What Facebook and P&G have in common?

Facebook’s Creative Labs seems to be busy — a new variation of its Paper app and latest Snapchat challenger, Slingshot are latest among the many experiments that world’s largest social platform tries to define its future. In the July/August 2014 issue, Fast Company magazine, talks about co-founder and CEO Mark Zuckerberg’s “Facebook everywhere” strategy. 

The article only reinforces my recent conclusion that the future of 10-year-old Facebook was similar to the strategy adopted by 175-year old Proctor and Gamble. I came to that conclusion, when I read Facebook CEO and co-founder Mark Zuckerberg describe his plans for the future in a recent interview with The New York Times.

Instead of waiting for upstart competitors to try and peel off some of its behaviors into standalone products, Zuckerberg wants to take hammer and tongs to his big blue app. Photos and messaging are core to Facebook but were getting buried in Facebook’s increasingly bulky and complicated mobile application.

Instagram and WhatsApp were simple and easy, and optimized to work on mobile with minimum fuss. In the end, those two companies ended up costing Facebook $20 billion (and change.) Snapchat is another one of those upstarts, that is worth billions of dollars and has turned down Facebook’s overtures. Facebook after failing with its Poke application, is taking a second run at Snapchat with Slingshot. 

The challenge Facebook has with all these upstarts is that they are all trying to steal attention away from the social giant. Facebook, in its current form is too complex, while on the mobile due to limited screen space, simple and nimble works well. The success of Facebook Messenger is a good reminder of that principle of singular focus.

In comparison, Facebook’s Paper has struggled because it essentially is not focused enough — it should be nothing but a mere reader for all stuff being shared on The social network. Instead of trying to be a pretty skin for all of Facebook, Paper should be taking their queues from Flipboard and build a proper Facebook-powered newspaper, with open web’s three common/wildly prevalent behaviors — like, share and comment. 

“What we’re doing with Creative Labs is basically unbundling the big blue app,” Zuckerberg told the New York Times. The Creative Labs is a team inside Facebook that is going to try and a launch a series – many dozens of different apps as Facebook tries to invent a future for itself in a highly mobile world. “You’ll see us exploring new areas that we felt we didn’t have the room to do before,” he told the Times.

Its not like Zuckerberg & Co. have much of a choice. Facebook, which in 2013 made 53 percent of its revenues from mobile, much of it from mobile-app installs. Once an app is installed, it is hard for the company to make more money from app developers. Instead, it now has to figure out ways to create ways to keep making money. Enter, mobile app deep linking (called App Links) where individual apps — say Uber – can put ads in the news feed that allows your to call an Uber right from within the mobile newsfeed, by automatically opening the Uber app by a simple click. Similarly, deep linking allows Facebook to shift attention to any of its own apps. 

To some his plan might look risky, but to me it makes perfect sense. In the past, companies that have owned the attention of consumers have been able to diversify into new verticals. For instance, Turner Broadcasting could leverage CNN into other TV networks. Yahoo did well to take the attention from its directory and search services to email, news and sports related products. Google went from search to Gmail and Android. Facebook is following this much treaded path — except for one difference — Facebook has a lot more users and is sitting on a bigger treasure trove of data, much of it behavioral data that can allow it to make smart guesses on where to focus its development efforts. 

P&G does business with 4.8 billion people around the world. Facebook counts 1.2 billion people as it’s customers and wants to eventually get to 5 billion people. The sheer size of their customer bases gives them what pretty much everyone craves — a lot of attention. P&G started with a handful of hit products, but it has since become pervasive in our households. We don’t even realize that many of them — Tide, Febreze, Crest, Mr. Clean, Oral-B and Crest all come from the Cincinnati, Ohio-based giant.

P&G spends roughly $2 billion a year on research but it spends a lot more money and effort on researching consumers, consumer behaviors and how they interact with the company’s products, both online, in their homes and in retail stores. It collects data, tests it with its customers and essentially uses the attention it has in the sales channels to create more space for itself on their shelves and in our pantries. 

Facebook’s making big money by offering app developers a chance to sell their apps inside its mobile app and in doing so, it is collecting data that can tell the company what is hot, what is interesting and what people are likely to buy. Facebook’s login/identity system gives the company an unprecedented understanding on how long people use an app in addition to data such as how many times people use an app and even what they do within the app. With its Parse mobile technology stack devoted to app developers and a new mobile advertising network, Facebook is collecting mountains of data around mobile behaviors and what that means is that it will not be caught napping next time around a Snapchat or Instagram starts to get popular. 

“It’s the data sources that help create the brand and keep it dynamic,” former P&G CEO Robert McDonald wrote in the November 2011 issue of McKinsey & Company’s magazine. “We need to come up with the ideas to innovate, and those innovations are always informed by data.” You could easily replace McDonald’s name with Zuckerberg and you wouldn’t spot the difference. 

P&G, which opened for business in 1837, is a company that has always been smart about technology. It has basically adopted the one and most important tenet of big data — use data to make smarter decisions, remain relevant and grow the footprint. Amazon has a similar approach. When big companies marry the attention they command with data they collect, they can start to find brand new opportunities. Facebook, too, is playing from the same playbook. Crazy, isn’t it!

A letter from Om

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