I think unless you’re a brand the size of Coca-Cola (or the like), have millions to throw away in social media, and a boss (or a board of directors) who demand it – my advice is simple: give up on Facebook beyond having a page and sharing your content on it, and know you’re on borrowed time in every other social media channel. My Facebook Advertising Strategy – Quit doing it.

Strong words? Let me make the case.

What is Pay for Play Anyways?

Facebook has essentially adopted a pay for play. If you want to access any of the fans you’ve accumulated – you have to pay Facebook.

Surprise! You didn’t think you had a legitimate right to those people – did you?

Pay for play (or payola in music industry parlance) is a very old practice. We despise it in politics (it’s the reason why Blago ultimately went to jail and the reason why we have campaign finance laws since 1900). We despised it in music and it is now a crime (it was made illegal after investigations in 1959 – 47 U.S. Code § 317, and 508 make the practice of payola a “Class A” misdemeanor). We despise it in business (the primary basis for the passage of the foreign corrupt practices act as well as the US anti-trust laws).

In short, pretty much everyone hates payola in almost every instance.

So why then is Facebook attempting to implement de facto payola scheme?

What Facebook (and I predict the rest) are attempting to do is basically have their cake and eat it too. Facebook has a problem – monetization of the time and efforts that people spend on Facebook. Building the infrastructure of the network takes money – a lot of it. To pay for all of that – Facebook tried to get businesses voluntarily advertise. Because that activity was such a revenue flop, Facebook now has decided to force businesses to pay for the networks they build on Facebook’s platform.

How was it able to accomplish this? Facebook had two main problems when it started about ten years ago: getting the network to grow, and developing content to make it sticky. It solved those problems in two ingenious ways, it made the activity social and it outsourced the development of all the content. This is what allows Facebook now to turn to these businesses and go “yeah – pay me.”

It made the content social

No one wants to be the only guy with email. It’s worthless if you’re the only guy who has email. The way you get value from email is everybody has to be on it. So when you got an email account, you ran around to all your friends saying, “Hey! Have you got email?” and showing it to them. This type of pathology of idea spreading is truly viral and exponential. It’s why email went from nothing back in 1989 (when I had my first account at the University of Minnesota) to almost everyone having email when I got married in 1994 (yes it’s 20 years this year). Now you can hardly imagine someone who doesn’t have email – they effectively don’t exist.

Same thing happened for Facebook. People who were on Facebook wanted you to be on Facebook. Next thing you knew – everyone was on Facebook. Now Facebook has a billion plus people (even if we consider all the lame fake profiles, it’s still roughly a billion people). Effectively the entire industrialized world of wealth is somehow connected to Facebook. More importantly, roughly one in three people connected to the internet is on Facebook (1 billion active profiles of “real people” against 2.8B people believed to be connected online given these stats).

Facebook has emerged as one of the true destinations of the internet. In that way, Facebook is a lot like TV in the 1950’s – everyone watches it. Moreover, Facebook’s penetration is so high, it’s like everyone in America having a TV and the TV only gets one network – the Facebook Channel.

It made the content free

The vast majority of the content on Facebook is garbage from a commercialized standpoint. Whether or not you think the cake you ate at Grandma’s was yummy is not of interest to everyone else on Facebook (and quite possibly even your friends don’t care). The vast majority of the content developed on Facebook is like this – pictures of our friends, things we do, places we like, etc. In the aggregate, all this content is why Facebook spread and became a site that 1/3 of the internet visits daily. In the aggregate all the content is exceptionally valuable, because it keeps you coming back to share more stuff with friends.

Facebook paid nothing to develop the content that perpetuates it. You paid. Facebook has always been a game of digital sharecropping. From the piece I wrote on Linked In:

Very little compensation (if any) flows to the millions of people who make these channels what they are – the content generation is entirely outsourced, or perhaps more accurately, externalized. The value chain of digital media channels often begins with the fact that the most difficult thing to produce, content, is an external cost to most digital media channels. In other words, the content producers work for free as far as Facebook, Bing, Google, LinkedIn, etc., see it from their accounting books. Moreover, the law recognizes this appropriation of property – the ideas and experiences of millions – as entirely legitimate.

Just in singing up a social media account, you become a digital slave. Voluntarily.

Social media channels can do with your digital person whatever they want. They can sell you, or your data, or your pictures, or whatever you post, to whoever they want. Your ability to thwart this activity is highly limited, and legal action has resulted in paltry recovery.

Have a look at the terms of Facebook, LinkedIn, and other social media. Not only do they have effectively unlimited rights over your contributions (including my publications), they have much stronger rights than you, the user, have over your own digital existence. In some cases, they can involuntarily appropriate or dispose of your information, your identity, your content, your creations, and your labors, in however manner they see fit.

