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Rise and Fall of MySpace is A Lesson for Facebook

MySpace was the king of the early social Web, with nearly 76 million monthly unique visitors at its peak in December 2008. It spawned the careers of several music mega-stars, and brought in as much as $470 million a year in advertising revenues. When News Corp. purchased the social network for $580 million from Intermix, MySpace was poised to become the transformative centerpiece of a new media empire. Shortly thereafter, a 21-year-old Mark Zuckerberg turned down a $1.6 billion offer from Yahoo!, and the world balked at his seemingly uncontrollable arrogance and idiocy. My, how time reveals all.

This week, with the backdrop of LinkedIn, Pandora, Groupon and Zynga enjoying multi-billion dollar valuations, MySpace was auctioned off to Specific Media (and Justin Timberlake) for a paltry $35 million, shrinking into the shadows of the new era of online and social media. Facebook, once dwarfed by the size and power of MySpace, is poised to go public in the next 9 months valued at over $100 billion. It seems Mark Zuckerberg, now personally worth over $18 billion thanks to Facebook, isn’t the arrogant fool many perceived him to be.

Instead, Zuckerberg is hailed as a genius, a visionary and has been crowned the King of the Web. His company is expected to pull in $2.19 billion in revenues in 2011 and double- and triple-digit growth in annual display ad revenue has vaulted Facebook past Yahoo! and Google to the forefront of display advertising. Today, Facebook enjoys the company of over 700 million users, while MySpace continues to shed millions of users and traffic has fallen off a cliff.

MySpace v Facebook BloombergBusinessWeek

Facebook is on a tear, and at times appears unstoppable. But if there is one thing Silicon Valley and the online world has learned, things can change in a heartbeat. As Google likes to say, the competitors are always just one click away, and in social networking, any exodus almost exclusively means a total exodus. When your friends flee, you flee. Facebook must learn from the mistakes MySpace made if it wants to avoid the same fate, especially considering how poorly regarded the company’s image is in spite of its massive size and success.

Mismanagement, a total disregard for the user, an onslaught of spam, fake profiles and spammy features and an ill-fated sale to a massive old media overlord are just a few of the missteps that took MySpace from a company that could have been worth billions to a nuisance happily discarded for pennies on the dollar.

Facebook’s first achievement on this path came years ago, when Mark Zuckerberg shocked the world and turned down a $1.6 billion offer for a company with little to no revenues. MySpace co-founder Chris DeWolfe noted to Bloomberg Businessweek that the News Corp. acquisition deprived his company of the start-up culture upon which the company was built and thrived. A relatively slow and simple introduction of advertising features on Facebook, partnered with a voracious focus on the user experience, has kept Facebook users from feeling exploited (at least not by ads, privacy concerns are another issue.) Partnerships with Zynga (which just filed to IPO valued at $20 billion and is hoping to raise up to $1B) and search giants Bing, Yahoo! and Google have made Facebook the core of the modern Web experience.

The potential for Facebook to succeed where MySpace failed is astounding, but rather than celebrating their victories over the fallen competitor, Facebook must treasure the opportunity to explore exactly how MySpace fell short, and how they can deliver mind-blowingly positive experiences to their users every step of the way.

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Img. Credit: Bloomberg Businessweek
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Online Advertising Has Plenty of Room to Grow – Mobile, Social and Branded Content

In the wake of the explosive LinkedIn IPO, which saw a 109% first day gain that valued the nine-year old company with over 100 million users at $8.9 billion, an intense spotlight has been focused on the new wave of Web-based companies that have taken venture capitalists and private and secondary markets by storm. The highly anticipated and inevitable IPOs of Web titans Facebook and Groupon have – rightly or wrongly – brought up fears of a “bubble” reminiscent of the dot-com bust that wiped away the fortunes of millions and oversaw the collapse of hundreds of “companies” that rushed to go public without revenues, not to mention profits.

(My take? We’re not in a bubble. Not yet. The lessons from a decade ago are fresh enough in the minds of VCs and investors, and the simple fact that we are being cautious and asking questions proves we are eons away from the insanity of 2000.)

