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“The Cloud” is one of the principal Cs of The Marketing Id’s E=MC5 theory of connectivity, which states that a social Enterprise must support Mobility, Cloud-based Communications, Cyber-security, Collaboration & Content.  While the other Cs seem to be more easily understood, there appears to be some confusion regarding “the Cloud?”  The Marketing Id believes that as a branding reference, “the Cloud” probably suffers from varying perceptions of mood (gloomy) and color (gray).  Most people eventually want weather clouds to clear and sunlight to stream in.  So we thought it might help to let some sunlight in to what we know as “the Cloud” in the business world!

To be objective and thorough, The Marketing Id will analyze this perception problem from both, the provider and user (i.e., customer) viewpoints of “the Cloud.”

From a provider perspective, The Marketing Id was intrigued by a November 2012 publication, “BVP Top 10 Laws of Cloud Computing 2012,” in which, Bessemer Venture Partners posits that cloud computing providers must adhere to the following ten laws in order to succeed:

  1. Drink Your Own Champagne
  2. Build for the Doer, Build Employee Software
  3. Death of the suite; long live best-of-breed and even best-of-feature
  4. Grow or Die
  5. Play moneyball in the cloud, and check the scoreboard with the 5 Cs of Cloud Finance
  6. Build the Revenue Engine, and only invest aggressively if you have a short CAC Payback Period
  7. Make online sales and marketing a core competency
  8. The most important part of Software-as-a-Service isn’t “Software” it’s “Service”
  9. Culture is key as you build your dream team
  10. Cash is (still) king – Cloudonomics requires that you focus on cash flow above operating profits, and plan your fuel stops very carefully

While each one of their Top 10 laws is compelling and elaborated upon in the BVP paper, The Marketing Id would like to focus on a couple of the laws.  Law #5 suggests that a provider needs to “play moneyball in the cloud” by focusing on five specific financial Cs.  The relevant paragraph from BVP’s Law #5 states:

“After surveying hundreds of leading public and private Cloud Computing companies, 5 key “C” metrics now rise above the others as essential top level performance indicators: CMRR, Cash Flow, CAC, CLTV, and Churn.”

Thus, a successful cloud services provider must be concerned with Committed Monthly Recurring Revenue (which is MRR minus the churn) as opposed to Total Contract Value or Annual Contract Value, both of which are often manipulated by sales to their advantage.  BVP also provides a detailed discussion on their other 4Cs, which makes for a worthy read.

BVP’s Law#7 is a natural for The Marketing Id to highlight as it simply suggests, “make online sales and marketing a core competency.”  We couldn’t agree more.  In fact, their opening statement seals the deal as far as The Marketing Id is concerned:

“You’re a cloud business, so by definition, your sales prospects are all online. Savvy online sales and marketing is a core competency (sometimes the only one) of every successful cloud business.”

BVP then goes on to criticize some of the B2B leaders in the cloud business:

“The most innovative B2C companies are lead generation machines, leveraging social media marketing, search engine optimization (SEO), viral marketing, search engine marketing (SEM), email marketing, and other technically-advanced methods. Yet many B2B companies don’t have a clue. The incumbent technology leaders like IBM, Oracle, and SAP have done very little in online marketing, and thus have given their smaller challengers a huge opportunity.”

So while B2B cloud services providers have some work to do, cloud services users (i.e., customers) also seem to have a “cloudy” vision when it comes to their understanding of how best to match their needs with the benefits and value offered by these services.  Accordingly, from a user/customer perspective, The Marketing Id found a June 2013 Forbes magazine article, “The Top 10 Myths About Cloud Computing,” by Bob Evans, Senior Vice President, Communications at Oracle, pertinent and useful.  Mr. Evans disavows the top ten myths (listed below) that dog cloud computing:

  • Myth #1: Public cloud is the only true cloud.
  • Myth #2: You’re either in the cloud or not.
  • Myth #3: Clouds are one-size-fits-all.
  • Myth #4: There’s no difference between virtualization and the cloud.
  • Myth #5: Clouds only run on commodity components.
  • Myth #6: Cloud will lock you in.
  • Myth #7: Cloud is about pay-per-use.
  • Myth #8: Public clouds are still not secure.
  • Myth #9: I need multiple clouds to run my business.
  • Myth #10: The biggest benefit of cloud computing is lower costs.

