What to Expect When Facebook Is Expecting: Five Predictions for Facebook’s First Public Year

This article was published as a guest post at AllThingsD, and is republished here for Digital Quarters readers.

Mark Zuckerberg’s baby will be coming of age in a few days, just eight years after it was born in a Harvard dorm room. We’ve been there for the first steps, and the first missteps. But do any of us know what Facebook-all-grown-up-as-a-public-company will look like?

I have five predictions of how Facebook will be maturing in the first year after its IPO:

1. Search

Facebook has become home base for users in many ways. But when it comes to search, Facebook makes you take a bus transfer at Google every time you want to leave the house.

And that’s a shame, because Google starts each search from a place of knowing almost nothing about me. When I’m taking a vacation to Bali, I’m far less interested in Google’s generic recommendations of things to do than I am in recommendations from my friends who have been there.

Facebook already knows which of my friends have been to Bali, and which restaurants and attractions they liked the best. It can even differentiate between the friend I trust for restaurant recs and the friend who always finds the best surfing spots.

There is a clear battle between Google and Facebook. But it’s not over “search vs. discovery,” as it is often framed. Rather, it’s “transaction vs. relationship” — which is why Facebook has the potential to disrupt search as we know it.

Prediction: Facebook will launch a purely social search by the end of 2012 (before tackling the whole hog in 2013).

2. Advertising

Despite the company’s fierce ethos of consumer experience first, business concerns second, an IPO will inevitably put upward pressure on the latter. With the numbers published quarterly and the prices reset every day, Facebook will be forced to support that share price (if not for the sake of its shareholders, then at least for its employees!) by expanding its advertising revenues.

Facebook today brings in quarterly ad revenue of $872M — just a tiny fraction of Google’s $9B. But transactions are by nature pecuniary — and relationships are priceless. As a gatekeeper to nearly a billion consumer relationships, Facebook can roll out new advertising products that are far more valuable than AdWords.

The market for online brand advertising is already huge at $85B today. As soon as Facebook unlocks the potential of relationship-based advertising, the market will open up by tens of billions more.

Prediction: By Q2 2013, Facebook will have more than tripled ad revenues to $3B per quarter.

3. Open Graph

Occupy Facebook! Oh wait, we already do. Or does Facebook occupy us? Facebook currently occupies 1 in 7 minutes of all time spent online.

As the locus of consumer identity, attention and relationships, Facebook has the potential to be the one true platform that links together every destination on the web.

But it’s not there yet. Open Graph was a start, but it lacks a complete and actionable vision for how publishers can connect, access data and establish relationships. Publishers don’t want bits and pieces of data that they need to analyze themselves — they want a unified schema that bridges their audiences’ online worlds and real lives.

When I buy a chicken at Whole Foods using a Facebook app’s mobile grocery coupon, Facebook can match that incoming data point with the fact that I read Cooks Illustrated and that I’ve been on an Indian food kick lately (based on my restaurant check-ins). By the time that chicken is in my reusable bag and I’m hauling it out the door, there should be chicken curry recipe suggestions on my Facebook page.

Facebook has an opportunity to turn data from the long tail of Facebook apps into real inferences about you and me that publishers and other brands on the web can actually use.

Prediction: Facebook will completely redesign their analytics offering by Q2 2013 to provide not just data but real, integrated audience insights that will guide brands’ personalization efforts.

4. Commerce and Currency

Advertising won’t be the only revenue play Facebook makes in its first year as a public company.

Digital commerce (i.e. digital goods) already represents more than $16B in market size, and is projected to grow to $36B globally by 2014. E-commerce is another $680B on top of that. Both are currently conducted by arcane means: Visa card numbers and PayPal accounts.

Why have digital payments been so slow to evolve? Because even the most trusting of us only allow a few close associates access to our most private details. Who knows me the best? My bank, my lawyer, my mother and Facebook. In fact, no one owns my identity as well as Facebook these days (sorry, Mom!). Just because Facebook doesn’t have access to my wallet yet doesn’t mean it’s not going to happen.

A host of companies today (Google, Apple, Square) are trying to become your digital wallet, but Facebook holds a valuable advantage: it is already the locus of your relationships with third-party Web sites through Open Graph. While the logistics will certainly be no piece of cake, commerce is right up Facebook’s alley.

Prediction: By Q2 2013, Facebook will be presiding over $2B in transactions.

5. Timeline

There’s nothing more core to Facebook than its user experience, and Facebook has since its birth shown a consistent healthy dissatisfaction with it no matter what the status quo.

