The Year that Was: Facebook
If they haven’t already, in just over a week from now, most people’s mind s will start to think about anything but work. That’s right. We’re coming up to the end of another year, and like so many before it, time only seemed to accelerate the further in we got. That it’s almost over is as hard to believe as all that transpired during it. Unlike many more traditional businesses, for internet advertising, the end of the year signifies only that we’ve reached the end of the year. It’s not the end of anything else. Our businesses don’t sleep and the race doesn’t end. What this time of year does allow for is generally a few extra moments to reflect on the year that was. And what a year it was!
Last year, Facebook made all sorts of headlines. This was no exception. From the performance marketing perspective, last year’s story was the solidification of Facebook as a marketing platform. It became the place to make money outside of email or pay per view. From the broader internet technology perspective, last year was in a way, Facebook going through adolescence and into high school. Like a young Tiger Woods, no one seemed to doubt the potential. And, with estimated revenues of $700 million, it became clear that Facebook could put up revenue numbers in addition to traffic numbers.
Given its rapid revenue growth, it seemed as though this year we might see a renewed focus on Facebook’s earning potential. Would the company, for example, make $1.1 billion? How about $1.5 billion. Perhaps it might top two billion? These conversations happened, but they’ve become secondary. If Facebook went through adolescence and entered high school in 2009, this year, what we glimpsed was that we still underestimated the company. This year, we realized the company is really Tiger Woods. We saw the company tested. We saw it do things we didn’t know it could do. Actually, we saw things that we didn’t know couldn’t be done.
Bigger Than Big – No one is talking about revenue numbers, because all of a sudden, it’s becoming clear that like Google, we have a company that in the not too distant future will be adding zeros onto its billion dollar yearly earning. But the amount of money isn’t what has turned heads. Like the once in a generation athlete, what we’re witnessing here is a company with a truly transformative impact on our lives well beyond what was initially the case. That is what became clear this year. This thing is bigger and further reaching than it seemed. And, what’s more, it’s still in the early days of its career. Facebook has become what AOL was in the mid to late 1990’s – a new paradigm.
Owners of the Social Graph – They did it. Social graph and Facebook have become almost synonymous. The company said it wanted to own our online identities, and it has all but locked up that goal. The rest of the web relies on Facbook.
Company Adoption – As part of the new paradigm Facebook has become much more than sum of its already impressive pieces. We saw this with Myspace, and we see it today with Twitter, but more and more big brands continue to push their Facebook page as the premier method of interaction. While great, but certainly not anywhere close to being a replacement for corporate home pages, the continued emphasis on companies promoting their Facebook pages is not to be underemphasized. Cynics might point to the use of Facebook being yet another fad that companies use trying to be cool. Myspace’s demise as a corporate marketing tool would suggest that Facebook could suffer a similar fate when the next big thing comes. That doesn’t seem as likely.
It’s hard to put our fingers on just why we feel as though Facebook pages will survive where Myspace profiles didn’t (from a company perspective). Perhaps it has to do with the separation of business and pleasure (a company profile page is separate from individual pages). Perhaps it is due to the sheer size of Facebook, which has far exceeded Myspace at its prime. Perhaps too it is because of the self-contained nature of Facbook – a company can spend money on Facebook to grow its page. More than anything, we find ourselves bullish because it’s so early. The company pages suck for the most part. It’s a horrible user experience, but it’s an outsourced one that will only get better, and as it gets better, the pages will become only more entrenched.
An Ecosystem unto Itself – If we needed any reason why Facebook matters, just consider that the company who powers the broadest and biggest array of applications is worth upwards of $5bn. Facebook is so big, that the clownfish to its sea anemone is worth more than just about any other private internet company out there. The platform is that big, and the biggest company is now that big.
Like A Drug – Thinking about Facebook and its relationship with the broader web makes us think of a line from the Matrix where Agent Smith calls the human race a virus. Facebook isn’t quite a virus, but it has spread to all aspects of the web, and as mentioned in the very first point about the social graph, the rest of the web has started to turn to Facebook in order to increase the functionality. Companies are letting Facebook dictate how the future unfolds and building on top of it. They are the drug that will keep so many others hooked and Facebook entrenched.