Again, while each one of these myths is certainly worthy of discussion, The Marketing Id will focus on a couple while encouraging our patrons to read the original article.  Myth #3: Clouds are one-size-fits-all is apparently a prevailing myth that probably has its roots in the B2C user base.  Most B2C users avail of online services from Amazon to Zynga without knowing or caring that they are, in fact, cloud services.  The average Joe simply sees these as a part of his regular online activities and because his experience doesn’t differ much from one cloud client to another, would probably think of any one of them as a “one-size-fits-all” service?

However, in the B2B world, a one-size-fits-all cloud services offering is a non-starter.  Because, as Mr. Evans explains, B2B users/customers require and have a wide range of options available to them.  First, they can choose from different deployment models, namely, public cloud, private cloud, and hybrid cloud.  Then they have a choice of basic service models, such as, Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).  Wikipedia (see their diagrams below) notes that these have been further expanded in recent years to include:

“Other key components in anything as a service (XaaS) are described in a comprehensive taxonomy model published in 2009, such as Strategy-as-a-Service, Collaboration-as-a-Service, Business Process-as-a-Service, Database-as-a-Service, etc.  In 2012, network as a service (NaaS) and communication as a service (CaaS) were officially included by ITU (International Telecommunication Union) as part of the basic cloud computing models, recognized service categories of a telecommunication-centric cloud ecosystem.”

Cloud_computing_layers

Cloud_computing_types

Diagrams – courtesy of Wikipedia’s “Cloud computing” article

Mr. Evans also suggests different operating models for a cloud solution, wherein the:

  • customer owns and operates it;
  • cloud provider owns and operates it; or,
  • customer owns the solution but the provider operates it.

Thus, it is pretty clear that in the B2B world one size does not fit all and there is a cloud computing solution that fits the varying needs of every business from a startups to a SMB to a large enterprise.

Finally, The Marketing Id would like to briefly mention Myth #8: Public clouds are still not secure.  Since Cyber-security is another principal C of the social Enterprise, we would like to cover it in a separate post in the future.  However, it is important to dispel this myth surrounding public clouds not being secure.  Nothing can be further from the truth on the B2B side of the public cloud infrastructure.  As Mr. Evans points out that public security providers have at least the following:

  • a dedicated team of cloud security experts,
  • processes that ensure full compliance with regulatory, and industry standards,
  • regularly scheduled third-party security audits, and,
  • automatic updates for their hardware and software.

We would like to end this lengthy post by putting the ball in the B2B cloud services marketing court.  There are too many misconceptions and misrepresentations out there of what is broadly known as “the cloud.”  Moving to the cloud might not be simple, but it should be as structured, staged and seamless as possible.  In order for providers to get there, they should be factually marketing the cloud, not further clouding the market with myths!

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Juggling social media options is a bear!

Juggling social media options is a bear!

Every business – whether it’s small, medium or large and regardless it’s a B2B, B2C or B2G – either has or must have a stake in its brand to thrive.  In a recent post, “5 Mistakes You Might Be Making on Social Media,” SocialMouths seemed to indicate that brands are suffering from what The Marketing Id prefers to call an “anti-Goldilocks” problem, which is one that is likely to affect all manner of businesses, if they don’t get their social media act together.  In a nutshell, SocialMouths posits that every business should try to figure out if its social media marketing suffers from any of the following traits:

 

  • Ignoring social media completely
  • Thinking “Likes” = Sales
  • Talking More Than Listening
  • Being Inconsistent
  • Biting Off More Than You Can Chew

 

If your business is not guilty of violating any of these attributes, then it is more likely to follow the Goldilocks standard of social media activity – i.e., messaging/content that is neither too hot, nor too cold; target audience/frequency that is neither too big, nor too small; and a medium/platform that is neither too hard, nor too soft – one that happens to be all just right!