The promise of the new media era is dependent on a new era of advertising, one that is integrated across many platforms, channels and formats. The booming success of Google and others dependent on online advertising may lead some to think that the market is saturated, leaving little opportunity for new entrants or growth for existing players. However, the data paints a dramatically different picture. The IAB projects double-digit growth in global online advertising spending for each of the next four years, reaching nearly $100 billion by 2014, or 17.4% of combined global ad spending.

Online Ad Spend Totals

There is a significant trend that one doesn’t need to dive through troves of data to recognize: people across the world are spending more time online. The time spent online on computers, tablets and smartphones is dramatically increasing year over year, but even these markets are relatively under-served. Just 82 million of more than 330 million Americans access the Internet on their mobile phones, and just 31% of wireless subscribers own a smartphone. Even with the billions of dollars in profits enjoyed by Apple, Google, Nokia and Microsoft in the mobile sector, the market is just getting started. More users with more Web-enabled smartphones means more ad dollars flowing to Web companies from the world’s biggest spenders.

So does this mean the tens of billions of dollars spent on television advertising will magically flow online? No. New value is created by reaching consumers online, and that means new dollars will be spent. Television advertising offers benefits that the hottest social media and branded content companies could never provide, and vice versa. It is the value of connecting and conversing with consumers in the new media era that will entice advertisers to direct new dollars from their ad budgets toward online campaigns.

eHow Style Site Takeover

The power to connect brands and consumers where the conversations are happening (social) and at the point of intent (branded content, action-oriented content) provides the opportunity for companies that offer these services to capitalize on the significant upside potential in the online advertising market. Online advertising isn’t just text links and banner ads. The new formats enabled by tablet and mobile technology and revolutionary business models ensure Silicon Valley’s best executors will reap the rewards of a booming online advertising market in the coming years.

Hat Tip: AdWeek – The Changing Scope of Online Advertising 

IAB Report: 2010 Internet Advertising Reveneus Increase 15% to $26 Billion, A New Record

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Is Google Offers Too Late to Compete? [Update]

[UPDATE: 4/21/11] In the four months since Google’s failed $6 billion Groupon acquisition bid, the company has faced increasingly vocal criticism on everything from lack of innovation to weak leadership. Today Google launched sign-up pages for its very own Groupon clone, Google Offers.

Following the company’s release of Google +1, this release will do little to calm the fears that Google is resorting to a “copy-cat” strategy as it falls further behind in social and perhaps is even losing its dominance in search. Further hampering Google’s progress is Groupon’s poaching of Google VP of Sales Operations Margo Georgiadis to fill the role of COO. With virtually zero differentiation in the company’s plunge into local deals, what makes Google believe it can compete with established heavyweights like Groupon and LivingSocial?

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More than a month after Groupon spurned a $6 billion acquisition offer from Google, the worldwide search engine leader is preparing to announce its own local deals service, Google Offers. According to Mashable, “Google will pay out 80% of a business’ revenue share three days after its deal runs. Google will hold the remaining 20% for 60 days to cover refunds before sending the rest.”

Groupon holds a dominant share of the local deals market, with LivingSocial trailing in a distant second and dozens of clones controlling minuscule shares. Reports of a similar service from Facebook have surfaced recently, and with Groupon supposedly preparing for a $15 billion IPO, questions are arising whether the market is saturated and if it can sustain another large competitor this late in the cycle.

The local deals market is by no means mature, and traditional marketing laws call for a strong number one versus number two competition over the long run, but the rules of Silicon Valley reward the first market entrants above all else. So with an established leader in Groupon controlling a heavy share and runner-up LivingSocial fresh off their blowout Amazon deal (which garnered over one million downloads), is Google Offers too late?

With little room for differentiation in the basic deals platform, Google’s opportunity to steal share from Groupon lies in its ability to integrate search, social, maps and location, and capitalize on the power of its online reach under the rejiggered executive management team led by some familiar faces. Pre-loaded mobile applications on its Android platforms and packaged search and local deals are likely components of Google’s strategic plan. It will take time to build these features out, but perhaps more than any time in the company’s history since its IPO, this is a critical inflection point for Google.

Google Offers

Google’s official response to a Mashable inquiry reveals the early development efforts of Offers:

“Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted.”

