Buddy Media was founded three years ago as a maker of Facebook applications for brands. The New York company shifted its business model with the introduction of Facebook pages for brands a little over 18 months ago. Now Buddy Media has a platform for building and managing brand Facebook presences. When Buddy Media started, Facebook had 20 million members. It now has over 600 million. Buddy Media CEO Michael Lazerow discusses Facebook’s growth potential, whether brands know yet what they’re doing on Facebook, the “stupid” debate over the value of a fan, and Twitter’s business model problems.
You once told me you think Facebook will be one of the biggest companies the world has seen. Why is that?
Facebook is going to be one of the biggest companies ever. I don’t think it’s just because of advertising, even though that’s big part of it. Google does $22 of revenue for every unique user, Yahoo does $7, Facebook is at $2. Facebook as it monetizes at scale gets at least to $7. It’s no longer if it reaches a billion users; it’s when. Facebook’s the only business of its kind globally that has an advertising product for every business in the world. Layer on top of that credits with games, payments and dating. When it goes into media downloads, whether it’s movies or TV, that’s another big business. People have voted with their attention that they want to live in the country of Facebook. People are voting with an average of a half hour spent a day across 650 million. Ultimately, it’s a parallel Internet. It’s at 25 percent of ad impressions. If the Internet was to be privatized, what’s the value to that?
Should marketers be wary of Facebook having too much power in the way they interact with their customers versus the open web?
It’s not mutually exclusive. I wouldn’t recommend any client build exclusively on one platform, but the amount of resources expended to build out their Facebook’s presence isn’t in any way equal to the amount of time consumers are spending there. If clients were to spend 23 percent of their digital dollars on Facebook, that would be spending the same amount as their users are spending time there. There’s no one I know who is spending even double digits [of its budget] on Facebook. I think they’re under-investing. Facebook for every one of their clients is one of the top sources of traffic. Marketers can equate traffic to what it costs in Google, whether through SEO or SEM. For most of our clients, Facebook is as big [a traffic driver] as Google. That’s scary for Google. The biggest issue we’ve seen that’s held Facebook back is there’s been an over-emphasis on paid search and under-emphasis on free social in overall marketing attribution models. Google gets credit for everything that happens with the last click. It’s dominated our business for 15 years. There needs to be more emphasis on SEO in social than pay per click. Social media got 8 percent less credit for sales than it should have gotten, according to an Econsultancy study. A lot of stuff that happens in social isn’t necesarily paid. It’s stuff that’s aways happening, people talking and sharing, that you can now track because it’s done on one platform versus 100,000 blogs.
Rishad Tobaccowala recently told us he thinks brands are getting bad advice in social media. Do you think that’s true?
The opportunity for social but challenge is that no two brands are the same. It’s not should I go on Facebook. We all agree on that. There are 650 million people, so you have to be there, the same way certain businesses need to be on Google. Facebook has ascended to be one of the must-have places. You’re expected as a modern brand to have a profile on Facebook, just like my best friends, my old teacher and my mom. The best practices weren’t here two years ago or a year ago. I’m not prepared to say they’re here today. But we have more data about what works. If you use data to influence decisions, you’ll get to a better place. I’m not saying you shouldn’t have a web site or mobile app. But you should also have a Facebook page.
What’s your take on the debate over the value of a Facebook fan?
I think it’s a stupid debate. I see more data coming across the Facebook platform that anyone other than Facebook. The problem is every time we try to back into a number it’s so different. The value of J&J trying to engage with 12-year-olds for contact lenses is much different than a Coca Cola as a mass marketer or a JetBlue who is very transaction-oriented. All I know is it’s going to be harder to get likes in the future. They only get more expensive over time as conversion rates go down. We’re all publishers now, like it or not.
Do you see Twitter becoming as important to brands as Facebook is?
I don’t think it’ll every be as important to brands as Facebook. It’s a different use case. Most people tend to listen and don’t tweet. Facebook is a very active platform. They’re doing so much stuff on Facebook. [Interacting with brands] is a natural part of the usage. [Twitter] would be silly not to open itself up to the creative types. They need to let good ideas run free. Facebook said this is my platform, go program it. With Twitter you’re in a jail that’s 140 characters wide by 140 characters deep. What happens is you program [campaigns] instead on the web or a Facebook page. Twitter is a delivery vehicle for those experiences. They’re not a home for those experiences. The web business is 1,000 times larger than the email business. Facebook is the web, Twitter is still in this messaging world with no scalable business model yet. They have to solve how are they more like a web experience than a text message. The great thing about text messages is that phone companies make a fortune off delivering them. Twitter does the same thing and has to pay to get them delivered in some cases. They have to come up with what’s better and cheaper for doing a campaign on Twitter versus on a website or Facebook.
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