 

From a marketing communications perspective, social media is a collection of new, digital channels that still need to conform to time-tested marketing rules.  In our December 2011 post titled, “Six Counts That Make For a Successful CEO,” The Marketing Id had alluded to this very notion:

 

“As in politics, so too in the business world, public relations and marketing communications professionals can string the right words together into the right message to the right audience at the right time and tailored for the right medium!

 

Thus, any purposeful use of social media in the B2B, B2C and B2G worlds needs to subscribe to proven marketing principles.  In fact, in a recent Social Media Explorer post titled “5 Steps to Determine the Perfect Social Media Strategy,” these marketing rules were outlined in five simple steps as follows:

 

  • Define Your Goals
  • Identify Your Target Audience
  • Target the Appropriate Social Media Platforms
  • Define Your Unique Selling Proposition (USP) and Core Topics
  • Create an Editorial Calendar

 

A non-purposeful, helter-skelter approach to social media use in the business world can do more harm than good and not just to the brand. So whether a business is promoting a webinar, or soliciting feedback on a product/service, or making an important announcement, or doing any one of the myriad activities impacting its revenue cycle – it needs to have a comprehensive social media plan that includes contingencies for ad hoc events.  Achieving the Goldilocks standard of social media activity might be the ideal, but the more a business plan adheres to it, the greater its rewards and the less of a bear social media becomes!

Jeff Bullas, a social media marketing guru, recently wrote a wonderful blog titled “How A Great Title Got Me A Link From The New York Times.”  The Marketing Id subsequently tweeted about it and as is customary included a link to Jeff’s post at the end of our tweet, which read as follows:

“If the headline doesn’t tick, people won’t click–as the saying goes, ‘well begun is half done!’”

In our February 2012 post, “Five i-Factors That Can Ensure Every Business Tweet Counts,” The Marketing Id had posited the following:

“In the B2B world, Twitter has the potential of becoming the launching pad of choice for all sorts of business communications beyond traditional PR and marketing to include sales, financial, engineering, operations, customer relationship management, et al.  Given the fact that a tweet can be used to initiate several different types of business communications, never has a tweet’s 140 characters seemed more valuable to the enterprise.”

However, in then going on to elaborate a tweet’s business purpose, in the wake of its, what we called, an “‘I’ journey from Interrupt to Inquire,” The Marketing Id failed to emphasize the significance of the “headline” aspects of a tweet in that blog post.  We highlighted the importance of classical AIDA (Attention, Interest, Desire, Action) principles in constructing a tweet by saying:

“It is vitally important to remember that the very first purpose of a tweet is to interrupt a follower’s thought processes.”

Nonetheless, we had neglected to mention the role of a catchy headline in capturing attention and the afore-mentioned Bullas post reminded us how critical this can be to cause a click-through as well as earn a favorable link in a prestigious publication just like Bullas did.

So as an experiential exercise, The Marketing Id went back and checked its tweets (@MahaTweeter) from the past couple of months to see if they offered more attention-grabbing “headline” material than the titles of the original articles that each of our tweets were actually promoting or linking to.  While The Marketing Id recognizes that mainstream business publications tend to be conservative with their story/article headlines, we nonetheless believe that these stories/articles should be promoted via Twitter with more “i-catching,” i.e., clickable, headlines.  This is becoming an imperative for traditional and online content providers, who want to gain/maintain readership within the new digital media content publishing/distribution paradigm.

So below we offer five examples of actual unedited tweets that The Marketing Id recently sent out to promote marketing items of interest:

  1. On September 3rd, Forbes published an article titled “Winners And Losers In The Microsoft Nokia Deal.”  The Marketing Id tweeted about this story and included an embedded link to their full article as follows:
  2. $MSFT MyPhone strategy–buys $NOK to replicate $AAPL $GOOG success–too much, too little, too late? http://onforb.es/19fk196

  3. On August 12th, The Wall Street Journal headlined an article with BlackBerry Puts Itself Up for Sale.” Here’s how The Marketing Id promoted this revelation and included an embedded link to WSJ’s complete story:
  4. $BBRY tried a name change, but brand had already been tarnished–lesson for marketers, you snooze, you lose! http://on.wsj.com/14GWv7e