So every post you put on Facebook, whether your Coca-Cola, or Bob, contributes in a very real way to Mark Zuckerberg’s empire. Welcome to the new digital slavery.

If you’re a business – you really have to think that one through. The allure is – Facebook, a kabillion people, wandering around, and I just have to get one tenth of one percent (you know the mantra). Reality is – what you do on a daily business makes Facebook more valuable, and probably makes you exhausted.

Facebook can change its terms at any time, appropriate any content you put on the network, and do whatever it wants. It controls the network. Basically content providers are little better than Hollywood stars of the 1920’s signed to MGM or Warner Brothers. Your efforts are Facebook’s property – period. You don’t own the medium, thus, developing on it is a very risky proposition.

It made the Audience accesible

The risk might be worth it, but for the fact that the payola isn’t worth the freight – which was getting an audience for less cost than attempting to build your own platforms to distribute content. What Facebook promised was essentially a low cost access to a large audience. That’s why so many businesses flocked to Facebook. It was simple to set up a page. It was simple to get followers (reasonably when compared to other media). It was an interactive media which allowed for rich content. All of this business activity helped draw people to Facebook.

Now what Facebook says is “NO SOUP FOR YOU!”  They’ve decided if you want to reach the audience you’ve built, you have to pay them. No pay? No soup for you.

If you are Coca-Cola, paying the payola makes some degree of sense. First, you’re already conditioned to pay it and you’ve been doing it for 100 years in radio and TV. Second, you might have a shot of making money on it given you have a product that literally is sold to billions of people. So for you, paying 200M a year to get access to your 80M fans is a relatively low cost way of continuing to reinforce brand.

If you’re anybody else – this is a losing proposition. Why? Because chances are you haven’t maxed out other ways to build your audience. Because chances are that helping to build Facebook’s empire doesn’t result in a high enough ROI for you given the effort necessary to build content to keep your audience engaged and entertained.

People join social media channels hoping essentially to be “picked” and become popular. They see the medium like American Idol. It can indeed work that way – but now, it’s a losing proposition on Facebook. Moreover, it was only a good strategy when the costs were essentially free. That’s no longer the case. If you’re going to spend all this time building an audience – why would you want them to be in someone else’s platform? What Facebook provides brands can build themselves. Interesting content will be sought out and consumed wherever it resides. You can use Facebook as a sharing channel, an extension of your original platform for building an audience, but using it like you used to – those days are over… forever.

Given all of these conditions – Clickafy has unpublished its Facebook page. We keep it to protect our brand marks – but we don’t use it anymore for communicating with prospects and customers.

Graphic Search

Critics of my “forget Facebook” conclusion bring up the idea of graph search.

(I find it highly ironic how this starts – make the world open and more connected, unless you’re a business in which case our mission is suck every last dime from your coffers to connect with the people you brought to us).

Graph search is an interesting idea. But think about what it takes to make it work in most instances relating to a business.

What Facebook hopes it can condition businesses to do (aided by lots of ad agencies and other “consultants” who really don’t care if the medium performs) is to get people to use Facebook as both a recommendation platform (similar to perhaps to Yelp or Yahoo) and a search platform similar to Google.

The chain of events might look like this – a plumber whom you called comes to your door and fixes your sink that exploded. You are so overjoyed by how awesome the guy was, you ran to Facebook and found the plumber’s business page, recommending them, and saying “My plumber is DA BOMB!” The plumber might even say to you, “If you really liked us – say so on Facebook!” or alternatively “If you say you liked us on Facebook, I’ll give you 10% off!”

Is that how life works? No, not really. Even if you consider the “Mac Daddy” of trust builders – the BBB – even they don’t get that level of interaction (I know, they used to be a client).

Alternatively, Facebook thinks the world might work like this, “My sink has exploded! Quick! Get me Facebook!” You would then search Facebook graph search, going “Hmmm Facebook, plumbers, toilet exploding, must find someone now…” and then see that your friend Sally really likes “Bob’s plumbing” and pow – you pick up your cell phone and Bob is on the way!

No. That’s not how life works either (at least not right now). Chances are – you’d Google a plumber, find a number for emergency repair, and then start dialing. Facebook doesn’t strike me as an effective replacement for the Yellow Pages or for local search.

So for Graph Search to work either way, Facebook has to condition people to interact with the engine beyond just their voluntary status updates, likes, etc. It’s not impossible, but not exactly a piece of cake either.

Facebook probably has a reasonable shot at achieving what it hopes for because of the fact there is an army of agencies that will push it in order to drive fee revenue for building content and pages (heck, it’s how TV remains in business). However, before that market exists (which today it doesn’t), strikes me as silly to pretend it does exist. To paraphrase my old boss, President Bush, fool me once shame on you, fool me twice and we hope we don’t get fooled again.