The potential viability of Offers is a snapshot into the current environment at the still highly regarded online behemoth. It is widely known that more than 90% of Google’s revenues come from search engine advertising, and a recent string of disappointing product failures has some industry insiders questioning the company’s ability to create new and sustainable innovations.

After announcing a record-breaking quarter, with profits jumping to $2.5 billion, Google is hardly faltering. Google’s efforts in display advertising and mobile are paying off, and search is as powerful as ever. But with news that Eric Schmidt will step down on April 4th and co-founder Larry Page will take over as CEO, investors and insiders will be keeping a close eye on Google over the next year. As one blogger questioned, will Page’s return to the helm be similar to Steve Jobs’ triumphant reclamation of the Apple throne in 1997, or more like Jerry Yang’s short-lived return to Yahoo! in 2007?

Image Credit: Mashable

As Bing Sees Big Gains, Is Microsoft Cool Again?

Under the tutelage of Bill Gates, Microsoft exploded into one of the world’s largest and most valuable companies, generating billions of dollars in profits annually for shareholders. The dot-com boom made many employees and investors millionaires, and the company appeared unstoppable.

As the company matured, growth stabilized and new tech darlings like Google stole the spotlight. Delayed product launches of centerpiece operating systems, failed products and advertising campaigns, broken acquisition deals and an apparent lack of internal innovation gave Microsoft a reputation as a “has been” that had passed its prime, and current CEO Steve Ballmer lost the confidence of many investors.

Bill Gates and Jerry Seinfeld Microsoft Ad

However, new data is showing that Microsoft may be experiencing a reversal of fortunes, as the company’s investments in search are beginning to pay off. The brutally competitive search engine market has had one dominant player for the last decade – Google – which has held as much as 80 percent of the United States search market.

In October 2010, the U.S. search marketshare breakdown was as follows: Google (72.15%); Yahoo + Bing (23.64%). The most recent Hitwise data shows Bing has made substantial gains at the expense of Google and Yahoo. Bing-powered search now controls 30.01% of the U.S. search market, while Google’s share has fallen to 64.42%. (See below: Image courtesy of Mashable.)

Bing vs. Google

These gains may be the result of a major multi-platform ad push by Microsoft for Bing, but the trend is a positive sign for investors and spectators that have remained loyal to the company.

Strong performance in search, high expectations for tablet and PC versions of the upcoming Windows 8 platform, new developer confidence in the Windows Phone platform following the recent Nokia partnership announcement, the smashing success of Kinect and Xbox 360 and widespread adoption of Microsoft’s iPhone and iPad apps are powerful indicators of a possible Microsoft mindshare and marketshare resurgence.

Bing iPad App

Less than a decade after Wall Street and Silicon Valley critics alike pronounced the death of Apple as a legitimate player in the lucrative personal computer market, the world has witnessed the resurgence of the Cupertino-based company as the dominant force in the rapidly-growing world of consumer electronics. Could we be seeing the beginning of an Apple-esque Microsoft turnaround? Critics will call it wishful thinking, but with Google in the process of a massive leadership change, Yahoo! undergoing a drawn-out transition phase and the tenure of Apple CEO Steve Jobs uncertain, the competitive landscape is changing and Microsoft has substantial opportunities in search, PCs and mobile.

Create Custom Text Clouds with Wordle

Free utility software is one of the great perks of the Web, with generous tinkerers sharing their creations with the world at no cost. One of my favorite tools, Wordle, comes from Johnathan Feinberg and partial source code owner IBM.

Wordle is a clever tag cloud tool that automatically creates a custom text cloud from a slate of creative templates. Users can enter text manually, copy/paste text blocks, or allow the program to crawl any website and Wordle will create a custom word cloud with the given text. Users can then edit word orientation, edit text colors, alter color variation and access a host of other customizations.

Demand Media Infographic - Wordle

(Click to enlarge.)

To create your own custom text cloud for free, visit www.Wordle.net.

What are your favorite free tools from around the Web? Share with a comment below.

Yahoo! Search Direct Provides Richer, Faster Results

Today Yahoo! announced a new search product, Search Direct, that integrates richer content and instant results to the search experience.