  5. On July 24th, Forbes published an article titled “Mark Zuckerberg Says Teenagers Aren’t Leaving Facebook.” The next day we tweeted about this disclosure and included an embedded link to their full story as follows:
  6. Teenagers Aren’t Leaving Facebook… $FB is leaving teenagers!  Rents & rentals (ad space) are turning kids off! http://onforb.es/12k0uFw

  7. On July 4th, Bloomberg headlined “Yahoo to Buy Software Firm Xobni for About $70 Million.”  The Marketing Id’s tweet of the story highlighted Yahoo CEO’s buying binge as follows:
  8. In #socmed era a video is worth a 1000 pictures, so $YHOO makes a Qwiki acquisition–15th since CEO Mayer leaned in!  http://bloom.bg/13pLTYw

  9. On June 12th, Forbes announced “With Waze, Google Signals Arrival Of New Business Model.”  Here’s how we tweeted the story:

$GOOG realizes it takes a village–wades into #crowdsourcing space with WAZE acquisition–for real time Google Maps? http://onforb.es/11fh5ED

The moral of our lesson here is that even if an original article does not “nail the headline,” make sure your social media message does.  Whether it originates from Twitter, LinkedIn or Facebook, the message that subsequently plugs an article to your followers/readers must entice them to click-through and actually read it?  Because, quite simply, if the headline doesn’t tick, people won’t click!

In the B2C world, social media marketers are constantly trying to calculate their true “Cost per Like.”  Back in November 2011 an EdgeRank Checker post titled “Comments 4x More Valuable Than Likes” stated the following:

“For every Like a Post gets, it received on average 3.1 Clicks. For every Comment a Post receives, it results on average 14.678 Clicks. This ultimately means that the more engagement your update receives, the more Clicks it will receive. What is interesting about this data is that a Comment results in roughly 4 times the amount of Clicks.”

More significantly, in October 2012 a DaylanDoes post titled “All About Facebook ‘Like’ Scam Posts” complained about how Likes were being abused:

“The Facebook Like algorithm is Facebook’s way of dictating if content is of any value to users. The more likes/shares/comments it gets, the more exposure to certain people it, and the profile it belongs to, will get both short term and long term.

 

All these metrics contribute to a users ‘EdgeRank’ – the score your profile is given that dictates how your page interacts with other profiles on Facebook.  The greater a page/profiles edge rank is, the more it will be exposed in people’s newsfeed. EdgeRank is the reason you see a lot of rubbish in your Facebook newsfeed these days. Certain people and pages have EdgeRank factors that Facebook have decided are relevant to you.”

More recently, in May 2013, a Yahoo News post titled “Facebook Scam Alert – What Really Happens When You ‘Like’” warned about a phenomenon called “Like Farming,” in which “Scammers Are Making Money Off Your Likes.”

These are probably some of the reasons why, in the B2B world, Likes do not hold much value.  In fact, long sales cycle B2Bs that provide high dollar value products/services hardly derive any tangible benefits from Likes.  To them, Likes are at best an endorsement of their B2B brand.   These B2Bs are far better served by Comments.  And, they have good reason to be – because Comments in the B2B world usually mark the start of a critical awareness phase of the revenue cycle that is associated with their integrated sales and marketing funnel (see Figure 1 below).  For more on this revenue cycle read The Marketing Id’s post titled “Revenue Performance Management: Viva La Drucker!”  If the awareness phase is handled well and supplemented through use of a Marketing Automation Platform (MAP), a Comment’s owner could be authentically entered into the B2B’s sales funnel.

REVENUE CYCLE ACROSS INTEGRATED SALES & MARKETING FUNNEL

REVENUE CYCLE ACROSS INTEGRATED SALES & MARKETING FUNNEL

FIGURE 1: REVENUE CYCLE ACROSS INTEGRATED SALES & MARKETING FUNNEL

In the old media world (i.e., the analog and pre-Internet era), the saying used to be “A picture is worth a thousand words.”  In the new media world (i.e., the digital and post-WWW age), YouTube quickly established that “A video is worth a thousand pictures.”  So in measuring the worthiness of inbound marketing impulses that are critical to the social media world and MAP metrics, The Marketing Id would like (no pun intended) to suggest, metaphorically, “A Comment is worth a thousand Likes.”  And, here are the Top 12 reasons why:

