Facebook fans might have a nebulous value, but Facebook fans respond to targeted communications with benefits (discounts, free stuff). I still don’t know what a Facebook fan is “worth” to me – specifically, I have no idea what the maximum CPA I’d be willing to pay to get an additional Facebook fan. What I do know, though, is that putting out an offer (discount code, free ticket, etc) to your Facebook fan gets real activity. Our most popular posts / messages were ones that offered discounts, deals, or really relevant updates on new speakers. Surprise, surprise – people respond to offers for free stuff or relevant information.

Facebook has a gaggle of products that could be simplified and unified – As a newbie advertiser, Facebook still has too many disjoint products. They have Fan Pages, Events, and Groups. My feeling is that they’re pushing most professional organizations to use Fan Pages. I have a group as well, but the tools for managing it are very basic. And you can’t (as far as I can tell) easily integrate a group into a Fan Page. And Facebook has Events. Events are great, but you can’t link an existing event with your Fan Page – you have to create events from scratch from the Fan Page to make them easy to find for your Fans. That’s something they should fix.

You know what would help? Facebook should pick a locus of activity and I think they have – it’s the Fan Page. Now they just need to make sure that as many of their tools / offerings as possible seamlessly integrate into the Fan Page experience.

Facebook advertising needs the same kind of 3rd party tools ecosystem that Google AdWords has – Overall, I feel like Facebook has really rudimentary tools when it comes to measuring the efficacy of your advertising campaigns and automating the whole bid optimization process. If you’ve spent money on Google Adwords or internet advertising more broadly, you know that there are tons of tools out there to help you maximize the efficacy of your spend, compare performance within and across networks, and to tune your creative. Facebook doesn’t have that tools ecosystem, but they’re still a young company. To make this a truly powerful platform for SME advertisers, Facebook will either need to beef up their tools or create a good 3rd party ecosystem where other people can do that for SMEs and earn a profit doing so. My money is on the company doing the latter – it’s more consistent with many of the things they’ve done to date.

Facebook advertising can deliver real results if you track it properly – For our latest conference, the Virtual Goods Summit, we managed to sell 16 tickets that were directly attributable to Facebook. To be 100% clear, that means that we sold 16 tickets where the transaction was completed by someone who clicked on a link where the referring source was Facebook. If you’re an Eventbrite user, this means that 16 of our tickets came from tracking URLs that were sent to the Facebook audience. Facebook was our second most fruitful channel for customer acquisition – the only channel that outperformed them (based on tracked, directly attributed ticket purchases) was our own mailing list. Not bad for a 5 year old company with a relatively new advertising platform.

Longer term, though, the value of having a strong presence on Facebook is that it is a relatively friction-free way to communicate with people who are interested in your brand. Email is clogged – it has been taken over by spammers. Reaching people through that channel is difficult. It’s hard to get people to give you phone numbers – that’s too private and not disposable. So I do think that having a low-friction channel with high responsiveness is a good thing for people who want to advertise. Facebook, though, will have to bear the responsibility for setting the rules of the road and keeping this channel from getting clogged.

If you want to take part in my FB marketing experiments, become a fan of the Virtual Goods Summit or the Social Gaming Summit. If you have thoughts on your experiences using Facebook’s marketing tools, let me know in the comments.

It can be rational to pursue “fame” because fame is a valuable complementary good in the tech community - Fame is useful in the tech community, as it is in most community. Fame gets you access to cool people, good ideas, and interesting opportunities. Look at Robert Scoble- he’s famous and he gets access to lots of interesting opportunities due to his notoriety. Being well-known in some area makes it easier to get a job, sell your services as a consultant, get access to smart people, and generally be “in the know” – in short it’s a complementary good for many other traditional businesses.

The vast majority of people who are doing things on the Facebook platform cannot be motivated by the revenue potential – There simply isn’t a lot of money to be made for app developers on the Facebook platform at the moment. I suspect this will change at some point. Even if it does, how will it be distributed? Will the majority of the revenue accrue to the largest of the large, with the smaller providers trying to feast on crumbs? My guess is that the biggest of the big (Slide, RockYou) are in the best position to figure out the business model that works as they have the most traffic, the most exposure, and the tightest links with the platform providers.

Also, it’s worth noting that I am focused on revenue, not “making money” – there will be Facebook apps that get bought for prices where the teams do well. There will also be folks who are able to raise money from angels or venture funds to build applications. I just don’t think the current revenue-generating potential is a strong attraction for most of the people developing these apps today.

