the facebook paradox

Do Not Distub!!Sigh. Another Facebook privacy policy update…another user pushback.

This time, numerous complaints have been filed with the United States Government, and even more have likely been sent directly to Facebook. It has become clear (at least to me) that there is a logically flawed startegy here…

The Facebook Paradox: They have the most valuable and extensive database of individualized user information that has ever existed, but the only way to use it results in alienating the users that provided them this information in the first place.

So whats the big deal?

Well, when Facebook tries to make these less-than-subtle changes to their privacy policy, they are attempting to open up access to their user base. Particularly, they are trying to grant access to people who are willing to give them money: businesses, search engines, data miners, etc. Why are they so insistent on opening these doors?

Users aren’t free

Unfortunately for Facebook, individual users don’t bring in any revenue. They could have 99% of the worlds population, and they still wouldn’t have any revenue. To make matters worse, the annual expense per individual user has been estimated to be about $5 per year.

$5 per user per year sounds inexpensive, after all its only about $.42 per month. Or about 1.5 cents per day, which seems about right especially with the absurdly high average amount of time people spend on site each day.

So, even though they aren’t selling a “product” they still have overhead for personal users…server space, offices, executive and sales staffs, energy costs, etc. Just imagine how many hard drives it takes to store the 2.5 billion pictures that are uploaded every month…that adds up over time.

Take that measly $5 per user per year and throw in 350 million worldwide users, and all of the sudden we’re talking about $1.75 billion dollars in expenses – all from people who aren’t going to buy anything from your company, ever.

Unbelievable growth

facebook_logoIt has become very clear since Facebook’s inception that getting personal users is the easy part. They are the 4th largest website in the world, in terms of overall traffic. They have 350 million users. People spend HOURS sharing with their friends, family, and coworkers. Its a service that has filled a great need in today’s digital age.

Along with this mass user adoption, Facebook has truly created the worlds most valuable database of personal information. Not only do they have age, sex, location, preference, and email address…they also have ACTUAL NAMES! For those of you not in “the biz”, this is similar to the Holy Grail of marketing. Advertisements can be targeted not only to geographic regions (cheese products to Wisconsin, umbrellas to Seattle), but potentially to individual people who have specific interests and have a specific demographic profile.

While this is a marketing department’s dream, its a privacy nightmare for users. People signed up for the service not only because its incredibly useful and fun, because it was free and it was somewhat private – you only become friends with people whom you are comfortable with. Over time, user’s patience was tried when they started receiving “friend requests” from people they hardly knew…coworkers, people from grade school, and friends of friends. Only because the service was so useful did they tolerate their own self-inflicted privacy erosion.

What the H is Privacy Erosion?

Here’s a typical timeline for your average Facebook user:

  1. I’m not on Facebook. The only people who know my “personal updates” are people I tell in person, or people I send direct emails too. I have nearly complete control of my public reputation.
  2. I join Facebook. I invite a few close friends to become my friends. We share details about our personal lives, post funny updates, and chat all day long. The only people who can see any of my updates are people who I know well and trust. My privacy is a little bit lower, but these are things I probably would have told them anyways.
  3. My Facebook friend base grows a little bit. It now includes that guy from Jazz Band that I was friends with, and some college classmates that were friends of friends. I would prefer that they didn’t know certain things, but its not worth making a big deal about it. I’ll just be more careful with what I post, because I don’t feel comfortable saying “no” to some of them as friends. Now, my privacy is really starting to take some noticeable lumps, and I have to start being a lot more protective of the information I share – its no longer just my closest group of friends.
  4. Now my Facebook friend list include my entire 7th-Grade B-Team basketball roster, my church Pastor, my Grandma, and several people whom I’ve never heard of but apparently they know me. Everything I post gets distributed to an enormous network of people, and then even those peoples friends can potentially see it. I now have very little confidence that personal things I post will stay private, and the risk of a Boss of mine being somewhere in there is startlingly high.
  5. Now you want to allow businesses and corporations to see my info? Whoa whoa whoa, wait just one minute here….

The bottom line is with every additional friend or fan that was added, a users privacy was eroded a fraction of a percent. Get enough friends in there, and eventually privacy becomes a distant memory.

