

Mark Cuban: Facebook Is Driving Away Brands - Starting With Mine - neya
http://readwrite.com/2012/11/13/mark-cuban-facebooks-sponsored-posts-are-driving-away-brands

======
glesica
Good riddance! What he and others are complaining about is that Facebook has
started to use pricing to stop them from spamming users. This is a good thing!

We're free-marketeers, right? Prices allow scarce resources (eyeballs, users
are the product, remember?) to be rationed in an efficient manner. Would he
prefer some nameless, faceless bureaucracy determine who gets to see his
messages?

This is a commons problem on some level. Very similar to the issue with push
notifications written about elsewhere. Too many companies used Facebook as a
way to get around email spam filters, and now everyone (good actors included)
is suffering.

Cry me a river.

~~~
arron61
If you are constantly getting spammed by a fan page that you explicitly
_liked_ or _followed_ , then the appropriate answer is to unlike or unfollow
it. There's no reason to curate information that you wanted to get to begin
with.

What if Twitter implemented something like this where certain tweets from a
person you are following do not appear? How would that feel?

This strikes me totally as a money play and not for the user.

~~~
TeMPOraL
> There's no reason to curate information that you wanted to get to begin
> with.

But are you sure users actually _wanted_ that information? I strongly believe
this assumption is false.

If I "like" something, I want to express that I _like_ it. I want my friends
to know it. It's not a "subscribe" button, it's a "like" button, and contrary
to what people in spam^H^H^H^Had business may believe, people actually attach
meaning to what is written. It's not a #:G4202 button, it's a "like" button.
If you call it "follow", you get a different meaning and different
expectations.

> What if Twitter implemented something like this where certain tweets from a
> person you are following do not appear? How would that feel?

Twitter is not Facebook. Twitter is about following people. Facebook is about
showing people (my friends) what I like (and not necessarily caring what it
has to say).

I, for one, welcome these new changes and want to repeat by GP: good riddance!

~~~
borlak
I think you've touched on the base problem of both sides of the argument --
it's a UX issue.

Facebook has given too much power to the 'like' button. There should be a
different 'follow' or 'subscribe' button. If you subscribe to a page, you
would expect to always get updates from it.

I only subscribed to facebook to be able to watch some dev videos. As I slowly
became more used to it, I wanted to know how to get updates from the company
page I work for. When I asked how to do this and was told to 'like' the
company, that made no sense to me. What if I don't actually "like" something,
but I still want to watch its activity?

~~~
arron61
Yes..this is exactly what I mean. If you don't want to be spammed from liking
something, then don't allow the brands to reach out to users who liked their
products. You can only do this with "follow."

By this definition, brands won't tell people to "like" their pages anymore,
they will just say "follow" them. FB blurred the links and now no one knows
what "like" or "follow" will do.

I can follow a brand and _still_ not get all the information from that brand.
This is ridiculous.

------
nsns
It seems there are two different "Facebooks" - one for people, a real "scoial'
network, the other for commercial entities and their customers. And this
unacknowledged duality seems to be slowly coming apart.

There might be a huge opening here for a "companies only" facebook clone,
where you can only get updates from your favorite brands and service
providers, not socialize with friends.

~~~
jonursenbach
"There might be a huge opening here for a "companies only" facebook clone,
where you can only get updates from your favorite brands and service
providers, not socialize with friends."

Isn't this just Twitter?

~~~
josefresco
No it's called LinkedIn.

And while valuable in it's own right has no where near the engagement numbers
of Facebook.

~~~
hoka
I don't think LinkedIn is good for this at all. I see things like earnings
press releases on LinkedIn, or "XYZ, Inc. invents new 2nm transistor that
won't be around for 300 years." on LinkedIn. LinkedIn presents itself as a
social network for professionals, and I think they cover that quite well.

Twitter doesn't quite fit nsns's description as a 'Companies Only' social
network, as much of it is social. I don't necessarily know that anyone would
willingly sign up for a companies only social network, despite what companies
may dream and pray for :-)

------
colmmacc
Without meaning to be unnecessarily negative; what I find most interesting
about this post is that neither the article, nor any comments in this thread
so far, even mention Google Plus. Cuban seems to write it off as a contender,
even a revived MySpace seems more likely to him as an alternative. Why?

