Mark Cuban: Facebook Is Driving Away Brands — Starting With Mine

concealment sends this quote from an article at ReadWriteWeb: "Tech billionaire and Dallas Mavericks owner Mark Cuban says he is fed up with Facebook and will take his business elsewhere. He's sick of getting hit with huge fees to send messages to his team's fans and followers. Two weeks ago Cuban tweeted out a screen grab of an offer he'd received from Facebook. The social network wanted to charge him $3,000 to reach 1 million people. Along with the screen grab, Cuban wrote, 'FB is blowing it? This is the first step. The Mavs are considering moving to Tumblr or to new MySpace as primary site.'"

Comments

That is cheap

[Billly Gates]

And effective too with marketing. $3,000 might seem expensive for us but if you have million fans and make hundreds of millions then the fee is a drop in the bucket that will generate far more revenue than spamming people for tickets and events.

Re:That is cheap

[jellomizer]

Compared to most other forms of Mass Marketing this is a rather fair deal.
Say you get 1% to respond of one million that is 10,000. If your product has $0.30 in profit then you break even. But who has $0.30 in profit, For a cheap product you usually get at least a few bucks out of it. So you pay for you Marking Cost. You could try the competitors and you may get a smaller rate, however you will not reach as many people.

Re:That is cheap

[fuzzyfuzzyfungus]

While I have no pity for Mr. Cuban(Oh, sure, facebook is just going to suck up the hosting bills for your web page and messaging system forever, for free...), this may well signal that Facebook has an actual problem...

If somebody who is, and has, actually run businesses and made money, and so forth, and is facebooking for commercial purposes is willing to throw a little tantrum in public about the price, this suggests that they don't think that facebook is worth what it is charging(or they do; but are willing to piss off a valuable communications channel over $3k). That would be bad for facebook. If you are an advertising vendor(which they are attempting to be, in this case) and a potential account laughs in your face, walks out, and then publishes an open letter mocking your offer as insultingly expensive, that isn't a good sign.

People whining about having to pay for things is largely irrelevant. People who are accustomed to paying for things refusing to pay for your product? That should make you nervous. Facebook has proven that people will flock to them at the $0 price point; but they have yet to do much testing of the demand curve at higher costs. If it turns out to be extremely elastic...

Re:That is cheap

[Billly Gates]

Well if companies stop using them then FB will respond by lowering their prices. That is capitalism 101. Advertising and marketing aint cheap.

I do respect Mr. Cuban. I watch him on sharktank and out of all the clueless MBA morons, he knows his stuff and is intelligent and very hard working to make sure his clients are happy and performing well.

It is true I read Ford was paying $1 million for advertising on FB with full page ads. That is crazy, but if you think about it more eyeballs look at FB than TV without DVRs in 2012. If that $3000 per tweets for a game represents just a 10% increase in sales that can pay for itself easily!

If Cuban does not think that is fair he can fund another FB startup.

Re:That is cheap

[rtfa-troll]

Compared to most other forms of Mass Marketing this is a rather fair deal.

Right; but it shouldn't be compared to "other forms of Mass Marketing" for several reasons.

• because this was a free service, which was marketed as a free service and then changed
• because in this case we are talking about people who voluntarily chose to connect to a company to get all it's messages
• because this direct connectivity as in Google+, Facebook and so on is something completely new and different from tradional messaging

The first; that this is a bait and switch operation, is for me the most important. However even though I feel some sympathy for these people, they fundamentally brought it on themselves and this is a situation where it's the people's responsibility to do something different next time. Never lock yourself in to a computing product controlled by one vendor without a written guarantee of indefinite access to good terms written by a lawyer you can trust. This is something most people knew in the pre-Windows era.

Compare the diference between what happened when the Gnome Foundation went rogue with the same situation from Microsoft. Gnome replaced Gnome 2 with a completely different Gnome 3 interface which doesn't fit old users needs. Microsoft is replacing Windows with Metro + a backwards compatibility interface which also doesn't fit user's needs. Because the Gnome users have the source code and multiple suppliers, XFCE, Cinnamon and Unity have sprung up as interfaces designed to cater to the needs of users that Gnome 3 doesn't fit for. By the time people are forced to switch they will have a choice which is right for them. Microsoft is going to force people who are locked into Windows to accept whatever Microsoft wants them to accept. Only those people that can switch to OS/X or Linux will be able to escape.

To achieve the same in social networking, even people who use Facebook need to concentrate on using other solutions wherever they can provide equivalent functionality. Otherwise we all end up locked in.

Re:That is cheap

[Nikker]

You may not be taking into account that each company will send at least one posting a day but most of them are just basic updates to keep the company name fresh in their heads. If (in this example) you have 1M followers and you send just one update per day $3000x30 = $90,000/month or $1,095,000 a year just to send one message a day to people who have already shown interest in what ever you happen to be babbling about. So compare this to Twitter where I can send verbal diarrhea all day long for next to nothing and we now have a supply/demand curve. So while overall you're spending roughly $1/follower/year(for only one post/day) when you compare it to twitter you start to see that you can engage your fan base (not necessarily your customer base) in a much more responsive manner. You can try out different tactics and see what fits. If you blab too much people will stop listening (not following) you, if you get it right you will attract more attention and followers.

So as the rhetoric goes the market will work its self out as we see today with Cubans $0.02.

Re:That is cheap

[TheRaven64]

These are people who have already opted in to receive messages from you. A fair comparison is people who have subscribed to your mailing list, RSS feed, or whatever. If it's costing you three cents per subscriber to your mailing list, then you're probably doing something wrong.

