Uh-Oh for Facebook Developers

23,857 Facebook applications later, the elephant in the room is making itself heard.

According to an analysis by Jesse Farmer, creator of the Adonomics application-stat-tracker, “the excitement over the Facebook Platform and its promise have waned. Application companies are branching out to other social networks not because they necessarily show more promise than Facebook, but because the future of the Facebook Platform has become murky.”

In a lengthy blog post, Farmer lays out the reasons for his viewpoint. First, activity in the Facebook developer forums has fallen off. Second, application activity has dropped off.

While he concentrates most of his argument on the forum activity, where developers post questions and talk business, it’s the application activity that marketers need to pay attention to. In one chart, he shows that between October 2007 and May 2008, the percentage of applications with at least 100 daily active users vs.  the total number of Facebook applications has dropped from around 27% to around 18%.

That speaks to the signal-to-noise ratio of Facebook but also to the challenge of promoting and virally spreading an app. Facebook has clamped down on developers that take advantage of friend networks, which is good, but it’s clear from this analysis that the viral infrastructure is also starting to crumble.

Whether this is a Facebook-only phenomenon or if it will spread to MySpace and other social networks is worth watching very, very closely.

BBC Clips Facebook for Lax App Security

The BBC posts the results of an investigation into the security of personal information on Facebook. It created an application designed to mine user data and made up a fake profile. Then, it used the application to gain access to the personal information of “Bob Smith,” including his name, hometown, interests and school.

That applications can do this shouldn’t be surprising, since nearly every application requires you to allow it to access your profile in order for you to install it. Still, the reminder of this fact is unsettling.

For its part, Facebook defends its practices, saying in an online Q&A: “Access by applications to Facebook user data is strictly regulated and if we find that an application is in violation of our terms and policies, we take appropriate action to bring it into compliance or remove it entirely.” It also repeated the idea that users have the ability to report a rogue application.

The problem is that the way someone might become aware of their private information being misused is by it being, in fact, misused. What Facebook needs to do (and I’ve said this before) is to prevent personal data from being misused in the first place.

Trendrr and Lexicon

I promised I’d report back on my experience with Trendrr. I just checked and here is my graph of the appearance of the words ["social network" advertising skepticism] in Google News articles. Though I’ve been tracking since April 2, the chart only shows data from around April 16 and I can’t figure out how to change it.

At any rate, it’s not much of a data set, yet. However, it appears the data has been viewed 30 times so somewhere out there a few others are apparently interested in tracking the same thing.

In the meantime, Facebook just launched its own trend tracker, Lexicon. It tracks the mention of words on Wall posts. Interesting scraping technology at work here - all anonymous, of course, but there are bound to be some embarrassing and potentially hurtful things people will do with this. Will be interesting to watch.

Is This Spam or Does Facebook Think It Knows Something?

This ad for “Seattle Hair Removal” appeared on my News Feed this morning. It’s one of those awkward moments when you wonder if it’s just spam or if Facebook has been checking my profile photo a bit too closely.

Where Will Facebook’s Developers Get Revenue?

First, apologies for the extended absense from posting. It’s not very blogger-like, I know. Between travel and presentations, my schedule got away from me.

TechCrunch reported yesterday that some developers are dissatisfied with Facebook. This is nothing new. What is new is the public debate over the (lack of) revenues developers are getting from being on Facebook. According to the blog post:

“The session started off with a disagreement over how much money developers are actually making through Facebook. Naval Ravikant from Venturehacks estimated that over $100M would be made in 2008, whereas Joyce Park of Renkoo and Matt Sanchez of VideoEgg predicted revenues as low as $10-35M this year.

All panelists agreed, however, that CPM rates on Facebook are miserably low, perhaps averaging 15 cents.”

I’ve believed for some time now that the widget and app space will not be the giant revenue generator that developers seem to think it is. Why? Too much clutter, not enough measurement, rogue apps, spam, to list a few quick reasons. Add in a messy US economy and things are starting to look dicey.

Facebook Revs Up New Features

Facebook’s on a new-feature roll. Last week it was new privacy tools to segregate the kinds of things friends and coworkers can see.

Next up: chat, which will launch next week, according to TechCrunch. And in the future, more preferential developer relationships like the one Facebook has with CBS for March Madness.

