battle of diminishing returns in their core business as they struggle to diversify and adapt their inherently flawed business models (see network television over the past 30 years).
I believe that both MySpace and especially Facebook, are either at or near their long-term valuation apex. We are already seeing migration from Facebook, particularly in the adult, gen X demographic away from consistent and active usage. Furthermore, network business models remain vulnerable to what we call the Law of Diminishing CPMs. On Facebook, for example, the primary user activity (95%+) is centered around communication. Any consumer marketer worth his or her salt knows that the most difficult activity to leverage and monetize is communication. When you’re communicating with your friends as a primary use case, the last thing in the world you’re likely to do is click on a Proactiv ad and head off to another site. This, in my opinion, is the Achilles heel of the Facebook business model. The Law of Diminishing CPMs kicks in not so much because people become increasingly adept at ignoring Facebook and MySpace’s banner ads but that the MORE members Facebook attracts, the MORE focused the communication becomes (due to the volume of communication outlets) and the likelihood of you being distracted to a search mode via banner advertising continues to decrease over time. So ironically, the more members Facebook gets the lower the value of their ad inventory becomes.
Ironically, we believe that the next generation of social networks won’t be social networks at all in the current sense of the category, but exclusive membership organizations. Ultimately, Fuego Nation is an exclusive membership club and our revenue generation opportunities are predicated on that foundation. This give us the opportunity to create a hybrid business model (advertising, subscriptions, direct to member services) that companies like MySpace, Facebook, Bebo, even LinkedIn) can’t really do. My recommendation to companies building high quality, sustainable businesses in the Social Networking 2.0 world is to begin with a business model, a roadmap of monetizable assets, the foundation of experience/brand and then determine which features/functions should be built to support that user experience. It seems odd to me that companies would create user activity and behavior around a utility and then step back and say, oftentimes years later, ‘How do we monetize our traffic?” The focus should be on providing valuable products and services to each member from day one. If I only have one member, how do I deliver so much value to that user that they would be more than happy to lay down their credit card in appreciation?
- BMK