Facebook is Your Volatile Nightmare Landlord

14 Oct

For a while now you’ll have seen TV commercials, magazine or online ads sign off with a Facebook link. If your business is using Facebook as its website you may already have invested a lot of time nurturing people one by one through the stages of engagement; interest, trial, customer and then friend. They may visit your Facebook page regularly and get your business notifications via their Liking you. All is wonderful in the land of Zuckerberg.

This is all fine as long as it’s understood that your business status on Facebook is that of a tenant. You have few rights, do not own your content and your landlord can change the rules whenever they like; even if that means torpedoing your business. Fantasy surely, but you only have to look to the moves Zynga announced last week.

Zynga is the social gaming giant of Facebook and its biggest app-maker. They provide free-to-play games, enhanced with micro-payments and with titles you may have heard of – Farmville, Cityville, Mafia Wars – they have been very successful. Their revenue in 2010 was $597 million of which $58 million was profit. In July of this year their profits plummeted. The main reason? Facebook.

Facebook Credits take a cut from your e-commerceIn July 2011 Facebook introduced Facebook credits and dictated that all transactions had to be conducted with their credits. Their cut is 30% and this slashed Zynga’s profits by 90% for the quarter.

I don’t see a 30% cut as particularly onerous by the way, it’s a lot better than Groupon’s 50% – 100%, but if your business’ online presence relies on Facebook, then I’d suggest you consider what you might do if they change the rules overnight. At  the very least check if your current page flouts any of the existing rules. This is especially important if you’re using Facebook’s native functionality to promote your business. For example, running a competition on your wall isn’t permitted by Facebook. Contravene it and they can just shut you down without warning. No more business page. And yes, they do check and they do enforce it.

Returning to Zynga. In their case they announced the launch of Zynga Direct. An effort to break their reliance on Facebook and get customers onto their platform without going through Facebook. Not an easy undertaking considering their business was built from the ground up on Facebook.

It’s vital to consider Facebook as one engagement channel and not your only channel. You need to spread your message across different channels, each tailored to the users and expectations of those channels. It’s harder to do and you may need an agency to strategise, co-ordinate, or set this up for you, but it allows you to be flexible and mitigates platform fatigue or failure.

You should also determine where your hub is; The place that your online visitors will end up at. Perhaps it starts with Facebook, ending at your own website where you control your content.

Let’s go a step further. What if your Facebook landlord decides to sell up and disappear? If there’s a constant in the digital world it’s that everything changes.

The biggest search engine in the world in 2000? Yahoo; the crumbling father of the internet, leaking CEO’s and market share like a North Korean submarine, exited search entirely in 2009, replaced by a company no-one had heard of 11 years ago… Google


4 Responses to “Facebook is Your Volatile Nightmare Landlord”

  1. Stephan Rosger October 14, 2011 at 12:56 pm #

    It isn’t just the threat of being blindsided by a better product (Yahoo vs. Google) or revenue tinkering that make Facebook a volatile landlord. You also have to be on top of their ever-changing layout, privacy settings, rules, and the huge overall overhaul they rolled-out last month.

    Speaking of that overhaul, like a landlord deciding to do some wonderful renovations, you can only guess how disruptive it will be. I’m still waiting for some solid developer information on what more to expect for the Facebook Pages platform, and it’s frustrating because clients ask questions and they expect more than: “I have no idea, but according to a blog post I saw…”

    Anyways, brace for continual changes, some of which will be akin to the landlord replacing all the windows in the middle of winter (true story for me).

    Good writeup Tom.

  2. tomhammarberg October 14, 2011 at 1:41 pm #

    Thanks Stephan, you’re right, we’ll never know how a subtle change might affect our(their) content and unless you follow the Facebook Developer’s blog, there’ll be no warning. It’s also worth noting the potential for damaging changes isn’t limited to the native functionality.

    For our own Copeland Page we found our recent ‘Boss for a Day’ vote – embedded in an external app – wasn’t viewable by a small, but concerning number of visitors. Facebook had introduced a requirement for external content to be stored on a secure server. Ours wasn’t.

    It didn’t matter that we weren’t collecting any personal information and we found a workaround, but it is like having a rogue IT department making arbitrary decisions without consultation.

    The worrying privacy concerns of the new timeline and Frictionless Sharing are for another day. In the meantime better dig out a woolly hat & gloves in case your landlord decides to replace the roof in January!

  3. Guy Hatton October 17, 2011 at 2:51 pm #

    Nice piece, Tom. Facebook are landlords in the social network space, but Google are bigger landlords across the web. Things can change quickly so it is possible to imagine a ‘world without Facebook’. Looks like we have some thoughts along the same lines http://www.clinic.co.uk/think/google-the-next-cog-on-the-cycle-of-social-networks/

  4. tomhammarberg October 17, 2011 at 3:26 pm #

    If I was going to put money on the ‘next cog’, I think I’d go with Google+ too. Not that it’s a sure bet by any means, but it’s the only contender on the horizon and as you astutely point out, has had a couple of tries at this already and seems to have learned from its mistakes.

    I backed it in a post after its launch with an early appraisal here: https://copelandcommunications.wordpress.com/2011/07/13/6-reasons-why-google-will-zuckerpunch-facebook/

    Your post correctly reminds us of Facebook’s lack of concern or forethought when it comes to privacy; also brilliantly covered in this damning Guardian article http://www.guardian.co.uk/technology/2011/sep/27/facebook-open-graph-web-underclass

    thanks for the comment Guy

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