Whales and Lobsters: Facebook and Twitter and CASH, oh my!
Adam Rifkin stashed this in PandaWhale Mentions
Twitter is deleting my Posterous.
So I'm moving this post over here.
It has gotten over 93,000 views since I wrote it on August 19, 2010.
It's been a month since I wrote Pandas and Lobsters, and I'm ready to delve further.
Whales and Lobsters are the foundation of social networks, and Facebook is a machine for turning Whales into CASH. Let's explore why, and the implications...
The hype around this week's launch of Facebook Places is misguided. Facebook Places arenot about check-ins; they're about making millions of new Facebook Pages that aremonetizable. Foursquare is a sideshow; Twitter is currently Facebook's main competition for public, lurkable, searchable, transactable Pages for brands. If someone asks why Facebook wants to be in local Pages, echo the immortal words attributed to bank robber Willie Sutton: "Because that's where the money is."
To understand why, we once again zoomorphize the Facebook population:
Lobsters are individuals with Facebook Profiles. Facebook is a lobster trap and your friends are the bait. A lobster has a ganglia-brain the size of a grasshopper's, and no attention span, so frankly the most useful thing it can do is get laid. Male lobsters try to mate with almost every other female in the area, which makes male lobsters very annoying. Collectively they are the reason why Facebook has more pageviews than the next 99 biggest websites combined.
Whales are brands with Facebook Pages. Brands encompass both individuals and businesses. Facebook Profiles are painfully unusable for Whales because in general they have more friends, fans, and followers to interact with than an individual with Facebook's tools can reasonably manage. If how Facebook makes CASH is the question, whales are the answer. Whales are the lifeblood of Facebook financially: they are the brands who in aggregate pay more than $1 billion annuallyto Facebook, Inc., to advertise their Facebook Pages and collect more fans for those Pages via billions of daily LIKE buttons.
Whales and Lobsters are the foundation of social networks, and Facebook is a machine for turning Whales into CASH. Whales create and share publically, and pay actual CASH; Lobsters consume privately, and occasionally LIKE and comment publically, and pay attention (and time). In the best social networks this creates a virtuous cycle: Celebrities and artists interact with fans, while businesses and organizations interact with customers, and social networks allow the Whales to build deeper relationships with their fans and customers. And vice versa. LIKE a palindrome. LIKE, totally.
A click's just a click, but a LIKE is a LEAD. Ongoing relationships are the key difference between the mere clicks Google advertisers pay for and the potentially-interactive LIKEsFacebook advertisers pay for. AdWords and AdSense account for 99% of Google's profit. This is why Google has taken notice (though someone should point out to Google thatLike.com has nothing to do with all the billions of daily LIKE buttons they see on the Open Web).
Facebook has only 3 million Whales -- Branded Individual and Business Pages -- that collectively represent only 5.3 billion clicks of the LIKE button thus far. Facebook by the Numbers hides this fact behind all the statistics about the 500 million Lobsters: the average Facebook user LIKEs fewer than 10 Facebook Pages (divide 5.3 billion by 500 million). And you have to look very carefully to realize that most of the total 5.3 billion LIKEs were unpaid or forced conversions.
Since Whales and LIKEs are essential to Facebook's revenues, the race is on to win the minds and hearts of Whales and the Lobsters who LIKE them. Facebook may look like Winner Takes All presently, but that's because Twitter hasn't really entered the market of charging Whales for LIKEs... yet. Now you may ask yourself: how many Whales and LIKEs does Twitter actually have? It's a good question because Twitter is pretty tight-lipped about these numbers. But I can guess.
Twitter currently has at least 10 million Whales, and more customers are willing to FOLLOW something than LIKE it. That's wild speculation on my part; 10 million comes from Twitter Counter and Twitter's Lobster count is over 190 million users; with more than 65 million tweets a day, I have no idea how many FOLLOWs the Twitter Whales collectively represent, but anecdotally I know more friends who are willing to FOLLOW things than LIKE things. Facebook gets 20 million LIKEs a day. Whatever the actual number of FOLLOWs a day is, it's clear from recent WTF features (andtheir WTF ilk) that Twitter wants to accelerate FOLLOWs sooner rather than later.
