Dan Rose, VP of Partnerships and Platform Marketing at Facebook, took the stage at DLD Conference in Munich this morning in a conversation with David Kirkpatrick, author of The Facebook Effect.
After Kirkpatrick was done promoting his book a couple of times, he commenced the interview as follows:
Q: You primarily work with large platform partners like Zynga. What other categories besides games gets most of your attention?
A: Game developers are obviously a large chunk of our partners, but don’t underestimate the many media companies on Facebook.
Q: You were at Amazon for a couple of years, mostly in business development. How long have you been at Facebook now?
A: About four and a half years.
Q: You’re quite an expert in monetization, so I know you like data. Facebook has long been working with Nielsen on marketing research – what has been the discovery so far?
A: At Facebook, we think of advertising as a unique opportunity. Digital advertising was different from everything that came before because of the sheer scale, the possibilities for two-way communication, and so on.
But early Internet advertising initiatives were rudimentary in our view – we think about advertising in a unique way because of the social aspect.
To answer your question, Nielsen has been actively measuring the impact of advertising efforts on Facebook, and what we’ve found is that when people see ads with their friends’ names in them, there’s a 60% uptake in brand advertising value.
Q: Has that translated into research on a purchasing level?
A: In our partnership with Nielsen, we haven’t gone down to the purchase level yet. What we can do, however, is measure the effect of advertising through user polls, not panels, and completely objectively at that. The concept of word of mouth is still very powerful, so rather than just put banners up, our advertising is about implementing word of mouth at scale.
Essentially, we’re moving from the wisdom of crowds to the wisdom of friends.
Q: I’ve been thinking about this for a while. With the data and platform Facebook currently has, advertising could easily be transported outside of the site, on the network of third parties. Is that something you’ve been looking at?
A: We get that question a lot, and the answer is always the same: there are no plans for that at this point. One of the real benefits of advertising on Facebook today is that you can target people based on who they really are. We obviously have a lot of usage, so we’re focused on trying to make ads relevant and personal for every user.
Q: There’s been a lot of discussion if Facebook is really worth $50 billion or even $70 billion, but I think most people underestimate the revenue opportunities Facebook has outside of the site. I just wanted to throw that out there.
Q: Going back to the partnership with Zynga, which is a huge platform partner of course, but what are the others?
A: We try to build capabilities to support all types of partners, from small startups asking about our Social Graph API to Zynga.
Our vision is: we believe we’re in the middle of a transformation, and we think that the games category is a leading indicator, but we’re equally excited about the next categories that will emerge, whether they’re coming from large companies or startups in a garage somewhere. We encourage disruption in all fields.
As such, we’re really quite indifferent to whether Zynga games are played on Facebook or on their website.
Q: Almost literally, there’s nothing you can do on Facebook you can do on your own website using all the capabilities and reach Facebook is capable of. Don’t you think taking the platform externally is a much larger opportunity?
A: That may be the outcome, but it’s early days.
Q: Apart from gaming, what’s an unexpected industry you would expect the next Zynga to emerge out of?
A: I think definitely the media and content space, primarily because that’s the kind of thing users want to engage in a social way around. Games are no doubt a leading indicator, but media is definitely something we’re very focused on.
Other categories include music, video, potentially retail – we believe every one of those categories will see disruption in the next decade.
Q: Game developers are what made Facebook the largest platform on the Web, but media companies still want people to essentially come of them. Do they need to experiment more on how to use Facebook, in your view?
A: True enough, media companies use mostly our social plugins so far on their own websites. What’s interesting about Zynga and other game developers, is that they have essentially reinvented what social games can look like. Most of these companies started with people, content came second.
Look at Flipboard on the iPad as another example – they are doing interesting things in this space, e.g. putting the friend who shared the article with you as the byline for articles you’re reading. That’s compelling.
Q: Would Facebook be interested in providing radically new facilities for media companies?
A: We work with our media partners and talk about a lot of ideas, and some are doing more than others, other we hope will follow suit.
Q: Moving over to Facebook Pages, I think these are very constrained. You get imposed a lot of limits. There’s a lot of work to be done there, in my opinion, especially when you expand to retail. How long will it take for Facebook to seriously take on retail?
A: We’re starting to see that, looking at experiments from my former employer, Amazon, and eBay. Retail is definitely an exciting category with lots of potential – we’ll almost certainly see much innovation there in the next few years.
Today, we make money from advertising, so more time spent on the site today means more income. But ultimately Facebook’s mission is making the world more open and connected.
Q: Zynga is one of, if not the biggest advertiser on Facebook, so revenue from them comes in two forms. Do you presume other companes will also start advertising on Facebook to lead people to what they’re actually doing on Facebook?
A: For a company like Zynga, it made a lot of sense, and it performs really well. It could prove to be a good opportunity for other types of companies too.
Q: Moving on to Facebook Credits, which you’re in charge of. I heard a senior marketer from Coke recently say the day will come soon that people can buy a soda using Credits. When is this going to happen?
A: We’re focused on making credits a virtual currency for virtual goods first and foremost. But obviously, you’re right, we can create a lot of value by expanding it across different platforms.
Q: Facebook is getting a lot of attention because of the movie, the Goldman Sachs investments and so on. Is there any negative aspect to all that attention?
A: It’s incredibly important to have a founder / CEO that’s consistent, and that was experience at Amazon and has been at Facebook so far. Mark Zuckerberg has a singularity of focus, and has had it from the start.
We’re starting to become a big company now, so that means sometimes people get smaller roles in a sense as times moves on, but at the same bigger because the scope widens. I think that has had the most impact on Facebook’s culture to date.
Q: Has Zuckerberg changed at all because of the enormous growth?
A: No, Zuckerberg is very similar to how he was when Facebook had only 100 million users; we’re at over 600 million today and not much has changed.
Q: Nevertheless, a large number of people in senior roles recently left the company. Was that a big deal inside Facebook – and how long do you plan to hang around yourself?
A: We still see ourselves as a startup, so some of the more entrepreneurial people will always end up leaving when their urge to start something new emerges. Scaling to a company the size of Facebook today means narrower roles for some employees over time. Some people are excited about that, others inevitably aren’t.