The three major social media sites have been pushing new tools out to their user communities aggressively over the past year. Each company has its own set of rumors, from IPOs to being on both sides of an acquisition. While the ultimate 2010 aims of Facebook, Twitter and LinkedIn may not have been revealed to us yet, it is clear that all three are looking for ways to beef up revenue and demonstrate long-term viability.
Whether or not Facebook goes public this year, it's still pointed toward that ultimate goal. The 350-million member social network is focused on finding new sources of revenue and gaining better penetration into those it already has. Even if it's more than a year away, it's never too soon to start shoring up your financial statements for an IPO. The latest new feature from Facebook, which has been announcing enhancements fairly rapidly over the past few months, is targeted directly at advertisers, underscoring the importance that the company's attaching to revenue growth.
Right now, Facebook is testing out a tool that would allow advertisers to track conversions from Facebook ads, which would provide another layer of intelligence beyond the click-based information currently available. Brian Boland, manager of direct response solutions for Facebook, revealed the effort briefly while on stage at the OMMA Social conference in San Francisco on Tuesday.
The new utility would enable advertisers to buy "cost per acquisition" (CPA) advertising, in which it pays only for clickers who go on to make a purchase. The de facto advertising standard on Facebook right now is "cost per click" (CPC), which doesn't involve the measurement of actual sales.
For cost-conscious advertisers, a CPA alternative is preferable, as the company would effectively be buying sales and could calculate the results, find optimal spreads between average consumer purchases and ad payments and maximize the results from their ad dollars. It would also be a differentiator from the ad solution offered by Google (GOOG), which is currently CPC.
According to Inside Facebook, the company isn't ready to reveal much but does confirm its efforts toward improved ad conversion tracking: "We are constantly working on ways to provide greater value and measurement to our advertisers and are always testing new products and features to do that. Conversion tracking is among these tests and is currently available in beta to a small set of advertisers. Better measurement tools are often requested by advertisers and we have taken a number of steps to respond to these requests with different products. For example, we announced Nielsen BrandLift in September 2009 and have seen that this product provides many useful insights to advertisers."
And, Facebook isn't the only social media company pushing new features. Both LinkedIn and Twitter have announced enhancements, which is unsurprising as they have big dreams for 2010, like Facebook.
Twitter has been rolling out "Local Trends" since late last week to help users see what is being discussed at the city and state level. This effort appears to be part of a larger trend toward driving users to Twitter.com to interact with the platform directly and improve traffic as a way to bolster an ad-based revenue model, which is the direction Twitter has said it's taking in 2010. On its blog, Twitter wrote, "Local Trends will allow you to learn more about the nuances in our world and discover even more relevant topics that might matter to you. We'll be improving this feature over time to provide more locations, languages, and data through our API."
New tools from LinkedIn are intended to make it easier for users to browse contacts and stay in touch with people. On its face, this may not seem groundbreaking, but the rapid increases in users common in the social media space through 2009's aggressive growth, but unwieldy relationships and large networks put the value and utility of social media tools at risk. LinkedIn's new browsing features are intended to help overcome the problem of oversized and cumbersome personal networks. So, in addition to the benefit of increased traffic, the new feature should reinforce loyalty and deeper use, which translates to a long-term advantage.
The subtlety is gone from the social media market. New features are coming quickly, each with the seemingly sole purpose of adding cash to the till, either through traffic means or improved advertising activity. It probably won't stop here. Throughout 2010, look for more positioning, as Facebook, Twitter and LinkedIn pursue whatever dreams are on their respective agendas.