Could this be the product & morale boost Yahoo! needs? It just may be. After months of public hits and high-profile executive departures, Yahoo! has taken a significant step forward in reversing the company’s downward trend. Competition from Google, Facebook, Twitter and others have put pressure on Yahoo! to release an innovative, revolutionary product to capitalize on the company’s massive Web audience.

Yahoo! Direct Search

Search Direct is clearly an effort to make Yahoo! Search more of a destination and less a sea of links. Search is about content and information discovery, and reducing the number of steps it takes to get a user from query to information is vital.

View and test Search Direct here.

Google Instant was a start – it brought links to users faster. Yahoo! Direct Search takes it one step further, providing a richer experience and faster, more comprehensive access to answers, not just links to answers. It’s early and the product is still being refined, but it has big potential.

Yahoo! Direct Search

Here is the press release from Yahoo! announcing Search Direct:

Yahoo! (NASDAQ: YHOO), the premier digital media company, today announced Search Direct, which delivers answers and direct access to websites before you complete a query, hit the search button, or go to a search results page. This search innovation supports Yahoo!’s strategy to fundamentally shift the way people experience the Web – by providing the richest, most integrated content faster and more efficiently.This new feature, currently in beta, taps into Yahoo!’s unique opportunity to combine content and structured data and to provide a rich search experience. Search Direct predicts search results as fast as a person types, character by character, and presents those results dynamically, generating a fast, simple search experience that goes beyond a list of blue links.  Search Direct rolls out in a public beta to Yahoo! users across the U.S. today, and will be available in other Yahoo! products and markets later this year.

“With today’s launch, direct answers – not the search results page – is the primary focus. We are redefining the search process and prominently displaying direct answers where search decisions are being made,” said Shashi Seth, senior vice president, Yahoo! Search and Marketplaces. “Search Direct is evidence of Yahoo! continuing to lead innovation in search, enabling people to take action faster, find what is most important, and sample what is possible with the next stage of search technology.”

With Search Direct, Yahoo! content is combined with information from the Web to provide rich answers, not just links, and to give people the option to immediately engage or continue to a traditional search results page. In this beta release, coverage includes top trending searches, movies, TV, sports teams and players, weather, local, travel, stocks, and shopping categories now available at search.yahoo.com.

·         Trending Searches – The moment the cursor hits the search box, top search trends appear and are updated every 10 minutes to display the latest and greatest search trends.

·         Search Previews – Search Direct predicts the search term as you type, providing the 10 most likely searches. You can then easily scan each option to see the related top results and find the best match for your needs.

·         Direct Answers – For many common searches, Search Direct provides instant answers before you click the Search button. Find an address or phone number, a three-day weather forecast, financial stock performance, the top trending stories at Yahoo! News, or when and where a movie is playing – all without going to a results page.

·         Direct Results – When you scan the search options and find the site you need, Search Direct provides exactly that – direct access to the site. No more overwhelming pages of links.

·         Rich Content – For all top searches about sports, top news stories, and finance, Search Direct displays rich content that only the world’s largest digital media company can provide. For example, type “n” to get the Yahoo! News display, which always shows the top two trending stories.

Yahoo! will continue to enhance and update Search Direct with new content, such as popular music and local listings.  For more information and a demo video of Search Direct from Yahoo!, visit search.yahoo.com and our company blog, Yodel Anecdotal.

Yahoo! CEO Carol Bartz

For more insight, check out the live blogs and analyses from Business Insider and All Things D.

From Avatar to the iPad 2 – We’re in an Experience Driven Economy

You know the feeling. Being so profoundly overtaken by awe, laughter, incredulity or amazement. Experiences like these tap into the deepest and purest of human emotions, and serve as powerful motivators. We are in a new economic era; an era in which savvy businesses craft their product and service strategies with the specific and overarching goal of creating compelling consumer experiences.