A line in the sand

But privacy amongst friends is different from privacy between businesses and consumers. After all, a business has no fundamental interest in becoming your “friend”, ultimately they have a singular goal of figuring out a way to separate you from your hard earned cashola. Thus, consumers have a lot less patience for relationships with businesses than they do with mildly obnoxious peripheral friends that insist on connecting through Facebook…at least they don’t want you to buy anything.

In the past few years, Facebook has tried several strategies for opening up the door for revenue, and all of them have been met with disastrous feedback from their user base. Just look up how well their Beacon program did. All joking aside, this latest Privacy Policy Rebellion is no surprise considering the result of some past attempts.

Will it ever work?

Somebody at Facebook needs to start asking: “will this ever work?” They have tried at least five different strategies at opening up individual profiles to businesses and other advertisers, and all of them have generated a public outcry from their user base so far. What’s the problem?

At a fundamental level, Facebook users signed up for the service under the presumption that it offered a way to connect with friends in a reasonably private environment. The fact that everything was reasonably confidential is partly why the site became popular…if their motto from the beginning was “sign up for our service to chat with your friends AND to let businesses secretly stalk you” they would have had a lot fewer people sign up.

Because they set the bar so unusually high from the start – free forever, unlimited storage, unlimited usage, unlimited friends, 100% control over your profile, etc – in terms of user expectations the only way they can move is down.

Facebook will continue their struggle to change horses midstream by opening user profiles up for public and corporate consumption. It would require convincing hundreds of millions of people that “its totally sweet and awesome to let businesses contact you!” and that will not happen anytime soon.

Its clear that just because users are willing to let their privacy erode amongst friends, that certainly does not mean they also will open themselves up to businesses.

But I see ads on Facebook all the time!

Display ads, as they are known, are the often-rectangular and traditionally-obnoxious advertisements that you see on the top, side, or bottom of a webpage. Unfortunately (for Facebook), they are very inexpensive for any small business to buy. For about $20 you can get a few thousand different eyeballs to at least see an ad. However, most people ignore banner ads, resulting in a low interaction rate.

On top of that, there are plenty of outlets for display ads, and thus tons of competition for Facebook. Any small business can advertise through Google’s AdWords sponsored links program, or even their local newspaper’s website for roughly the same price. Because of the high availability and low industry costs for display advertising, Facebook cannot charge a premium price for their advertisement. These display ads are not where they are going to make their billions of dollars back.

Just looking at their assumed expenses from daily operations…

If they make $500 per business advertiser, they would need 3.5 million advertisers just to keep the lights on with $1.75 billion. As of the writing of this article, they have a mere 1.6 million “fan pages”, and many of those are not advertisers (like me!). Sure, this is an over-simplification of a very complex issue, but you hopefully you can see the staggering amount of success that will be required for them to maintain profitability.

The ace up their sleeve is in hyper-targeted advertisements, because no other media channel has the ability to find such minute demographic groups. Facebook knows EVERYTHING  about each individual user, whereas outlets like Google only know the websites that you tend to visit, and build an extrapolated user profile based upon your habits.

The only way to utilize Facebook user information to make big-time money is to change the fundamental reason why people use the service in the first place. Many users are already realizing this problem, and the beginnings of a mass Facebook exodus can be seen if you look hard enough.

The $9.5 Billion Gamble

Many many companies want a piece of the action here…the potential for cashing out is ridiculous. Even small businesses pay upwards of $30+ per name just to have the opportunity at new customers, so if Facebook can figure out a way to make this work they will be all set.

The only problem is that right now…its still merely a potential for ridiculous success.

stay away from my phone…unless theres a free sandwich involved

arbyRBJust read a great article about mobile marketing for a restaurant in Oklahoma (

It made me think, with everybody and their brother trying out different campaigns that are designed to engage mobile users, what is actually working, and what is just fluff?

So, simply as an observation…

Hands down, the best use of mobile marketing that I have experienced so far is from Arby’s. Back during the Brew Crew season, they aired a commercial that said something along the lines of “Text ‘roastburger’ to short code 54321 to get your very own free roastburger!”

I couldn’t get the phone out of my pocket fast enough.

