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ARTICLE OF THE MONTH
The Facebook Phenomenon
Contributed by Barzan 'Tony' Antal
It all started when Mark Zuckerberg founded Facebook on February 4, 2004 with two of his roommates and another computer science comrade from Harvard College. Their vision was to create a networking site where they could remain in touch with friends. For this reason, at first this socialization network was restricted to Harvard College students but since September 2006 the network is open to users worldwide. This article takes a look at where Facebook has been, and where it is going.
As of 2007, Facebook CEO Mark Zuckerberg has become an instant billionaire; according to some sources he owns approximately 30% of the company and this equals more than $4 billion of total net worth. Forbes ranked him the youngest billionaire at 23 years old, and he is certainly one of the wealthiest 20-something of the world.
Moving the company headquarters to Silicon Valley and becoming a billionaire on paper, Mark is often compared with other Harvard college dropout entrepreneurs and innovators such as Bill Gates and Steve Jobs. The spirits of Silicon Valley have taken notice, and lately Mr. Zuckerberg has been offered a variety of deals.
In this article we'll do our best to demystify the Facebook phenomenon. You can expect to read a detailed analysis on its growth which will be backed up with numbers and statistics. Ultimately we're going to predict the future of Facebook based on the CEO's latest actions and discuss offers, rejected deals, and ad campaigns. Moreover, I've devoted an entire section specifically to website promotion via Facebook.
Before we move on, please don't skip the following disclaimer: I am not affiliated with Facebook or any company that appears in my article. Everything that I talk about is open to the public and therefore this article is a collection of facts, reports, news, and statistics to debunk the said phenomenon. I've also presented some rumors, noting them as such.
Let's Talk Business
Based on research done by comScore on February 2007, Facebook ranked as the sixth most trafficked website in the USA with more than 30 billion page views per month. It's a no-brainer that this has increased over time, hence the popularity surge of the past few months. Another interesting fact is that over half of the users log in each day.
At the time of writing Facebook's primary competitor still remains MySpace, which is the most popular social network with more than 200 million of users. Two years ago in 2005 News Corp. bought MySpace outright for $580 million. The race of social network acquisitions continued with Yahoo in 2006 offering $1 billion for Facebook. Would you believe that Zuckerberg rejected this deal?
Yeah, that's right! He explained that he plans to hold off for another two years at least. It's really amazing that Yahoo offered one billion dollars to purchase an online company that generated only $100 million revenue (estimated in 2006). And yet the young CEO rejected the offer. Now looking back it seems like his decision was an excellent one.
Facebook's growth is still increasing exponentially. As of October 2007, Facebook can count 42 million active members, and is expected by the end of the year to pass the 60 million milestone. Through the years numerous negotiations and deals were rejected due to Zuckerberg's plans to run the company independently.
The blossoming period for Facebook's valuation started in September 2007. It was rumored that Microsoft might buy a stake. These rumors were proven right on October 24, 2007 when Microsoft bought a 1.6% share of the company for $246 million. Now if you do simple second grade mathematics, you realize that the total "worth" of the company equals nothing less than $15 billion! This is where I've derived the data at the beginning of this article stating that Mark's net worth is more than $4 billion.
(Mark Zuckerberg, founder and CEO of Facebook.)
Why did Microsoft invest $246M in a three-year-old decent company that brings in a total of only $150 million annual revenue (estimated in 2007)? Why is Facebook worth $15 billion? Answering these questions is challenging but mostly it's because the online social network promises more than profit. It's an aggressive bet that assumes two things: the continued exponential growth of online advertising, and that Facebook will remain among the most popular social networking sites. It will require a high level of maintenance for Facebook not to lose their position.
Notwithstanding this challenge, let's take a moment to analyze the growth of Facebook, according to the latest comScore statistics. Within the category of unique visitors the increase is 89% from May 2006 to May 2007. The statistics also shown an explosion in Europe; the number of total unique visitors rose 422% up to 10.2M over a year.