Re:That is cheap

[jvkjvk]

So, if you could point me to the contract you signed with Facebook promising you a free service I would appreciate it.

Otherwise, I fail to understand why you believe Facebook promised you anything.

They built something and let you use it. Is that what you refer to as a "promise"?

Re:That is cheap

[JaredOfEuropa]

Really? I am not overly impressed with the quality of messages I get from the people who are paying for the privilege, on any medium or platform. That sort of content is called "advertising", and it sucks anytime.

It's not bad that FB wants to charge a wealthy commercial party to reach millions of customers, but it is bad that they broke the notification system itself in the process... Nonprofits or even people who happen to have a lot of followers also have to pay up, or their posts won't reach all of their followers. And if you follow someone, you might not get to see all of their updatess either unless they pay up.

Re:That is cheap

[TheRedSeven]

Yes and No.

If you (as an individual personal-account user) want to get any message out on FB to 100% of the people who follow you, you now have to pay for it. If you do not promote a post, it will reach approximately 15-20% of your friends who have you set to the default (How many updates? "Most Updates"; What types of Updates? "all are checked"), and about 50-75% of your friends who have you set to the max (How many updates? "all updates").

If you are a business page or other 'professional' account, any non-promoted post will reach 15-20% of your followers/likers/subscribers. Only if you PAY to PROMOTE your post will it reach the News Feed of 100% of your followers.

This from a friend who does a TON of work with Facebook's API and has made several requests for documentation directly from the powers-that-be at Facebook. So my source is secondhand, but he's getting it direct from the horse's mouth and I trust him--especially because this change is directly harmful to his business and he's pissed about it.

Re:That is cheap

[TheRedSeven]

Facebook users can post and their posts will get to everyone who has not muted them

False. Facebook filters individual pages too. If you make a post, only about 15-20% of your friends will see it on their News Feed if they have their settings for you set at the default (How many updates? "Most Updates"). For friends that have you set to the most visible setting ("All Updates"), you will still only reach about 50-75% of those people.

Now, FB tends to be pretty good about knowing which 50-75% of your friends are most likely to notice that they're missing your posts (the people who are labeled as 'family', those who most often show up in photos with you, and those who are all more active are MUCH more likely to find themselves in the % that SEE your post). But they are NOT transparently passing your message along to all of your friends. And you are not necessarily seeing 100% of the posts that your friends make, even if you have your settings made for "All Updates" for a specific friend.

Re:That is cheap

[vux984]

Everyone capable of having a reasoned thought process around the subject will come to realize that the cost is pretty reasonable

This Facebook fan page shit is basically just RSS. You know what it costs to serve an RSS feed update? Next to nothing.

The trick is to get a million people to sign up to the RSS feed.

And that is sort of the 'bait and switch' situation. Facebook had what are essentially 'facebook-RSS' feeds, that other facebook users could 'subscribe to'. And it was free.

So companies spent millions of hours and dollars promoting the shit out of them to get a million subscribers... and then they have the carpet yanked out from under them -- now the feeds cost thousands to update -- at least if you want any sort of reliability that users will get the update.

They'd have perhaps been better off spending all that effort promoting actual RSS feeds all along, and then when they'd accumulated a million users facebook wouldn't be able to step in and insert a toll booth.

Too bad they got all caught up in the facebook hype. To paraphrase you 'anyone capable of having a reasoned thought process around the subject will come to realize that building a business venture on top of a social network platform gives away power to the social network platform, and really... all they REALLY provide is a cheesy proprietary hosted CMS.

Or ... in other words... jack squat.

The actual news here...

[InvisibleClergy]

...is that Facebook is actually having to deal with the consequences of their shady shenanigans!

But

[Anonymous Coward]

He has no quarems with his $60 million private plane that generates no ROI. But $3,000 that generates more revenue?! Outrageous!

Re:But

[TubeSteak]

He has no quarems with his $60 million private plane that generates no ROI.

A private plane doesn't have to generate revenue.
Commercial or private, air travel costs time and money.
If you can reduce travel time and turn it into working time, that can be enough to tip the cost:benefit ratio in favor of a private plane. /.ers make the exact same argument about IT every day:
It costs money, but it makes everyone more efficient, which generates revenue, which justifies the expense of IT.

Why do companies use FaceBook anyway?

[magic maverick]

I don't understand why companies and individuals with a "brand" are so willing to put that brand behind Facebook's. E.g. webcomic artists who say, "see this Facebook exclusive comic", or companies that have Facebook exclusive deals. They should be using Facebook to drive people towards their primary site, not use their primary site to drive people towards a third party who doesn't really care about them, and that may disappear within the year (or whenever a new website comes up).

So all these brands that are on Facebook and not pushing people off Facebook are doing it wrong.

I think he's confused

[Anonymous Coward]

I think he's confused over the dynamics at work here. The fans aren't on Facebook because the Mavericks are there, the Mavericks are there because that's where the fans are. Moving to another service isn't really an option.

Any expense is against the point

[orthancstone]

The "why not" is simple: Because they aren't posting this information as advertising. They are trying to keep their users informed (you know, users who actively sought out such information by "Like"ing the Mavs FB page in the first place) and FB is trying to force them to pay for reaching all of those folks that wanted the information. If they don't pay, only a small percentage will see the post by default (while the rest will just have to navigate to the FB page in question) despite the fact that all of the users wanted to see it.

Re:Congratulations, Mr. Cuban!

[jhoegl]

Wait wait wait... so you are telling me it costs money to run a business?
Bastards!

Funny thing is, this costs less than emailing 1 million people.