04/02/2015

By Rich Martin, Digital Planning Director, MEC

As Facebook celebrates its 11th anniversary our thoughts turn to the future of this social enabler and media behemoth. These two descriptors though are a ghetto to Facebook who perceive themselves predominantly as a tech company, with a competitor set of Google, Amazon, Apple, even Microsoft and the constant surge of new pretenders to their respective thrones.

If we view Facebook as a tech company with a social background then we have a clearer perspective on what its future might hold. With the launch of Facebook at Work, moving across to the business of workplace collaboration makes sense strategically, as a successful product will help them escape their perception ghetto in the same way Amazon did with Kindle. That said, the company has presented itself with a new set of problems to solve.

1. Brand
The young remain on Facebook, and still view it as a key channel, but are using it less than they did. In this context, the move towards a business audience runs the risk of alienating them further. To the typical procurement practitioner though, Facebook’s brand is about downtime, chatting with friends and other non-business applications so there’s a perception shift that needs to happen for Facebook at Work to be successful. Finally, there is a risk of cannibalisation for the users of any Facebook branded business product. As they come to associate the brand with work they may choose to spend less of their “own” time on it – diluting Facebook’s original proposition.

2. Financial & privacy
These are inextricably linked for Facebook. They have traditionally been excellent at taking customer data and turning it into efficient ways to reach consumers of products. Indeed, we seldom see a direct response campaign without a Facebook component. Should they try to introduce a paywall for the use of their systems, their proposition becomes very confusing. Assuming then a free to air model with advertising, they are challenged by the tension between creating a credible offer and being able to generate revenue from it: for credibility the product needs to be a scalable, and above all secure, environment for businesses to share confidential documents. In order for it to be commercially successful for Facebook it needs to create value for advertisers with the user information it generates. Getting this right is the key to the success of this venture.

3. Potential outcomes
It’s important not to underestimate the achievements of Facebook – and as odd as it sounds, the longevity it has enjoyed. The Hobbesian world of competition that was the social network scene when they arrived is no less fierce now, but Facebook has continued to innovate and improve. Its challenges are those of a dominant company.

One option is to diversify its brands in order to avoid the problems of blurred perception and cannibalisation. One clue toward that direction has been the decision to keep the purchased brands Instagram and Oculus Rift as they were previously named.

Alternatively, they may plough on under one Facebook brand and re-write things as they go. This would fit with the constant test and refine process of most tech companies.

Whatever happens, the move into B2B products won’t happen in isolation. Indeed, spread betting on a number of innovations tends to be the road to success for tech companies. So, don’t be surprised to see another innovation or spectacular purchase soon to augment the Facebook offering to the young.