MarketMe 2.0

Microsoft just bought a small stake in Facebook for $240 million (more than Facebook’s 2006 revenues, which is interesting) on a $15 billion valuation. Kevin Johnson, president of Microsoft’s Platform and Services Division, sent this e-mail to all Microsofties explaining why this was such a coup:

From: Steve Ballmer [Email excised]
Sent: 25 October 2007 02:28
To: Kevin Johnson; Microsoft - All Employees (QBDG)
Subject: RE: Facebook Partnership

Great job you really pulled this together unbelievably
From: Kevin Johnson
Sent: Wednesday, October 24, 2007 2:04 PM
To: Microsoft - All Employees (QBDG)
Subject: Facebook Partnership

Today, we announced a global expansion of our advertising syndication partnership with Facebook.

This deal is a major advertising syndication win for Microsoft and an enormous vote of confidence from our largest advertising partner. As we continue to grow our share of the global online advertising opportunity - currently worth $40 billion and growing rapidly - increasing the volume of advertising on our platform through partnerships like this is key to our success.

Today, we also announced an equity investment in Facebook which represents the depth of the partnership between the two companies.

Today’s announcement is significant for a number of reasons:

• For advertisers, this advertising deal expands Microsoft’s ability to deliver a one-stop shop that reaches users globally through Microsoft’s platform and sales force.
• For publishers, it is further evidence of Microsoft’s commitment to long-term innovation and partnerships in advertising. We look for win-win situations like this with our syndication partners.
• For Microsoft, today’s announcement represents a step forward in our long-term commitment to lead in digital advertising. This builds on momentum we’ve already experienced with Facebook and other publishers such as Digg and Piczo. It also builds on the advertising platform investments we have been making organically and through acquisitions including aQuantive, adECN, ScreenTonic, Massive, and others.

I’d like to thank the everyone who is helping to building our advertising business.

It is the momentum you have created that leads to partnership wins like this one. Being the best advertising platform and partner for users, advertisers, and publishers is key to our future.

Let’s keep up the great momentum!

Regards,
Kevin Johnson l President Microsoft Platforms & Services Division

It’s a great coup for Microsoft, though I admit I still don’t know what to do with Facebook. Maybe if Microsoft integrates it with its Outlook/Exchange solution, it would be useful to more people who collaborate over e-mail/IM, and not a Web site.

Originally posted at The Open Road.

If only the Internet had been around to comfort Rear Window’s Miss Lonelyhearts back in 1954.

A new poll shows that nearly 1 in 4 Americans say the Internet could be a stand-in for a significant other for a period of time. Among singles, the percentage was even higher: 31 percent. (One wonders how popular such responses as “reading a good book” or “playing with my cats” were to the question of substitutes.)

The poll examined people’s attitudes about the Internet. Results of the online survey, conducted by Zogby International and 463 Communications, were released Wednesday.

The survey also found that there are people willing to have a device implanted in their brain–safely, of course–so they’d have ready access to the Internet. About 11 percent of respondents said so. But more men (17 percent) than women (7 percent) did. (Just think, you could impress many a date and your trivia team would win every week. Although when the suitably impressed person becomes a steady thing, the Internet might get jealous.)

Other tidbits from the results:

•  To help keep track of children’s whereabouts, nearly 1 in 5 respondents said they would be willing to have a chip implanted in a child 13 or younger.

•  Among the 18- to 24-year-old set, 78 percent said they have a social-networking profile. More Democrats (32 percent) than Republicans (22 percent) said they have a presence on a social-networking site.

•  When it comes to spirituality, 10 percent said the Internet made them closer to God, but 6 percent said it made them more distant.

•  The self-esteem of Hollywood hotties is safe for now. Halle Berry, Scarlett Johansson and Patrick Dempsey are considered sexier than the iPhone, according to the poll. Respondents were asked who or what was sexier. Berry came in at 27 percent, Johansson had 17 percent and Dempsey got 14 percent. The iPhone tied with Derek Jeter at 6 percent. It doesn’t appear that respondents were asked whether owning an iPhone–or simply wearing the iPhone hat–increases one’s appeal. (This is just a guess: the people who consider the iPhone sexier than any of the people above probably believe that the Internet could be a substitute for a partner.)

The survey, conducted October 4 through 8, tallied the responses of 9,743 adults across the country. It has a margin of error plus or minus 1 percentage point.

It’s official. Facebook decided to ignore the friend request from Google and instead clicked “OK” to one from Microsoft.

The deal, reported first in this spot earlier Wednesday, gives Microsoft a much-needed win against its Silicon Valley search rival. As noted over at Caroline McCarthy’s blog, The Social, Microsoft is paying $240 million for a stake in Facebook, in a deal that values the social networking company at $15 billion. That’s at the high end of what had been rumored.

