Risks and opportunities — what Facebook may unveil tomorrow

Facebook will unveil a raft of new features when it takes the stage tomorrow at its first f8 developer conference in two years. That’s one week after its social networking rival Twitter unveiled its own competitive vision for the social web and finally debuted an ad network at its inaugural developer conference. Who will win this round in the battle for the social web?

There are much-anticipated rumored products like the company’s new “like” button for the web. But there are also lesser-known projects that may see the light of day this week — including the company’s controversial plan to automatically share data with special partner web sites when users visit, a new search API the company is testing with partners and richer analytics that will help brands monitor and respond to conversations.

Facebook Connect gets pushier

Three weeks ago, Facebook slipped in a tiny mention of a new program that would let the company automatically share personal data with special “pre-approved” partner web sites upon a user’s arrival. It was in a privacy policy the company opened for public comment on a Friday evening — a classic way of burying controversial news.

Right now, users must explicitly allow the social network, through its Facebook Connect program, to share information with a partner website. It’s a more cautious stance the company adopted after the failure of a previous program, Beacon, which shared information without a user’s explicit consent.

Multiple sources say this more aggressive Facebook Connect program will launch this week. Will there be a privacy backlash? It’s hard to say. With the memory of Beacon’s botched debut seared into company memory, Facebook’s leadership will be much, much savvier about its launch partners.

Three years onward, it’s clear that the company never believed that the original spirit behind the problem — in facilitating social and commercial experiences across the Web — was wrong. It was the execution that left much to be desired. Facebook is still trying to make good on its vision and since then, the company has been quite successful through Connect, with more than 80,000 partner sites.

Opportunities: Automatically initiating Facebook Connect will make it easier to pre-populate external sites with activity from a user’s friends. Imagine hopping over to the New York Times website and seeing the top stories as read by your friends, for example. Getting rid of a login would boost conversions dramatically.

Risks: The question is how much control will users want. A default opt-in is very aggressive and could lead to a fresh backlash.

Real-time search

To compete more directly with Twitter, which many people tap for a sense of what people are buzzing about at any given moment, Facebook is offering ways to mine its users’ status updates for similar information. It’s testing a real-time search application programming interface with several partners, according to multiple sources with direct knowledge of the API.

Opportunities: This is one area where Facebook is playing catchup. The value of real-time status-update search came out of nowhere in 2008 when Twitter bought Summize, a search engine for the microblogging site. Now the company says it’s managing 600 million search queries a day, or more than Microsoft and Yahoo combined. Facebook can and should have a piece of this with 400 million active users. Because Facebook encourages real personal identities and single accounts, it probably has more authentic real-time data too.

Risks: Users who haven’t opted to change their privacy settings may be caught off-guard. Facebook has a much tougher position compared to competing status-update network Twitter in this regard, because more users opt to limit access to their status updates to friends only.

Improved analytics for brands

Facebook is also already working with several partners in the social media and brand management space on better data about user behavior, according to sources with direct knowledge of the project. Brands are fairly frustrated that they can only monitor demographics and statistics on conversations on their official Fan Pages. For any given brand, there may be dozens or hundreds of informal Groups or Fan Pages and marketers want to understand the flow and dynamics of conversation there. An update to Facebook’s Insights may help fix this problem.

Opportunities: More accountability and detail equals happier and more efficient marketers, which leads to more ad spending. Nick O’Neill at AllFacebook speculates that this may be Facebook’s serious competitor to Google Analytics.

Risks: Not many here, except for the usual — privacy.

“Like” Button for the web

This is a rather subtle but profound variation on Facebook’s share buttons. Users will be able to like external websites and Facebook will keep track of their tastes.

Opportunities: Michael Arrington of TechCrunch speculated that this is a pretty smart way of indexing the web via user tastes and human judgment. Google has historically analyzed links to discern which sites are influential and which ones aren’t. Many links aren’t created by human users though, and there are sites that remain near the top of search rankings through inertia. (Because they’re at the top of Google search, more people see and link to them, cementing their position.) If Facebook’s users take to this feature, the company may be able to understand which nodes across the web are the most influential in real-time.

