The growing power of Facebook

Social networking sites know a lot about you – and with all that information at their fingertips, coupled with the fact that people ‘get’ how it all works, it is a value proposition that is begging to be monetised.

 

One of my big predictions for 2009 is that Facebook will have a huge year, which would pave the way for an IPO in 2010. A lot of readers may disagree with me, predicting instead that Facebook would head the way of previous social networks like MySpace and Friendster — they’d be yesterday’s news once all those fickle teenagers move on to the next big thing, whatever that might be.

Here, though, is why I think that won’t happen to Facebook at all, and instead 2009 will be a huge year for the company.

It’s growing like crazy

Facebook CEO Mark Zuckerberg announced recently that Facebook now has 150 million active users (unique users who logged in over the past month), half of which use the site daily. Facebook has added about 10 million users over the past three weeks, which suggests that at its current growth rate, the site would double its active user base to 300 million by year end.

What’s more impressive than its incredible growth, which Zuckerberg says would make Facebook the eighth most populated country in the world, is that the growth is happening everywhere — across 170 countries and in every age group.

Using AllFacebook’s demographic statistics tool, it’s easy to see where growth is happening on Facebook. I randomly jumped around from country to country, male to female, and across different age groups, and couldn’t find many that didn’t see user growth over the past month.

Spanish males aged 60-65? Growing. Australian females ages 26-34? Growing. Mexican 18-25 year olds? Growing. Americans 45-54? Yup.

Give it a try yourself. There are likely some demographic groups that are flat or declining (such as in China), but the vast, vast majority are growing in line with the rest of Facebook.

This is universal, mainstream growth. Further, as a percentage of all web visits, Facebook is growing while chief rivals are shrinking, and the social network might be approaching “Google-like” dominance, where the prospect of being dethroned is a near impossibility.

Facebook Connect is pure (evil) genius

Connect is essentially a unified login platform that allows third-party sites to access Facebook user profile and social graph data from outside the social network. In essence, that means that Connect extends the Facebook platform outside of the social network’s walls.

Users understand it, and there’s a clear value proposition for developers.

An anecdote: When Wetpaint dropped OpenID support in November, they said that less than 200 registered users out of over a million accounts ever used OpenID. Facebook senior platform manager Dave Morin, meanwhile, says that initial tests of Facebook Connect found that users were logging in via the system over their pre-existing login credentials at a 2:1 ratio.

Early Connect adopter Govit.com saw 58% of new users choosing to login with Facebook. That paints a pretty clear picture; users understand “login with Facebook” in ways that they have not understood OpenID – which most users are still completely oblivious to.

Connect also comes with a built-in marketing channel, which makes it a clear choice for many web developers.

As Chris Saad writes: “Facebook [essentially] is trying to replace all logins with their own, and control the creation, distribution and application of the social graph using their proprietary platform.”

So if Facebook Connect does win, it might mean that Facebook is basically alone at the helm controlling our entire social experience across the web.

Because Facebook is apparently increasingly being looked at in a position of trust, many (most?) users might not really mind that eventuality.

Facebook is ‘email 2.0’

Throughout the 1990s the killer app for the web was communication, and it came in the form of email. Everyone used email for both business and socialising.

But it looks like the reign of email is coming to a close. It might not ever completely disappear, but it’s no longer the go-to communication tool for the younger generation.

For the so-called Generations-Y and Z (hopefully the last of the lettered generations), email seems old fashioned. “Kids today prefer one-to-many communication; email to them is antiquated,” says Hitwise general manager of global research Bill Tancer.

Instead, they use social networks. Next year’s incoming class of 2013 at Boston College won’t even receive @bc.edu email addresses. Erik Qualman recently wrote on Search Engine Watch that “are you on Facebook?” is the new “can I get your phone number?”

Qualman talks about a “seismic shift in the way information is exchanged among people”, and Facebook is clearly in the best position to benefit.

He says that it is counter-intuitive for brands to try to pull people off social networks to market to them. It would be like “meeting a pretty girl in a bar and asking if she would like a drink. When she responds ‘yes’ rather than ordering a drink from the bartender, you grab her and throw her into your car and drive her back to your place, since after all, you have beer in your fridge,” he writes.

“This is not a sound courtship strategy, nor are analogous social media strategies employed by companies ‘courting’ potential customers.”

As the younger generation grows up looking at Facebook as the “internet” (a view that becomes even more likely if Facebook Connect succeeds massively), then brands will be forced to communicate with people where they go to communicate – that is, on Facebook.

Facebook knows all about you

Facebook knows a lot about its 150 million users – where they live, how old they are, who their friends are, what sort of music, movies, TV, books, food, and activities they like, even what they’re up to right now.

As VentureBeat points out, because Facebook emphasised privacy early on – only people you’ve approved as friends get to see your details – most profiles on the site are full of legit, marketable information.

What that also means is that Facebook is built on a foundation of real-world connections.

Unlike on MySpace, where half your friends might be people you’ve met using an assumed name over the web, or bands or products you like but have no personal connection to, your Facebook social graph is likely full of people you know and trust. And even though I’ve argued that social search will never replace traditional search, Facebook does enable a new kind of discovery.

“Simply put; they broker transactions from finding lost friends, staying in touch with existing friends, making new friends, to finding and buying products and services,” writes business and technology blogger John Furrier, which is a good way to explain what I’m talking about. This is where the money will come from.

This is what Alex Iskold of smart browsing company AdaptiveBlue called “the mighty pipe” in 2007 shortly after the launch of the Facebook platform. “Being a pipe that gets a cut in all transactions that occurs between a lot of Facebook users and a lot of outside services would make Facebook into a gigantic marketplace,” he wrote then. Iskold was writing about the platform, but it will really come via Facebook Connect.

Beyond the opportunity for a transactional marketplace, if Connect wins, Facebook will end up knowing even more about you. “Each service adds a few more data points about you inside the Facebook brain, which is quite aware of your activities inside the Facebook ecosystem,” wrote blogger Om Malik last July.

“The brain can then crunch all that information and build a fairly accurate image of who you are, what you like and what might interest you. With all that information at its disposal, Facebook can build a fairly large cash register [via advertising].”