Under the deal, Microsoft will also get an expanded role in Facebook’s ad sales, becoming “the exclusive third-party advertising platform partner for Facebook,” and also beginning to sell ads internationally. The two companies’ prior deal covered only banner ads and only in the U.S.

So how important is the deal for Microsoft? Piper Jaffray analyst Gene Munster put it this way earlier Wednesday. “They’ve been beaten by Google since the beginning of time,” Munster said. “They may want to make a statement that they aren’t going to sit on the sidelines.”

Well, it’s definitely a statement. Let’s see what Wall Street and the industry make of that statement. A conference call with analysts is due to start shortly.

There are very few essential differences between Whrrl and Rummble, two new social networks built on geotagging, ratings and recommendations within a trusted network, and an amphibian experience of comfortable operation on the Internet and cell phone.

Both Rummble and Whrrl pin users? whereabouts and ratings on a local map so their friends can see. Both also contain stealth settings to dissuade stalkers or shunned friends, and a manual mechanism for updating location if the phone isn?t GPS-enabled.

The major differences between the reviews service and Yelp is mostly philosophical. Yelp, too, contains filters for whittling opinions to your network, and privacy settings to cloak your identity. Yet Yelp doesn’t place you on a map for all to see, and won’t help you schedule a meet-up as a result.

Whrrl’s mapping key serves up ratings at a glance.

(Credit: Whrrl)

Between Whrrl and Rummble, Whrrl is much more ready for prime time than Rummble, which is still locked into a closed beta and which sports a much plainer (”faster, more universal”) mobile interface. Whrrl’s mapping key is also much more meaningful than Rummble’s. Yet Whrrl needs a WAP site to get smartphone users to jump on board, and to improve the way information is organized on the phone. And let’s not discount Rummble’s fancy behavior-based algorithms for adjusting the percentage of trust you have in your friends’ judgment.

Whrrl’s plans for behavior-based intelligence is linked to ad support. Thankfully not the location-based targeting that pummels pedestrians with coupons as they pass a shop; rather offers associated with actual patronage.

Whrrl is a new service that allows mobile phone users to chronicle every social activity in their lives — writing reviews of movies or restaurants or uploading photos from concerts and sporting events. It then plots that information on a map and combines it with similar content from friends, creating a personal mobile city guide. It also provides the real-time locations of people as they wander from place to place in a city, tracking chosen friends as dots on a map.

Whrrl — not to be confused with a competing service called Whirrl — is the first offering from Pelago, a Seattle startup that scored $7.4 million from Kleiner Perkins Caufield & Byers, Amazon.com founder Jeff Bezos and Trilogy Equity Partners last year.

Led by Jeff Holden and Darren Erik Vengroff, both of whom previously held high-ranking positions at Amazon.com, Pelago is one of a number of companies trying to tap the emerging arena of location-based services. The idea is that mobile phone users will want to locate friends — who may be at a nearby restaurant — or at the very least get a review of the restaurant that a friend wrote a few weeks ago. The service is also accessible on a PC.

For businesses, the concept holds much promise — potentially allowing them to target coupons or advertisements to people as they shop in a bookstore or buy a cup of coffee.

Of course, plotting the location of people on a mobile map in real time opens up dozens of potential privacy issues. That’s especially the case since Pelago is targeting teenagers and those in their 20s. Eventually, the company wants to combine the power of GPS phones with a patent-pending technology it dubs “Passive Visitation” to automatically record the locations of users as they move around a city.

Holden, a former senior vice president at Amazon.com, said Whrrl was built so that location information doesn’t get into the wrong hands. For example, users can set different privacy levels in order to allow or disallow specific people from seeing the location. They also can “cloak” themselves — essentially switching off the location feature, Holden said.

Despite the potential privacy bottlenecks, Holden believes that people will find value in disclosing their locations to selected friends or family members.

And, he said, the ability to search for restaurant reviews or other information based on one’s location is a compelling idea that hasn’t been addressed by other players in the market.

“The real power of this thing is that you can combine social data with factual data that we have gathered,” Holden said. “And so you can say, ‘I want to see only the places that my foodie friends think are great restaurants and are within a half-mile of here, have outdoor seating and are open now.’ That is a trivial query in our product.” Such a query would take just four clicks, Vengroff added.

The search functionality allows users to quickly “mine tribal knowledge” from friends, which Holden said is a much more powerful recommendation than reading some anonymous review.

Of course, the concept will work only if people start using it. To attract users, Pelago has entered into a marketing agreement with American Eagle Outfitters in which customers of the retailer will be exposed to the Whrrl service through in-store and Web site promotions.

It also is working to create services so people can add reviews from their mobile devices to social networking sites such as Facebook and MySpace.

