Clara Shih, The Facebook Era, and Business Opportunities on Facebook


Several months ago I had the opportunity to sit in on a guest lecture Clara Shih gave at the Stanford Seminar on People, Computers, and Design. Clara has spent the last several years at Salesforce leading their social networking product strategy as well as developed Faceconnector, the first business app on Facebook that made it easy to integrate Facebook profile data into Salesforce CRM tools. With this insight, Clara recently authored The Facebook Era, a look at how social networks have changed people's behaviors, expectations, and relationships, and the resulting business opportunities it has created.

After attending the seminar, I decided to read the book and wanted to share some of the key trends discussed and the business opportunities that arise from them.

Opportunity #1: Transparent transitive trust opens up social advertising possibilities
Clara speaks at length about transitive trust: the notion that if I have mutual friends with you that I trust, I am by extension more likely to trust you. In addition, if a friend of mine endorses a product or service, I am more likely to respond positively to the brand. Facebook creates complete transparency in both of these scenarios, allowing you to quickly see who are your mutual friends with someone as well as to see a variety of brand endorsements through fan pages, groups, status messages, and a variety of notifications of engagement with various brand applications.

Facebook's enabling of passive word of mouth of brand recommendations creates many opportunities around social campaigns that leverage the higher conversion rate associated with word of mouth referrals. Brands can capitalize on this new channel and user's willingness and desire to associate themselves with the brands they care about to supercharge their previously offline and unscaleable user referral programs.

SocialMedia has been one of the early innovators on social ads, with the Word of Mouth Impression being their latest ad creation. This new ad product attempts to incorporate your friends sentiment around the advertised brand to increase conversion rates of ad campaigns. Appirio has also built a Referral Management for Viral Marketing product to enable brand advocates to easily share their brand preferences with their friends on Facebook.

Opportunity #2: Explicit self expression makes hyper targeting a reality
Compared to the social networks that came before it, Facebook has encouraged authentic online identities and personalities. This has led to users willingly and explicitly expressing themselves on their profiles and streams. With this has come never before available deep data about user's demographics, behaviors, and interests. Of course this creates exciting new opportunities for advertisers to hyper target a set of users based on their interests.

The Facebook Ads platform has provided an opportunity to get at some of this hyper targeted data. Advertisers can now target their campaigns on specific demographics and interest keywords found on user profiles. However, this platform is still in its infancy, only scratching the surface on the targeting vectors that are possible. Hopefully with time Facebook will continue to innovate on their ad platform as well as open up an advertising API to allow third party developers to help with the innovation around targeting. To date third parties have been severely limited by Facebook in their ability to use the data available on user profiles for the purposes of targeting.

Opportunity #3: New forms of casual interactions enable maintaining and growing weak ties
Clara also emphasizes the importance of weak ties on social networks. These are the friends you have on social networks that aren't your closest real life friends, but instead the people you casually or occasionally keep up with. What's important about this class of individuals is that research has shown these are the connections that will be most important to you in terms of business relationships, since over the life of your career these are the people that you are likely to benefit from in one way or another. Facebook enables you to easily maintain and grow connections with these weak ties through casual interactions, including reading their status updates, posting wall posts, sending messages, and more.

Many applications have been developed on Facebook to further encourage casual interactions to grow these weak ties. MyCalendar and Birthday Cards enable you to easily remember your friends birthdays and events and send them online greeting cards. Even many of the social games on Facebook have the affect of allowing you to casually interact with your friends and remind them of you.

Facebook has truly enabled new scenarios and behaviors for people across the world. With these new interactions come many new business opportunities to leverage the social graph to create value. Clara Shih has done a great job of researching and documenting this trend. So check out her book!
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