Today Adam Kleinberg, CEO of Traction, wrote an insightful piece calling Facebook’s acquisition of Whatsapp Zuckerberg’s second shot at keeping to his social principles. The article points out that the Facebook founder relentlessly fought advertising on Facebook until the company went public. Now, with advertising inundating newsfeeds, audiences are migrating away from the platform. Further, brands are frustrated as Facebook’s control over the process means brand posts only get to perhaps 10% of brand followers. Yet, the purchase of text and chat platform Whatsapp is being heralded as Facebook’s salvation and advertisers’ hope that Facebook can deliver on the potential it was once that to have for marketing.
Largely, I agree with Kleinberg’s argument that this will not work. However, the article’s discussion brings up a bigger issue with regards to Facebook’s, or any social entity, ability to make a profit and keep users. The problem has always been the same: THE BUSINESS MODEL MUST BE BENEFICIAL FOR USERS, BRANDS, AND THE PLATFORM TO BE SUCCESSFUL IN THE LONG-RUN!
As an advertising scholar, I can tell you the advertising (at least not alone) is not the answer. Any successful e-Business must have three types of streams: logistical. value, and revenue. It is the networks created within SNSs that provide the logistical part of this equation. Within the networks, messages, commercial and otherwise, can travel anywhere and in large numbers at alarming speeds. Viral advertising is driven by this fact. However, messages only travel if they create value for the people within the network. Value in that it provides worthwhile information or that it is entertaining or that it is discussion worthy. The network has to care! Luckily, given that viral advertising exists, brands can provide valuable content for the network.
This means that we have two of the three streams to be successful: logistics and value, So, how do we create the third, the revenue stream? Well, just as the value and logistical streams are integral to one another (see above), the revenue stream must be intertwined meaningfully with the other two if the model is to work. The logistical streams provided by the SNSs which distribute the content that is valuable to people within the networks are dependent upon the users to create the networks. On the other hand, the only reason the content is valuable is because it facilitates interactions that are only possible because of the networks within the SNS platform. So, any revenue stream must account for the well-being of the platform, the users, and brands if it is to be a useful marketing product.
A few years ago now, my colleague Geoffrey Graybeal and I (@JamesonHayes) suggested our approach to this problem and published it in an article entitled “Synergizing traditional media and the Social Web for Monetization: A Modified Media Micropayment Model.” Microearning is a modification of micropayment that is more compatible with the true nature of the Social Web. Microeaning contends that rather than advertising being the currency of the Social Web, sharing is. Consumers share content that they see as valuable with their contacts within social networks every day. Every time brand content goes viral consumers and the SNS platform are doing work for brands without payment. Impressions are created that are far more effective than traditional advertising because it is coming from a trusted source. Microearning suggests that consumers and SNSs should earn small payments from brands in exchange for the access provided to the brands. In other words, for every impression derived from a consumer’s sharing of content, that consumer should microearn compensation. Further, the platform should also drive revenue based upon this sharing because that is exactly what the true value of the SNS platform is. This is beneficial for all involved. And, for Mark Zuckerberg, it is a revenue model consistent with Facebook’s social mission.
There are several nuances to microearning and this is but one application. Tesco and CarrotPay are two companies that have implemented microearning on smaller levels over the past few years, Tesco has had particularly great success. Facebook’s issue with advertising is a microcosm of a bigger eCommerce problem within the Social Web. It is time to try microearning on a larger scale.