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Wilson Kerr (@WLLK) is the founder of Location Based Strategy, LLC a Boston-based consulting company dedicated to location-based marketing and business development. You can “become a fan of” Location Based Strategy on Facebook.

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Now that the collective tech/social media world is coming off the sugar rush of Facebook’s big Open Graph announcements of last week, I thought I’d take a fresh look. I should say that I am 41 years old and an active user of Facebook. I certainly see the powerful implications of sharing subjective information across a social network (graph). What I am not 100% sure about is if anyone is stepping back and questioning the viability of their approach.

Facebook made an audacious and smart positioning move to grab the social media high ground, but what are the real benefits to consumers? To Brands? To Facebook? Did Facebook really just “Win The Web”, as the New York Times proclaimed?

Not New News

First of all, last week’s thunderstruck, gushing over-reaction of adoration among industry insiders and press seems somewhat odd, given that Facebook introduced the Open Graph concept at the Developer Garage of October 28, 2009. Here’s an article by Nick O’Neil that outlines what he rightly categorizes (at the time) as “part of a broader move by Facebook”.

From Facebook at the time: “The Open Graph API will allow any page on the Web to have all the features of a Facebook Page…it will show up on that user’s profile and in search results, and that page will be able to publish stories to the stream of its fans.”

So, why then the wild enthusiasm and assertions? Perhaps the youthful Zuckerberg-lead Facebook team best-embodies the promise of social networks to finally dethrone some of the entrenched ad-supported superpowers like Google.

A Google Killer?

Is this move so profound that it will allow Facebook to collect enough information to power a “social search engine” and, as such, topple Google? There is no doubt that Facebook is in a position to learn, store and categorize opt-in personal preferences of individuals and utilize them to great advertising sales advantage. But there are major differences between these companies.

Google makes $23 Billion annually by giving people useful personal and business tools and serving effective and unobtrusive contextually ads in exchange for the use of these tools. Google increased Gmail users by 43% last year and their list of services is impressive, and growing. Google also has direct connections with the local retail points of sale that are so important for tracking incremental purchases and, as I have written about, is well-along the path toward deciding on the right way to collect, measure, and capitalize on these metrics.

Facebook, on the other hand, is not useful. Yes, I said it…fun, interesting, and a novel new socially relevant way to correspond with others with shared commonality. But useful? No. Over 37% of all people signed up for Facebook are inactive. That’s 150 million of them. Facebook made an estimated $650 Million last year and certainly has a lot of traffic, but they have not yet capitalized in a way that comes even close to challenging Google. The fundamental value proposition Facebook offers consumers is different. Try not checking your Facebook page for a week and see what happens. Facebook is a nice to have and, as such, needs to be incrementally more thoughtful about what they do and how they do it.

Size Matters

There were other implied assertions Facebook made last week that I question. Namely, that growth and unique appeal can coexist. Facebook has rocketed to popularity by mimicking the same voyeuristic appeal as the original printed freshman facebooks most of us used to peruse the social landscape back in college. But, after freshman year, the book became irrelevant. Why? Because the size of the graph made the details of the graph highly relevant. If the network grows and becomes indistinct, it loses its effectiveness and the stream of information becomes cloudy and irrelevant in the context of a broader network (no longer wow’d by the initial relevance).

For brands, the “fan page” acts as a tighter circle of consumer interaction and an opt-in sub-network, within the broader context of the web. Consumers have to “become a fan” and the thoughtful act of doing this makes the sub-network powerful and relevant to the brand and others within it. Facebook’s switch to the “Like” button was designed to make it easier for people to convey their preferences. This also has the potential negative side effect of broadening the input stream of consumers to specific sub-networks and clouding the waters  by making the size of the pool exponentially larger and, as such, less meaningful. The more the merrier for Facebook, as this grows the audience to whom they will serve ads to and pads their knowledge about every Facebook user. But it could dilute the opt-in pool for brands and clog the feedback loops.

The Like Button Is Too Easy

The sharing of subjective opinions and preferences based on real world interactions with products and services is the real power of social media (and location based marketing). Ratings and reviews are the best example of how consumers interact with real places and share input, currently, but it does not take much imagination to see that real-world interaction with a wider range of products and services is coming soon.

Providing this subjective input takes a minute or two and this fact (especially when consumers are mobile) serves as detergent to flip or casual positive or negative inputs. The “Like” button allows instant input, with less thought, all designed to rapidly fill Facebook’s master database. Great for Facebook and their advertising machinery plans, but the user experience (in the form of people’s news feeds) could-well become clogged with a deluge of “likes” that become less impactful in direct proportion to the times the too-easy “Like” button is used.

Personal Preference Profile Probes

What Facebook has announced is very smart, but it requires compliance by companies and brands. They are essentially telling any company that has a web page dedicated to something someone would “Like” to infuse Facebook code into that page, with specific metadata tags that categorizes the real-world product shown. This is very good for Facebook, but it essentially means web pages need to insert little  “probes” under their skin that feed a stream of data back to the Facebook mothership. Will companies and brands do this?

