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

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

Posted by Soulskill on Tuesday November 13, 2012 @07:53AM from the monetizing-your-eyeballs dept.

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.'"

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Congratulations, Mr. Cuban! by game+kid · 2012-11-13 07:58 · Score: 4, Funny

Congratulations, Mr. Cuban! Facebook now considers you not just a product, but an actual user/venture-capital source!

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1. Re:Congratulations, Mr. Cuban! by jhoegl · 2012-11-13 09:24 · Score: 3, Insightful
  
  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.
That is cheap by Billly+Gates · 2012-11-13 07:58 · Score: 5, Insightful

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.

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http://saveie6.com/
1. Re:That is cheap by jellomizer · 2012-11-13 08:10 · Score: 3, Insightful
  
  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.
  
  --
  If something is so important that you feel the need to post it on the internet... It probably isn't that important.
2. Re:That is cheap by Hatta · 2012-11-13 08:11 · Score: 4, Interesting
  
  .3 cents per person is really pretty cheap. Somehow telemarketers stay in business, and they're paying someone $8/hr to make what 20 calls an hour? If it's not worth .3 cents per person to contact them, you probably have no actual business contacting them at all.
  
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3. Re:That is cheap by fuzzyfuzzyfungus · 2012-11-13 08:13 · Score: 5, Insightful
  
  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...
4. Re:That is cheap by scottbomb · 2012-11-13 08:14 · Score: 5, Funny
  
  This is true. I've worked in advertising and $3000 ain't bad. Sounds like a temper-tantrum to me.
  "The Mavs are considering moving to Tumblr or to new MySpace as primary site."
  That's like going from primetime TV to midnight re-runs.
5. Re:That is cheap by Billly+Gates · 2012-11-13 08:20 · Score: 5, Insightful
  
  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.
  
  --
  http://saveie6.com/
6. Re:That is cheap by rtfa-troll · 2012-11-13 08:32 · Score: 5, Insightful
  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.
  --
  =~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
7. Re:That is cheap by Nikker · 2012-11-13 08:46 · Score: 5, Insightful
  
  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.
  
  --
  A loop, by its nature, continues. If that didn't make sense, start reading this sentence again.
8. Re:That is cheap by HarrySquatter · 2012-11-13 09:05 · Score: 3, Informative
  
  The first; that this is a bait and switch operation,
  No it's not. A bait-and-switch is advertising a product for some price and then when a customer comes you tell them the product is not available and you attempt to sell them something else. Changing a free service to being partially paid-for is not a bait-and-switch.
9. Re:That is cheap by Enderandrew · 2012-11-13 09:15 · Score: 5, Interesting
  
  This is precisely a bait and switch. You promise a free service, refuse to offer the free service and then demand money for the exact same functionality that was promised for free.
  Combine this with recent accusations that Facebook's feeds have been broken on purpose as of late to necessitate promoting posts, and accusations of click-fraud eating up paid advertising and you have to wonder if Facebook is beginning to shoot themselves in the foot. They have tons of users, but they don't seem to know how to monetize that well.
  http://memeburn.com/2012/11/is-facebook-really-broken-on-purpose/
  http://www.businessinsider.com/facebook-accused-of-click-fraud-by-advertiser-2012-7
  
  --
  http://blindscribblings.com - Tasty pop-culture in conceptual fashion.
10. Re:That is cheap by _xeno_ · 2012-11-13 09:26 · Score: 5, Interesting
  
  .3 cents per person is really pretty cheap.
  Is it? If you read the actual article, Cuban's complaints seem to be that there are extra costs not included in that figure. Part of his problem is that they had to advertise for Facebook to drive people to their Facebook page in the first place. So there's already money invested which should be taken into consideration as part of the "cost per person."
  He also points out that since it's variable and on a per-post basis, it's basically impossible for them to plan ahead - they can't say "OK, we're dedicating $100,000 this year to our Facebook budget" and then choose when and what to post based on that, as the price per post can change. He also seems to suggest that this actually increases the costs, as it adds a new layer of accounting for every post.
  I find that second argument to be the most persuasive. If the cost per post really does change and budgeting really is impossible, then yes, that's definitely a problem and one that Facebook should fix. He seems to be OK with the idea of paying Facebook, but he wants the costs to be known ahead of time and paid up front, rather than on a per-post basis.
  Cuban also appears to be betting that, since they have to advertise to get people to the Facebook page in the first place, he can advertise their Twitter feed and get people to follow that, instead. That way their upfront costs would remain the same, but they wouldn't have extra unexpected and unknowable costs in the future. I'm not sure I entirely believe this, but if he's right and it's their advertising that's driving people to their Facebook page and not Facebook as a platform itself, then why should he pay Facebook extra for the privilege of needing to advertise for them in the first place?
  Of course, I suppose we'll only find out if he's right in a year or two, after he tries out moving to other platforms. I'm not so sure he is, but then again, I never "liked" any businesses on Facebook in the first place.
  
