Monetizing the Social Network: Why Facebook May Become the Next AOL - And Twitter Might Just Be A Better Platform For Ads

As filmmakers, we need to understand the advantages (and disadvantages) of the various social media platforms.

Facebook is a great place for recommendations. The Facebook “like” button is perhaps the best sharing tool yet devised for filmmakers - because it allows users to express an opinion with just one click - and when the user clicks the like button, a story appears in the user's friends' News Feed with a link back to the filmmaker's website. If you have a great trailer or other video, Facebook is therefore a powerful platform for social sharing - allowing your content to spread virally. But Facebook is not (as yet) a proven platform for ads for indie films. For paid advertising messages, filmmakers may want to consider other online platforms...

In a July 5th, 2012 blogpost, technology blogger Mathew Ingram makes the observation that Facebook "is a social place where users expect to interact with their friends, not with commercial messages." Mathew Ingram contrasts the nature of Facebook ("designed to allow users to control their social network at a very granular level, by approving each and every “friend,” and therefore implicitly accepting that messages from them will appear in their timeline") with Twitter ("we are more likely to be open to commercial messages appearing in our Twitter stream because the network is asymmetric... meaning you don’t have to approve every follower, and users can send you messages by simply using your Twitter name").

This fundamental distinction - the differences in who can send us messages - between two of the most popular social networking platforms may have huge implications for how each makes money. That's because Twitter is already suited to messages from advertisers, while - before massive advertising dollars can flow to Facebook - Mark Zuckerberg's minions have to figure out how to interrupt the social conversations with messages from advertisers who aren't your friends.

Mathew Ingram isn't alone in identifying this fundamental problem for Facebook. For example, startup advisor Alistair Croll has also written about this same topic: "At its core, Facebook is also built around the idea of a network of friends, which means some people (and their messages) are foreign to that network. Our “immune system” reacts when someone promotes something to us. Our first reaction is that their computer has a virus and it’s spamming their social graph—not that they might be genuinely recommending something."

And the tacit understandings about whose messages will show up in our feeds that distinguish Twitter from Facebook are not the only differences between the two services that may impact their ability to make money. There is the fundamental issue of "trust."

In a May 18th, 2012 NY Times blogpost, Nick Bilton discussed privacy issues and user trust - comparing Twitter and Facebook to the the Tortoise and the Hare: "Facebook looks like the swift and cunning hare, Twitter the leisurely and careful tortoise. This race is not judged by speed but by a stopwatch with a much longer lifespan, one that is tied to trust." And, according to Nick Bilson, Facebook may have been quick out of the gate, but it lags behind Twitter when it comes to "trust."

In the rush to expand its service, Nick Bilton argues that "Facebook pushed the boundaries of people’s privacy by making things public that had once been declared private on its site... Twitter, on the hand, has taken an opposite approach. The company has never made its users’ private information public when it has introduced new features. Unlike Facebook, Twitter has not endlessly changed its privacy policy. Users of the site trust Twitter more."

But all is not gloomy for Facebook. They did just raise $16 billion. As Alistair Croll writes: "The smartest thing Facebook has done is build a vast war chest and an unbeatable amount of user engagement so that it can tackle these challenges."

And, as Mathew Ingram observes: "Obviously, Facebook is far from doomed when it comes to either advertising or generating revenue. One of the few advantages the network has — apart from just its massive size — is the “open graph” platform it has created, which connects it to millions of websites through “like” buttons and comments and other features (something Google has been trying to replicate to some extent with its Google+ network and the +1 button). There is at least the potential that Facebook could use these connections to develop an advertising network that places ads on partner sites and targets them using the behavior of its users, avoiding the anti-social problem."

Thanks to Lance Weiler for recommending the link to Mathew Ingram's gigaom.com post.