Facebook seeks more revenue, not control of Web, analysts say
4/23/2010 12:50:00 PM
kenmouse
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Moves could boost Facebook's marketing revenue if they don't lead to another user revoltContrary to a lot of online buzz, analysts say that Facebook's moves this week don't indicate that the company is looking to take over the Web.
Facebook on Wednesday unveiled a bevy of development tools aimed at enabling the social networking phenom to extend its reach across a greater expanse of the Web.
The new tools let operators of other Web sites share user data with Facebook, providing the social networking firm with new online advertising opportunities.
Industry analysts say the moves could affect the future breadth and pervasiveness of social networking, extending it to many new areas of the Internet, including news and e-commerce sites.
"Facebook isn't going to take over the Web, as much as they might try," said Dan Olds, an analyst with The Gabriel Consulting Group. "What this does signify is that social networking has reached the point where it's very big business and the stakes are high. Facebook sees the opportunity to make a power play and get into the online marketing game in a much bigger way. At this point, we don't know if Facebook has a gold mine here or not."
Rob Enderle, an analyst with the Enderle Group, agrees that Facebook is likely looking to position itself as a leader in the effort to create a more social Web so that it can better capitalize on its revenue potential.
"This is Facebook making strategic moves to own its customers and [get] the revenue these customers generate," said Enderle. "It is likely the first of a number of steps [toward] pushing [social networking] beyond what it is now. In fact, we may stop calling it social networking as it becomes an integral part of the Web experience."
Stuart Williams, an analyst with Technology Business Research, said Facebook is in a race to stake a position in the expanding business before other companies create alternatives tools aimed at attracting Facebook users and their marketing potential.
"Vendors -- Google, Microsoft, Salesforce.com, IBM -- are bringing social platforms to market all over the place for both business and personal environments," said Williams. "Users are getting more sophisticated about wanting more control over their online personas as well as their personal data, comments, photos, video and history. Facebook is monetizing the online personas of their users, by doing them the favor of integrating the Facebook environment with other social platforms and Web services. "
A key question, said Olds, is whether Facebook users will see the moves as a favor or a flagrant misuse of personal information. Facebook users have a history of speaking up -- loudly -- about perceived threats to their privacy.
"It's not that this type of information - my likes, my dislikes, what I'm talking about now -- isn't already public in Facebook," Olds said. "It is, but it's primarily confined to my universe of friends and admirers. Facebook is going to give marketers a lot more information to pinpoint and direct advertising to me."
He predicted that "there's going to be a firestorm of criticism over this, Users are very touchy about privacy and being used against their will. This has the potential to mash those user hot buttons with a hammer."
Williams added that the new features could be a prime example of Facebook's tendency to simultaneously please and irritate its users.
"Users get more and easier access to other platforms but Facebook and its partners get more value from the aggregate usage and shared information," he said. "I see the clouds of a civil war on the horizon between users and the platform vendors as users want more discrete control over their history, privacy and data, and the platform vendors who drive advertising and data mining businesses."
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