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Facebook Places: A slowly emerging giant

by Nitesh Patel | 8月 24, 2010

Dennis Crowley – Founder of Foursquare - may be right. Facebook Places is indeed boring. However, anyone – Crowley included -that thinks Facebook Places in its current iteration is the final step for Facebook into the location based social networking space is kidding themselves. Facebook Places will have long term ramifications on the location based social networking space in due time but for now there are more questions than answers:

· Will users be able to check in their friends on third party sites even if they are not members of that service?

· Fragmentation of various services still exist making checking in to Brightkite, Foursquare, Gowalla, and others time consuming. FB may allow for dual service check-in (ie. Foursquare and FB or Gowalla and FB but not all three).

· Will FB users find enough usefulness in third party networks to utilize them or will their growth be stunted?

The question about competition comes down to Facebook’s ambitions which is a desire to drive revenue through the creation of a comprehensive ad network. Places will allow FB to acquire more information on users, increase the frequency of user interaction with Facebook, and better understand the nature of relationships between individual users. This type of data is important and integral to advertising not only via mobile but also on the web. If Facebook knows who a user spends time with it creates compelling new advertising opportunities. Let alone knowing where people go. How frequently they are there. The intelligence and effectiveness of Facebook’s advertising platform could come to rival and quickly exceed that of Google.

Partnering with others gives FB a way to appease the market in the short term by not appearing anti-competitive but Places will thwart competitor’s long term growth. Even if it helps them in the short term by bringing awareness to the services. But think about this – if just 1% of Facebook users regularly uses Places – Facebook will have more than 5M users – double that of Foursquare. And 1% of users would be a failure by Facebook’s standards.

For now, competition can continue to abound as competitors will have the opportunity to differentiate. Foursquare can continue to offer mayorships and enticements. Gowalla can offer trips, pins, and other prizes. But in the long term - competitive services - will have to move well beyond the check-in in order to grow beyond their current user base. Booyah’s MyTown is an excellent example of how to accomplish this – by turning location – into a game.

The immediate effect will be on weaker competitors who don’t have the resources or the buzz to convince new users to sign up. Some of these services will likely wither away before the end of 2010 as others see growth stunted and plan exit strategies for 2011. A select few may continue to press on, but Facebook will be the biggest game in town by then. And with scale comes sponsors, advertisers, new business models, etc.

Competitors aren’t the only long term losers either as carriers – hoping smaller third party services – would emerge as a viable new revenue stream from local advertising may miss the boat as subscribers instead opt for Facebook’s service which is unlikely to share revenue with carrier partners.

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