Furthermore, it's rumored that Facebook earned another $500M from this frenzy funding spree on the same day the deal with Microsoft was accepted for 1.6% shares. The aforementioned $500M comes apparently from two NYC-based hedge funds; they add up to a total of $750M (~500+243). These were not confirmed at the time of writing, but to us the valuation of $15 billion matters the most.
Facebook's Online Advertising System
In the previous chapter we've mentioned that Microsoft's investment seems like it's been done just to ensure the brokering of Microsoft ads and search engine on the site. Over the past few months Microsoft has lost numerous deals with various companies to Google. These include but are not limited to: Time Warner, DoubleClick, and Time Warner's AOL unit.
In the field of online advertising and search engines Microsoft is facing challenges thanks to their primary competitor - Google. They can't seem to keep up with the pace of online advertising market that's currently dominated by Google. But Microsoft focused lately on designing a powerful technology to systematize their advertising market.
It's been rumored that Google was negotiating to win an agreement with Facebook. Either way, the end result is clear and that is Microsoft investing $246 million, thereby ensuring their ad-brokering partnership with Facebook up to 2011. Keep in mind that this includes international versions of Facebook. As we've seen, Facebook has developed an advertising system of their own, and its likely effect on Microsoft's ads is unknown.
Anyway, it is somewhat hard to believe that the Google giant could lose a deal to Microsoft unless they didn't want the agreement badly enough. Based on their latest acquisitions, deals and agreements, profits and growth, I think we all can agree that Google wasn't longing to fund Facebook. I won't reject the rumor; they may have indeed been there to negotiate, then ultimately abandoned the deal. Assuming they did, it probably would not have been because of finances; either it wasn't worth that much for them or Facebook simply rejected their offer.
Right now there are the following advertising possibilities to market a specific product, brand or service on Facebook: mass banner ads, flyers targeting members of a particular university or community (a self-service solution), ads that feature groups and promotions, custom polls to get detailed results based on age, location, sex, school (market research), and integrated solutions (embedding into news feeds).
Members have the ability to quickly buy and set up social ads either on a CPM (cost per thousands) or CPC (cost per click) basis. You can precisely target your specific audience, customize your ad(s), and ultimately keep an eye on the evolution of demographic data to optimize your ad(s), getting the most out of them.
You can also create Facebook Pages that engage fans and potential customers. Using this service you can create a deeper connection with your clients because you are in direct contact. You can send them news, special offers, or any kind of update. They can leave you feedback. The more member interaction you can get the more clients you'll get; it's a vicious cycle because their actions are broadcast via news feeds.
Combine all of these together and you have a really powerful marketing system to promote your brand, product or service. Also, I am curious to see how their new ad brokering system works out. Many thought that it should be something that picks up specific data from user profiles and targets dedicated ads on the preferred hobbies, music, etc. Integration into the Facebook platform is promising due to the high number of daily visitors. But their current approach, where users become somewhat unwitting spokespersons for the brands and companies they "friend," may be considered too invasive.
Is the Future Bright?
With the recently acquired funds Mark Zuckerberg is planning to heavily expand Facebook. At this moment they employ approximately 300+ people but in the near future it should reach 700. As with every giant IT company there's always a slot for truly talented and exceptional engineers and "one-of-a-kind individuals."
Let's talk about the particular developer features of the Facebook Platform - mostly about the Facebook Marked Language (FBML), Facebook Query Language (FQL), API (REST Web Service) and Facebook JavaScript (FBJS). It is important to understand that because of these features, coders are able to develop their own applications on the Facebook Platform.
FBML is an evolved subset of HTML with some elements removed. It allows application writers to develop and integrate applications deeply into the Facebook Platform. They can configure their "look & feel," reach specifics like profiles, canvas news feeds, and such. This is the way Facebook servers "understand" your code.
FQL is a SQL-like query language. It assists the programmers because it's much easier to code in a sort of traditional language rather than depend on complex API methodologies to do the same queries. With FQL you can query data from the database.
