Types of Graphs

Over the past year, we’ve seen the emergence of a number of other “graphs”, each of which having players that are vying to “own”… thereby, controlling particular slices of the social fabric by becoming the de facto source for that data which in turn everyone else relies on:

Interest Graph- Identifies connections between people and things they are interested in via social and search activity (typically by “following” something). Along with the Social Graph, the Interest Graph is “foundational” to the social web.Who owns it? No one at this time, but keep an eye on Twitter, Google+ Sparks, Topics in Quora, and of course, Facebook.

Taste Graph- Identifies shared preference of behaviors.Who owns it? Hunch were the ones who introduced the Taste Graph earlier this year, which is built on a massive data set that powers their predictions platform.

Location Graph – Identifies the personal location pattern (checkins) of individuals and how they are connected to these places (venues).Who owns it? Foursquare‘s Venues Project seeks to cement them as owners of the Location Graph by creating associations with 3rd party location data to their venues (they’ve already partnered with The New York Times, New York Magazine, Thrillist, and MenuPages ). Yelp and Gowalla seem to have missed the boat (even though they were in the space first), but Facebook and Google aim to own this space as well.

Health Graph - A digital representation of a person’s personal health, body measurement stats, and health/fitness related actions, and their evolution over time.Who owns it? The Health Graph was created/announced by Runkeeper earlier this year, who saw an opportunity to go beyond just being a GPS fitness mapping mobile app and by opening up the Health Graph to allow others to not just tap into it, but build on top of it as well. This probably has the most “real word” (physical) implications, since 3rd party fitness device manufacturers like FitBit, Zeo, and Withings have begun integrating their data with the Health Graph.

Developing New Graphs

What’s common about these graphs is that in most cases, the companies had no original intention of creating them. Essentially, what they did was:

• Look inward at the data they have already amassed and identify a set of data no one else has but is of extreme value
• Provide structure and open up the data(via APIs), thereby providing both read/write access (letting others in turn grow/add value to your graph)
• Give it a cool name

The Intersection of Graphs

Where this whole graphs business gets interesting is when new businesses are built by layering or combining several graphs to form a new business model, i.e.:

• Yelp - Social Graph + Locations Graph
• Pandora - Social Graph + Interest Graph + Tastes Graph + Music Graph
• SCVNGR – Social Graph + Locations Graph + Gaming Layer (I’ll talk about “layers” some other time
• GetGlue – Social Graph + Interest Graph  + Entertainment Graph (music, movies, tv)

As Mark Zuckerberg put it,”If we can take these separate maps of the graph and pull them all together, then we can create a Web that’s smarter, more social, more personalized, and more semantically aware.”

The Business of Graphs

How do companies intend on making money off of these graphs? Primarily, two ways:

• Advertising. By understanding the relationships between people (Social Graph) and what they like (Interest Graph) that creates a powerful opportunity for highly targeted content. Once Facebook starts to better automate their targeting (right now it’s self-serve unless you use a 3rd party tool) and combine this with retargeting (since they’ll know if you visited a 3rd party site), the opportunities are tremendous. Twitter will be playing in this space as well. The Taste Graph offers the next biggest opportunity to make money (for the same reasons as Social and Interest Graphs).
• Licensing. Another way companies will make money is from commercializing their graphs by licensing access to them. This is no different than, say, companies like All Music Guide license their database of music-related info to third party sites to supplement (i.e., if I’m browsing music on Spotify and click on “artist bio” or “related artists” to see more info).

The Future of Graphs

It will be interesting to see what other graphs and layers emerge in the coming year. Some ideas that come to mind:

• Knowledge Graph?- One would argue that Wikipedia owns the knowledge space. Quora is building a pretty large body of knowledge through a well-maintained repository o fuser-contributed questions and answers, grouped by topic and tied to both social and interest graphs.
  Who *could* own it? Wikipedia, Quora, Yahoo Answers
• Deals Graph?- These could be tied to locations (via the Locations graph) or within the social graph (tied to brands, etc.).
  Who *could* own it? Groupon, Living Social, Facebook, Amazon, Yelp
• Stats Graph?- Sports Statistics comprise a pretty large, constantly updating data set.
  Who *could* own it? Elias Sports Bureau, ESPN, STATS
• Genome Graph?- Provide access to the most up-to-date set up data related to DNA sequencing.
  Who *could* own it? Human Genome Project, 23andMe

In Summary

• Social and Interest graphs are the foundation of the social web. Facebook outright owns the Social Graph (“one graph to rule them all”).
• After Social and Interest Graphs, the Taste Graph has the most potential to make money through ad targeting and predicting user preferences. Other graphs will be monetized through licensing/access fees to third parties.
• Niche-based and long-tail graphs are being developed which in themselves will have business models, but will not succeed financially on the scale of the Social or Interest Graphs.

What graphs might you be able to own (and transform your business with)?

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.

The primary change is that a majority of the page is now taken up with the “wall”, which consists of status updates and comments by fans. This is obviously a direct response to Twitter and the success it has given brands in engaging their followers in direct communication.

The biggest drawback is that pages now have the exact same layout as user profiles. Previously, many brands were able to highly customize the content and look of their pages using the large area available for images and multiple large application boxes. Now, there is only a small image on the upper left corner and a few small application boxes down the left column. As on a profile, the rest of the applications have been relegated to a boxes tab that many fans probably won’t take the time to explore. While it is possible to change settings to have new users start on this tab, once someone becomes a fan of a page, they will always start on the main wall.

The consequences are clear. Brands will not be able to rely on rich graphics or flashy widgets to create engagement and reinforce identity; the focus in now on the conversation. Brands that update their status will have it appear just like friends’ updates on their fans home pages where they will be able to “like” and comment on it. With the imminent redesign of the home page, this conversation will only gain prominence and become the primary way for brands to engage fans and grow virally through the social graph.

The challenge will be for brands to use these new touch points for communication effectively. People will not accept passively receiving broadcast information like an RSS feed of blog posts; they require real engagement and two-way conversation. Brands will need to find real people to convey their voices and identity. There have already been successful examples of this on Twitter such as Zappos and Comcast.

It will only become more complex maintaining and managing a brand’s conversation as it moves away from a brand’s own site to the distributed web. As more sites and services open APIs, new tools and meta-services will be created to facilitate this for brands as FriendFeed and TweetDeck have only begun to demonstrate for consumers.

We see the potential here as being enormous, and are already hard at work integrating social applications into our clients’ word of mouth/social media marketing mix. We’ve just released our first app, called Pass the Soccer Ball.

The premise is quite simple – you pass ‘balls’ to your friends who can in turn either pass it down the field to one of their friends or take a ‘shot’ at the goal (with each successive pass improving the odds of scoring a goal). The very nature of the game takes advantage of the “social graph” and spreads virally. In fact, we quietly released the first version of the application last week with no promotion and over 1000 people installed the app in just the first few days (it also boasts an “active user” base in the top 15% of all Facebook apps, according to Adonomics).

This is a sign of bigger things to come, as Myspace, Yahoo, and even Google are rumored to follow suit and release developer APIs that allow deep integration with their platforms. Social networks are becoming the new operating systems

Got a Facebook account? Why not check out the app and pass me a soccer ball?

Related Links:

Facebook Developers API
Pass the Soccer Ball Game (Facebook account required)