TechCrunch has a problem with the latter, but the way I see it, it’s nothing new and totally expected. The developers that bring the most traffic to Facebook SHOULD be recognized and supported, and the CBS March Madness application is clearly driving usage. I couldn’t find the total number of users of the application, but there are over 2000 discussion topics on the page and CBS Sports says that more than 3.6 million fans are playing some form of CBS bracket on the Web. Granted, some of the commenters on Facebook are people who have been irritated when the app doesn’t run right, but come on, folks. Big corporations will always get the best treatment when it comes to media.
My prediction: This will keep happening.

Zuckerberg Still Believes in Beacon, Social Advertising

Even though most in the ad community have deemed Beacon a disaster for Facebook, Mark Zuckerberg still believes in the basic idea. In other words, bad execution doesn’t necessarily mean bad idea.

In an interview with GigaOm, Zuckerberg says:

“Beacon was … part of this while [sic] effort to blur the boundaries between what’s inside Facebook and what’s outside Facebook. Beacon was our first cut at a protocol to do that.

When it comes to social ads we really want to line up what people are trying to do on Facebook and the utility it offers with monetization. If you look at what people are trying to do on the site, it’s communicating and connecting with each other and sharing information, so the business model should be around people sharing information and staying connected.”

He makes a valuable point. Businessweek, among others, has criticized social network advertising because click-through rates are terrible. But focusing on click-through is a content-site mentality, and it doesn’t work on a social network site.

Engaging social network users isn’t about interrupting them while they’re trying to interact with their friends; it’s about finding a way to participate in the conversation. Or make the conversation easier. Or more fun. Or more productive. And if Beacon was a bad execution, it won’t be the last one. But the breakthrough idea is still out there, I’m confident of that.

Everything You Wanted to Know About Widget Marketing

Businessweek devotes this month’s CEO Guide to Technology to widgets and it’s an interesting package (full disclosure: I was interviewed for one of the articles). In one article describing why widgets are a fad, there’s this great quote from Ben Kunz in his opinion column:

The entire mindset of a person engaged on MySpace or LinkedIn is different from that of a hunter on a search engine. A Google user is walking into a store. A Facebook user is walking into a bar.

Later, he describes a conversation he had with an ad network exec, who said his clients’ widget clickthrough rates were down, so they were running ads promoting the widgets.

“If you need to run ads to get people to your ads, maybe you have a problem,” Kunz writes. Probably not a problem if you’re an ad network exec, though.

Another neat feature: A series of profiles of Facebook apps from major marketers that flopped. I can add one more: the Hellman’s Holiday Kitchen app (no longer available, seeing as it’s now March). One of the cardinal rules of social network marketing is that the brand has to be something people feel passionate about. I’m sorry, but I just don’t feel passionate about mayonnaise. And moreover, even if I were, would I want to let all my friends know about it?

Facebook’s New COO

Facebook has a big new hire. It’s Sheryl Sandberg, a Google vet who most recently helped lead the search giant’s enormous ad sales operation.

Having experience building a huge sales team from scratch will certainly come in handy at Facebook. More importantly, Sandberg has plenty of experience with changing the online ad game, since Google rose to dominance in search ad spending under her six-year watch. Facebook certainly has its own ambitions in that arena.

Facebook’s Take on Beacon: Mistakes = Innovation

Facebook has said very little about Beacon lately. Surely the company is putting some, um, tweaks on the program, which angered users whose purchases on sites outside of Facebook were beamed back to their Facebook friends without their permission.

I guess if you’re leaving the company, you have more leeway to talk. According to a PaidContent.org interview with Owen Van Natta, the chief revenue officer who will be departing the company shortly:

“The ability to learn from [mistakes], will unlock the benefits of this kind of media. I was at Amazon.com when it started and the book publishers were nervous about letting consumers put reviews up. They only wanted the good review, not the bad ones. But the thing is, the good reviews only have credibility when you have the courage to put negative opinion alongside them. So Amazon changed that view in the retail industry and social media’s doing the same for every other brand on the planet.”

Personally I think Facebook needs to do a big sitdown with one of the leading business pubs and get it all out in the open. You innovate, mess up, clean it up and then move on. And then tell the world how you did it.

Update: WSJ published a story on March 5 that touched on these issues (and recapped a lot of what has already been reported about Facebook). If you’re a registered user you can find the article here.