The current timeline experience is a nice try, but it’s not quite right. Timeline solved one problem — the indigestible frequency and quantity of updates at all levels of priority — while creating several more. New Problem #1: Timeline’s intuition about what’s important is too frequently just plain wrong. And while it gives us a great retrospective on people, it does a surprisingly poor job of helping us stay up to date with them. New Problem #2: Timeline depends heavily on Open Graph widgets to summarize our lives.

The latter is both ambitious and troubling. We admire great biographers for their ability to identify and communicate the essence of a person. It’s an insult say that a Nike Fuel score algorithm can capture the “real me” in the same way.

Timeline is a v1 product. It will take significant and deep tuning over many versions to reach its full potential.

This may seem like it’s just a UI update, but it’s not. Timeline is the clearinghouse for everything that happens on Facebook. Getting Timeline right is probably the single most valuable thing Facebook can do to grow its effectiveness with users — and its revenues.

Prediction: Facebook will release the first major redesign of Timeline by the first half of 2013.

Will the precocious kid that Facebook is today grow into a smart, savvy adult? A boatload of investors and J.P. Morgan certainly seem to think so. Over the long term, it will depend on Facebook’s ability to leave its youthful single-minded focus on users behind and execute consistently against two metrics: great user experience and revenues to match.

How To Use Facebook’s Open Graph To Build Your Business

This article was published as a guest post at PaidContent, and is republished here for Digital Quarters readers.

Last year, it became clear that Facebook is well on its way to becoming a social operating system underlying our digital lives.  And the enhanced Facebook Open Graph makes that vision a reality.

My company, Wetpaint, was fortunate to participate in a beta phase with Facebook and be a launch partner with The Washington Post (NYSE: WPO) social reader project; in the process, we have gotten a glimpse of how to build media for a fully social web, and it’s had a dramatic impact on our business.

We have learned that without question, there is a ton to be gained in audience acquisition, branding, and retention by integrating into the Open Graph.  And, based on the few months’ head start we’ve had, I wanted to provide a brief guide to what has worked, and explain how to take full advantage of the Open Graph.

Here, then, are the four most important elements:

1. Determine what’s inherently social in what you do for your audience – This is the most important part, and it’s not easy, because people don’t want to share everything they read online.  Rather, they share the things that are helpful to others, or contribute to their public identity.

Don’t fight it.  Work with it, instead.  Provide content your audiences will use to define themselves and enhance their reputations as a curator.  With your content, what specifically can they share, and what can it say about them?

I especially like this item from a cousin who recently posted this recipe for fried Coke (what? oh yes!).  If you think it means she’s a southern gourmet, you’d be right:  she makes the best fried chicken I’ve ever had. And posting recipes like this makes sure we all know about her decadent down-home style.

People also respond to things that make them smile.  Who wouldn’t like a picture of a cat laughing with a dinosaur?  Sharing it makes a statement about what gems you can find, what loops you’re in, what makes you chuckle, and that you like brightening your friends’ day.

We are thumbs-up with things that back our opinions, or show we are in the know about things that are important to how we want to be perceived. For a news site, this means interests and causes that we want to support; and, for a sports site, it’s our tribal badging and admiration of teams and players.

And for games, movies, and events, it’s more about sharing something special together. Whether a concert or a conference, convening with others turns content into an experience. The phenomenon of Social TV that we see at Wetpaint, and throughout all TV programming, is proof positive that media events are made to be shared.

2. Start thinking in verbs – other than “Like” – To date, publishers have been focused on the page.  Now it’s time to think about the interaction – not just with the page, but with the content.  Think in verbs.  Facebook has suggested a handful of obvious ones.  Your audience should “watch” videos; “listen to” songs; and “read” articles.  But beyond that, you can also add your own creative alternatives:  “view” photo galleries, “lust for” celebrities, “OMG” scenes on TV, “vote for” reality TV contestants.  All of these help define a relationship between your audience and what they love.  And as a publisher, you get to take credit for that introduction and its viral distribution among a user’s circle.

3. Own objects, not just content – In the now-more-open Open Graph world, the objects of our affections are no longer just dumb pages.  Rather, you can define objects in the real-world – with the promise of improving Facebook’s and your audience’s connections to them, and to you.  As with the examples above, the limit of what you can define is constrained only by your creativity; however, the focus should be on objects that are natural social extensions of your consumer experience.  Don’t try to socialize objects that no one wants to share – I don’t want to circulate that I “zero balanced” my “bank account.”