~~~
josefresco
He's bluffing, and could have easily said Orkut or Pinterest.

~~~
hayksaakian
Good point, last I remember pintrest is more popular than MySpace.

------
pejoculant
Is it just me or does $3000 seem like a really cheap price for the Dallas
Mavericks to reach 1M+ fans? Would it make any significant difference to their
marketing budget if the price were cut to $1000 or doubled to $6000?

~~~
bluetidepro
I had the same thought.

Think of when you go to an NBA game and they give out some sort of "freebie".
I would imagine those game "freebies" cost much more than $3000, and
regardless of that, with Facebook you are potentially reaching the 1M+ fans
where as those game "freebies" might only be handed out to a measly 5K. It
seems like a no-brainer to use Facebook to reach 1M+ fans at that price, vs
what they traditionally pay for other forms of marketing.

Also, you could easily be selective on what sort of post validates for a $3K
(post) promotion. Not all posts are worth promoting to every one of your fans,
doing so would just weaken the brand image (in my eyes).

~~~
patrickk
The problem is that you got that reach before _for free_. It's the change
that's upset people. If Twitter started charging companies for tweeting there
would be a similar backlash.

People feel betrayed by a company desperate for new revenue.

~~~
bluetidepro
Yeah, very true. That makes much more sense why people are upset. However, I
still think they should just take a step back and just look at the cost of
more "traditional" alternatives that, what it seems like, are never even
questioned for their price to value ratio. An extreme example would be how the
Ford Explorer launch on Facebook generated more traffic than a Super Bowl ad
[1].

[1] [http://www.socialsyntax.net/2012/02/facebook-trumped-
super-b...](http://www.socialsyntax.net/2012/02/facebook-trumped-super-bowl-
ads-but-marketing-integration-is-the-key/)

------
josefresco
I don't get it. Facebook isn't working out so they are considering a change to
MySpace or Tumblr? How about changing your focus to oh I dunno ... your
website!? Moving from one free, closed-garden system to another isn't
progress.

~~~
ckluis
This - it's so dumb to cry about that. Build your brand on our website, your
own social network, & your own smart phone apps. They can push/pull/interact
with any other - but not building your own with that type of budget is
assinine.

------
mvkel
Know what drives away consumers, Mr. Cuban? Awkwardly obvious product
placement:
[http://www.youtube.com/watch?v=HEBtJqze0rE&t=8s](http://www.youtube.com/watch?v=HEBtJqze0rE&t=8s)

~~~
ckluis
My wife now watches Shark Tank with me and is becoming rather shrewd in
evaluating businesses. We both hate the product placements.

Speaking of business model that drives away customers. Did you know you give
up 5% of your business to appear on shark tank because of the exposure? With
or without the deal. That is why they do the follow-ups on companies that did
or did not accept a deal. It's good for the shows owners.

~~~
Evbn
Did you know that YC takes 7% of your business, whether or not you get funded
a demo day? Shark Tank may be a better deal. Or not. But it is ridiculous to
argue that based on the fee for a prime time infomercial.

~~~
mvkel
7%, seriously? I had no idea.

Why are people clamoring to get accepted by YC? I'd be doing everything I
could to make it a last resort, not a means to succeed.

~~~
pja
Well, apart having personal advice on tap from a range of experts, the fact
that on demo day your idea _will_ be in front of the best VC groups in SV,
access to YC alumni for help and advice, I can't imagine why people would give
up 7% of their nascent startup either!

(this is sarcasm btw.)

More seriously: you're giving up 6-7% of your company in return for a whole
swathe of things that are very likely to increase your chances of succeeding
significantly. Most people don't have ready access to the kind of personal
networks that YC offers: the combination of that access, plus the social proof
of having the YC imprinteur massively increases the likelihood of success for
many, many startups.

And I'm saying this as someone who's very unlikely to ever apply to YC, but
even I can see the benefits in applying, as do many others who choose to go to
YC even if they don't in fact need the money: the fringe benefits are worth
far, far more than the cash.

------
macspoofing
His vision of Facebook makes no sense. There is no chance in hell Facebook
will allow every "Liked" product, service and company to spam the users'
newsfeed as much as they want, considering the primary purpose of it is to
keep up to date with what friends and family are doing.

