In January I suggested 2011 would be the year Facebook puts all brands on notice. So far this appears to be true as Facebook is primed to become a more formidable competitor in the social media marketplace with two new announcements today. As Jason Calacanis explains in Business Insider, their current market valuation may be grossly under-estimated in light of a potential $12 billion in 2011 revenue as opposed to the the current wisdom of $4 billion (based on FacebookSense, Instream advertising, and video ad units revenue). That enviable position was bolstered this week by the announcement of Facebook Deals and Sponsored Stories.
Facebook Deals is poised to become a fierce competitor for Groupon and LivingSocial. Facebook already has a broader market penetration and the weight of user numbers, plus Facebook assures us that that Facebook Deals would be a more social experience. What this means is that deals will be designed to be shared and experienced within the user’s social circle. These deals can be accessed through daily notifications or through the Deals tab on the home page. If your friends choose to share the deals they got, you’ll also see it in the news feed as well as in the description of the deal that states “Your friend purchased this deal.” This social aspect is a potential game changer in the deals market that, according to BAI/Kelsey Group, is estimated to reach $3.9 billion by 2015.
The second major announcement was the launch of three new types of sponsored stories. Sponsored stories are the much debated advertisements which turn a user’s content into an actual advertisement. According to All Facebook, the three stories category are as follows:
- The page post like story will allow you to surface stories about your fans liking any post from your page, so that their friends (even if they are not yet fans of your page) can see and engage with your post.
- The app used and game played story will help app and game developers surface stories about people using their app or playing their game, so that their friends will be encouraged to join the App or Game.
- The domain story will allow you to give more visibility to stories about people liking or sharing something, so that more of their friends will visit your site to discover this piece of content.
The diagram above (provided by Facebook) explains the seven types of sponsored stories now available and they represent a huge financial opportunity for advertising on Facebook as a way for publishers to get new readers (especially using the gaming and app stories).
Nor should either of these platforms be viewed in isolation as each weaves an ever denser web of connectivity between users, their social circles and Facebook. As products, advertising and games become commonplace within the Facebook ecosystem, it will become harder for competitors to attract users or readers away. This portends an even stronger financial position for Facebook at the end of 2011 and an even more unassailable market leader position.
Do you believe Facebook deals will trump Groupon? Do you think users will users accept the advertising contained in sponsored stories?