  1. Likes are primarily a B2C driver, Comments are more of a B2B feeder;
  2. Likes are typically anonymous, Comments are usually from a known entity;
  3. Likes actually reflect a passive sentiment, Comments suggest an active response;
  4. Likes originate with one lazy click, Comments are developed through a group of considered ones;
  5. Likes are often impulsive, Comments are mostly deliberate;
  6. Likes are quite unreliable, Comments are reasonably certain;
  7. Likes are simply akin to a thumbs up, Comments are more like all hands on deck;
  8. Likes are useful to just 1P (promotion) in the marketing mix, Comments are pertinent to all 4Ps in the marketing mix;
  9. Likes are basically a brand builder, Comments are more of a lead generator;
  10. Likes are associated with subject matter novices, Comments are related to subject matter experts/sleuths;
  11. Likes are invariably dubious suspects, Comments are targetable as likely prospects;
  12. Likes come at a variable cost; Comments are a probable revenue source!

While it might appear that The Marketing Id is not a fan of Likes, the truth is in the B2B domain even an unfavorable Comment is likely to provide more business value than a thousand Likes can?  So don’t hesitate to comment on this post!

Jeff Bullas, a Top 50 Social Media Power Influencer on Forbes.com, recently wondered whether social media had reached a digital tipping point.  Jeff believes that social media, smartphones and search engine evolution are causing a paradigm shift in our digital landscape.  While Jeff’s prognostication might be true as far as smartphones and search engine evolution are concerned, I would posit that social media has some ways to go in this regard.

There is a simple reason that the recent Facebook IPO bombed–a billion, largely non-revenue generating subscribers do not make for a very attractive business model.  More importantly, most of the so-called successful social media companies such as Facebook, Groupon, Zynga, etc. have been operating pre-dominantly in the B2C (business-to-consumer) services domain.  The Internet consumer services segment is dominated by a largely young demographic, which has become used to a “free-is-good” culture.  Without advertising to generate revenues, most B2C social media services companies will find it hard to survive in the long term, which is barely a couple of years in Internet time.

Thus social media needs to make rapid inroads into the B2B (business-to-business) world, where businesses actually pay for services rendered.  In this regard, companies such as Salesforce.com have been pioneers in quickly integrating social media into the business environment, both B2B and B2C.  In fact, at last year’s Dreamforce 2011 conference, Salesforce.com CEO Marc Benioff, introduced the concept of the social enterprise.  In his keynote address, Marc very relevantly pondered, “Customers and employees are social.  Are enterprises social?”  He went on suggest that they were not social and wondered if there was a way to bridge this social divide between the enterprise and its employees and customers.

All that bridging Benioff’s social media divide required was the establishing of a value proposition that would be compelling to the enterprise. And, Mr. Benioff did so quite convincingly in his Dreamforce 2011 keynote.  He asserted that for an enterprise, delighting customers is knowing who they are and what they like–Facebook tells us what they like, Twitter tells us what they are saying and LinkedIn tells us who they are connected to?  So in order to become a “social enterprise,” a B2B needs to follow three steps–begin creating customer social profiles in its database, establish an employee social network and finally integrate these into customer and product social networks with the appropriate security and access provisions as required.

From a marketing standpoint, the social enterprise could become the Holy Grail for B2B marketers when it comes to sales enablement, demand generation and a truly integrated sales and marketing funnel– what revenue managers refer to as “one vision of the truth.”   With a customer relationship management (CRM)-integrated marketing automation platform, marketing to the social enterprise then becomes a collaborative, real-time exercise that ought to make it a delightful experience to customers, employees, partners, et al.

Finally, infrastructure is key for a social enterprise to function effectively in the world of social media. I have therefore previously proposed my own E=MC5 theory of connectivity, which states that a social Enterprise must provide Mobility, Cloud-based Communications, Cyber-security, Collaboration & Content.  Thus, for social media to make a successful foray into the B2B world, a business must necessarily meet this E=MC5 threshold and it does not have to be a business Einstein to make this connectivity happen!