~~~
nollidge
> There is no chance in hell Facebook will allow every "Liked" product,
> service and company to spam the users' newsfeed as much as they want

Except that's exactly what they've done for years now. The real problem is
that Facebook didn't limit this _from the beginning_ , because now companies
are going to complain. I removed all my "likes" several years ago for that
reason.

Facebook likes to push out extreme changes and then walk them back to what
people actually want. This is the opposite of the right way to do it.

~~~
bduerst
That's usually how it works with commons - everybody can use it until someone
starts to screw it up.

Facebook originally allowed this because it enticed both user and content
engagement. Now, Facebook needs to reel it back in to preserve whatever value
is left of it's activity feed - _before_ it becomes the next useless myspace.

~~~
grey-area
What FB should have done is let users control what is in their feed - give
them options to define groups of people and let them view just certain groups
in the feed, or split the concepts of liking and following. Instead it seems
Facebook is happy to spam users for you if you'll pay for the privilege. Not
really good for anyone involved, and not worth it for businesses long term to
pay only to be perceived as unwanted spam amongst personal posts.

~~~
nollidge
Facebook does have groups. But yes, what Facebook did was a bait-and-switch:
there were likes, which were just biographical information, but then those
turned into subscriptions.

------
chaseadam17
With regard to online advertising - companies follow people, people don't
follow companies. Facebook gets this.

Let's play worst case scenario here - Cuban convinces all companies to leave
Facebook. Then what? Do you honestly think there would be a mass diaspora of
users because all the companies left? Hell no. Sure, Facebook's stock would
plummet, but they'd still have options, because as long as Facebook has users,
it has a future.

Now, let's reverse the scenario. All your friends leave Facebook. Then what?
You leave too and so do all the companies, because after all, Pepsi doesn't
hang out on Facebook to advertise to Coke. If the people leave, Facebook dies.

Facebook isn't a charity, nor a utopia, it's a company that is required by law
to maximize value for shareholders. Facebook is already a master of providing
value, they've built an empire by doing so. Now they have to learn how to
extract value, and it's very smart of them to begin by extracting value from
companies in a way that doesn't significantly impact user experience.

But this is just the beginning. Soon, Facebook will begin extracting value
from people in more obvious ways. And I'd bet the #1 question on Zuckerberg's
mind right now is, "How much shit will people take?" How many ads until
everyone leaves?

I don't know the answer to that, but judging by how much shit is forced down
the throat of an average American during a 30-minute episode of MTV cribs, I'd
bet we'll take a lot more than we realize.

------
jrwoodruff
This is kind of amusing, in a way. It always seemed weird to me that large
corporations were willing to invest so much in promoting Facebook - From CNN
promoting it on every commercial to big brands creating departments to manage
'Social Media' - e.g. Facebook and Twitter.

Did they all think this was free advertising, forever? FB is (at least now) a
publicly traded, 'walled garden' after all, and Twitter isn't much different.

Looks like the social media revenue model is becoming clear: All your customer
are belong to us, pay up.

~~~
radicaldreamer
Isn't the model always been clear: advertising?

You can run around in circles moaning about how it isn't "fair", but it isn't
the Mark Cuban who built the infrastructure or attracted the users with a core
product on Facebook. Secondly, Facebook never guaranteed 100% reach, I'm not
sure why Mark Cuban expects it (and for free!).

~~~
ebiester
To be fair, he asked in his post for cost certainty, not "free."

Now, honestly, what _I_ want as a user _and_ as an advertiser is the ability
for the user to turn up and down the volume of another entity, be it a person
or brand. I may want medium on George Takei, high on King's X and low on
Hormel's Spam (yes, I like Spam.) Do you think it'd be valuable to send things
to different demographics as a brand? I know I think so, especially if I can
get some cost certainty.

The problem is that the amount of likes and the value of the brand are
unrelated. Takei is not going to pay as much as Quizno's, even if he has three
times the fans.

