My Top 1 (yes, ONE) Prediction for 2011

By Bob Troia

Yes, it’s that time of year again when the pundits come out of the woodwork to make their “Top 10″ lists of predictions for the following year, so I figured I would throw my hat in the ring… with a twist. Since the social web has greatly reduced our attention spans, I’ve decided to trim down my list to just one prediction (which will also make it easier to look back on in a year and see how I fared!).

Without further ado, here is my Top 1 Prediction for 2011…

1. Facebook Launches Distributed Ad Network – an Endgame to Take on Google

I’ve been preaching this to colleagues/friends for the past year, and with each strategic move Facebook makes, I feel more certain about it. Facebook’s ultimate Google-threat is going to be the launch of a distributed ad network. Let’s review the evolution:

Facebook Platform (Social Graph)
While Google may know your search history, sites you visit, and can mine through your Gmail messages, Facebook has been gathering data on everything about you (well, as much as you are willing to reveal). They know not just where you live, but your phone number, your various social relationships, religion/sexual orientation/political leanings, the things you “like”, as well as your level of influence (how much of what you post gets likes/comments/reposts or how many people “hide” you in their newsfeed). Everything is represented in the “social graph”, and Facebook owns it.

Facebook Pages
As Facebook’s popularity began to skyrocket, brands wanted in the game so they could “fish where the fish are”. Pages allowed brands to set up shop and connect with an audience. Applications (built on the Facebook platform) could be integrated into pages as well, providing another level of data acquisition/usage tracking.

Facebook Ads
With the amount of traffic Facebook was generating, launching an ad service (albeit a rather shoddy one) was a no-brainer. Not only could they monetize their existing site traffic, but brands would throw them millions billions of dollars – to buy ads that drive people back to Facebook (and, in turn, add value back to Facebook). A brilliant business model, indeed!

Facebook Connect
Next, Facebook launched “Connect“. This allowed external sites to provide an easy way for users to log in using their existing Facebook credentials. As more and more sites adopted Connect, Facebook began to control identity, and in turn bring those external sites into the social graph (with the launch of Open Graph, Facebook has since killed off Connect in favor of using Oauth-based logins on top of the rebranded Facebook Platform).

Facebook Places and Social Commerce
Given some of their recent acquisitions (such as Hot Potato), Facebook isn’t hiding the fact that they are investing heavily in mobile/location-based-services (LBS’s). “Places” tie everything together. You “check in” at a place. You attend an event at a “place”. Not only do they want to know who you are and what you like, but where you are and who you are with as well. With the proliferation of “deals” services (most notably Groupon and LivingSocial, and location-based deals/offers provided by Foursquare, Yelp, Shopkick, etc.), it’s a proven model that a) $$works and b) has a long tail effect that even the smallest local mom-and-pop business can leverage.

Rumors have been swirling that Facebook might begin to charge users, but Facebook stands to make way more money by charging for their users than charging from their users directly (they will still make money off their users in other ways, such as Facebook Credits).

Social Plugins
After unveiling Open Graph, Facebook then released a suite of “social plugins” that anyone could customize/embed into their website with just a few lines of JavaScript code to instantly add Facebook-powered comments, content recommendations, and friends’ activity. Wouldn’t it be trivial to provide a customizable ad widget to majorly trafficked sites such as CNN.com or WashingtonPost.com who are already using Facebook’s social plugins? This would long-tail all the way down to the least-trafficked websites who use “like” buttons.

Facebook Apps and iFrames
Without getting too technical, Facebook has made some changes in the way applications are built on the Facebook platform. In the past, you could utilize FBML (Facebook Markup Language), but this is being deprecated for iframe-based development using Facebook’s JavaScript SDK and Social Plugins. This basically means you will be able to build Facebook apps that can run the same way on either on your own website or within Facebook. The new page design that was recently leaked shows they are doing away with “tabs”. What does this mean? Facebook may control the user’s wall/news feed, but they want to push the traffic back out to external sites (scale out traffic/users/ads/reach).

Search Partnerships
Yahoo and Google both know they screwed up big by not scooping up Facebook when they had the chance for a few “paltry” hundred million. Instead, Facebook took a minority investment from Microsoft. Since that time, Facebook has struck out a search partnerships with Microsoft-owned Bing and has been speaking with AOL (even though AOL just renewed their search deal with Google).

Even though these search engines only make up only around 13% of the current search market, Facebook is already the most-trafficked website on the planet, so this will only add to their reach (that’s a lot of potential ad impressions!).

Facebook Messages
Facebook recently relaunched their messaging service to be a unified communications platform blending email, IM, and SMS. Think about it – how many of your Facebook friends do you ever email (or even know their email addresses)? Now Facebook can mine your conversations and use that data to target ads. Combine that with the fact that Facebook is now allowing people to grab @facebook.com email addresses, and that looks like a direct attack on Gmail. I would venture to guess that there are more Facebook users with @aol.com addresses than @gmail.com addresses – they could potentially acquire tens of millions of more users who might be more apt to switch to an @facebook.com address than @gmail.com. And then they can run advertisements against them.

Conclusion
Do you see a pattern emerging here?

At the end of the day, Google’s bread and butter are the revenues they generate from Adwords. And you may argue that for Facebook, and IPO is their endgame. However, any thoughts of an IPO will hinge on the successful launch of a large-scale ad network initiative, as it will add billions to their pre-IPO valuation.

This is some serious stuff. If/when Facebook decides to launch their end-game ad network, they can simply flip a switch and enable millions of sites to start displaying highly-targeted (“scarily”-targeted, in fact) ads that will instantly put a damper on Google’s revenues/market share while catapulting Facebook’s revenues into the tens of billions.

Curious to hear what you think – drop a note in the comments, or hit me up on Twitter.