Other potential competitors include online city guides such as Yelp and Citysearch, both of which have mobile products, and Loopt, a two-year-old Silicon Valley startup that also allows users to find friends on a map on a mobile phone. Backed with $5 million from Sequoia Capital and New Enterprise Associates, Loopt’s service is available on about two dozen Sprint phones for $2.99 a month.

Google also is moving into the arena with the purchase of Jaiku, a company that allows mobile-phone users to create a running Web log of events, recommendations and other information. Jaiku describes its mobile product as “a live phone book that displays the activity streams, availability, and location of your Jaiku contacts right in your phone contact list.” Twitter, which also allows people to share small tidbits of information with friends, also is a potential threat.

Holden said he likes the concept of Jaiku and Twitter because they offer an “always-on connection to your network.” But he said Whrrl is different because the content has more long-lasting value than the quick posts on Twitter and Jaiku.

“People post something and it is not that interesting like five minutes later, whereas in our world, when you post something, it is almost always in the context of some thing in the physical world,” Holden said, adding that restaurant reviews or concert photos can be recycled for others to use.

Though it is launching Tuesday, Whrrl is not available to all mobile phone users. Only subscribers to AT&T, Sprint and T-Mobile — on about eight to 10 phone models — can download Whrrl. A portion of the service is free, though Pelago plans to charge less than $3 a month for the location-based service. Pelago, which plans to pursue more funding early next year, employs 34 people.

Seattle PI

BustedTees, the Web site responsible for that “Prose before Hos” t-shirt that you wore to your English 101 final exam, has announced a Facebook Platform application that offers to split cash revenue with users willing to install it.

The application has soft-launched and is set to launch formally in a few days.

The model here is similar to traditional “affiliate programs” for advertising on Web sites and blogs–and indeed, it’s essentially a “Facebookified” version of BustedTees’ existing affiliate program. Pimp them on your Facebook profile, and you’ll get a cut of the cash when it produces results. It’s $5 per shirt, to be exact, and if you install the BustedTees widget by clicking on the profile of a friend who already has it, that friend will make $1 per shirt sold through your profile. You get paid either through checks in the mail or via Paypal.

I spoke with BustedTees representatives to see if there were any concerns about the app getting flagged as a pyramid scheme, which happened to online music start-up BurnLounge earlier this year. Apparently, the BustedTees application won’t run into that problem because you only earn a commission from friends who’ve installed the app directly from your profile–”it only runs one level deep,” retail director Josh Mohrer told me.

(While BustedTees likely won’t have an issue with pyramid scheme allegations, expect talk of multi-level marketing to surface more as Facebook application developers divert their attention away from zombie attacks and food fights, and more towards, well, revenue.)

So you probably can’t get rich off it, but the BustedTees Facebook app could presumably earn you some extra beer money if there are lots of people on your Facebook friends list who have a penchant for BustedTees’ fare–which tends to be along the same lines of the we’re-cool-kids-but-still-huge-dorks modus operandi of its sister site CollegeHumor. Both are part of the InterActiveCorp-owned Connected Ventures.

Among BustedTees’ offerings are t-shirts printed with viral Web in-jokes (like the “Dramatic Chipmunk”), references to Frat Pack movies (like a logo for “Speaker City,” a nod to the movie Old School) and early-’90s kiddie nostalgia (like “The Beets Killer Tofu Tour ‘96,” which has now gotten that irritating song from Doug stuck in my head), and some more straightforward slogans, like “Jesus Hates the Yankees.”

Teens may be reacting with horror to the idea that Facebook is now open to everybody, so their parents may be showing up to butt in to their social network.

I find myself on the other side of that equation, wondering “Why would I bother joining Facebook?” Fast Company recently discussed Facebook’s growth, noting that “60% of the site’s users are not in college networks, and the fastest-growing demographic is 25 and over.” I had to laugh a bit at the broad swath covered by this statistic. Age 25 is a relatively recent college grad who is probably experiencing social networking as part of their peer experience.

As for those of use who are over age 30…well, let’s say that no matter how wired we are, we did not exactly make a seamless transition from a yearbook to Facebook.

Facebook may have opened the gates to all adults, but that doesn’t mean we are going to stampede in. You can explore very little of the site without actually joining, and the site tour is completely uninspiring, so where is the motivation for people like me to take the time to investigate it further? The company itself doesn’t seem to have put much energy into addressing the question, “Why Facebook?”

I can’t imagine putting in the time to develop a profile and network, because I have enough friends already in real life, and I don’t even have time and energy to keep up with them. Would Facebook allow us to strengthen those bonds?

One of my most tech-savvy friends thinks so. Sheryl Grant is the co-host of The Mojo Mom Podcast and as of this year, she’s a Library and Information Sciences grad student. She’s exploring social networks and Second Life as part of her graduate studies.