~~~
radicaldreamer
If I recall correctly, I think Facebook used to allow you to fine tune who you
saw on your news feed. Not sure if it's still buried somewhere, gone, or what
the uptake on this feature was.

------
jivatmanx
Mark Cuban is a primary investor in the patent troll Vringo. Why are we
pretending he's some kind of tech trendsetter?

~~~
s_henry_paulson
He's not pretending to be a tech trendsetter, he's being an investor, and
hedging his bets, as all good investors do

 _This is a hedge against the unlimited patent exposure all the companies I
have investments in face. Patent risk is impossible to quantify. It's
unrealistic for most small to medium businesses to have any clue which patents
they are at risk over. Vringo's IP from the merger is the flip side of that
risk and offers an imperfect hedge. So, I made the investment._

[http://www.forbes.com/sites/ericsavitz/2012/04/17/cuban-
says...](http://www.forbes.com/sites/ericsavitz/2012/04/17/cuban-says-vringo-
stake-hedges-patent-risk-in-other-investments/2/)

------
joeblau
> "The big negative for Facebook is that we will no longer push for likes or
> subscribers because we can't reach them all. Why would we invest in
> extending our Facebook audience size if we have to pay to reach them? That's
> crazy.

I think this mindset is the poisons venom in Facebook's revenue strategy.
Facebook is seen as just a social network and not a legitimate communication
or advertising platform like TV, radio, or mobile phones. Cuban has no problem
paying for Ad's on Radio and TV, but is appalled when Facebook charges for a
similar (And arguably more accurate) service. Facebook's response also makes
little logical sense--On one hand they say the fees are to fight spam, but the
screen clearly shows that the fees are to communicate with more people.

~~~
jbail
TV/Radio/Google Adwords/etc is drastically different from FB's advertising
model.

The key point, as Cuban says in this article, is that companies spend real
resources in trying to acquire "Likes" on FB. People build entire FB tabs.
Curate what content gets posted. Build deep integrations on their websites.
I've built a lot of this type of FB integration for clients...and I charge a
lot, so I know this isn't cheap.

People do this with the expectation that they can reach the people who like
their brand. When FB changes the game, it breaks this assumption and makes it
doubly expensive to curate and communicate with your FB following. This is
pretty much the gist what Cuban is arguing in the article.

On TV/Radio/Google Adwords/etc, there isn't a first step where a brand spends
a lot of time and money sending users to said 3rd party advertising platform.
You don't first spend development resources on integrating with the radio
station's website, ultimately advertising their website for free and sending
them tons of free traffic. You just give the radio or TV station your money,
they play your ad, and that's it. That is the extent of your advertising
investment. It's very concrete and simple to implement.

This is not the extent of the investments people have made in building up FB
pages and followers. Brands have spent and continue to spend a ton of time and
money on this and like Cuban, they are justified in being ticked off when FB
changes the rules in an effort to squeeze revenue from them.

I have no doubt that money is the reason behind charging to communicate with
your followers on FB. The altruistic motives like "fighting spam" would best
be done with an algorithm. It surely wouldn't be something you could "opt out
of" just by having a fat wallet. By FB allowing brands to pay them to spam
people just means FB is fine with spam as long as they get paid. That doesn't
seem like a stance that has the well being on their users foremost in mind.

