Facebook For Profit?

So there seems to be a lot of hub-bub out there in print, on the airwaves, and of course via the world-wide web about how social networks can monetize their worth.  Facebook for one example seems to be worth (depending on who is doing the valuation) around $3 billion.  So ask yourself the question...how are they worth this?  It can't just be the "pay-per-click" advertising!

The how is simply answered by giving people what they want.  Notice I said "want" not need.  People want to interact with friends, groups, old flames (tricky territory here), and even companies. But...what if Facebook took a different approach and instead of the standard "pay-per-click" model monetize their users at by offering a "pay-to-play" model.  I'm not talking about charge for the privilege of using Facebook, I'm talking about paying their users to promote products and services on their own pages.

So for example, if on your Facebook page you had the option of adding "my recommendations" and as that user you could go to a library of advertiser products and services and add that product or services "widget/ad" to your recommendations.  In exchange for adding that "promotion" to your page, you would receive a "pay-per-click" spiff every time one of your Facebook friends clicked on it.  Additionally, every time a particular businesses product or services "widget/ad" were downloaded to a users page, then that business paid for the download or they bought in advance "x-number of impressions/placements."  This becomes a win/win scenario for you the user, the business owner, and Facebook.

But what is really scary is...with all that information that is in the databases of the Facebook servers...you do realize that they could begin to share information with the businesses.  For example, 23% of "widget/ad" downloads were females, age 32 - 40, on the West Coast, who access their Facebook account 3.5 times per day for an average session time of 10.5 minuets.  Scary thought isn't it?

So do you pay to play, or play to get paid with big brother watching?

$$ vs.% - What Makes Sense

It seems rather uncanny to me that during these less than stellar economic times, small business choose either not to market or market ineffectively.  On a daily basis I retrieve direct mail offering 10% off some service or product.  So, I decided to bring "teach an old dog a new trick analogy" to this thought process.

Why would you offer someone 10% off their purchase if your average sell is less than $50, and quite honestly if it is less than $100?  To most buyers, $5 off a $50 purchase is much more tantilizing that 10% off that same purchase.  Now I am not trying to break the small business owners back here, but even big ticker retailers - i.e. cars, appliances, computers, houses - rarely go the "percent off" route.  And when they do, they promote a big ticket item specifically that you will get the discount on.

So my advice to the businesses who promote "percent off," ...don't!  Experiement witth what you can do with dollar off offers that don't dent your pocketbook and that really tantilize consumers with vision of money in their pocket rather than percentages they have to calculate while shopping.