Likewise, the Facebook API uses a REST-based interface. The code you write will get read, parsed, executed, and published on the Facebook REST servers. You simply call the functions and they do their job. Its impressively thorough privacy checks and security systems are analyzing and keeping track of your actions.
You can read in-depth information about these from the official documentation that's reachable through the Facebook Developers Wiki. Using these features you can maximize your overall Facebook experience.
The success of these features and Facebook's markup languages was, simply put, tremendous. Right now there are more than 5,500 applications hosted on Facebook servers. They all are coded and run on the Facebook Platform. Likewise, the MySpace Platform is currently in development and they would really like to follow in Facebook's footsteps.
Most of the applications on the Facebook Platform are for entertainment but a significantly smaller number are business-related too. The race toward getting your application published and ranked within the best on Facebook sparks competition between programmers. Therefore, this is an amazing opportunity to stand out from the crowd. If your application gets downloaded by numerous users, you'll certainly earn some bucks as a reward.
Apparently more than 70,000 programmers are developing applications for Facebook. Mark Zuckerberg's vision is that the business aspect of this must be boosted. It could serve as a starting point for entrepreneurs and managers looking for talented employees, an amazing job hunting land where companies could list their currently available jobs, etc.
What we cannot know is how this "particular" Facebook Platform with all of its markup languages will face the competitor's (Google) OpenSocial solution? OpenSocial is a set of common APIs for building various social applications with the freedom of interpolation through various networks. It was designed with maximum flexibility to ensure maximum portability over different social networks like Orkut, Hi5, Ning, etc.
Recently Facebook has launched fbFund, which aids as a simple funding campaign. The Facebook company is able to finance starting entrepreneurs to jump start their business with sums up to $250,000 as long as they have not raised any formal venture funding and agree to develop their business based on the renowned Facebook Platform.
Article from PREVIOUS MONTH
If you have been doing SEO for a long time, you may have an almost intuitive sense of what you need to do to optimize a web site. You may work on several things at once rather than following a step-by-step process. But when you’re learning SEO or trying to understand what your SEO is doing to your site, it can seem a little overwhelming, especially when it’s your first campaign.
This article will hopefully help beginning SEOs to think more clearly about the SEO process, and veteran SEOs to communicate more clearly with their clients. I owe most of the information you’ll read here to SEO Chat forum member Maximum Tadpole. He noticed that many of his clients wanted a step-boy-step guide to the SEO process. To help answer that need, he recorded what he did for one recent site that he took on as an SEO client.
The very first step he took for the site was opening a Google Analytics account. This free service from Google is designed to help you discover where your visitors come from and how they interact with your site. This important information can help you make changes to your site to increase your traffic and make your site friendlier to visitors.
Once you have that account, the next few steps involve some serious site contemplation. What value does the site have to offer? Is it selling products or offering content? What kind of content – articles, classified ads, what? To use SEO Chat as an example, our site offers articles, SEO tools, and a set of forums with plenty of networking opportunities.
Now that you know what value the site has to offer, you need to figure out who would benefit from that value. Maximum Tadpole was working on a free web site with job opportunity listings and career advice for nurses. Clearly, this information would be of most benefit to nurses, especially nurses who were just graduating from nursing school. Keep this audience clearly in mind, because much of the rest of your strategy is going to depend on them.
Indeed, the next steps in this phase of your campaign involve figuring out how to get in touch with those people – and figuring out how to get them to come to you. After you’ve thought about all these points for the site as a whole, you want to think about them again (though not in quite as much depth) for the parts of the site to which you will want to build links aggressively, such as category pages.
At this point, you need to start thinking like the people you’re targeting. When they search for the valuable products and/or information you’re offering, what kinds of keywords are they likely to use? Temper this by also considering which keywords the site even has a chance of competing for, at least at first. You can go for the more competitive ones later.
To use the example of the free web site on which Maximum Tadpole was working, he explained that “I decided ‘Nurse Careers’ and ‘Nursing Job Advice’ were better choices than ‘Nurse Jobs’ and ‘Nursing Careers’ for the home page.” The secret behind this is that, by “first optimizing for less competitive keywords” you’re actually in a “better position to go after the more competitive ones in the future.” Don’t limit yourself to the home page, of course; you want to write down the best key words for each page of the site.