This will also allow the social network to serve ads more efficiently by understanding what users like beyond Facebook.com. The company already factors status update data into its targeting. Unlike sharing or retweeting, “liking” is a behavior that is less time-sensitive. People usually share content like music, blog posts and videos because they’re new, then there’s a huge drop-off in sharing after a few days once something has gone viral. “Liking” is an interesting proxy for understanding taste; it’s more static than shares but more ephemeral than asking people to list interests in a profile. Nick O’Neill of AllFacebook says that a public datastream of anonymized “liking” behavior could fuel many interesting applications built by third parties.

To be clear though, Facebook says that it’s not going forward with new advertising initiatives this week.

Risks: It depends on implementation. If a user were to “Like,” but not explicitly “Share” content on the web, does that get sent to friends? Does it spam their feeds? If that behavior isn’t shared, what is the incentive for doing it? And if it is shared, how will Facebook parse and filter all the “liking” behavior?

Facebook Bar

Facebook may launch a persistent bottom toolbar for publishers to integrate on their websites, offering another way to share content and see which friends are interested in the same site.

Opportunities: This would seem to offer a similar value proposition as Meebo or Wibiya to publishers — keep users engaged with their social networks on your page so they stay longer. It would also probably refer interesting data back on how users engage with sites.

Risks: This could initiate a discussion about whether the company is overreaching. Google never went for a publisher-installed bar, though the company has a popular browser toolbar (which also feeds data back to search). Facebook and Twitter are establishing beachheads on sites across the web through their Connect and @anywhere services; these initial integrations pave the way for more intrusive products. Just think: First, it starts with a button, which then becomes a bar. That, in some not-too-distant future, it could become an ad. A bar on external sites could also collect data about Facebook partners’ users.

Location

Facebook has been readying location features for some time, as hinted by changes to its privacy policy.

Opportunities: Smart location features open the door to socially-intelligent local ads and lead generation  — a multibillion dollar opportunity. No company, Google and Yelp included, has solved this. Facebook has positioned itself as a brand advertising solution, in contrast to Google with its comparative strength in search ads near the point of purchase. The problem is brand advertising doesn’t yet have the analytics behind it to quantify effectiveness. Mobile advertising and analytics represent one powerful and accountable solution to this. Location-sharing could be used to track follow-through and whether users actually visited a restaurant or store after seeing a campaign.

Risks: Again, a privacy backlash. Just because a user has 1,000 friends doesn’t mean they want to blast their location out to them.

Although Facebook will want the ability to monetize local ads and offers, it won’t want to design a location-sharing feature in a way that completely kills off nascent companies in this space. Location enables so many potential experiences beyond the check-in. There are lots of unpredictable opportunities and the company will want to serve as a platform for experimentation and innovation.

Open Graph API

First revealed at a Developer Roadmap last fall, the Open Graph API, according to Facebook, will “allow any page on the Web to have all the features of a Facebook Page – users will be able to become a Fan of the page, it will show up on that user’s profile and in search results, and that page will be able to publish stories to the stream of its fans.”

Opportunities: This is big. This is the company’s counterpart to what Twitter announced last week with Annotations and @anywhere and will play into its Connect and “Like” button announcements. It’s a way of feeding content from the web through Facebook’s network and understanding in a very granular way how users interact with information beyond Facebook.com. Although the company has never said anything to this effect, it could lay the groundwork for an extremely targeted and distributed advertising network.

Risks: There is so little information out about this initiative. It depends on implementation.

Payments

Facebook has gradually been gradually ramping up experimentation with its virtual currency Credits. It’s possible that the company may use f8 as a space to lay out more of its vision for payments.

Opportunities: There are several: 1) Further cashing in on the more than $1.6 billion virtual-goods industry Facebook has helped spawn in the U.S. 2) Making users feel safer when they hand over financial details to pay for virtual goods in games, leading to higher conversions. 3) And in the distant future, perhaps facilitating payments for goods and services in the real world too.

Risks: Some virtual-goods marketers have been associated with unsavory offers that consumers have complained about, such as subscriptions to unwanted recurring charges on their cell-phone bills. If Facebook becomes more closely tied to these marketers by handling payments as well, its brand could take a hit.


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