There are also very good reasons to presume that what Facebook is hoping for never happens:

1. Google is remarkably sticky – it has a high “lock in” factor about it.
2. When people want information, they want to feel in control of the searching. WoM matters in      that, but it’s not a driving force.
3. Facebook is seen as the place where you share “I ate Yummy Cake!” not where you find a professional or a business solution.

So for now, arguments of “you have to be in it to win it” on Facebook and Graph Search seem a bit tenuous. Claim your page perhaps, share content on it if it doesn’t cost you a lot to do so, but understand why you’re doing all that. You’re doing it for the few people who might come by and go “Oh yeah! I like them!” and want a place to share additional content. Do not treat Facebook as an audience builder (anymore) and do not expect to grow your brand unless you’re prepared to play Facebook like you would Television – massive repetition and massive budgets.

That said, one shouldn’t discount the real power of Graph Search for marketers, advertisers, and as a part of planning.

The Graph Search is an interesting product. For example, if you want to do consumer preference research, I think Graph Search is an amazing tool. You can type in “music liked by people who like advertising agencies” and you get a list that matches your query. You may think this is silly – but if you’re going to create content (say a podcast) knowing the music tastes might help the content resonate better if you’re doing a marketing podcast.

The video I attached to this blog post explains how Facebook calculates the results to display. While many people see it as similar to Google, understand that this is something materially different from Google (for now anyways). Facebook can give you what we would call in economics “revealed preferences” based upon the trillions of individual little transactions of “I like cake! I like Beastie Boys! I like advertising! I like strawberries!” across billions of people. You can find out essentially where the consumer tastes of the “herd” point to. It’s a predictive model based on data mining of very big data in a rather innocuous way.

That is a neat thing. So the question then is – will people say “I like brand X!” Could you search, “people who like Coca-Cola” and get a list. Sure. It works that way I’d say for any national brand X.

But you need to understand the chicken and the egg paradox here: they’ll say that only after Brand X already becomes Brand X. You won’t become Brand X through Facebook (even if you pay). In other words, if I do “music that people who like Coca-Cola like,” as a query, I’ll get interesting mix of music. By the way, the top results for that query are Lady Gaga (who represents Pepsi) and Brittney Spears (who also represented Pepsi). One has to wonder then – what’s Pepsi’s deal! Alternatively, if I were Coca-Cola, I might pay close attention to this and attempt to align with Spears, Gaga, Jay Z, and the other artists who came up in the associations. Facebook’s Graph Search does represent what is effectively an on-demand searchable information market. That is powerful stuff for research and prediction modeling. Given this product is presently free – it’s more than a bargain.

Moreover, the order in which the things come up isn’t random – Facebook makes a valuation based on the overall social value of the property in relation to the query. So quite frankly, Lady Gaga has more sway than Spears for Coca-Cola. Given a choice between signing Gaga and signing Brittney – it would be Gaga if we were to go solely by the graph search engine.

For brand and content planning, Facebook gives you a quick tool to potentially gather some insight in a relatively simple platform. I think the reality is, however, that this platform works best only when it can harmonize literally millions of data bits; this implies it only works the best for big concepts, big brands, and big linkages.

The Future of Social Interaction

One of the things that frustrates me is this notion that Facebook is enduring. Facebook really didn’t exist six years ago – at least not in the way we understand it today. Google, in comparison, has been around for sixteen years.  Search engines have come and gone against Google. Really no one has challenged Facebook (in part because anyone who looks like they might challenge them suddenly gets Borgified in a multi-gazillion dollar payout). Facebook could go the way of Myspace – here today, kaput tomorrow.

Bottom line is that social sharing technology isn’t going to disappear. I believe Facebook ultimately will implode (in large part from actions like this where it suddenly becomes the Social Nazi). If nothing else, Facebook is going to have to figure out how to mature – like Google. Growth only works until you’ve assimilated everyone (which Facebook is probably very near to accomplishing). Once you’ve assimilated the entire potential base – growth is not an effective strategy anymore. Exactly what Facebook might do isn’t clear – but graph search appears to be one potential line. I could see Graph Search ultimately being a pay product – and as a strategist, I might be willing to pay for using it if it becomes very robust in revealing consumer preferences. It would be an ultimate research engine.

There are some things that businesses should look at in planning for the future:

1. Google Authorship – tags to you regardless of where you write, and thus,      helps bring authority and links back to you.
2. Focusing on business content and business public relations online
3. Focusing on building rich content that builds trust and authority
4. Becoming a robust media producer – blogs, podcasting, & video
5. Establishing trust and authority through both online and offline activities.

I’ll be talking about those five things over the next few weeks so – stay tuned.

While I don’t think Facebook is going to implode any time soon, I do think that for most businesses – it’s a losing proposition.