Two Social Trends That Facebook, Inc. Fears

Facebook has shaped our culture for the past decade. Will it be around for the next decade?

Dan Newman
Dan Newman
Jul 29, 2014 at 1:00PM
Technology and Telecom

Facebook (NASDAQ:FB) has defined the digital social experience for the past decade. It has altered what the world thinks about privacy, how we interact both with people we've just met, and the amount of information available to marketers.

In the past few years, however, Facebook's grasp on digital society seems to have a few cracks. It's patched these up with acquisitions of Instagram and WhatsApp, but the organization from 2004 appears to clang around here in 2014, vigilant but fearful of remaining relevant.

And for good reason. Society is moving toward more authenticity and economics are moving toward a la carte incomes. And both trends strike fear in Facebook's continued social dominance.

We know if it's real
Marketers have now become experts in virality. A viral "banned" advertisement that a company posts on YouTube can have a greater return than paying millions for a television spot. A story posted online about fantastic customer service is worth millions in good public relations; and, likewise, a negative story can cost millions, or at least significant time in dealing with the fallout.

However, corporate social profiles open up a company to numerous two-way personal interactions with the public, as opposed to the traditional, one-way public relations statements. In this new relationship, companies that attempt to deviate from an authentic corporate voice and personality, and stretch themselves to fit in to the new digital marketing trends, often fail spectacularly. Take JP Morgan & Chase's attempt at holding a question and answer session on Twitter, in which people had some pointed questions for the bank:

While marketers have honed their social skills, consumers have set up a filter for the abrasively commercial marketing attempts.

In the end, as the Arthur W. Page Society writes:

Trust is no longer a function only of compliance with the law and business ethics. With the emergence of empowered, distributed and technology-enabled employees, customers, communities and other stakeholders, the challenge of building trust is more acute than ever.

How does authenticity relate to Facebook? As Facebook required certain profile aspects to become completely public, profiles are now carefully manicured public presentations of an individual -- a potential employer would likely check up on this fact. We now have the term "Facebook friend," to takeover the meaning of acquaintance. Both bits of inauthenticity that Facebook perpetuates, not to mention the violation of trust when it ran a psychological experiment on users.

And Facebook knows it must fight inauthenticity. As captured last November, Facebook asked users, "How authentic does this post feel?" on a scale of five, from "not at all" to "extremely".

But the real threat is money
Facebook gives away a free service in exchange for displaying advertising around user's posts, photos, and updates. In essence, they monetize a user's content.

There are new social networks, like Bubblews, that take a fraction of the advertising revenue and then pass the remaining revenue onto users. The cost to run a social network -- even one with billions of users like Facebook -- is relatively small compared to the revenue opportunity. Facebook itself has an operating margin of 48%.

There are also start-ups that let users sell their information directly, like DataCoup. After choosing which accounts you want to link, like your social media or checking or credit card accounts, you decide who to sell your data to and DataCoup sends you a check each month.

These type of small-income opportunities now abound. Less than part-time jobs, available through services like TaskRabbit or any of the new driving services like UberX, Lyft, or Sidecar, help people cobble together a paycheck from multiple sources. As we have more conversations about a guaranteed income and the displacement of workers due to technology, why not make a few more dollars from activity you already publish online?

These competitors will have a tough time breaking into Facebook's billion-strong network effect, but they have a great incentive for new members: actual profit-sharing.

Facebook and the future of authenticity and competitors
Facebook admits that between 5% and 11% of its accounts are fake. Both improving the authenticity of accounts and interactions are important to keep users from Facebook fatigue.

It's a longshot that any start-up will challenge Facebook's position. However, acquiring Instagram and its 13 employees for $1 billion shows that longshots are not impossibilities. With some of these start-ups new monetary incentives for users, it's possible they offer a social network for 2014, instead of 2004.