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Why Facebook Will Have a Big 2009

By Josh Catone

In my predictions for 2009, I guessed that Facebook would have a huge year in 2009, which would pave the way for an IPO in 2010. I was pretty vague on the details, though, with the only measurable reason why Facebook might be heading toward IPO land being my prediction that they’d expand on their search deal over the coming year. A lot of readers disagreed with me in the comments, predicting instead that Facebook would head the way of previous social networks like MySpace and Friendster — they’d be yesterday’s news once all those fickle teenagers move on to the next big thing, whatever that might be.

Here, though, is why I think that won’t happen to Facebook at all, and instead 2009 will be a huge year for the company.

1. They’re Growing Like Crazy

Facebook CEO Mark Zuckerberg announced this morning that Facebook now has 150 million active users (unique users who logged in over the past month), half of which use the site daily. Facebook has added about 10 million users over the past 3 weeks, which suggests that at their current growth rate the site would double its active user base to 300 million by year end.

What’s more impressive than their incredible growth, which Zuckerberg says would make Facebook the eighth most populated country in the world, is that the growth is happening everywhere — across 170 countries and in every age group. Using AllFacebook’s Demographic Statistics tool, it’s easy to see where growth is happening on Facebook. I randomly jumped around from country to country, male to female, and across different age groups and couldn’t many that didn’t see user growth over the past month. Spanish males aged 60-65? Growing. Australian females ages 26-34? Growing. Mexican 18-25 year olds? Growing. Americans 45-54? Yup.

Give it a try yourself. There are likely some demographic groups that are flat or declining (such as in China), but the vast, vast majority are growing in line with the rest of Facebook. This is universal, mainstream growth. Further, as a percentage of all web visits, Facebook is growing while chief rivals are shrinking, and the social network might be approaching “Google-like” dominance, where the prospect of being dethroned is a near impossibility.

2. Facebook Connect is Pure (Evil) Genius

We’ve written extensively about why Facebook Connect wins and what it means for the company. Simply put, Facebook Connect wins because users understand it, and there’s a clear value proposition for developers.

An anecdote: When Wetpaint dropped OpenID support in November, they said that less than 200 registered users out of over a million accounts ever used OpenID. Facebook Senior Platform Manager Dave Morin, meanwhile, says that initial tests of Facebook Connect found that users were logging in via the system over their pre-existing login credentials at a 2:1 ratio. Early Connect adopter Govit.com saw 58% of new users choosing to login with Facebook. That paints a pretty clear picture: users understand “login with Facebook” in ways that they have not understood OpenID — which most users are still completely oblivious to.

Connect also comes with a built in marketing channel, which makes it a clear choice for many web developers.

As Chris Saad writes, “Facebook [essentially] is trying to replace all logins with their own, and control the creation, distribution and application of the social graph using their proprietary platform.” As we wrote in December, if Facebook Connect does win, it might mean that Facebook is basically alone at the helm controlling our entire social experience across the web.

Because Facebook is apparently increasingly being looked at in a position of trust, many (most?) users might not really mind that eventuality.

3. Facebook is Email 2.0

Throughout the 90s the killer app for the web was communication, and it came in the form of email. Everyone used email for both business and socializing. But it looks like the reign of email is coming to a close. It might not ever completely disappear, but it’s no longer the go to communication tool for the younger generation.

For the so-called Generations Y and Z (hopefully the last of the lettered generations), email seems old fashioned. “Kids today prefer one to many communication; email to them is antiquated,” says Hitwise general manager of global research Bill Tancer.

Instead, they use social networks. Next year’s incoming class of 2013 at Boston College won’t even receive @bc.edu email addresses. Erik Qualman recently wrote on Search Engine Watch that “Are you on Facebook?” is the new “can I get your phone number?” He talks about a “seismic shift in the way information is exchanged among people,” and Facebook is clearly in the best position to benefit.

Qualman says that it is counter-intuitive for brands to try to pull people off social networks to market to them. It would be like “meeting a pretty girl within a bar and asking if she would like a drink. When she responds “yes” rather than ordering a drink from the bartender, you grab her and throw her into your car and drive her back to your place, since after all, you have beer in your fridge,” he writes. “This is not a sound courtship strategy, nor are analogous social media strategies employed by companies “courting” potential customers.”