A few reasons why this is notable:

  1. I go to Arby’s about once every year. Come to think of it thats probably on the high side. Wendy’s on the other hand…
  2. I had not ever had a Roastburger before.
  3. I had never fallen victim to a mobile marketing campaign before.
  4. Like most people, I am EXTREMELY protective of my cell phone number – because I’ve seen what happens when you share your email address.

So I text in the phrase to the shortcode, and I get a response that says “Show this text to the cashier at your Arby’s and get your free Roastburger, with the purchase of a drink.” Like a good obedient marketing statistic, I go to my local Arby’s, show them the text, and sure enough I get a free Roastburger with no hassle whatsoever.

All in all, the Roastburger was pretty darn good. It probably cost them about $1.50 at their cost for the sandwich, but even that was offset by me having to buy a drink.

So that was at least six months ago. I haven’t been back to Arby’s since, and I haven’t received any followup whatsoever from them (phew). Even though they didn’t turn me into a new loyal customer, at the very least the found a creative way to generate the opportunity to to find loyal customers and new business. That’s what made it so successful, they didn’t focus on generating revenue, but focused on generating opportunity.

The execution of the remainder of their campaign is questionable at best. There was no request for follow up, no email subscription options, nothing. They had this wealth of opportunity for creating new loyal customers, and they dropped the ball.

Moral of the story: Mobile (SMS) Marketing is INCREDIBLY powerful, but you need to have the right message, and the right call to action. I don’t need to get updates on my phone about your employee of the month, because that lacks the spontaneity and urgency that the SMS platform should be used for. BUT – if you want to text me about free curly fries for anybody who comes by for lunch today, I’ll see you there at 12:01.

the beginning of the end for the app store?

Screenshot of Home Run Derby 3D by Com2Us
Screenshot of Home Run Derby 3D by Com2Us

Maybe its just me, but I can’t remember the last time I got excited to hear about an iPhone app.  This is a scary thought, because I would consider myself slightly more excitable than the average bear when it comes to new software or games – just ask me how I feel about New Super Mario Brothers for Wii.

At first I didn’t notice anything. I had been checking the top 25 lists on the App Store for the past few weeks, but didn’t really come across anything. More Pocket God games, stick figures fighting, social networking apps, blah blah blah. Same old same old.

Then this morning I was sitting there staring at my Apps and for the first time I thought: “I’m bored.” Much to my suprise, I can only play Home Run Derby 3D so many times before it lost its appeal…

It dawned on me that I haven’t found anything REALLY exciting on the App store in the last month or so. I know about 10 different people with iPhones or iPod touches, and I haven’t gotten a single MMS or text saying – “DUDE you have to check this out!!” Could this be a warning of a coming storm for the App Store?

There are a few different problems to consider if we try to analyze this seriously:

1. Oversaturation
With over 100,000 Apps available, its quite possible that all the good ones are getting lost. While there are a plethora of sites available that do App reviews, they may be coming out at a rate that simply makes it impossible for any individual to keep up with given a reasonable amount of effort. It’s a real thing that some call “decision fatigue” that sets in when a consumer is presented with too many choices at the same time. Generally speaking, most people can choose between 3 or 4 options, but ask them to make a choice between 300 and you might as well get comfortable.

2. Innovation Deceleration
The iPhone/iPod touch has been out for three years now, and has not had any major advances in physical hardware. Its always had a camera, its always had data and voice, and its always had a touchscreen and an accelerometer. GPS was a big addition to be sure, but any other changes have been based around speed  (no, I don’t count the compass as a significant upgrade). Its quite possible that we are reaching the point where developers have exhausted most of the interesting things we can do with the phone in its current state. Eventually, there will be a point where virtually every conceivable App has been created, and then true innovation will come far less frequently. If we truly are at that point, then the days of going on the App Store once a week to potentially have your mind blown (do you remember the first time you opened up Shazam?) are long gone.

3. Exciting New Platforms
Has anybody heard of this new phone called the Droid? Or an operating system called Android? Well, the coolest free apps that I’ve heard about lately have been exclusives for Android! How is this possible?! Google Goggles, Google Navigation… all only available on Android. That’s what happens when there is new hardware and dramatic updates in software platforms, new and exciting things can come out. Instead, Apple hasn’t updated their User Interface since they introduced the ability to add “pages” to the home screen. You can’t even change the color of the background from black to hot-pink. Unfortunately for Apple, resistance to change, random rejections of people hard work, and hatred of the open-source community actually stifles developers desire to work on your platform, and will eventually force them to other platforms – just ask the Google Voice team.