Hollywood was among the first industries to recognize that even the best stories need great packaging to become the mega-hits that bring swarms of people to theaters in costumes and tents, waiting for hours to experience the story. Avatar was not a multi-billion dollar smash hit because the story was particularly exceptional or because audiences were deeply committed to the film’s message of environmentalism. The film attracted an enormous and diverse audience of moviegoers craving to immerse themselves in the engrossing experience James Cameron expertly crafted. The impressive 3D effects, captivating majesty of Pandora and exceptionally-directed audio throughout the film catapulted audiences into a foreign world, allowing them to experience the story in a way that simply was not possible even twenty years ago. James Cameron isn’t just selling movie tickets. He is selling an experience. Entertainment locations like Universal’s Harry Potter theme park and Disneyworld don’t sell roller coaster tickets and concessions. They sell an experience. Starbucks isn’t selling coffee and pastries. It is selling an experience.

Avatar Movie Wallpaper

The entertainment industry was a pioneer, but new players are encouraged by the success they’ve seen and are increasing their efforts to weave the overall consumer or experience into every decision they make.

The resurgence of Apple as a beloved consumer and cultural icon can be directly linked to its insistence on providing unique and powerfully positive experiences to its customers. One only needs to step inside an Apple retail store to understand how well this strategy has caught on. Flocks of current and would-be customers seem suspended in a perpetual state of bliss and fascination as they explore and tinker with the latest iPhones, iPads and MacBooks. Even months after a product is released, Apple stores are bustling with activity and energy. Why? Because Apple created a hands-on experience and instills a sense of ownership in its customers.

But what makes Apple such a unique and powerful example of experience-driven strategy is its array of products designed to wow the users’ senses. The touch, audio and visual interactions that characterize the company’s most successful products have taken a company that was once a quarter or two away from a low-ball acquisition and made it a beloved symbol of quality, innovation and excellence. (Author’s note: I give high praise to Apple, but I’m no ‘fanboy’ – I have happily used a PC for 15 years and will critique Apple if/when necessary.)

Apple iPad 2 Customers in Store

Facebook, Twitter, Foursquare and others are carefully crafting new and addictive user experiences that have led to astounding engagement and interaction metrics. The genuinely positive experience of interacting with your social connections and having the ability to share your own story is an experience we – as humans – crave.

From luxury car dealerships and IMAX theaters to retail stores and theme parks, business are trending toward products and services driven by a foundation of selling experiences. These experiences are powerful, and as technology advances even further, the experiences will become deeper, more interactive and more compelling. An incredible, truly wowing experience with a product or service is rare, but if businesses can deliver one, they are poised for transformative success.

NOTE: Visit www.letschatbusiness.net on your iPad for a unique, Flipboard-esque experience driven by Onswipe and WordPress.

Facebook Poised to Reveal Comment Platform

Facebook is preparing to take the next step in its quest to monetize its exponential growth and continued dominance of the social Web. Reports surfaced this week that Facebook will introduce a third-party commenting platform for publishers across the Web.

The incredible success of Facebook Connect has convinced the Palo Alto-based company that significant potential lies in its ability to forge partnerships with media and content producers that integrate social connections into a wide variety of Web experiences. (Facebook has recently taken steps in courting major media publishers like Time Warner in an effort to pursue new platforms of integration and penetration.) More than two million Web properties have taken advantage of Facebook’s “Like” function to drive traffic and increase user engagement, and a Facebook commenting platform will continue to grow that number.

Facebook Like

To date, Disqus has been a fairly ubiquitous presence as the comment tool of choice for top publishers like TechCrunch, Mashable, The Wall Street Journal and many others. Users can give articles a “Thumbs Up” or “Thumbs Down” and can comment via Disqus through their Twitter or Facebook accounts, but Facebook’s new commenting platform threatens to displace Disqus as the king of commenting.

Facebook already has nearly 600 million users; no need to set up a new account, no need to give application permissions, no hassle. Publishers can’t drive engagement if they aren’t connecting with people, and a partnership with Facebook means instant access to hundreds of millions of users and their friends. Readers can “Like” and comment on a piece of content, and the power of social proof produces a snowball effect that increases traffic and extends online reach as those actions permeate onto users’ news feeds, boosting awareness and driving new traffic to the site. Reports indicate users will also be able to vote for and against comments in a stream, and a Facebook-run moderation system may be in the works. People.com is already using a version of Facebook’s commenting platform, and major online publishers like The New York Times, The Huffington Post, and TIME are prime candidates to adopt the service as it is rolled out.