At this point you’re ready to do your on page optimization. Using your key words, place unique targeted title tags on each page. This is the title element. If you’re having a hard time coming up with a title for the page, Maximum Tadpole suggests a way to think about it: “If each page of your site is a book, what would you title it? Make sure your title matches the content of the page.” He also suggests trying to keep your title tag under five words. It’s very important to make sure that your title matches the content of your pages; if it doesn’t, change either the title or the content until they match.
As for other tags, you’ll want to use Meta and key word tags for your home page, but the jury’s out as to whether those are valuable for any other pages on your site. But there are other details you’ll want to tend to – doing a 301 redirect to send non-www pages to the www versions. You should also optimize every internal link on your site with relevant text, including alt tags for images. Maximum Tadpole gives an example of having a site focused on soccer with a soccer ball logo in the upper left hand corner that takes visitors to the home page when they click on it. Rather than “home” as your alt text, you might consider making it “soccer.” You can probably come up with something even better, perhaps “soccer home.”
Once you’ve completed the on page optimization, it’s time to start the off-page optimization of your web site. That means building links. You don’t want to go the route of doing reciprocal link trades or link farms. What you really want to do is think back to the very first steps you took to optimize the site. What value does the site offer? Who would find it most valuable? Where do these people “hang out” online, and how can you get them to come to you?
Most web sites want to offer their visitors something of value. If you can show a site owner how a link to your site would help its users, you stand a good chance of getting a link from that site. You shouldn’t actually request a link so much as focus on the value your site offers so the site owner will think of linking to you himself. Maximum Tadpole said he has seen a favorable response rate of five to ten percent with a simple email that reads like so: “I have created a web site for nursing students called mysite.com, which could be very valuable to your graduating nurses. It is a free site with job opportunity listings and career advice for nurses. If you find time, please visit our site, and consider linking to it from your site, as it would certainly be a resource for your students. Any feedback would be much appreciated! Thanks for your time and have a nice day!”
How strong of a campaign should you conduct? Maximum Tadpole said that he personally requested 100 links per day for five days. Remember, this is just the beginning as far as SEO for your site goes; you’ll do more link requests later, after you’ve completed this first phase.
If you have a site that lends itself well to using social networks to help promote, by all means do so. Here on SEO Chat, you’ll find a number of articles that explain how to use this web 2.0 method of building interest in your site.
The final stage is so important – and unexpected – that I’m going to quote Maximum Tadpole again: “You won’t believe me, but don’t do anything but look at traffic for a month. Check rankings every day and most importantly, the keywords that people are finding your site with. Use those to decide if you should create entirely new pages to target JUST those words or to write content targeting those keywords. As you move into top positions for the easier words, go after the hard ones.”
That may perhaps sound strange; wouldn’t it make more sense to change the existing content by using the terms for which more people are searching rather than adding more pages? Not necessarily; it depends on what they’re searching for, and why they’re searching for it. As an example, Maximum Tadpole noticed 300 searches over one week on his site for a piece of equipment used in eye surgery. He’d mentioned it once in an article that actually had little to do with the equipment. A little more investigating revealed that people were searching Google for the equipment, finding his site, then searching his site for it.
Obviously, this was an unfulfilled need just begging for help. So he dedicated an entire page of his site to that piece of equipment. It is now one of the best pages on his site.
So, after you have gone through all of these steps, now what do you do? You take the information you got from Google Analytics about your traffic, analyze it and assess what you need to do. Go through the various steps listed here as necessary. It’s worth noting that this strategy might not be the optimal one for your site, but it should at least give you an outline for thinking about what your site needs and how to tackle its optimization.
Does it work? Well, Maximum Tadpole used this strategy for his client, and Google search referrals went from an average of three per day to 164 per day in one month. That’s a nice increase. Your results may vary, of course, but it’s good to have a plan.