They might, but they also might realize that they are turning over the keys to the kingdom to the same barbarian at the gate who will then come back and charge them advertising fees based on the personal preference profile metrics they delivered on a silver platter. They could also do things in the future with this “holy grail” (the personal preference profile) that we can not conceive of currently. My point is that brands should not jump on this before they carefully consider the implications of the volume of valuable opt-in metrics they will be delivering to Facebook, and the benefits.

Content websites should be careful too, as Facebook is sure to sell advertising based on consumer preferences for something they read. Again very good for Facebook, but it could mean a thorny editorial/sales line in the sand gets crossed if readers get hit with ads for products related to an element of the content that does not resonate with the consumer targeted or if the ad seems to imply a paid connection between the editorial content and the advertiser.

Three Things Not Announced: Location, Location, Location

In a surprise to many (including me), Facebook made no mention last week of location-based marketing and framed their announcements around web-based open graph linkages and, more specifically, the integration of “like” button code on product pages to tap the power of personal preference aggregation. While the “visionary” open graph high ground move got the press, the real pot of gold lies at the end of the point-of-sale rainbow, reached by linking marketing to incremental tracked sales. Brands make money by selling more products in stores, period.

It was widely speculated that the reason Facebook did not announce checkin functionality or QR codes or NFC to link updates with real-world physical locations last week was that they might buy Gowalla or Foursquare. We now know that Facebook was about to launch a “door sticker” campaign to reach out directly to merchants and is using, of all things, SMS short codes to track consumer interaction and link it to location.

I personally think this is just the beginning and Facebook will dive headlong into the location-verified Proof Of Presence Metrics game soon. But can they pull it off? A simple location-enabled “Like, with comments option” might not be the right move here. This is too flip, to fast, to easy. Again, good for Facebook as they seek to remove friction for aggregation of personal profile preferences for who, what and where, but I am not sure members of the social graphs want to hear about every checkin and every store or venue or brand that those in their network simply “Like”.

My Friends All Like Different Things

I know the people in my social network and I am certainly more interested in hearing their preferences and opinions than the blanket ads I see every day, foisted upon me by those charged with selling the products. This, of course, is the power of social networks to shape consumer behavior. But I also have a solid majority of pals who are not on Facebook. The two I reached both gave me the same answer, which was, essentially, “Facebook is stupid. It’s full of asinine egocentric banter and takes way too much time to deal with”.  I sympathize and often have to weed though posts about spilled milk (literally) and inane random thoughts.

But I also use Facebook for business and have made an effort to be a fan only of pages conveying important, relevant information. I, for one, do not intend to fill my feed with all my “Likes” and hope those who fill my feed will hold off too. Aside from the obvious volume implications, I am not going to be swayed by the fact that someone “Likes” anything. Now, if they took the time to write a review or checkedin on Gowalla and stopped to rave about something and this was posted with intent, I’d be inclined to take a look. But the click of a “Like” button is too fast, to flip, and too easy and we all like many, many different things, for different reasons.

I know brands and companies have a different Facebook opportunity to potentially take advantage of, but the people making these social media marketing decisions are usually personal Facebook users as well.

Considering The Implications

Facebook has the traffic and the momentum to do some powerful things. I just hope the collective Social Media/LBS/Mobile world can stop for a minute and consider the positive and negative implications of not just the “open graph”, but the site-integrated Facebook metadata tags that, if implemented, will feed consumer preference back to the now-warming Facebook ad engine. Agencies should consider this move on behalf of their clients carefully. I hope Facebook users consider the long and short term implications of sharing so much about their personal product preference profiles with Facebook, the privacy issues this raises, and the effect of potentially having volume and size dull down the interactions with others within their network. And, I hope Facebook considers the user experience implications and that they treat the heavy crop of rich realtime opt-in metrics they will/hope to reap with consideration. Easy is not always good.

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Wilson Kerr (@WLLK) is  the founder of Location Based Strategy, LLC a Boston-based LBS consulting company founded in 2007 (Facebook). Wilson is also a location based blogger, speaker, panelist, and thought leader.

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Social networks are poised to be the most-effective marketing tool of the next decade. Facebook is the biggest social network and word on the street is they will announce location-sharing functionality very soon. While this new feature will make Facebook more interesting and compelling for individual users, location sharing is not new.

What would be new and what would interest me is if Facebook introduces transformational marketing tools for brands that will link Facebook campaigns to incremental visits to locations where real products can be purchased. These incremental, verified store visits and real-world product  interactions could very well become a new ad unit, and could reshape the very nature of how mobile advertising ROI is measured.

A New Consumer Touchpoint

Before I address Facebook-powered brand interaction linked to real locations, I want to back up and address why social networks have recently hit the marketing radar and become so popular generally.

