Is FB tapering off?

Tuesday, 30 August 2011 00:00 -     - {{hitsCtrl.values.hits}}

It’s strange how the innovations of the world tend to wrap around our daily life. One of them is the brand Facebook. I have been trying to locate a friend of mine for the last 12 years and failed, until I used a modern IT application like FB and today I realise the power of cutting edge brands that reshaped our life.

When I met the founder of FB Mark Zuckerburg last November at a CEO conference in New York, our discussion centred round the issue of piracy and how businesses are robbing the data off the FB customer base, which was creating a serious legal issue for him. We never got to discussing if a competitor could outsmart the brand with a similar or better product offering.

This year, having being at the birthplace of FB - Harvard, we realised how entrenched competitive business can be with the launch of Google+, which has wiped away six million customers of FB only in the US and another 1.5 million from Canada. Maybe when I meet Mark this November, we might have a totally different conversation like: How will FB protect its customer base? I guess this is the magic of today’s business world where a business can get wiped away overnight

Will ‘W’ happen?

Whilst we are focusing our own business in Sri Lanka I feel it’s good for us to get a perspective of what’s happening around the world. Global stock exchanges have lost over a four trillion dollars post the US debt rating issue.

When Wall Street lost 12,000 points over three days of trading, it even forced President Obama to make a 10-minute address to the nation where a powerful message somewhat steadied the declining trend. His message was clear and crisp. There can be many situations we are faced with in our life but how we respond to them will determine the future.

Whilst this may be true, the issue at hand is that when a country’s debt is increasing, at one point some sanity will have to come to play to curtail the expenditure. Especially in a country like the US, any cuts in expenditure are going to drive down economic development initiatives which in turn tend to have a rub-off on the business confidence. The 12,000 points shaved off the US stock exchange reflects the view of the future earning potential of the investors who are ‘dumping off’ and moving out.

Current estimates are that the unemployment numbers will move to almost 15 per cent from the current nine per cent odd and this can have serious ramifications, given that Sri Lanka’s export revenue is somewhat dependent on the US consumer. The debt issue in the EU is further aggravating the situation given that it is also a key market for Sri Lanka. Hence the exposure to Sri Lanka if a double dip were to happen will be almost six billion dollars on the export base of 10 billion targeted for 2011.

I guess time will reveal the state of the economy globally. But maybe a proactive stance that Sri Lanka can take will be to understand the strategies adopted by a country like Turkey. The country that is bordering Asia and Europe has taken a conscious decision of focusing business on the BRIC countries and today is reaping its benefits. After all Brazil, Russia, India and China cover two thirds of the world population and even if one picks 1% share of business, it will be sizeable in nature. This is all the more true of the middle class of emerging growth countries like India, which have almost 400 million potential customers.


In the backdrop of a double dip, research has revealed some interesting consumer behavioural trends that happen during a recession. Latest research by Mintel state that consumer demand picks up during an economic downturn for products categories like women’s intimates.

Qualitative data throws out insights, like more families tend to spend time at home due to the pressure on the purse and this drives women to pamper themselves by purchasing lingerie, whilst it has double benefit of enticing a husband to stay at home.

Let’s see if a similar pattern of behaviour holds ground this time around if a double dip happens. If it does happen, maybe Sri Lankan apparel companies will not have a negative impact. I go back to the words of a World Bank Economist Ejaz Ghani who once worked in Sri Lanka who commented: “I think God is a Sri Lankan.” Maybe this ethos still remains true.

FB $ 19.1 b

Whilst FB as a product cannot be touched or felt, the brand is worth $ 19.1 billion and is ranked the 35th most valuable brand as per Milward Brown at a staggering growth of 246% last year. However, when growth numbers that was clocking in 20 million customers a month comes down to 11 million odd, it sure makes a company worry – especially when this happens at a time when a competitor has launched an aggressive brand like Google plus.

Maybe once again the option is to focus on the BRIC countries where internet penetration is rapidly increasing, which in turn can spruce up FB subscribers. I would argue that it is time that FB does some strong advertising to build equity for the brand.

At the end of the day, perceptions drive behaviour. FB can be positioned as a brand that is warm and lovable and the best friend to a person when one is lonely. Google+ cannot take this position in a consumer’s mind, given that the brand name infers a technical connotation.

At the end of the day, the mother brand Google is a technological platform. But FB tends to evoke positive and warm connotations given that the brand characteristics bring out these feelings. Now the challenge is how FB builds on this aspect and differentiates FB as against its competitors so that one can protect its customer base. The good news for us in marketing is that the war has just begun between FB and Google+. Let’s watch the fun and pick up the learnings.

Why Google+?

The latest count at the time of writing is that Google+ has moved up to 25 million subscribers with the brand securing 18 million in just two-and-a-half weeks. The first group that normally comes into any brand is called innovators.

The next challenge is for the brand to attract the early adapters. This is the tough group to crack as they are the leaders in a society. Well educated, holding top jobs and become adapted to new products after much thought. If Google+ breaks into this market segment in a country, then FB will be up against a severe challenge from a strict marketing point of view. Let me outline why I believe that FB must embark on brand differentiating exercise.

Why 1: Circles

Whilst FB is all about mutual friendship, Google+ has introduced a new feature called ‘Circles’. Circles are groups of friends which are reflective of the real life situations that we live in. Hence we can choose what information we will share with each of the circles of friends, which means that the tone of the language we use and the content will be exclusive to that group of friends. This means that there is more privacy.

Why 2: Integrate with Google products

In Google+ the interface with Gmail, Google Calendar and Google Maps is possible whilst in FB it is strictly a social network. Some say that Google+ is more secure platform with no spam and no ads and a fresh list of friends can be included, which makes the interface exciting. It’s almost like starting a new life where you can arrange all your friends again. Think about it. It’s quite unique in a way that can start a new revolution.

Why 3: Group video chat

If you want to group video chat, this is possible on Google+ up to 10 friends. Interchanging to text is also possible. FB provides video calls thanks to the deal with Skype but group chatting is not possible, which means that Google+ can be positioned to the corporate segment and it can be positioned as a serious social network.

Maybe this can be the differentiator for Google+ as in some companies FB is not allowed to be accessed during work times as it seen as a leisure activity rather than a support to business.

Why 4: No Ads

Currently Google+ is ad free, which makes it very focused to meeting customer requirements of connectivity. FB and Twitter have both ramped up advertising, which has increased its clutter levels.

Sri Lanka

Whilst internet penetration is increasing in Sri Lanka, I guess Google as a company can position the brand Google+ in a perspective that differentiates itself from FB to rake in the subscriber base. The only way for FB to protect its customer base is by positioning itself as a cool interface which is warm and lovable and the best friend of a lonely Sri Lankan than the high tech rival Google+ that can be seen as serious and business-like, with many tech-savvy features. I guess time will tell

(The author is an award-winning marketer and business personality. He has a double degree in marketing, MBA and reading for a doctoral degree in Business Administration and an alumnus of Harvard University. The thoughts expressed are his own and not the views of the organisations he serves in Sri Lanka or overseas.)

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