In our April 14th post “If Facebook Were a Country…” we hinted at the irrational exuberance that was being generated by the Facebook IPO.  Since early April, MahaTweeter (The Marketing Id’s Twitter handle) had been trying to standathwart history, yelling ‘Stop!’  In any event, before we get to our Seven Doggone-Its of Highly Effective People (with apologies to Dr. Stephen R. Covey, Author of The 7 Habits of Highly Effective People®) involved in the Facebook IPO, we present a timeline (keeping in character with Facebook’s new look) of MahaTweeter tweets to make our larger point.

A couple of days after Facebook acquired Instagram for an ungodly sum, MahaTweeter fired a couple of warning shots, the first of which included a sarcastic reference to its “insta-acquisition”:

 April 11, 2012 – Instawham: #social #media startup earns billion dollar valuation despite phantom cash flows from non-paying subscriber base of millions! #in

April 12, 2012 – Déjà vu all over again–financiers investing in fantasy business models that promise a #socmed utilization they cannot fully comprehend! #in

MahaTweeter followed up with a quote from our Aril 14th post to highlight Facebook’s ridiculously low revenue per subscriber and net income per subscriber numbers:

April 16, 2012 – #Social #media by numbers: FB generated $4.39 in revenue per active sub and $1.18 in net income per active sub in 2011. http://wp.me/p1zesw-8h

In late April, MahaTweeter wondered about the efficacy of advertising-based social media models in this tweet:

April 28, 2012 – The success of advertising-based #social #media models depends on how effectively those impressions transcend brand to generate demand! #in

By Mayday, seeing no discernible drop in Facebook fever, MahaTweeter warned:

May 3, 2012 – #IPO: It’s no #GOOG–without a plan to monetize its active subscriber base of photo-swapping millennials– #FB is all sizzle and no steak! #in

As FB’s IPO date drew near, some alarm bells finally started to ring.  MahaTweeter read what Francis Gaskins, President of IPODesktop.com, had to say and tweeted accordingly:

May 7, 2012 – #Social #media bubble stress test on May 18th – meanwhile IPO expert warns of getting egg all over your #Facebook http://yhoo.it/J8jgm0 #in

The following day, MahaTweeter was tickled by the hoodie roadshow and remembered how even his hippie idol, Steve Jobs, had to clean up for Apple’s IPO back in December 1980.  It resulted in a Bob Dylan and Dire Straits laced “MahaTweet” that would have hopefully made Jobs proud:

May 8, 2012 – The Times They Are A-Changin’–“don’t-judge-a-Facebook-by-its-cover” #WallStreet raises Money for Nothing during the #hoodie roadshow? #in

During IPO week, MahaTweeter fired daily warning shots as recounted below – even referencing a cautionary Wall Street Journal report on IPO eve:

May 15, 2012 – Caveat Emptor–unless #B2C #social #media demonstrates sustainable, long-term monetization model, we are headed for Internet #Bubble 2.0! #in

May 16, 2012 – Planets aligned for the big #IPO–Jupiter will spawn instant millionaires–but can #social #media reconcile with notion of capital gains? #in

May 17, 2012 – #FB #IPO: public investors rush in where private ones have fled–http://on.wsj.com/JklbRY –we Face growing pains, as they Book early gains! #in

Finally, MahaTweeter put out this deferential (to the markets) tweet on the morning of the FB IPO:

May 18, 2012 – #FB #IPO: When Social Met Capital–markets will now validate whether a billion non-paying subscribers warrant its $100 billion valuation? #in

After the disastrous debut of the Facebook IPO, MahaTweeter expressed relief in a rare Saturday tweet that at least there would be no social media bubble:

 May 19, 2012 – All that glitters is not Google – #FB #IPO indicates dot com bubble redux unlikely; #social #media must learn to walk before it can run! #in

But then Monday after the IPO, we were disheartened to learn that the company that had made its name by encouraging people to share all sorts of information had actually withheld pertinent financial information relating to its future growth from the investing public!  Even before the call for congressional inquiries had begun, MahaTweeter had one last blast on the subject:

May 22, 2012 – More egg over your Facebook–during hoodie roadshow, rev est. cut while IPO price raised–no wonder #FB is tanking! http://yhoo.it/KIzl4W#in

And so, here we are on Memorial Day weekend doing a post-mortem examination of the highly-anticipated, yet badly-botched Facebook IPO.  Our intent is to present readers with what we referred to earlier as the “Seven Doggone-Its of Highly Effective People,” who were involved in some material way with this fiasco:

  1. TAS (Total Active Subscribers) is not equal to TAM (Total Addressable Market)!  Infinity times zero is still zero–even in the new math!  A billion non-paying subscribers can be active for several hours a day on their Facebook pages, yet not move the needle on company revenue.  Typically, TAM is what businesses count on for revenue-generating opportunities, and investors are beginning to understand that TAS is not the same as TAM.  Unfortunately, the highly effective analysts who rave over the social media juggernaut seemed to have missed this distinction.
  2. The Facebook Like has more social value than business value!  It’s pretty apparent that Facebook’s legacy subscriber base (i.e., students from U.S. schools, colleges and universities), which indulges in the use of “likes” in its collective vocabulary, transferred that same sentiment pretty liberally through the use of Facebook’s infamous “Like” button.  From a business perspective, if there is no easy way to monetize that Like, it offers very little redeeming value.  Again, investors seemed to have figured out that the Facebook “Like” thus far has not been all that it is cracked up to be.  So when will the highly effective social media quants come up with a measure already?
  3. Facebook not only made “friend” a verb but also devalued its meaning!  According to HubSpot, an inbound marketing company, the average Facebook user has 130 friends.  In the age of social media that might seem low, but The Marketing Id believes that is a high number of friends for the average Joe to have.  Since its birth in a Harvard dorm room, Facebook has gradually blurred the distinction between friend and acquaintance.  In fact, in the rush to appear popular (i.e., well-connected), Facebook subscribers are quite likely friending strangers.  From a business standpoint, a non-celebrity subscriber is unlikely to influence the purchase decisions of such a “questionable” network of friends.  The highly effective people that derived Facebook’s lofty valuation seemed to have based at least a part of it on an over-valued “friend” factor.
  4. Facebook squandered a “mobile in the hand opportunity for two PCs in the bush!” Facebook had admitted in its S-1 filing that it does “not currently directly generate any meaningful revenue from the use of Facebook mobile products.”  This confession seemed to have not garnered a lot of attention prior to the IPO but gained some currency after the fact.  This “revenue immobility” situation could be attributed to the fact that Facebook’s legacy subscriber base is likely more mobile than its newer and smaller desktop subscriber base from the business world – a possibility that seems to have eluded Facebook’s highly effective management until recently.
  5. Facebook’s “too much, too little, too late” platform strategy?  The Facebook platform had been largely static (i.e., computer-based as opposed to mobile device-based) for five years until Instagram, which was hastily acquired (so it seemed) by Facebook’s highly effective management about five weeks before the IPO.  Most social media pundits believed at the time that Facebook paid too much – $1 billion – to jumpstart its mobile strategy ahead of the IPO.  Then on May 24th Facebook Camera was launched and Forbes suggested that “Facebook purchased Instagram to remove the competition.”  It is unclear how Facebook Camera monetizes mobile, so even if the platform is great and may not be too late, it still remains a too little strategy from a business standpoint.  Again, Facebook’s highly effective management needs to reconcile Instagram with Facebook Camera for a skeptical investing public?
  6. Facebook’s IPO roadshow violated its own mission statement!  A company that wants to “to give people the power to share and make the world more open and connected” stumbled right out of the starting gate.  It appears that during the Facebook roadshow, its lead investment bank, Morgan Stanley cut its second-quarter and full-year forecasts for Facebook and “shared” this vital information with only a handful of clients.  It reminded The Marketing Id of that classical Orwellian line from Animal Farm – “All animals are equal but some animals are more equal than others.” This is a doggone it at the heart of the social media experiment, which needs to be addressed by the Chief Highly Effective Officer himself!
  7. NASDAQ’s embarrassing ~$100 million glitch over a $100 billion IPO!  In the grand scheme of things, NASDAQ’s 20-minute black hole at the start of trading amounted to only 0.1% of Facebook’s market value at launch.  The stars might have been aligned to spawn insta-millionaires as MahaTweeter had tweeted, but according to the Wall Street Journal, “The market-making arms of UBS AG (UBS) and Citigroup Inc. (C) suffered combined losses of about $50 million on trades made during last Friday’s glitch-plagued listing of Facebook Inc.”  Any wonder that FINRA is investigating how the highly effective NASDAQ went dark on FB trades for 20 minutes – an eternity in today’s high-frequency trading environment!