4. Everybody’s Cashing In
Unfortunately for us consumers, app developers have realized that while getting 1 million downloads of your app in a single weekend is pretty sweet, it doesn’t exactly pay the bills. More and more apps cost a couple of bucks at least – with several that are upwards of $100. While I love my phone and I carry it everywhere I go, it doesn’t mean I’m crazy and have lost all grasp on the meaning of value. I hate to say it, but that $1.99 will actually stand in the way of me trying out your App, because I don’t want to go through the disappointment if it turns out I wasted my money. Hear that Occipital’s Red Laser?? As much as I could possibly love you, and even though you’ve been #1 on the Top Paid Apps list for about a month, you’re still not worth the $2 risk. Sorry.

What needs to happen??

Look, I’m not saying that the iPhone is in desperation mode here. Clearly, things are going great and the phone has a lion’s share of the market for smart phones. However, the longer they rest on the laurels of the innovation from the original iPhone, the more time they give their competitors to catch up. According to me, here’s what the iPhone needs:

  1. A user interface overhaul – at this point, its about as interesting as using XP.
  2. Basic New Features – HD Video, Adobe Flash, a camera flash too for that matter, a front facing camera, etc
  3. Loosen the reigns! – I’m not saying make the iPhone OS open source, but for crying out loud at least let me add music from two different computers without having to delete everything on the phone. JEEEEEEZ.

Am I missing any sweet apps that have come out that have blown your mind? Has anybody else noticed a drop off in the excitement around apps lately? Let me know!

*as usual, all Apple, iPhone, and iPod stuff is the sole trademark of Apple of Cupertino. Just to be clear.

how to remove internal traffic from your GAnalytics!

Are you trying to figure out exactly how many of your uniques are coming from your own internal traffic? Well wonder no more with Google Analytics Filters!

I wish someone had give me this tip a few years back when I first started using Google for their outstanding (and free!) analytics software. I can’t imagine anyone who has their own website doesn’t already know about GAnalytics, but in the off chance: check it out here.

This article will explain how to set up a “filter” that can be applied to any of the sites that you track through Google Analytics. It is especially helpful for people who suspect that a significant amount of their traffic is actually coming from internal usage – like myself. When I add or try out new features and plugins to, I will often do a ton of refreshes to various pages to see how it looks. I always knew that would artificially inflate my Analytics, and sure enough it did.

However, Google has a way for your to filter out the data that is coming from a certain public IP. For those of you not familiar with IP addresses, a quick overview…even though every computer on your internal network has its own IP address (i.e., all of your traffic that goes out to the rest of the public Internet is under a single IP. Generally speaking, if a physical location only has one internet connection, then every computer has the same public IP address.

So if you own a small sales company and you have 10 different computers that all connect to the internet, to the rest of the public internet they are all indistinguishable in terms of their IP. So in order to filter out the traffic that comes from your staff, we’ll need to find out what that public IP address is.

The easiest way I have found is to go to IPchicken. Right in bold blue number on the top of the page is your public IP address (it should look like #.#.#.#, or – don’t worry if yours looks weird, they are all different). If you aren’t sure if everybody has the same one, then go to a few other computers on your network and go to the site to double check.

Once you have your IP address, write it down unless you can remember it (it has to be exact). Then log in to your Analytics account like usual, but don’t click through into the actual data. On the Account listing page, you should see the following towards the bottom right:


Click on the Filter Manager link as is circled above. Once in, you’ll want to add a new filter by clicking on the “+Add Filter” button, as seen below:


Once in the Add a Filter page, you’ll need to setup the filter so that it EXCLUDES your IP. Give your filter a name so you can identify it from any other filters in the future, such as “Office” or something. Then with “predefined filters” selected, set it up so that is says “Exclude Traffic from the following IP addresses that are equal to:”

filters3From there, you’ll see four boxes popup up underneath where you need to enter the IP that you were supposed to write down earlier. If you ignored my advice, just open up a new window and find out what it is again. Remember not to enter the . (dots) in between each number (you can also enter an IP address range here if you wish, but most people won’t use that feature).

