The uncertain future of Facebook

At first I was about to write about utilization of social networking knowledge in WOM marketing. It has been already a while since people from this business fixed their attention to Facebook. But when I went through a couple of articles I realised that it is not clear what happens with Facebook in next five years and whether it will be really the holy grail of marketers.
Facebook is generally acknowledged to be a huge success of today. Mark Zuckerberg is constantly publishing breathtaking numbers of new users (by this time it is more than 300 million of active users). However, certain doubts are arising due to persistent silence of Facebook management, when it comes to disclosure of financial information. Facebook has been also criticised recently by its users for design innovations and by experts for awkwared business strategy.
This leads to a question whether Facebook is a successful well strategically managed company or uncontrollably growing experiment going on the path of trials and errors.
What will we to have to stand in the future to remain connected with our personal social networks? Paying of user fees? Increasing amount of advertisements? Disclosure of our privacy? And will we be still interested in this way of socializing? And the last but not least, who will be more empowered concentrated and connected customers or data mining marketers?
Many experts agree that Facebook will remain a substantial part of our reality. However, there is an uncertainity about how is it going to attract us in the future and what will be the engine for its profits.
During negotiations about Microsoft´s investment into Facebook, the value of Facebook was estimated to be 15 billion USD.[1]
Sheryl Sandberg, the COO of Facebook, in her interview for Business Week (http://www.businessweek.com/technology/content/apr2009/tc2009048_429871.htm ), assert that the company has already found its profit engine in advertising. Facebook offers to marketers highly personal connections with customers and enables ineractive marketing approach. Sandberg also confirmed that the company expects to grow revenue 70% year-over-year.[2]
In spite of this Michael Arrington in his article Facebook May Be Growing Too Fast (http://www.techcrunch.com/2008/10/31/facebooks-growing-problem/ ) claims that Facebook has a problem to keep up with growth and the communication platform will need money sooner than later.
He declares that “it costs a couple of hundred million dollars a year just to keep the lights on at Facebook“. Due to all of user-created translated versions of the website the number of users increases exponentially and there is not a possibility to restrict this trend significantly. Arrington assumes that Facebook spends millions on elektricity, servers, office and datacenter rent payments. Nowadays has Facebook 750 employees and this platform is growing. Arringtons estimates appear to be very likely and thus the question of how does the company plan to earn its profits in a close future, seems to be even more urgent.[3]

It is quite conceviable that Facebook will combine several strategies to finance that growth. According to Jeremiah Owyang (http://www.web-strategist.com/blog/2009/08/17/the-future-of-facebook/) there is a chance that Facebook will aggregate all digital media, so the company will be able to profit from the common knowledge that our decisions are highly influenced by our friends. Together with the real time search tool, which is already working, it will enable to deliver more relevant information to the customers, who will make their decisions while being influenced by their peers. Facebook will also able to provide more specific information to the marketers. Owyang also predicts that Facebook content will go more public. This is already happening (Friendfeed acquisition) and it was also confirmed by Mark Zuckerberg as a company´s future vision. Facebook might also colonize the other websites and enable any experince to be shared.
Personally, I believe that the main power of Facebook concerning profitability consits in the huge database of exact marketing information and in the number of contacts. The marketing practices on Facebook are already working very well, but mainly for lovemarks. However, some products are more suitable to succeed on Facebook than the others. Facebook is a big opportunity for emotional products such as (clothes, shoes, beverages, music, movies, etc.).
On the subject of marketing the proportion between public and private content becomes to be a question. I believe that Facebook has so many members because of quality of its privacy tools. But this key factor might also contribute to shrinking of the revenues from marketing.
Another thing is that main reason for the Facebook popularity is that you can get to know of your friends. Most of us go there to see what are our friends doing, what is new in their personal lives, to see the photos from the yesterday party, but hardly anyone is searching for marketing information. Facebook is about trust, but what happens, when you will not be sure who can see what on your profile? Or when everybody will be on Facebook, your boss as well as your grandmother? When strange people from your past will comment on your status more and more often? I think that managing this issues and achiving the balance between the privacy and public content are the biggest challenges that Facebook is going to face in the future. This will probably predetermine if we will meet each other on Facebook also in 2014.



Sources:

1) http://www.web-strategist.com/blog/2009/08/17/the-future-of-facebook/
2) http://www.insidefacebook.com/2009/08/10/facebook-launches-real-time-public-timeline-search-for-everyone/
3) http://www.web-strategist.com/blog/2009/04/27/future-of-the-social-web/
4) http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/15/BUPA197LDD.DTL&type=business
5) http://www.web-strategist.com/blog/2008/07/28/an-overview-of-facebooks-f8-developers-community/
6) http://blogs.computerworld.com/node/6483
7) http://www.time.com/time/business/article/0,8599,1644040,00.html
8) http://www.adido-solutions.com/resources/articles/facebook-fad-or-future.aspx
9) http://www.businessweek.com/technology/content/apr2009/tc2009048_429871.htm
10) http://www.newsweek.com/id/207843/page/2
11)http://www.readwriteweb.com/archives/whats_wrong_with_facebook_when_strategy_fails_to_meet_execution.php

[1] http://www.msnbc.msn.com/id/21458486/
[2] http://www.businessweek.com/technology/content/apr2009/tc2009048_429871.htm

[3] http://www.techcrunch.com/2008/10/31/facebooks-growing-problem/