The pursuit of fame is driving people to create apps that are famous for being famous. They don’t persist and more energy is being put into driving adoption and installation than actual ongoing usage. This is the one thing that I do find mildly humorous. Perhaps I am being naive, but viral marketing is a tool, not an end in and of itself. Getting reach and adoption ought to be part of your plan, but it shouldn’t be your whole plan. Lately I see an increasing number of applications that have done a great job of being clever in their viral loops and marketing plans but the applications themselves are really disappointing. They’re not that much fun nor do they have much ongoing entertainment value or utility. Simply put, there are a lot of folks who seem focused just on driving installs at the expense of building applications that will drive continued usage once they’re installed. It feels like the ends and means have been confused here.

This whole situation feels a lot like blogging 3-5 years back. A number of folks have built decent revenue-generating businesses from their blogs. A larger group has achieved fame that helps them in their professional life (selling consulting services, their personal job search, finding interesting investment opportunities). For the vast majority, however, the principal return is personal satisfaction and the occasional nod or pointer from a more popular blog. I think we’re already starting to see that with Facebook apps today. We have a few “professional” app developers who are building apps that are engaging and persistent and could conceivably turn into real businesses. There’s another handful of folks who are building apps and have already achieved some level of fame for being “big on Facebook” and have managed to convert that fame into something valuable (angel financing, consulting agreements, conferences, etc). The vast majority, however, are likely going to have to content themselves with personal pride and the joy of the process, neither of which should be undersold.

Mobile Advertising is Neither Well-Defined nor Understood. The conference session I attended called “The Co-Evolution of Marketing and New Media” touched on the whole subject of new media advertising. Based on what I heard on the panel, from Niren Hiro in particular, the mobile advertising and marketing market is still not well-understood by folks who are not intimately involved in the space. Even among this panel of experienced ad folks, there were a lot of questions about how best to address the mobile opportunity and where the actual opportunity lies.

New Media Advertising – You Can’t Just Blame the Brand Advertisers. Perhaps the most interesting thing I heard on the ads side was that there are a lot of folks in the video space who have not figured out how best to integrate advertising into video. This was not surprising – what was surprising, however, was the admission that it has as much to do with video service providers not having the answers/solutions as it does with brand advertisers not being willing to put their brands next to potentially objectionable content. Most of the commentary I tend to hear focuses on what brand advertisers won’t do with their brands as opposed to the open questions new media companies haven’t solved.
Video Games are Media Businesses, not Technology Businesses. The CEO of EA made a presentation on the video games business. I’m sure it’s available online somewhere. The most telling portion about “betting on people” was one of the clearest articulations I’ve seen as to why video games are much closer to media and entertainment driven businesses than technology businesses, even though technology is a major input for them.
Casual Games are the most misunderstood part of the games industry. My favorite panel of the day was the one on casual games. The more I read about casual games, the more I become convinced that one of the big things holding back casual games is the perception that they’re only relevant to “older” women in a download-for-purchase model. Nothing could be further from the truth and I think the definition of what constitutes a “game” will continue to evolve in the very near future.

If you’re an existing widget provider and developing an ad network or ad capability is part of your overall business plan, experimenting with Facebook makes sense to me. Facebook is a pretty fertile ground for innovation and Facebook is a good way to figure out whether ad serving in widgets is a viable way to proceed. If your name is RockYou or Slide, this makes a lot of sense to me as a hedge at a minimum and as a real business opportunity at best. Those two companies already have enough non-Facebook widget traffic; figuring out how to better monetize that traffic using Facebook as a testbed makes a lot of sense to me. Any key learnings could likely be filtered back into the non-Facebook product as well.Ultimately I think the widget business is going to be about delivering ad impressions anyway.

Until it’s clear that Facebook is not interested in playing in this game, I’m not sure that I would pour a lot of resources into building a monetization engine only for Facebook. Perhaps I am being naive, but I only see two real revenue opportunities for Facebook — ads and virtual items. For the near term, I expect ads to dwarf the virtual items piece. I’m not sure whether devoting resources to build an ad product for Facebook is a wise investment.

I don’t want to abandon this point prematurely. Building a good advertising product requires three key components: advertisers, publishers, and reasonable expectations about conversion. From everything I’ve seen, the conversion rates on most Facebook-related advertising is fairly low. To actually make money, app publishers will need to build applications that generate a lot of traffic, especially if we’re talking about display advertising with fairly low CPMs. I won’t even touch on the question of advertiser acquisition – getting quality advertisers on board is very expensive. If building a really good ad network were cheap and easy, everyone and anyone could do it.

Like any emerging market, there are more questions than answers. But until I see more data, I’m just not convinced that Facebook-specific ad networks make a lot of sense at this point in time. Feel free to agree or disagree in the comments.