Why are Facebook Places so important? 1.5 million Facebook Pages are local businesses, and Facebook needs more Pages. Since almost every celebrity, artist, and global business already has a Facebook Page, local businesses are pretty much the only way for Facebook to increase its lucrative Whale count. So much for theopen versus privacy tradeoff: Facebook Places are Facebook Pages, and Facebook Pages are too money to be private. That Facebook also gets to stomp on Google Places only makes it more delicious, but mark my words: Facebook is fighting Twitter for mindshare with the Whales who pay them CASH.
Why do Whales LIKE to pay Facebook? FOLLOW the CASH. My friend Winston, a local business owner in Palo Alto, told me recently that he had little faith in Yelp, FourSquare, Groupon, or even Google Places to move the needle on his business. You heard me: 300k groupons can be wrong because no local business is The Gap. What did he think worked? His Facebook Page. Why? Because he couldeasily see how many users had visited the Page each day, and the age-sex-location of those users.
Even though Winston received no data about conversion rates and offered no special deals -- his Facebook Page, like most, is almost entirely a Placeholder -- he zeroed in on the fundamental truth of all brand advertising: that eventually numbers of local eyeballs will convert to local business. The thing that pleased him wassimply being able to see the numbers of eyeballs entering the funnel at the top.Facebook's success is really as simple as being the first business to offer that data visually with such ease of use. Even Foursquare knows that "local businesses love this stuff."
Now, the early bird gets the worm. The early worm gets... eaten. Is Facebook the annelid in the New Whale Order? Yes, if Twitter can learn enough about what Facebook offers its Whales in exchange for CASH -- with the LIKEs and the age-sex-location demographics and the pretty pictures that illustrate funnels. We're not talking about fixing the unusable mess that is Twitter search or developing the rocket science that is Google Analytics. We're talking something much simpler and emotionally satisfying than anything Google can provide: Local businesses using the Web to build relationships with their customers. Tweet, and your customers tweet with you; Google, and you Google alone.
My guess is that Twitter already knows everything I just said, and is quietly employing Lesson #4, Part 3: keep your mouth shut.
No wonder Twitter is so... quietly nonchalant. Look carefully, and you'll see in their eyes the kind of calm that comes from knowing something profound that others are only beginning to wrap their heads around...
Below are the comments I got for this post.
thesethings (andy) liked this post.
over 2 years agomichaelwatsonjr (Twitter) responded:
What do you mean by, "Facebook Pages are too money to be private"?
over 2 years agoAdam Rifkin responded:
Michael, I mean this:When deciding whether a new Facebook feature is by default open and public, or by default maintaining the existing privacy preferences of its users, Facebook considers carefully how that feature will make money.
Facebook Places make money by being public and having people publicly LIKE them and publicly be tagged in them. They're worth too much money to default to private.
Defaulting as public the tagging of people in Places is not good:http://gigaom.com/2010/08/21/facebook-turns-the-privacy-fear-meter-up-to-11/
Being able to by default tag people publicly in Places -- whether they've been to those places or not -- can lead to abuses:http://www.crunchgear.com/2010/08/23/discontent-grows-with-facebook-places-ab...
So in the battle of open versus privacy-maintaining as the default for Places, open won. Because public Places are too lucrative to default those behaviors to private.
Here's how to turn off Facebook Places being public -- just enough steps that most Facebook users won't:http://lifehacker.com/5616395/how-to-disable-facebook-places
Perhaps Facebook should consider a "follow" model, which is better suited for making everything public:http://techcrunch.com/2010/08/24/facebook-follow/
over 2 years agoThe Dean Dean responded:
Another great perspective Adam.
over 2 years agoPaula Marttila liked this post.
over 2 years agoYIQUN HU liked this post.
over 2 years agoSimon Jochim responded:
Agree - twitter is plannings something and is carefully caring about their image / culture while facebook is jeopardizing its image with offensive privacy inceptions.
over 2 years agoAdam Rifkin responded:
Thank you Dean and SimTo!
over 2 years agoThe Dean Dean responded:
Adam believe it or not, you're making me better at what I do in ways you'll never even know.
about 2 years agoVikram liked this post.