------
loceng
It makes sense for him to want to leave considering Facebook is really just
providing a newsletter service, and it was the marketing that the companies
have done to drive them to their Facebook pages. It should be a mutually
beneficial relationship, not one where Facebook is trying to milk both
companies and consumers. The problem is they aren't making 'enough' off of
consumers, and therefore are trying to go after companies too. It's chicken
and egg problem, and now that Facebook has 'everyone' on it they are trying to
milk it. Yes, there is value of guaranteeing that X number of followers will
see a post in their feed - which true fans would want to see anyway (and based
on algorithms likely would or would be an active visitor to their Facebook
page), however Facebook is trying to prove their $100 billion valuation by
essentially trying to extort companies, whereas it should be a slightly above
cost of reaching (as the minimum). Facebook is trying to charge Advertising
prices for something that is at its foundation a service being provided;
Facebook has no monopoly on containing fans. If Facebook doesn't change this
quickly it has no chance of ever becoming a $100 billion company, because by
that time Facebook won't be freely marketed by big companies linking to their
'Facebook pages.' Facebook's abusing the relationship, and like anyone in an
abusive relationship - it won't end well for the abuser, they won't get what
they want. - at least not once more people realize it's abuse and they don't
need to be in that relationship.

~~~
eliza1wright
Agreed. It sounds whiny coming from Cuban, but imagine you're a small business
owner who relies on your Facebook page to communicate with your fans. You put
a lot of time and money into gaining those fans organically, and now Facebook
is essentially holding them hostage. What was that little blurb that Facebook
used to have on their sign-on page? "It's free and it always will be." Hmmm.
Don't promise a free service and then reneg. Perhaps businesses wouldn't have
been so eager to get on Facebook if they knew that access to their fans would
come at a steep price.

------
neutronicus
One could interpret this as Facebook being a "victim" of their own success -
they have so much demand for advertising that they have to limit access to
their userbase in order to ensure that the advertising retains its value.
Perhaps, as Cuban says, uninformed business owners think they're paying for
something other than what they're getting and demand will dry up once
advertisers get wise. Or perhaps Facebook's conversion rate is just that good.

~~~
executive
More like so little demand for advertising.

FB has a massive supply of impressions which has bottomed-out remnant/auction
CPM rates industry wide.

I see this as a move to try and introduce a (somewhat) premium ad product.
Users have already indicated interest in the brand -- now they will have to
pay to reach these intenders.

------
parka
Here's another way to look at this.

When I subscribe to a page, I expect to get updates on new postings.

Because Facebook is using their EdgeRank to filter out those postings, I'm no
longer get updates on all the postings. As such I've to go to the subscribed
page manually.

No wonder I'm getting so few updates lately. Because Facebook is filtering out
everything. How backwards is that?

~~~
TeMPOraL
Go to your profile, find the list of things you like.

<https://www.facebook.com/[user> ID or name]/favorites

Tell me, do you want to receive updates on all of 0.5k things you liked?
Because if each of them writes even one post a week, you can forget about ever
reading things from your family and friends. And the latter is what Facebook
was designed for.

------
dlapiduz
Why do brands keep pushing traffic to the Facebook/Twitter pages instead of
their own pages? They should create dynamic interesting content on their main
pages and use social media to push traffic towards it instead of using social
media as a goal.

Ownership of your following is really important and at the end of the day the
only way to do that is to have a proper standalone website.

~~~
cpeterso
Why do people rob banks? Because that's where the money is. Facebook and
Twitter are where the people are.

------
jasonkolb
He has a great point. It takes resources to build up an audience anywhere, and
then the assumption is generally that once you have that audience you've
gained the right to speak to it. Facebook expects you to pay to build your
audience (via ads) and then again to speak to it (via "reach"). This makes it
a pretty bad idea to spend resources on building an audience there.

Will Twitter do something like this? I don't think so. But it's also a
crapshoot whether your tweet will actually be seen or too far down your tweet
stream for someone to actually see it. I still believe that email marketing is
The. Best. place to build an audience because you have permission to send a
message to someone that is almost guaranteed to at least have its headline
read.

Of course the rules of the road apply wherever you build an audience, meaning
you can't spam or abuse the privilege to talk to them. But all things being
equal, owning the channel has some HUGE advantages.

~~~
matznerd
The power of owning the channel is a huge advantage, I wish more people
understood. Email marketing used to be the best, but email read rates are
usually less than 20% and it's over a few days. There is a better medium to
build an audience that guarantees they get read...And definitely agree about
not spamming or abusing the privilege.

~~~
jasonkolb
Ok, now I'm curious... which medium/channel are you talking about?

------
antonioevans
As with all new ad platforms you have to test the ROI. Apparently in his
businesses he didn't see the benefit and did what all good marketers would do,
pull your inventory. As Facebook tweaks it's EdgeRank Algo I am sure they will
figure out how to get the most "bang for the buck". If not their stock price
will continue it's slide.

