Facebook May Not Be Skynet, But It Is Getting Smarter. And That’s Bad For Google.

skynet.jpgRemember the computer network in THE TERMINATOR that progressively got so smart, it became sentient and thusly attempted to annihilate the human race? That network was called Skynet, and its goal was to remove the possibility of human error and slowness of reaction time to guarantee fast, efficient response to enemy attack.


Today, at F8, the annual Facebook Developer Conference, Facebook announced its open graph initiative to take Facebook to its next logical evolution — everyplace other than Facebook. The initiative is designed to use people’s social interactions (when logged into Facebook which is like always, natch) to shape their experiences across every possible connected environment. On the Facebook blog, Founder Mark Zuckerberg stated that “the power of the open graph is that it helps to create a smarter, personalized web that gets better with every action taken.” Imagine visiting Pandora and it would already know how to program your station. Or visiting CNN and having it know what kind of news to display to you first. As a consumer, there are potentially many benefits of the initiative, making many experiences you have more and more relevant the more interactions you perform.


In order to make all of this happen, a significant amount of non-personally-identifiable data will be collected from consumers and made available to approved developers and publishers (75 at launch). As you might imagine, there will probably be some backlash from people concerned about privacy (heck, people made a fuss over the census). But the promise here is that your experience on the web will be better, thanks to Facebook and its delivery of more customized, relevant content. There’s a nifty little chart that explains it here.


This is all a very big deal if it’s successful. Bigger than you think. And It makes Facebook a direct competitor to Google. Facebook has managed to succeed where Google has failed — turning your social behavior into actionable intelligence. Google’s major attempts at insights into webwide consumer behavior (Orkut, FriendConnect, Checkout, Buzz) have not had anything close to the success that the Facebook platform has had. The intelligence collected from relationships with others, social micro-interactions (e.g. ‘likes’, ‘shares’, comments, updates), location (yup, Facebook’s working on that) and even transactions (see Facebook Credits) will be inherently more valuable to advertisers than clickthrough and search behavior (as advertisers get smarter themselves about what those kinds of behaviors mean to their bottom lines). And make no mistake, this data will be collected en masse. Facebook expects to serve 1 billion ‘likes’ in just 24 hours. By applying this kind of statistically significant intelligence to its Engagement Ads, Facebook can deliver even more efficient, impression-generating advertising for its customers.


And what the open graph suggests is that what happens off of Facebook may be even more important as what happens on it.


It seems to be an inevitability that all of this intelligence will one day soon be applied to power a socially-targeted ad network as big (or bigger than) Google’s AdSense. It would be a network that would theoretically deliver even better results for advertisers, resulting in higher CPMs/CPCs/CP-whatevers that can deliver higher payouts to publishers, making a choice between the two platforms a not-too difficult one for those publishers.


Facebook took a huge step today towards becoming a lot smarter, and a lot more powerful. If you’re an advertiser, you should take the cue. Start getting smarter about how social relationships and interactions impact your business. The brands that figure this out first will be the ones that are ready to take advantage of the new Facebook open graph initiative, and the inevitable developments that will ensue.


At a recent dinner, a group of friends of mine discussed whether or not Facebook’s market capitalization would ever eclipse Google’s. If this plan is successful, it may not be a question of if, but when.


Oh — and if it does (and achieves sentience)? Please don’t annihilate humanity, Facebook. We wouldn’t be fans of ‘like’ that.
BONUS SNARKY CONSPIRACY THEORY: Former Facebook Chief Privacy Officer (and genuine, great guy) Chris Kelly is running for California Attorney General. California’s Governor is Arnold Schwarzenegger. Ahnold was THE TERMINATOR. Circle. Complete.


UPDATE: Adage weighs in on this, and I have some comments in there too.

Comments

  1. Nice analysis. Yet I don’t see Facebook supplanting Google, but rather becoming a different type of analytics business that could be just as big.
    Google is direct marketing in reverse, generating lists of consumers who are looking for products at the exact second marketers can promote to them. Google has that nailed. Because of this immediate connection, it functions well as an ad platform.
    Facebook makes a lousy ad platform (with a few exceptions) since consumers aren’t paying attention to ads, are chatting among themselves, and are in a social modality similar to reading email (please tell me three recent ads you recall from Gmail and I’ll change my thesis). Personalization of ads is unlikely to fix this; Don Peppers said 1to1 personalization would change the world in 1993, and it still hasn’t. But Facebook could become the Experian of the Internet — gathering data across the web that it doesn’t use to sell ads inside its own walls, but to resell to other businesses.
    Experian, for instance, grabs information from your credit card to build lists that it sells to marketers. It doesn’t push ads back at you through the card itself. The *collection* of data and its *monetization* elsewhere are separated, but that’s a killer business model.
    Facebook could do the same. If ads and promotions in social media generally suck, even if personalized, who cares? Facebook could take its billions of “like” clicks to build a robust profile on you, Ian, and then sell that as a list to marketers who might nail you with old-school postcards in your mailbox.
    So I agree — Facebook is moving big. But I think the direction of that move may surprise you; the advertising contacts may pop up far away from your online friends’ news feed.

  2. Nice post. There is huge, huge, HUGE potential here. This can definitely help expand the socialization of the web. Is that good or bad? I suppose that depends on who you ask.
    For brands, especially those looking to provide a more social/community buying experience there are some interesting things that can be done (the Levi’s video is a simple yet good example: http://www.youtube.com/watch?v=Ed5vJeaEuzA). Again, right now I don’t think this is something that EVERYONE will care for (right now)…but it’s very interesting.
    I especially like this quote “Start getting smarter about how social relationships and interactions impact your business.” AGREED.