E-commerce on Facebook, Are You Kidding Me?

You know the difference between social media and social marketing. Social media is about that dorky kid on youtube swinging a stick around, and social marketing is about efforts that engage consumers in two way conversations. But branding isn’t good enough these days. Direct sales and hand over first ROI that anyone with sixth grade level of education can understand seems to be the new push.

Enter Facebook credits. Match this with Payvment, a new e-commerce engine, and you have what looks to be the beginning of a new revenue model on Facebook, e-commerce.

The Web 2.0 model of audience first, monetization later has proven to work. But, with an entity as big as Facebook with massive privacy issues, you don’t necessarily have the freedom to throw a bunch of shit at the wall to see what sticks. Okay, maybe they are putting a little more thought into it than that, but so much of what they do seems inherently risky. I guess at that level anything is.

Facebook’s failed Beacon program missed the mark for one reason. No opt in ability. They were just going to broadcast everything you purchase to everyone in your network. So much for surprise birthday presents. Well, of course that failed.

Now, if I had an easy way to select whether or not to share a purchase, I could see that working. There is no incentive for me to tell someone I bought ketchup. Even with a Facebook credit promotion that paid me to share, I still won’t. My social currency, the value of my shared information, drops when I share lame content. However, if I purchased a new smart phone running Android because I now hate Apple; that communicates who I am and raises my social currency. Their brand elevates my status.

I am defined through some of my purchases, certainly not all of them. So what happens when e-commerce takes place of branding? Brands look less cool which in turn makes me less interested in sharing anything about that brand. There needs to be a place for both and while related they are separate. For me, Facebook is about the brand conversations. Brand development drives sales, but you have to do your homework to see the ROI. It’s not always obvious but it does work. Strong brands are inherently shareworthy. Does your social marketing suck? That’s probably because your brand efforts suck.

Monetization of social media means we have to live with social marketing. Companies need revenue before they run out of VC money. Regardless, there are limits to what they can subject users to. Exceed those limits and you start disenchanting them. When another front runner pops up, everyone will just migrate to next big thing. People migrated from Friendster to MySpace to Facebook.

If Facebook starts engaging in e-commerce, the already problematic privacy issues they have are going to explode. If they focus too much on money while ignoring what makes great online communities, it very well could be the beginning of the end. Communities, brand pages, advertising, and now e-commerce? I just don’t see why the entire Web needs to be on one URL.

The Value of Social Currency in Social Networks

One thought I was having recently has been about the value of social currency within social networks. You’re social currency is the information you share. And like currency it has a value. If the information is of high value, meaning it’s engaging and relevant; it gets consumed. If the information is of the highest value, it gets passed along. So you can define the value of social currency as the frequency in which someone will respond to you and the number of people they will pass on your message.

Value of social currency = (frequency of response) x (number of people shared with)

That maybe a little pointless in and of itself, but as we consider that social content is openly shared with no immediate monetary gain, I think there should be a deep interest in what does motivate someone to take the time to either create a blog or pass something along.

When I post to my blog and it gets a lot of hits, I am excited. No one is paying me anything to do this. But, increasing the value of my social currency is what I am interested in. When someone posts to Facebook they anticipate a response. They look for validation, just like in the physical world. Even the most introverted people want that acceptance.

Reputation scores are how the blogging aggregator site Technorati works. The more people who link to your blog (along with some other things), the higher the rating you get. Reddit.com and other social bookmarking sites and even Google work on this principle. What we are not seeing on sites like Facebook and Twitter are these ways to judge the value of social currency even if it is somewhat implicit. The mayor feature of Foursquare is an excellent example of new ways to handle this.

Socially, we judge quality all the time. We look at how a person is groomed, what clothe they wear, and the car they drive. Aside from your mother telling you not to judge a book by its cover, evaluating other people is ingrained to our very existence. Who should I listen to? Who is my friend? Does this person know what they are talking about? It would be interesting to see more social media account for this.

Lately researchers have pointed out that social media in essence is simply the digital version of our physical relationships. We have strong, weak and temporary ties: http://www.boxesandarrows.com/view/designing-for-social. We essentially communicate with a very small group of people on a regular basis. And with this high level of frequency comes a high level of trust. The value of social currency is tied to frequency of conversations.

As the social Web grows in sophistication we will really see this take on greater meaning. Designers will find more and better ways to display it, users will more easily find relevant content, and marketers will have new ways to target and proposition their sales based on it.