So after a tumultuous week (ending May 25th) as a publicly traded company, FB stock closed 16% below its IPO price.  Notwithstanding the seven doggone-its of the various highly effective people that we have outlined above, it might be still too early to judge whether FB shares had been priced appropriately for the IPO.  Nonetheless, the fallout from the Facebook IPO has significantly reduced the risks of a bubble in social media stocks for the foreseeable future.  Unfortunately, the foreseeable future always comes sooner than later in Internet time; so doggone it, we all need to be vigilant!  Happy Memorial Day!

Facebook, the world’s largest social network company, is set to launch its Initial Public Offering (IPO) next month. Given all the hype that this IPO has generated, The Marketing Id would like to lift this speculation to an entirely different level – what if Facebook were a country?  In the spirit of its forthcoming IPO, we refer to Facebook in our discussion below as, FB, its proposed common stock symbol listing.

With a projected subscriber base of 1 billion by August 2012, per Gregory Lyons of iCrossing (a digital marketing agency), FB would qualify as the third most populous “billionaire nation” after China and India.

The Marketing Id suspects that FB could even become the most populous “country” in a couple of years if current growth trends continue.  FB hopes to rapidly expand in the India market, where it currently has ~45 million subscribers amongst India’s ~120 million Internet users, and where Internet penetration is presently only ~10% of the population, but expected to grow briskly over the next few years.

Per its S-1 filing with the SEC, FB “had more than 425 million MAUs who used Facebook mobile products in December 2011.” (Note: MAU – monthly active users).  Again, FB qualifies as the third highest “nation” of mobile phone users behind China (1.01 billion) and India (911 million) – these numbers, courtesy Wikipedia.

Unfortunately, FB admits in its S-1 filing that it does “not currently directly generate any meaningful revenue from the use of Facebook mobile products.”  With this tremendous “mobile in the hand” opportunity being squandered for “two PCs in the bush[1],” The Marketing Id wonders how long before FB, a likely third-largest “country” of mobile phone users, capitalizes on its massive mobile subscriber base?  Will FB do a Google to monetize mobility because its recent Instagram acquisition is certainly not the answer?

In its S-1 filing with the SEC, FB says its “mission is to make the world more open and connected.” So if FB were a “country,” it clearly would be a free nation – in more ways than one!  Because FB does not currently require any of its citizens, i.e., subscribers, to pay taxes, i.e., service charges.  Thus if FB were a “country,” it would live up to its founding definition and be a socialist state providing a range of services to its citizens for free!

FB reports in its S-1 filing that it generates “a substantial majority of our revenue from advertising…”  The Marketing Id noted FB had 2011 revenue of $3.71 billion and net income of $1 billion, which translates to $4.39 in revenue per active subscriber and $1.18 in net income per active subscriber in 2011.  Per a Business Week report published shortly after its S-1 filing, FB’s market valuation topped $100 billion.  This valuation makes each active FB subscriber worth ~$118, even though FB generated only $4.39 in revenue per active subscriber in 2011 – a “neo-capitalist” model that gives new meaning to the “social” in an increasingly ubiquitous social media framework!

Finally, if FB were a country, it would be a multicultural melting pot with representation from people across the globe.  FB’s diverse subscriber base, i.e., diaspora of ethnicities, would ensure that it was in the forefront of freedom movements, such as the Arab spring, helping topple dictators.  FB as a country would provide a voice for people in the most remote regions of the world. FB could effectively function as the United Nations of social media!

Having said all of the above, if FB were indeed a country, it could only be a 21st century version of the good old US of A!


[1] FB has almost half of its subscribers using its mobile products

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