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Mobile, social bringing about huge sea change: analyst

April 6, 2011

Facebook Credits

NEW YORK – An analyst at appssavvy’s Social Media Summit said that mobile and social are bringing about the biggest sea change in consumers’ lives, and brands and retailers should take note of the ever-changing landscape.

The lines between mobile and social are becoming increasingly blurred. The INQ Android-based Facebook phone knows the people a particular user calls all the time, so those contacts show up higher in the news feed because those are the ones that user really cares about.

“The mobile phone is bringing about the biggest sea change in our lives,” said Lou Kerner, social media analyst at Wedbush Securities, New York. “One day I woke up in 2009 and found that Facebook was taking over the world.

“The biggest innovation of social media was the introduction of the newsfeed—you no longer had to go to 500 profiles, the 500 profiles now come to you,” he said. “The next big step was in May 2007, when they opened up their API, went totally vertical and passed MySpace.

Facebook is generating revenue from social commerce and micropayments for social gaming and virtual goods.

In addition, Facebook is setting its sights on various areas that are bringing it into conflict with other established players.

“With 600 million plus users, Facebook is going to be a major ad network—social ads are proliferating on Facebook,” Mr. Kerner said. “Social ads are highly impactful, generating four times the purchase intent of static display ads.

“Facebook Credits is going to put a dent in PayPal, and Facebook Deals will put a big dent in Groupon and Living Social as well,” he said. “There are so many daily deal companies, and it is an amazing vertical with massive wealth generation currently.”

Facebook’s growth is not unprecedented—its growth curve is similar to that of Google, per Mr. Kerner.

The companies are increasingly butting heads as Facebook moves strongly into search, display and social advertising.

In addition, Facebook is driving massive traffic to other sites. For example, Living Social will soon be getting more traffic from Facebook than Google.

While Facebook and Google are competing in many areas, they are also becoming dependent on each other.

“What is Facebook’s biggest reach play?” Mr. Kerner said. “By 2016 more than half of all Facebook Places check-ins are going to be via Android—the companies will become increasingly interdependent, which positions Google very strongly.”

“Massive wealth creation and destruction is coming,” he said. “The wall of data is coming that nobody has any idea of—there is one company that is going to help us understand that wall of data, which is Google, and it has tons of social media assets as well.

“Google will index it and make it searchable.”

Both Google and Facebook are intensely interested in location-based services. That could be another area where they become frenemies.

“Geosocial changes everything—it is going to be huge,” Mr. Kerner said. “LBS is a land grab, and it is not just about where you are now, it is where you’ve been and where are you going.

“We will soon see how geosocial is going to add massive value to our lives,” he said. “LBS equals proximal notification.”

Facebook has been innovating in various ways, by enabling its users to stream Warner Bros. movies.

Another new area is Facebook news feed optimization (NFO), optimizing content so users read it, click on it and comment on it, sending it to the top of the search rankings.

“The social media framework for brands is paid, owned and earned audiences,” Mr. Kerner said. “The value of Likes is going to go up and the cost of Facebook fan page growth is going to go up, so the time to build your fan base is now.

“Another innovation is sponsored stories, and the value of fans is only going to go one way—up,” he said.

Mr. Lerner does not seem too concerned about privacy issues related to social media.

“Privacy on Facebook is more of an issue in the media and with government regulators than the general population,” Mr. Lerner said. “Mark Zuckerberg does care about what people say, all Mark cares about is what people do.”

Final Take
Mr. Lerner

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Dan Butcher is associate editor on Mobile Commerce Daily and Mobile Marketer. Reach him at

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