As the younger generation grows up looking at Facebook as the Internet (a view that becomes even more likely if Facebook Connect succeeds massively), then brands will be forced to communicate with people where they go to communicate — i.e., on Facebook.

4. Facebook Knows All About You

Facebook knows a lot about its 150 million users — where they live, how old they are, who their friends are, what sort of music, movies, TV, books, food, and activities they like, even what they’re up to right now. As VentureBeat points out, because Facebook emphasized privacy early on — only people you’ve approved as friends get to see your details — most profiles on the site are full of legit, marketable information.

What that also means is that Facebook is built on a foundation of real-world connections. Unlike on MySpace where half your friends might be people you’ve met using an assumed name over the web, or bands or products you like but have no personal connection to, your Facebook social graph is likely full of people you know and trust. And even though I’ve argued that social search will never replace traditional search, Facebook does enable a new kind of discovery.

“Simply put: they broker transactions from finding lost friends, staying in touch with existing friends, making new friends, to finding and buying products and services,” writes John Furrier, which is a good way to explain what I’m talking about. This is where the money will come from.

This is what Alex Iskold called “the mighty pipe” in 2007 shortly after the launch of the Facebook Platform. “Being a pipe that gets a cut in all transactions that occurs between a lot of Facebook users and a lot of outside services would make Facebook into a gigantic marketplace,” he wrote then. Iskold was writing about the platform, but it will really come via Facebook Connect.

Beyond the opportunity for a transactional marketplace, if Connect wins, Facebook will end up knowing even more about you. “Each service adds a few more data points about you inside the Facebook brain, which is quite aware of your activities inside the Facebook ecosystem,” wrote blogger Om Malik last July. “The brain can then crunch all that information and build a fairly accurate image of who you are, what you like and what might interest you. With all that information at its disposal, Facebook can build a fairly large cash register [via advertising].”

  • Jhay

    Indeed! Go Facebook!

  • nedlud

    These are all good points for why Facebook will thrive. But at what point will it seriously start to attract unwanted attention which will take some of the gloss off it? Already I have seen stories circulating about phishing scams being run from inside facebook using the information that people share about themselves to make the scam more plausible.

    Yes, facebook has the appearance of security, but it is exactly that illusion that makes these scams successful.

    Also, re the questions of identity, not everyone on facebook is there under their own name. The handle “nedlud” by which I’m posting this comment, has been my “name” online for many years. It’s who I am, online. Is information about me any more or less real or true if I registered a facebook account under that name?

    As it is, my circle of “friends” in facebook represents a skewed picture of me. Almost half the people I’m currently “friends” with were recruited via discussion groups in facebook solely for the purpose of me getting a bigger team in Dragon/Gang/Vampire Wars. That game is the only thing, that I’m aware of, that I have in common with them. And once my current intrest in that game dwindle, I’ll probably stop using facebook again too. Until the next game comes along… (facebook as gaming platform?)

  • roosevelt

    Like said before OpenID doesn’t make sense to average users. It sounds simple enough to login with your facebook credentials to another website, but OpenID/Login with URL/Manage Logins is just too much for average users to comprehend.

  • hembeck

    I still cannot comprehend how Facebook or any other social network is supposed to replace email.

  • Anonymous

    dont forget to mention the facebook boost in windows(live) /osx(iphoto).. :)

  • http://www.tyssendesign.com.au Tyssen

    I still cannot comprehend how Facebook or any other social network is supposed to replace email.

    Just one example – I don’t bother emailing my family photos or videos of us and the kids any more; I got them to sign up to Facebook and post them there instead.

  • briank

    “An anecdote: When Wetpaint dropped OpenID support…”

    Correct, only an anecdote. Yes, OpenID has room to improve but it is an open standard with the support of Yahoo, AOL, Google, MySpace, Microsoft, IBM, Verisign, and many others. Its harder for multiple players in participating in an open standard environment to agree on all aspects of the UX early on, but OpenID will get there. And when it does, website operators and end users will have a common standard to work with, not a menagerie of proprietary implementations.