Facebook Comments

As CNET pointed out, Facebook has developed a significant slate of new products in recent months, including Facebook Places, Facebook Deals and Facebook Questions, providing instant competition for companies like Foursquare, Groupon and Quora. While each of these products are still in their infancy, its conceivable that the rising prominence of social media in business and the utter dominance of Facebook within the social realm will force properties and publishers to adopt Facebook tools for fear of missing out on its massive and addicted user base.

The benefits of Facebook integration to publishers are clear, but why would Facebook continue to offer its API to these properties for free? In return for enabling social integration, Facebook often receives extensive data on a publisher’s audience, which can in turn be combined with Facebook’s knowledge of its users’ activities to improve ad targeting on its own network. Understanding user intent and preference is critical, and the ability for Facebook to better understand the behavior of its users away from its own network is a key factor in advancing the company’s efforts to monetize in a period of hyper growth and massive external investment.

Social integration has become a crucial part of the success of online publishers, and given the widespread popularity of early Facebook integrations, the release of a Facebook commenting platform is a significant threat to Disqus, Echo and the other startups that have led the way thus far.

LivingSocial Finds A Rockstar Partner in Amazon

With Groupon leading the way, Google Offers making waves, and Facebook Deals under development, the local coupon market is one of the fastest-growing sectors in tech right now. Dozens of imitators have sprouted up looking to ride the coattails of the market’s recent success, but LivingSocial has emerged as a clear second place stalwart with the help of a rockstar partner.

The month of January marked a significant step in the development of LivingSocial, with the Washington, D.C.-based company receiving a $175 million strategic investment from Amazon. A wildly popular coupon that gave buyers a $20 Amazon gift card for $10 was purchased by more than one million customers, many of them first-time buyers.

On the day of the Amazon deal, mentions of LivingSocial on Twitter and Facebook skyrocketed, and the power of social proof helped the coupon spread across the Web like wildfire. An Experian HitWise report (seen below) indicates US traffic to LivingSocial jumped 80% during the week of the Amazon deal.

LivingSocial

It’s likely that traffic will subdue in the coming weeks without another irresistible deal driving users to the site, but the Amazon deal put LivingSocial on the map as a formidable opponent to Groupon in a highly competitive market. Tens of thousands of new users registered to snag a 50% off Amazon gift card, and even if only 20% of those new users return to the site and purchase other deals, LivingSocial will have gained valuable ground against Groupon.

With the prospect of competing against such a well-established foe, not to mention the powerful forces of Google and Facebook, LivingSocial will benefit immensely from their new partnership with Amazon. The value of this partnership cannot be understated. Aside from the ever-important infusion of capital, LivingSocial now has an incredible resource of technical and logistics knowledge. The increased visibility provided by the Amazon partnership will help LivingSocial penetrate the market and gain all-important mindshare.

The trifecta of Groupon, Google Offers and Facebook Deals will ensure a long and hard-fought battle ahead, but with Amazon in its corner, LivingSocial could be a force to reckon with.

How Facebook Can Rule the World

[UPDATE 1/3/11]: Facebook had an incredible year in 2010, and they have opened 2011 with a bang. News broke on Sunday evening that Goldman Sachs had invested $450 million in Facebook at a $50 billion valuation, and early Facebook investor, Digital Sky Technologies, would invest another $50 million. If that was not enough, Goldman Sachs committed to raising an addition $1.5 billion in funding from its high net worth clients.

With a $2 billion cash infusion imminent, Facebook’s highly-anticipated IPO likely will not happen in 2011. What reason does CEO Mark Zuckerberg have to go public? Facebook has hundreds of millions of dollars in cash to continue to fund operations, innovation and growth. The skyrocketing valuation of Facebook shares will fund acquisitions and allow some early investors and employees to cash in. IPOs consume immense quantities of time and resources, and it would be a headache Zuckerberg does not need. Instead of the late stage startup having every reason to go public, Facebook has every reason to stay private in 2011. Analysts and industry speculators now predict early 2012 as a preliminary target for a Facebook IPO.