She recently tantalized me with the statement, “I’ve been treating Facebook as something that young college students do, and not taking it very seriously, but I got on there last night and realized that it’s quite possible this could be even more useful to moms than cell phones and iPods. I’d love to get your thoughts on it as a management tool for socially maxed out moms.”

We’re going to get together so that she can show me what she means. I am interested to see if her expertise can overcome my failure of imagination to show me why Facebook would be useful to busy parents…and not just to snoop on their kids.

Consider this the “before” snapshot in my Facebook makeover. I’ll report back at the end of next week with the results of my exploration.

Whether or not it was strategically planned to be the day after Google’s big announcement, Mark Zuckerberg will be announcing the launch of Facebook’s new advertising system on November 6th.  I have spoken with at least one individual who’s company was invited to the event.  According to advertising industry insiders, information about users’ relationships can be used to target them on the site and off of the site.

I have been hearing for months that the ad system would be unveiled at the Ad Tech event in New York early next month. The rumor appears to have been true given that the announcement falls right in the middle of the event. This news comes days after Facebook released an unannounced upgrade to their Flyers system, enabling users to view demographic data within the site. Interestingly, Facebook recently filed a trademark for “SocialAds” just last month. This ad network is one of a number of features that has been rumored over the past few months.

It appears as though this is finally taking place next month. Also rumored to be launching in the coming months is an advanced analytics package and e-commerce features for the Facebook platform. There are a number of other features that Facebook plans on launching but it looks as though they are beginning to ramp up to become more than just a social network. It also looks like the dream of psychographic and/or behavioral ad targeting may finally become a reality.

AllFacebook

Google is partnering with Nielsen so that companies that buy its Google TV Ads can find out how many people actually watch the ads.

Nielsen’s metering devices are installed in a large number of households across the U.S., enabling the company to keep track of which TV programs are the most popular.

Now, Google will have access to Nielsen’s demographic data from aggregated set-top boxes so advertisers can see what ads are effective and get additional aggregate information about the viewers, such as age and gender, according to Nielsen.

“This is the first time that advertisers and agencies will have this level of detailed measurement available in a single place and at such a large scale,” a statement announcing the news on Wednesday said.

In addition to this multi-year strategic relationship, Google and Nielsen said they would explore other opportunities to work together “to measure online and other media.” They did not elaborate.

Nielsen has been expanding beyond the TV market into the online world, measuring Web site traffic, streaming video, and video game usage, as well as monitoring buzz on blogs.

Meanwhile, Google is opening up its lucrative online advertising platform so that marketers can buy advertising not just on Web sites, but also on TV and radio, and in print.

Social-networking sites will enlist 230 million active members by the end of the year and will keep attracting new users until at least 2009, according to an analyst report. But investors are still wary–and for good reason, as long-term growth is by no means certain. A report by U.K.-based Datamonitor, titled “The future of social networking: Understanding market strategic and technological developments,” predicts that growth in the number of people signing up to be a part of the cultural phenomenon, which has put the likes of Facebook on the map, will peak by 2009 and plateau by 2012.

It also suggests revenues from social-networking services will hit $965 million this year, swelling to $2.4 billion by 2012.

Growth in the membership of social-networking sites varies dramatically by region, according to the analyst, which predicts Asia Pacific will account for 35 percent of global social networking users by the end of this year, followed by EMEA (28 percent), North America (25 percent), and the Caribbean and Latin America (12 percent).

However, while Datamonitor likens the current hype and excitement around social networking to the heady days of the dot-com boom, it said there is anxiety as well, and warns that investors are pulled in two directions. They do not want to miss out on the “next Google or Yahoo” but are cautious of being overconfident about a Web phenomenon that is not proven over the long term.

It is for this reason that most social-networking sites would be wise to postpone an IPO, said the analyst.

Speaking at a Web 2.0 conference in the US recently, Mark Zuckerberg, this year’s top Agenda Setter award winner and founder and chief executive of Facebook–very much the social network of the moment–said his company is “years” away from any such flotation.

Ri Pierce-Grove Technology, analyst at Datamonitor and author of the report, said in a statement: “The extraordinary proliferation of online social networks is fueled by real innovation and is substantially changing the way we communicate. However, the hothouse atmosphere of easy capital, media attention and user curiosity which stimulates creativity will not be sustained indefinitely.”

The analyst added that players must develop a “two-pronged strategy in order to survive the extremes of heat and eventual chill which this market will undergo.”

Datamonitor said the current growth in social networking offers opportunities for businesses to get involved in supporting the infrastructure needed to run such sites, and it advises technology providers to look for ways to support social-networking services in the areas of scalability and availability.

The analyst also takes the view that consolidation in the marketplace is likely as it becomes more crowded, but said this does not necessarily mean individual sites will be swallowed up. For instance, it predicts special interest social-network sites will continue to play a role.

Natasha Lomas of Silicon.com reported from London.