4. Live in Facebook’s world – It’s not really just Zuckerberg’s world … it’s your users’ world, too.  500 million Facebook users are logging in every day, and spend seven hours per month (on average) on Facebook.  That’s why it’s important to create an experience that blends with the social world; and that experience needs to be connected, and in real-time. The more you integrate into Facebook’s clearing house, the more you can benefit from seamless transitions, access to connected user data, and user expectations of implicit sharing.  Facebook Connect is critical; as is earning the Likes to be in a relationship with your audience.  When you do that, you can program your users’ news feeds.  At Wetpaint, we average 30 impressions per fan per month.  I’ve never had that much communication in any of my relationships with friends or family (much to my mother’s dismay, which she reminds me of all the time), yet our consumers have it with us all year long.  And, beyond the news feed, creating a Facebook canvas app (we’re working on a new one now) means you can truly be everywhere your audience wants you to be – both in Facebook and on the Web.

With the new Open Graph features, a short-term way of thinking about the opportunity is that you are integrating into Facebook’s technical architecture.  But a far more meaningful – and, ultimately, more beneficial – way of thinking about it for both your users and your business is that you are integrating into your users’ lives.

I overheard someone at last year’s F8 event say that Facebook is no longer “Face”-book, it’s really becoming “Life”-book.  It’s that level of integration with real life that can create the most powerful opportunities for the next era of the Web.

Facebook’s Like Button: A Force Powerful Enough to Save Media from Google Search

CNN.com Activity FeedThis article by Ben Elowitz originally appeared as a guest post on Huffington Post.

With its new and soon-to-be-ubiquitous Open Graph initiative, Facebook is poised to become the great network of networks that circulates the majority of traffic on the web. For publishers, that is a good thing. And for Google, that is very, very threatening.

Last week’s announcements from Facebook at the f8 conference have sparked a great deal of discussion among the tech community and privacy advocates, but have left many publishers confused amidst discussion of plugins, SDKs, and the “semantic web”. Setting aside the tech garble, the new social sharing features introduced with the Facebook Open Graph are extremely positive for most publishers (a few exceptions correctly noted by Alex Iskold at ReadWriteWeb) and should be adopted sooner rather than later.

Facebook’s Open Graph allows your readers to “like” a topic or article, thereby sharing it with their Facebook friends and in some cases, creating a permanent link in their profile. It also will allow your site visitors to see who among their friends have liked your content and any comments that have been left. Finally, Facebook can use passive browsing behavior on partner sites to recommend content to their users. The downside for publishers is that at least currently, you don’t have direct access to this user-generated content: it is stored only by Facebook and can be used by them however they like (most likely to target ads on their site, potentially from your competitors).

However, the upside for publishers is significant: in a nutshell, Facebook is re-introducing serendipity. Top media brands are experts at creating compelling content and experiences. Consumers like to share high-quality content, and the easier that process is, the more that content is passed around and the authors benefit from viral distribution. While media companies are effective at cross-promotion, such as the lead-ins in TV, many traditional media companies have failed to harness word-of-mouth marketing online to expand their audience. Rather than a TV / Preview guide of available content (Yahoo attempted this for the web in the 1990s until it became unmanageable) consumers will now get a personalized guide to online content, authored by their friends. Effectively, it’s Tivo Suggestions (based on your viewing behavior + ratings) with the added intelligence of your friends’ preferences. What remains to be seen is how aggressively Facebook will promote the passively recommended content within your news stream.

Content sharing favors well-authored, branded experiences, which contrasts with the Google referral engine which favors “relevance” to a search phrase based on a mathematical algorithm. In a Google-dominated world, high-quality content can take back seat to keyword-heavy SEO-optimized pages, or simply newer content. That said, search has never been an end-all tool: blogs have grown in popularity because they are editorialized collections of content and opinions. However, Open Graph effectively explodes the number of content critics, now enabling consumers to glean the preferences of a large number of their friends rather than the small minority who take the time to blog. Media companies can spend more time focusing on creating outstanding experiences, and less time optimizing for Google results.

Facebook has already established itself as the new rising force for serendipity, but this new Open Graph goes much farther. Instead of relying solely on proactive recommendations, Facebook is now in a position with automatic login on many sites to passively collect consumption data, and pair that with friends’ behaviors to make suggestions. The better they utilize this data, the more Google needs to watch out, as Facebook can anticipate consumer desires faster than consumers can type “google” into their browsers.