------
bmac27
I don't know the FB advertising system inside & out either but like Cuban, I'm
miffed by this. The implication here is that companies essentially don't own
their own "likes." What value do they have outside of being a vanity metric if
you can't reach them aside from coughing up thousands of extra dollars?

~~~
glesica
They _don't_ own their "Likes"! Has that ever, even for one single moment,
really been in doubt? Facebook owns the platform. You play in their sandbox,
you follow their rules. They own _all_ the toys.

Look at Twitter locking down their API or Apple inconsistently enforcing
arcane app store rules. When someone else owns the platform, they
_effectively_ own anything you create with it.

~~~
tjculbertson
You nailed it. Lots of great arguments for both sides, but FB owns the
platform and all the toys. All big brands know the risks of making big bets to
sell stuff in another guy's yard. In a free market FB can move the goalposts
all they want,but the reach is still worth the risk until the cost of doing
business with them makes the roi equal to or less than other big reach
platforms.

------
mamoswined
Why not use all social networking avenues? I use Instragram, Tumblr, and
Twitter alongside Facebook, but even without paying anything on Facebook, I
get views and interaction from users that I wouldn't get if I said "fuck it"
about Facebook.

~~~
RobAtticus
My impression from the article is that's what he's doing. He's still going to
use FB, just de-emphasize it as the main source for fans to follow the Mavs.

~~~
mamoswined
I feel like totally different people use Twitter compared to FB, with some
intersection. I x-post everything.

------
orangethirty
He makes fair points. Though the one thing that really grinds my gears about
Facebook (and I will state it so that Facebookers can consider the issue) is
that I cannot use their Open Graph API to build FB apps without being an
active member of the network. Being an active FB member requires me to give
them my mobile number, an spend a questionable amount of time using it. Time
better spent _working_. I wish I could just pay them a developers fee
($50/year ? ), and have my own little dev account with no other feature other
than being able to use the API.

~~~
TeMPOraL
But what kind of apps do you want to make on Facebook if you don't _use_
Facebook yourself? How do you plan to test it, or even make sure if it fits
the ecosystem?

~~~
orangethirty
The developer account should allow me to test for that.

------
arbuge
If anything the situation is worse than he makes it out to be because apart
from Edgerank factors there's also the ease with which fans can permanently
hide the visibility of page posts. All it takes is disapproval of one post,
followed by a single unsubscribe.

No easy way around this maybe, since fans have to be able to easily
unsubscribe, but it's another big reason why collecting a ton of likes for
your Facebook page may be largely wasted energy.

~~~
TeMPOraL
How about not posting shit as a way to prevent people from unliking? I see
more and more companies posting things without any value just to make sure
their logo pops up regularly on user's news feed.

~~~
arbuge
I think that misses my point. I'm all for easy hiding of page posts for fans,
but the honest thing for FB to do is call a spade a spade and remove the Like
when that happens. As things stand the page still thinks they have a fan when
they don't - it's not a good reflection of reality.

------
hkmurakami
_> "I haven't bought and I wouldn't buy here. I think they have to determine
what their business is right now and how they will make money at it. I don't
believe they are clear about either."_

Odd. I distinctly remember Cuban saying how he bought FB stock as a trade, and
exited the position at a loss when he saw that the initial rally wasn't going
to materialize.

~~~
mikeryan
He did, I think the key word in that thread is the "here".

A lot of analysts like Facebook at the $18-$20 price point, something
reflected in the stocks relative stability since August.

He did buy into the IPO expecting a quick bump which didn't materialize. And
he doesn't blame Facebook for it.

[http://blogmaverick.com/2012/09/04/facebook-handled-their-
ip...](http://blogmaverick.com/2012/09/04/facebook-handled-their-ipo-exactly-
right/)

------
grimey27
He's not doing anything other businesses haven't considered. I'm sure he'll go
back.

------
drivingmenuts
FB is probably the last social network I'll ever use. If it goes, I'm back to
email plus a whitelist and updating my webpage once every two years or so.

------
BlackNapoleon
How does Cuban make money these days?

------
Evbn
Maybe when the "brands" are gone, Facebook will stop driving away users.

------
jacquesm
Easy fix: change the text on the like button to 'spam me and my friends'.

