Cashing Out: Week of June 17th – 23rd 2012 in Online Marketing News
Facebook buys Face.com for facial recognition
Israel’s Face.com â€“ a startup that specializes in facial recognition software â€“ announced in a June 18 blog postÂ that it has been acquired by Facebook.
As The New York TimesÂ (NYT) reports, Facebook has been using the company’s software for its photo tagging feature for couple of years now, so the deal isn’t a total surprise.
But using software and buying the company that makes it are two different things entirely, and the NYT makes a pretty solid argument for why the social network would now be interested in acquiring a company Â it has already been working with for two years.
As TechCrunch notes, “Face.comâ€™s speciality is mobile facial recognition,” and that, says the NYT, may be the key to this deal.
Face.com’s latest product is a mobile-centric app that allows users to automatically tag friends in pictures before putting them on Facebook. Because facial recognition is easier on computers than on mobile devices, the NYT argues the product will help boost Facebook in mobile, an area that may be crucial to their short-term success:
“Facebookâ€™s short term future, particularly on Wall Street, depends in large part on how it takes advantage of cellphones and tablets â€“ and how it spins money from one of its singular assets: pictures of babies, weddings, vacations and parties.”
The terms of the deal were not announced, though TechCrunch spoke with “a source familiar with the matter” who estimates it’s worth between $55 million and $60 million, a figure that conflicts with other reports saying the the value of the deal could be as high as $100 million.
Facebook forced to allow opting out of Sponsored Stories
Now public, Facebook needs to focus on monetization more than it ever has before, but this week threw at least one obstacle in the company’s path, TechCrunch reported June 21.
A class action suit led by five Californians has forced the social network to allow users to opt out of having their names and pictures used to accompany Facebook’s Sponsored Story ads. Because Sponsored Stories use relevant content created buy users to promote brands, displaying those users’ names and avatars is essential to the ad format.
“The issue,” says TechCrunch, “is that California law protects citizens from unauthorized use of their likeness for promotional purposes. Those likenesses are exactly what make Sponsored Stories so powerful, but Facebook does not currently offer any way to opt out of being shown in them to friends.”
Unfortunately for Facebook, Sponsored Stories (especially on mobile) are one of Facebook’s more effective means of monetizing, as new studies this week showed. The only bright side, as TechCrunch points out, is that users will have to opt out of each sponsored story, and won’t have settings allowing them to indefinitely opt out of all of them.
50 new patents bought in Google’s latest spree
Google is showing no signs of slowing down its spending on new patents.
According to a June 18 TechCrunch article, the internet giant has just snapped up 50 new patents from New Jersey-based Magnolia Broadband for an undisclosed sum.
Among the areas covered by these new patents are increasing network capacity,uplink transmission, battery life, and more.
Writes Techcrunch: “With the acquisition of Motorola, Google of course acquired a large number of patents as well, so chances are Magnoliaâ€™sÂ beam forming Mobile Transmit Diversity patent portfolioÂ is meant to strengthen its existing patent stash (and keep it away from Googleâ€™s competitors, of course).”
Facebook ditches Credits for currency
In a move the New York Times says signals Facebook’s “ambitions to grow as a payment platform,” the social network announced June 19 that it is making changes to the way people pay on its platform.
Whereas users used to have to use Facebook Credits to buy things like virtual goods in Facebook games, those credits will now be replaced with real currency.
Of course, Credits were purchased with real currency in the first place, and Facebook took a cut. But, if one were buying a coffee machine in real life, rather than premium items in a freemium game, it would make little sense not to use a real unit of currency that exists outside the platform. With Credits being phased out by the end of the year, users will then add credit cards to their Facebook accounts and purchases will be automatically made in their own native currency.
“The changes announced on Tuesday are designed to encourage companies well beyond game developers to sell their wares on the Facebook platform itself,” wrote the NYT, referring to the switch from Credits to currency. But they also noted another change to Facebook’s payments method that “carries the additional benefit of potentially keeping Facebook users on the site longer and harnessing more data about what they buy.”
That’s because Facebook will now be allowing users to subscribe to services where they make monthly payments. Right now, users can only make one payment or purchase at a time. It’s another indication that Facebook is looking to grow as a payments platform and marketplace, where users buy ongoing services instead of one-time items.
Like the NYT, TechCrunch has high hopes that Facebook will one day be “a dominant player in the Payments space, similar to a PayPal [...] By the end of this year, once paid apps are added to Facebookâ€™s App Center, it wouldnâ€™t be surprising if 50 million people, or about five percent of Facebookâ€™s users are purchasing apps and other digital goods.”
Microsoft’s launches Surface Tablet, their answer to the iPad
Arguably the most anticipated event of the week, Microsoft’s media event in New York June 18 saw the unveiling of the company’s latest device, the Surface Tablet, Mashable reported.
The new Windows-powered device has Â a keyboard and trackpad built into the cover, a built-in “kickstand” to prop it up, a 10.6 inch screen, and is similar in size and weight to Apple’s iPad, with which it’s obviously designed to compete.
But, as the New York Times writes, Apple’s not the only company Microsoft will be competing with, now that the Surface Tablet has been unveiled:
“Microsoft executives, however, were largely mum on how Surface would affect the companyâ€™s relationships with PC makers, the hardware companies that are the vehicles for sales of Windows software. With its new tablet, Microsoft will effectively be competing directly with its biggest customers.”
CBS to launch Draw Something game show
When Zynga bought Draw Something maker OMGPop for around $200 million in March, questions abounded as to whether Zynga could ever monetize Draw Something to the point where the deal’s price seemed worth it.
There were a few suggestions being thrown around, like the possibility of deeper social integration, premium add-ons, and such. But few expected to see Draw Something taken in the direction we saw it turn this week.
According to Econsultancy, which cites a report in Variety, CBS has picked up a pilot for a Draw Something-based TV game show. Apparently, teams of celebrities and ordinary people “will test their skills in front of a studio audience to earn money and big laughs.” Audiences at home will be able to play along too, “for a chance to win prizes and compete with the celebrities.”
Though, as Econsultancy notes, internet success doesn’t always spell success on television, “the interest amongst the television networks in taking a punt on a popular game that didn’t even exist a year ago suggests that the internet-to-television trend is just getting started. That’s likely good news for gaming companies like Zynga.”
This week in marketing studies and reports:
In U.S., ebook sales better than hardcover for first time
A report from the Association of American Publishers, picked up by Mashable, found that, for the first time in the U.S., revenue from the sale of ebooks has exceeded that of hardcover book sales. In the first quarter of 2012, sales from ebooks brought inÂ $282.3 million, as compared theÂ $229.6 million gained from the sale of hardcover books in the same period.
Free ad-supported apps preferred by tablet users
AdAge reported on findings from the Online Publishers’ Association that show 54 percent of tablet owners would rather have free apps supported by ads than paid ones without ads. Only 19 percent said they would rather pay for apps without ads than get free ad-supported apps. That figure is down 30 percent since 2011.
Facebook mobile ads more effective than desktop ads
A study from some of Facebook’s largest ads API partners, reported on by TechCrunch, found the social network’s mobile ads to be much more effective than their desktop ads.
On mobile, Sponsored Stories were clicked on 13 times more and earned 11.2 times more per impression than Facebookâ€™s desktop ads.