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**Originally published August 25, 2010**

The indomitable social-networking site has enjoyed a meteoric rise from college dorm startup to multi-billion dollar household name. With over 500 million users, Facebook has a massive reach online, placing them in a uniquely powerful position to leverage their loyal and dedicated user base to help them develop new products and enter new sectors. Their unparalleled position has Facebook poised to dominate the Web in ways that no company ever has. As we know, however, potential and execution are two very different concepts. Facebook can succeed in this impressive quest if they:

1) Remain the Dominant Social Media Platform for Companies with Facebook “Pages”

With social media becoming an increasingly important part of consumers’ everyday lives, companies must develop a social media strategy to build, control, and maintain their brand online. Those who don’t are missing out on a valuable, inexpensive, and effective tool to market their products and strategy and manage their brand. Companies are beginning to leverage Facebook’s impressive scope to interact with current customers and attract new customers. A new service by Parature  makes it easy for Facebook Page administrators to make their page a customer service hub. Users spend record lengths of time on Facebook, and if  companies properly leverage Facebook’s user base and infrastructure, Facebook  can take advantage of  their growing importance in the marketplace, expanding offerings for companies willing to pay to further develop their Pages. The structure for this paid service could be similar to the WordPress VIP program, where high-traffic Pages gain access to extra services, features, and customizations.

Pepsi

To fully capitalize on this asset, Facebook needs to implement a sophisticated analytics system that allows companies to better understand the behavior of users and the extent of their interactions. Tracking the sources of “Likes” is currently unavailable, and with many retargeting campaigns linking to a brand’s Facebook Page, this would be a strongly desired feature.

2) Take Advantage of Facebook “Places”

Over the past year, location services like Foursquare (the dominant player), Yelp, and Gowalla have experienced exponential growth in their userbases as more individuals begin to adopt the technology. Last week, Facebook introduced their own location service, Facebook Places. Although they were a tad late to the party, forcing some to make a decision to switch, they still entered the market early enough to steal away majority share from Foursquare. While Foursquare currently has more features and has become largely installed as the primary and dominant location service, Facebook has a unique opportunity. Unlike Foursquare and the others, which are standalone apps, Facebook Places is an extension of Facebook’s current product mix, and is fully integrated with Facebook’s mobile apps. I’ve heard testimony from former Foursquare users that they were migrating to Places for the simple reason that it is one less app to switch to. As Places grows and introduces a more complete set of features and capabilities, users may be more inclined to ditch the plethora of social apps and replace them with Facebook.

foursquare

To maximize the potential benefits of Places, Facebook can implement a feature similar to Foursquare’s “Special Nearby”. Doing this would simply bring Facebook on par with the competition. However, to surpass their peers, Facebook must leverage and expand its extensive advertising network to target Facebook users based on their Check-Ins. The privacy issues abound, but Facebook hasn’t had a problem pushing these boundaries before.

3) Capitalize on Social Search

Social search is becoming an important topic in the debate about the future of search. With the wealth of metadata at Facebook’s disposal (thanks to its 500 million-strong and growing userbase), the company is uniquely positioned to dominate social search. Searching within one’s social graph has the opportunity to provide personally relevant information in ways that bots crawling the web can never provide. Although some disagree that social search will replace traditional search as we know it today – a point I agree on – social search has a place in our future online. TripAdvisor and Amazon have integrated with Facebook, allowing users to see recommendations from friends while browsing, and inroads like these are indicative of a growing understanding of the importance of social interaction in commerce. Because Facebook is the largest social media platform, they are the primary target for companies looking to integrate with social search. The indexed data that social search is capable of providing can supplement current search algorithms to provide increasingly relevant and personalized information to users in a central location. Facebook’s biggest competitor would be search industry titan Google, but Facebook’s advantage lies in their access to variables like comments, user influence, and network memberships that they can add to their search algorithm.

Largely, Facebook’s potential to create a further diversified and expansive presence online lies within the company’s ability to integrate a variety of popular services on its central platform. If they create high-quality, integrated products that leverage their existing platforms and access to metadata, Facebook can move closer to online domination. As we know, however, potential and execution are two very different concepts.

What do you think? Can Facebook dominate the Web or will they struggle amid concerns about privacy, patents, and ownership?