    Some counter “anecdotes” where OpenID is benefiting website operators – seven case studies of successful OpenID deployments at http://www.janrain.com/openid/casestudies

    Have a look at implementations at Interscope Records (www.interscope.com) or UserVoice (www.uservoice.com) to see how the OpenID UX can be more intuitive and “facebook-like” In these cases it doesn’t even have to be OpenID or Facebook, it can be both in one easy to deploy, easy to use package.

  • Darryl

    I agree that Facebook will replace a lot of things, but all of email? It will in the end still depend on what works for you, and how the world works. All these students now know Facebook, till they get to their first job, and find out that their clients aren’t on Facebook, and that their company has blocked the Facebook URL, because they see it as a waste of time.

  • http://www.pamil-visions.com Phil Butler

    Replacing email….hmmm. I guess that is conceivable. Heck anything is conceivable. On a personal level though, there is something more personal and innately close to me as a user about email. Perhaps there is some ethereal link between me (or anybody) between stuff that resides on the PC. This is a hard one to nail down. But, though we do not use the rich features of email so much, this is one aspect that Facebook or other remote sites do not allow us.

    That being ..uh said or thought, if someone made an App for Facebook that possessed all the rich features and security of Thunderbird or Outlook etc….then yes Facebook would have something big…opps there’s a free idea.

    Always,
    Phil

    P.S. I somehow thing that Faceboook might decline a little this year, maybe something a lot cooler will come out.

  • http://www.pamil-visions.com Phil Butler

    I tend to agree with Brian, in that OpenID will get there. I recently talked with CEO of Flock Shawn Hardin right after the deal with MySpace. I had been a fan of Flock some time and on this event, had occasion to re-test their latest version. From a user standpoint (and simplistically) downloading Flock on my latest PC

  • http://www.pamil-visions.com Phil Butler

    Opps. a hotkey away from comment disaster, sorry. Any way. the end result of Flock and OpenID was what you might call – “The POOF syndrome” in that I was connected on every level to Facebook, YouTube, Digg and etc rather instantly. POOF is good for me, especially as the security level goes up.

    I think OpenID is going to win this little war.

    Always,

    Phil

  • http://www.mockriot.com/ Josh Catone

    @briank: Certainly, OpenID is working very well for a lot of people. But it’s a war for public perception right now and so the failures — even small ones — turn into big problems. People love to complain about the bad stuff more than talk about the triumphs, unfortunately (that goes for Facebook, as well — i.e., Beacon).

    For early adopters, it’s easy for us to see why OpenID and the open stack makes a lot more sense. But Facebook has the clear path to victory among the mainstream right now. I hope that changes, personally, but their strategy is looking very impressive at the moment, imho.

    @Darryl: I think that will change, actually. It’s something I’ve been saying for a couple of years and a lot of people disagree, but I think Facebook is in a good position to be the future of business networking, as well (i.e., compete with LinkedIn). It’s harder for anyone over 24 or 25 to see, I think (it’s hard for me to really see how it will replace email — and I am 25), but it’s already happening for such a large percentage of the younger audience that it is hard to ignore.

    I think there’s a good chance that businesses will actually begin to accept Facebook and use it as a productivity tool (which I think it can be given proper privacy controls). Further, if Facebook Connect really does win out, it will become a lot harder to block it at work since so many sites will rely on it.

  • http://www.newbreedjesusfreaks.com/ mcdanielnc89

    So wrong.. Facebok is no better than myspace.. U can add all the people u want on facebook just like myspace.. no better than any othe ersocial network.

  • http://www.mikeborozdin.com/ Mike Borozdin

    >Facebook is Email 2.0

    It’s likely to happen for personal communication, but not for business communication.

    Moreover there are many limitations of Facebook e-mail, you cannot attach a file, forward messages, add blind-cardbon copies and so on.

    Besides to find out if you’ve got a new message you have to stay on Facebook or get an e-mail notification, but it’s much easier to send and receive e-mails rather than e-mail notifications from Facebook and then go to Facebook read and send…

  • c0wfunk

    and yet I can’t find a link to “post to facebook” on your articles!

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