Home David vs. Goliath? An F8 Overview for Startups

David vs. Goliath? An F8 Overview for Startups

It’s been a given for some time that businesses, including startups, should have a presence on and connection with Facebook. With over 400 million active users, chances are your potential investors and customers are already there.

Fan pages have been a simple way to generate interest and engage customers, and Facebook Connect has quickly become a standard in signing up and signing in users. In his keynote at f8 yesterday Facebook CEO Mark Zuckerberg actually mentioned startups in his opening remarks, stating that they “are requiring that their users use Facebook Connect. We want to make it simple to create these personalized experiences.”

Whether or not Facebook is a “requirement” for startups, there are some things new businesses should think about based on yesterday’s announcements.

“Facebook Connect On Steroids”

Facebook announced a major overhaul to its API and introduced three new components yesterday: social plugins, the Open Graph protocol, and the Graph API. By using the tags specified in this protocol, any website can now become part of the Facebook ecosystem.

If a Facebook user visits your site and Likes your page, you have the ability then to publish information into that user’s stream. In addition, implementation of the code on your site will give you access to administrative tools and analytics just like any Facebook fan page owner. As we wrote yesterday, this will take analytics to the next level, providing an incredible amount of demographic data about users who like and link their profiles to your site. However, this information will reside with Facebook, not on your own website, making them a de facto owner of your visitors’ social data.

Applications & Virtual Currency: Where the Money Is?

While many businesses will likely integrate their websites into the expanding Facebook ecosystem, there is likely still room for growth within the platform itself, namely with application development. There are over 550,000 applications on the site, a number that continues to grow – and to encourage return visitors.

To coincide with the growth of the application market, particularly in the area of social gaming, Facebook also announced the expansion of its official virtual currency, Credits. Last year Paypal processed over $500 million in virtual goods last year, with social gaming company Zynga becoming Paypal’s second largest merchant (following eBay). Clearly Facebook seeks to stake a claim in the virtual currency market.

Facebook Credits are currently in beta with over 100 applications, and will roll out to the entire network soon, Zuckerberg said yesterday. Credits will allow users to purchase one currency for all transactions on Facebook, rather than have to enter their credit card information with each purchase. By facilitating online payments, Facebook hopes to increase the percentage of users willing to purchase virtual goods to between 8% and 20%

David vs. Goliath?

Despite repetition at f8 yesterday that these changes were meant designed “for developers,” it remains to be seen how the announcements will play out for developers and for users alike, the latter of whom are notorious for protesting changes to the site. In particular, continued concerns about privacy might not be well received, particulary given Facebook’s past history with opening user data.

Privacy concerns might not be the only thing that gives some businesses pause about Facebook’s direction. Facebook also announced yesterday “instant personalization” yesterday, giving three “preferred partners” – Yelp, Pandora, and CNN – instant and additional access to Facebook profile information when users visit their sites. For startups in these areas, namely restaurant recommendation, music sharing, and news delivery, the “preferred partner” program might make industry in-roads more difficult and could adversely impact user adoption. As the “preferred partner” program expands beyond the three selected for launch, it remains to be seen the effect of being sanctioned – or not – by Facebook.

The buzz yesterday was that Facebook had just “seized control of the Internet.” Comments on how you think the f8 announcements might play out for startups welcome!

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