People voluntarily linked by something in common (friendship, an interest, or a preference for a brand) can convey subjective information with far more impact than the traditional “broadcast” norm that has ruled for so long. Sounds pretty obvious, but this is the fuel that social networks run on.

Since it’s no longer only individuals that can have Facebook pages, companies can interact with consumers who have opted-in to their specific social sub-network, within the larger Facebook ecosystem. Messages initiated by the brand and information conveyed is disproportionately impactful, due to the highly prequalified nature of the opt-in audience.

Remember, these new social media touchpoints are also a two-way street. Members of these opt-in brand sub-networks (Facebook fans) can interact with the actual company producing the products and their collective input can shape the products or services offered. Companies can engage in real dialogue with their customers like never before.

A Huge Opportunity: 26,143 years/day

With a reported 400+ million registered users and 250+ Million active users spending 55 minutes daily on Facebook, Facebook is best-positioned to win the race to integrate location and roll out location sharing functionality for consumers on a grand scale. If they are smart, they will also introduce innovative location-based marketing tools for brands and companies.

Of US companies on Fortune’s Top 100 list, almost 70% reported having Facebook pages. Each averaged about 41,000 fans and was posting 3.6 new messages a week (Report from Jan 2010).

Wait, let me back up a second and get out the calculator: 250 Million users at 55 minutes each daily is 13.75 Billion minutes a day, or 229+ Thousand hours! This is the equivalent of….26,143 years spent interacting with Facebook, each day. Facebook, if it were a country, would the third largest in the world and now threatens Google for web traffic generated. Facebook is very well positioned indeed.

Location, Location, Location

Either through a GPS receiver (outside) or cell tower triangulation or wifi location systems (inside), most mobile devices are “location enabled” and can share this location information with the social networking application interfaces people choose to access. The fact that we carry a device as we go about our daily lives that knows where it is becomes even more significant when we consider that this is when we are in contact with real goods to buy and the locations that sell them.

If, as is expected, Facebook helps make location sharing within social networks ubiquitous by introducing this functionality on a grand scale, the opportunities for marketing campaigns that utilize shared, opt-in real-time location information should grow very rapidly.

Again, while location sharing among individuals is neat, the tracking of opt-in interactions with actual points of sale is the real financial opportunity for Facebook. Odds are, consumers will not mind an offer to try a new coffee flavor while they are in a coffee shop, if they have volunteered to share the fact that they are there. Google now takes in $23 Billion a year on the AdWords educated bet they made back in 2000. That is: ads can be both effective and unobtrusive,  if they are contextually relevant.

Checkins, QR Codes and ROI

According to Forrester, the amount of real-world sales influenced by online ads/marketing will be $1.4 Trillion by 2014.  The percentage of sales influenced by the web is increasing at a compounded rate of 9% annually. Yet these linkages between online research and offline sales are almost totally untracked. By understanding this research online, buy offline (ROBO) “gap”, you can start to see the potential upside of linking a Facebook-powered marketing campaign to actual in-store visits and what this means for measuring ROI.

For popular “checkin” platforms like Gowalla and Foursquare, place-labeled location sharing serves as the cornerstone of their whole model. Facebook could mimic this and introduce “Facebook Checkins”, allowing mobile users to tap a button and instantly post where they are and (optionally) what they are doing, as a status update.

This same functionality could be linked to campaigns run by brands and the metrics tracked and fed back to the brands. If a special deal or offer is needed to incent users to checkin, fine. Most businesses already thrive on these proven revenue drivers. Large national incentive and loyalty programs already in-place could provide the fuel for these programs to take off fast.

Why are those funny little square Quick Response (QR) codes suddenly so important to understand? Because consumers can scan them with a phone and they both deliver information to the application that scans them and use this information to launch little portals between the real world and the virtual, online world. Sounds odd, but this is only because this way of quickly interacting with a place or product is in its infancy in the US.  Take a trip to Japan if you want to comprehend the potential impact of tracked campaigns that make use of QR codes. Here’s an example, from last year.

Facebook QR codes for brands or location checkins could drive incremental tracked and quantified consumer interactions with the dealer doors where branded goods are sold (or even with the actual product). Facebook could capture all the details of how and when this occurred and, I’d imagine, be able to deliver a compelling ROI/metrics story to keep brands signing up for more.

Stay Tuned..

Facebook’s F8 conference is next Wednesday April 21st in San Francisco. It is widely predicted that they will launch location sharing for their users and, possibly, unveil related news for brands.

How will Facebook harness the power of location for its 400 Million registered users and give brands the tools they need to track social network marketing campaign ROI in new ways? This is what I will be watching for, as this is where the money is. Stay tuned..

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Wilson Kerr (@WLLK) is  the founder of Location Based Strategy, LLC a Boston-based LBS consulting company founded in 2007 (Facebook). Wilson is also a location based blogger, speaker, panelist, and thought leader.

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