advertising vs. data collection in monetizing social networks.

I promised to follow up on this post around two weeks ago, but I think I can be excused due to the holiday madness that filled that time period.

In the previous post, my general complaint was that the amount of initiative necessary to elevate advertising in social networks from an annoyance to a service is negligible in comparison to the potential returns, both directly and in terms of reputation. The example at hand was Facebook, and the mediocre targeting that let me know a band I like was touring in my country, but didn't bother to take it a step further and actually point me to venues near me, and a place to purchase tickets.

The problem goes deeper than that, and it's pretty simple to explain. Facebook, like most social networks, has made the assumption that having a business model based on advertising revenue means you are a company that works in advertising. Looking into Facebook's brand promotion 'Fans' pages, etc, there is a lot of useful space in which to inject a brand identity. They've also made a point to keep the structure fairly rigid, which I respect - this feature was, at first, the major differentiator from MySpace. I'm not trying to question the advertiser focused initiatives that Facebook has created. I'm just wondering why they were necessary at all.

Facebook is not an advertising company. Facebook, like all social networks, is more accurately a clearing house of user data. Facebook has a lovely, massive community of people, many of whom are highly engaged with the 'social utility'. Most of whom have made vast amounts of personal information available. This is what Facebook is selling, first and foremost - the ability to identify a useful target market for ads, services, etc.

So why are they taking it further than that? You want fan pages for Brands, sure. This makes perfect sense to me. But beyond that? What you have to offer is a community, and your collected information about them. Leave the rest to people why can actually make creative, targeted advertising work. Don't further the spread of the pseudo banner ad by putting them into the News Feed.

Offer the information. Leave strategy to the same guys who handle the creative in other, slightly less closed systems, all the time.

When reading about advertising and the future, the word that is thrown around a lot is authenticity, because us youth of today have finely tuned bullshit detectors, etc etc. My stance is that it's often quality that's more important - you can't make something an ad, and hide that you are trying to sell me something by coating it in a fine layer of authenticity. But you can make me care, and sit through the ad, because the content is good, relevant to me, and entertaining.

Facebook has the information to be astounding at determining the relevance of a product or service to it's users. But honestly, trusting either quality of content, or entertainment value to a company who openly and proudly has been built on unpaid, personal contributions by users seems more than slightly odd.

Hopefully it's clear that Facebook is interchangeable for any other social network or social utility here. The issue is that if the only thing you are actually bringing to the table is information, why are you trying to sell a full service, rather than just taking money for the information at substantially less overhead?