Facebook.
The name is ubiquitous. You want to quit it but you can’t. It has become so ingrained with your every day life that something keeps pulling you back.
But…
Are aware of just how effective Facebook was to get to that point?
Where Facebook Was Genius
Facebook was the first social network that required you to use your real name.
The way they initially did this was very smart. By requiring you to use your college email (which always contains your name to help their automatic verification process), they helped create the initial set of social norms when using their platform. It would have been faux pas to make up a user name. And while some people did, Facebook did a good enough job stamping those people out and growing to the size it is today with real names.
Regardless of whether you personally like the Real Name move or not, it does lead to a bit more accountability for your actions than most social networks.
Why This Is So Important For Profitability
Facebook knows everyone’s real name. Twitter might, Youtube might, Pinterest might, and Instagram is owned by Facebook so it doesn’t matter.
The thing is, if you are going to build a long term platform for advertising, knowing someone’s real name is a good place to start.
From there, every like, conversation keywords, and website visited is stored by Facebook to help create a user profile. Facebook can use these profiles to help an advertiser better target their audience.
Better targeting = happier advertisers = more $$$ for Facebook.
MySpace never did this. Twitter can’t do this. They don’t have nearly as much information to do so. Neither does Youtube, neither does Pinterest, Reddit, or Tumblr. And for any of these companies to change their policy now, they would risk losing a significant user base.
Facebook Is On a Roll
Facebook knows what they are doing. A tip of the hat to Mark Zuckerberg. They bought out Instagram for $1 billion 3 years ago. Many people thought that was an insane price. However, in hindsight it is looking like the bargain of the century. Citigroup recently valued the company at $35 billion.
Instagram was on target to be a huge competitor to Facebook, but now it is part of it. Facebook has shown it is aware of the market and willing to strategically buy competitors that are gaining traction. They have also done so with companies like WhatsApp and OcculusVR.
Not Just a Social Media Company
Facebook is not a company that is going to pigeonhole itself into just one market. Facebook is aware of their potential and will use to expand.
Facebook has stated it is interested in getting into the Virtual Reality space, which is confirmed by their purchase of Occulus Rift.
Facebook also is on a mission to be in the video space, competing with the likes of YouTube, Twitch TV, which could potentially even challenge Netflix and Traditional Cable.
DATA DATA DATA
Let’s say super conservatively, each user/customer on Facebook is worth $10 a year (meaning the combination of yearly Facebook advertisements spent to reach a user is $10).
Facebook has 1.49 billion active users.
If you do the math, Facebook would make $14.9 billion a year strictly on Facebook advertising.
These advertising prices are rapidly increasing as larger companies are seeing the great return on investment of online advertising compared to traditional advertising models.
Once companies begin spending as much on Facebook as they do on television, radio, and billboard ads, look out. The value is there, it’s just a matter of time before more than just early adopters see it.