Wednesday, May 30, 2012

Facebook Doesn't Have Shoppers

Facebook claims that it's worth billions because of all the money it might make selling advertising, but that plan is going to fail for one simple reason: Facebook doesn't know that much about its users' shopping habits because Facebook Doesn't Have Shoppers.

What does Facebook know? It knows my birthday. It knows my friends? It knows my interests if I took the time to tell it my favorite movies and whatnot--which probably means I already own that stuff if I want it.

What it doesn't know is my shopping habits or future shopping needs. For that matter, I barely know this stuff.

Compare Facebook to Google--the big name in Internet Advertising. When I need to buy something, I google for it. At that moment, I am telling Google what I want. That's why Google is so effective at advertising. It doesn't have to guess what I need. It doesn't have to play fortuneteller; Google only has to respond to my explicit pleas for shopping help. Facebook doesn't have this luxury; it doesn't know me as a shopper.

Compare Facebook to Amazon--the big name in Internet Retail. Amazon has a record of my shopping history. It knows what I've bought. It knows what I've looked at while shopping. It knows what I've stored in my wishlist for later shopping. It knows what I'm interested in because I've helped improve its shopping recommendations for me. Facebook doesn't have this luxury; it doesn't know me as a shopper.

What Facebook has is a bunch of data that is mostly personal and mostly crap. That's nice for putting me in contact with people from fourth grade I've totally forgotten about, but it doesn't count for much in helping me find my next purchase. It doesn't help me shop! To help me shop, Facebook must predict what I need. But how can it? It doesn't have the data you need to make those kinds of predictions because Facebook has never watched me shop!

This is why Facebook is going to fail. I buy electronics online, but Facebook doesn't know that, and even if it did, it doesn't actually know what I bought, which is crucial. I buy books and music online, but Facebook doesn't know that, and again, even if it did, it still wouldn't know what I bought. I buy toys and games online, but Facebook doesn't know that with all the problems this entails. I buy junk off of Ebay, but Facebook doesn't know that either. Google does because it helps me find all this stuff in the first place. Amazon does because it's usually where Google lands me. But Facebook doesn't have a clue.

Facebook's advertising isn't worth much. True, the website has a billion users, but it doesn't know those users' shopping habits or needs, and without that data, it cannot--in my opinion--compete with Amazon or Google. In other words, Facebook is just the latest incarnation of Geocities and Myspace: a website but not a business.

Finally, take a moment to reflect on who uses Facebook now. Who are those 1 billion strong? Why, it's none other than today's parents. Think about that... When our kids get old enough to become full citizens of the Internet--and that won't be long, just a few more years--those newly minted teens won't want to join mom and dad's website. That's uncool. They won't want their actions popping up for their parents to review. They will want their own place to hang out: someplace safe from prying parental eyes. That's not wrong; it's normal; it's unavoidable; and it's the measure of Facebook's life expectancy.

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