Now, make sure that you enable the filter for your site. Otherwise your filter will just sit there and won’t be doing anything.

filters4You can add multiple filters too! For example, I have one for my office and one for my home. That way if I’m doing work at either location the visits won’t pollute my statistics.

Other notable things to consider when using filters:

Analytics Filters work in the background, blocking the data from ever arriving in your results. When they are enabled there really isn’t anything that reminds you that they are turned on, and you can’t just flip them on and off. So if you see a sudden dip in traffic, you’ll know why.  So the lesson here is that Filters literally filter everything when they are turned on, its not just a customized view of your results.

It also should be noted that once you have your filter turned on, it ignores all traffic from that point on. It will not retroactively filter those results out of any history you have already in your Analytics account. That is unfortunate, but the sooner you start looking at your traffic honestly, the better job you can do of judging the success or failure of new campaigns and other changes!


My friend Cale from brought up an excellent point…some internet providers use DHCP even for their customers. That essentially means that one day you will have a certain IP address, and the next it will be completely different with no relation to the first. If that is the case, your new Google Analytics filters will be rendered practically useless.

To figure out if you have an internet provider that is using DHCP, check your public IP for a few days to see if it stays consistent. If it does, chances are you’ll be safe. However, you may want to check in every now and then to see if they switch it on you – unless you have a business with a T1 or more, they most likely wouldn’t notify you of any changes.

the true value from facebook fan pages?

Facebook Logo

Just looking at some of the Facebook stats ( ) and an article written by TechCrunch with data from Sysomos (

350,000,000 active users
30% of active users are in the United States, thats 105M users
305,000,000 is the population of the US
so 34% of the US population is on FB

77% of business’ “fan” pages have less than 1,000 fans

That means that if you are a small business in Milwaukee, you have a potential client base of about 1 million people. 34% of those people are on Facebook, bringing the number of local clients that are on Facebook to 340,000. According to, about 11% of FB users are under the age of 18, so we’ll take them out because they probably don’t have any money.

That brings the number down to 302,000 possible users in Milwaukee that could possibly become your fan. But 77% of fan pages have less than a 1,000 fans. If you’re in that 77%, you’ve only captured .3% of the possible Facebook users in your area. If you compare those 1,000 fans to the total population of Milwaukee, you’re only connecting with .1% of the potential customers.

Keep in mind, this is assuming that you have a product or service that is sell-able to literally everybody over 18…if you have a service that has a specific target market (1000 clients), 34% of them are on Facebook (340). Then, how many of the people that follow your updates are people who will actually someday be spending money with you business, as opposed to other friends in the industry, competitors, spammers, family, or employees?

So when you ad up the amount of time and money invested in your Facebook Fan Page, is it commensurate with perhaps only reaching .1% of your potential market? How many paying customers actually come from you Facebook Fan Page, especially if you’re one of the unfortunate people who are in the 77%?

Another point of consideration is that it takes roughly the same amount of time, labor, and commitment to manage a Facebook page whether you have 543 fans (George Webbs, one of my favorites) or 46,366 (Culvers, another personal fave). If you assume every hour of work that is put in to maintain the page for both restaurants costs the same amount, about $25, you’ll see…

George Webbs: $.046 per client per hour
Culvers: $.0005 per client per hour

That $25 instead could have generated probably about 20 clicks to your website using any SEM campaign. If you’re Culvers, you would need to have .o4% of your Facebook Fans click through from your page to get 20 clicks, which is about the average for any banner ad. If you’re George Webbs, you’d need to get a full 3% in order to get 20 people to your site! You can see how it becomes difficult to justify spending the time with such a small user base.

If you are a small business, or are having trouble spreading the word about your Facebook page, don’t worry! You’re not missing out on a huge opportunity, in fact you should do everything in your power to minimize the time (and money) you spend on your page until you implement a unique and appealing strategy. Unless you’re generating consistent fresh content and adding new users, your hard work should be spent on other activities…like cold calls or emails!

Sadly, Facebook seems to be cost prohibitive until you get to a point where you have enough fans to generate actual sales… the more time you spend in the initial phase, the more expensive it is per potential client. For most small and local businesses, Facebook is closer to having a listing in the Yellow Pages – you better be there when people are looking for you!