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Federating Social Domains

by Sachin Balagopalan on December 1, 2008 · 1 comment

Quite a bit of buzz on the blogosphere today in response to a New York Times article on Facebook’s latest offering called “Facebook Connect”. The idea is pretty simple - login to any Website (that partners with FB) using your FB credentials and “socialize” with your friends i.e see your friends activities on those sites. The notion of a “social web” has been on the radar for a few years now. It seems like a logical step to extend the concept of social networking to the rest of the world wide web instead of limiting it to a handful of social networking sites. One sure way to expedite that is through credential or identity federation i.e allow users to access data across domains in a secure and seamless way by using a single sign on. By sharing credentials across domains opens up a whole new dimension to online social networking.

MySpace, Yahoo and Google have all announced similar programs this year, using common standards that will allow other Web sites to reduce the work needed to embrace each identity system. Facebook, which is using its own data-sharing technology, is slightly ahead of its rivals.

“Reduce the work needed…” is the key point here. A website like Discovery.com - with minimal effort - can instantaneously add a social component to their site by partnering with an established social networking site like Facebook and gain access to 120 million members. Of-Course it is up to Facebook to determine what type of information to share with their partner sites which opens up a new can of worms - privacy. I think FB has learned from it’s mistakes - remember the Beacon debacle - and will no doubt require the user to opt-in to the kinds of information they want to share with other web sites.

At the end of the day, for Facebook it’s all about monetizing their huge user base which incidentally they haven’t been able to do so yet. It is not clear if they are actually going to leverage FB Connect to increase their advertising revenue stream.

A survey last week from the research firm IDC suggested that social networks were a miserable place for advertisers: just 57 percent of all users of social networks clicked on an ad in the last year, and only 11 percent of those clicks led to a purchase, IDC said. And it turns out that marketers are not so interested in advertising on pages filled with personal trivia and relationship updates.

A business model for on-line services that relies solely on advertising is bad in most cases - Yes, Google is an exception !

Facebook has detailed information about its users: their real identities, what they like and dislike and whom they associate with. With a member’s permission, it could use that data to help other Web sites deliver more personalized ads. Similarly, those sites could tell Facebook what its users are doing elsewhere, helping to make its own ads more targeted.

“It’s becoming very clear that advertisers don’t know how to advertise on Facebook,” said Charlene Li, an independent consultant and social media analyst. “But if you take a group of Facebook friends and put them on a travel site where they are spending more time and generating more ad dollars in a focused area like travel, that is an opportunity ripe for getting revenues back and sharing it.”

IMO leveraging FB Connect may enhance their ad revenues slightly but at the end of the day I think they need to figure out other ways of generating revenue. 120 million members - albeit growing - is not that much in the grand scheme of things, certainly not enough to generate bread & butter revenue anyway.


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