The Facebook story can be safely rated as one of the most fascinating tales in recent history- from being a start-up in a Harvard dormitory to a $100 billion IPO- at times it might seem no less than a fairy tale. At the heart of this success story, is an even more intriguing revenue model that has perhaps made this possible. While creating the model cannot be attributed to Zuckerberg, there is little doubt that he can be credited with taking this model to the digital platform. The model I am referring to is the one comprising of – Connectors, Mavens and Salesman.
Malcom Gladwell in his book “The Tipping Point” explored the reasons why certain events become viral in the market place while other similar events fail. One of the reasons that he cites for this is the law of the few, in which he divides the people who lead these campaigns into three distinct classes: Connectors– These are the individuals who have fantastic networking skills and connect us to others, Mavens– The individuals who are the source of information & Salesman– The ones who help in spreading the information and making the people act on it. Together, these three classes lead the initiative for successfully running any campaign. One point to highlight though is the inter-dependencies of these three classes on each other.
Let us now consider these as three individuals C, M & S – C provides his network, M has the information to spread and S ensures that network of C receives the information provided by M. So essentially, the role performed by S can be considered as the most significant, in other words, S>M=C.
What Facebook however does using the digital landscape is it transfers the attributes of these three individuals into one single point, the average Facebook user. Consider it this way- You have your friends in the social network (as connector), you can find new information via the newsfeed (as Maven) and you share the information if you like it (as salesman). Now, you are essentially using a social network, so the chances for you to interact with the information increases many folds as you are dealing with information that you can personally identify and be familiar with. This is where Facebook delivers the master-stroke.
Facebook’s advertising model acts in two ways itself- by either itself acting as Maven or (and this is more interesting) creating the salesman out of you. Let us see how.
Recommended pages and sponsored articles in the newsfeed are the tools that Facebook employs to turn every user into a maven. Based on the activities and interests that we ourselves either perform or input information about on Facebook, it customizes the similar articles or pages from its sponsors on our newsfeed, thereby exponentially increasing the chances of attracting the right eyeballs- an extremely successful example of targeted marketing.
Facebook now goes one step further of turning every individual into the salesman- it promotes your activities on your friends’ feeds, whether you intended it to be or not. For instance, I have often seen information on my feed stating ABC likes certain page and below it a small sponsored text below the item. While one may debate whether it is ethical to use personal choices for promotion, one has to accept it as an effective advertisement tool.
What really drives Facebook to a success factor is not the sponsored links or feeds, it is largely owing to the business model which resembles a Buckminsterfullerene structure (C60) -a football like honeycomb structure. Now if we consider certain branches of this structure as sponsored, it still leaves large part of the structure fairly organic and source of large tracts of information. So even if the average Facebook user understands that occasionally his data and privacy will get compromised to the advertisers, it will still appear to him as an attractive destination owing to the source of information that he can get access to for free.
But does it mean that in the digital age, the distinctions in Gladwell’s model are no longer valid ? Not really. In fact, in my view it will become more prominent. The personalities that we shape in the outside world bears the greatest impact on the influence we have on the social network. So a person X sharing an item on the social network might attract more views than person Y, just like the likes received from friends on your profile pic.
So what exactly is Facebook trying to do with this strategy ? It is perhaps trying to emulate the most effective selling strategy on the digital landscape- Word of Mouth marketing with a click of the mouse. The amount of time that we spend daily on Facebook along with over a billion users makes this possible. When you share something on facebook, your peer group is more likely to accept that and vice-versa. However, if such paid sharing of information occurs frequently, eventually it will destroy the user base of the network as the users will no longer see value in the news feed. So the company has to tread a careful line in the years to come.
In fact, it is word of mouth marketing itself that perhaps made Facebook the most popular social network. With increasing number of individuals accessing it from mobile, FB has to ensure that its ad revenue from mobile devices do not fall short.
Was it Malcom Gladwell’s idea which inspired Zuckerberg to create Facebook’s revenue model ? Perhaps, it is best for the reader to decide. Till then, happy liking and sharing !
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