  --
  You are in a maze of twisty little relative jumps, all alike.
11. Re:That is cheap by TheRaven64 · 2012-11-13 09:27 · Score: 4, Insightful
  
  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.
  
  --
  I am TheRaven on Soylent News
12. Re:That is cheap by jvkjvk · 2012-11-13 09:38 · Score: 5, Insightful
  
  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"?
13. Re:That is cheap by Anonymous Coward · 2012-11-13 09:57 · Score: 4, Informative
  
  No contract is involved (just terms of use), but Facebook has indeed made the promise that its service "is free and always will be."
  http://abcnews.go.com/blogs/technology/2011/09/facebook-will-always-be-free-company-says/
14. Re:That is cheap by JaredOfEuropa · 2012-11-13 10:56 · Score: 3, Insightful
  
  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.
  
  --
  If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
15. Re:That is cheap by Dahamma · 2012-11-13 11:27 · Score: 3
  
  Except it wasn't a product, it was just a random post to the Mavericks page. Facebook basically wanted to charge him $3000 to bypass their "spam filter" so it went to the top of everyone's news feed.
  They claim they "It's Not A Shakedown - We're Trying To Fight Spam" but SPAM is unsolicited junk email. When you specifically choose to follow a page you are signing up for whatever posts they make to the page. And what's even worse is Facebook provides a way for someone to choose what types of posts they see in this case, *unless* Facebook gets paid in which case they are explicitly encouraging the spam...
  But hey, it's their service and it's free and ad supported. They have a right to do things like this to make money, and if you don't like it the appropriate response is to stop using the service, as Cuban has done. That and bitch about their hypocrisy and apparent redefinition of "spam", which is more satisfying but usually less productive (unless you are a billionaire who influences purchasing decisions for dozens of companies... in which case bitching is both satisfying AND productive!)
16. Re:That is cheap by byjove · 2012-11-13 11:30 · Score: 5, Informative
  
  Do you really reach all 1,800 fans with your post? Have you looked at your actual reach counts? We have dozens of FB pages here with millions of followers. At the beginning of this year, our posts reached an average of 24% of our followers. After F8, it dropped to 16%. As of last month, our posts reach 4% of our audience. All due to the way Facebook has changed their EdgeRank algorithm. If we want our posts to reach more of our audience, we have to pay.
17. Re:That is cheap by TheRedSeven · 2012-11-13 12:28 · Score: 5, Insightful
  
  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.
18. Re:That is cheap by TheRedSeven · 2012-11-13 12:33 · Score: 3, Insightful
  
  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.
19. Re:That is cheap by vux984 · 2012-11-13 12:57 · Score: 4, Insightful
  
  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.
20. Re:That is cheap by vux984 · 2012-11-13 13:50 · Score: 3, Interesting
  
  All he has to do is convince a million of his fans to leave Facebook and setup their own pod.
  Pretty much.
  Technically speaking, you are right, they just provide RSS feeds. A billion or so of them, filtered and correlated and available 24x7. With unlimited photo storage, the ability to update the feeds from a smartphone in an app so easy to use that everyone from a 2 year old kid to an 80+ year old grand parent can use.
  The problem isn't SAAS per se, its the lock in to the facebook platform. If I shell out for a hosted Joomla or Drupal or whatever flavor of the day CMS you like... Diaspora even. That can be outsourced SAAS, and I could have 5 9's uptime and effectively unlimited photo storage, and enough bandwidth to serve millions for pretty close to chump change.
  But I'd be in shock if the host one day decided to charge me $3000 to post an update to the site's RSS feed. ... The thing is, such a think already exists. www.nba.com Obviously that site did not have the market penetration that the Mavericks needed. If it did, they would have been better off convincing people to visit www.nba.com/mavericks, instead of Liking a FB page.
  Exactly, this BLEW my mind, when I started seeing major enterprises who ALREADY had web functional presences sending their users off to facebook/what-am-i-thinking
  They should have had the spigot turned the other way, let users find them on facebook, like the on facebook, whatever, but have all that as a launchpad to www.my-own-bloody-site.com.
  Facebook owns the market segment called Facebook.
  And this is only valuable because enterprises fell over themselves to get onto it. They handed over the power to connect with users to be cool, or something.
  Half the people I know with facebook accounts only created them precisely to enter a contest, or leave a comment, or some other nonsense on a site that should have hosted it themselves.
  As an enterprise, you absolutely want to be able to connect with facebook users, and go after that segment, but the last thing you should be doing is driving users into facebook, and becoming dependent on it.
  That is simply too stupid for words; and yet its exactly where a lot of companies are right now.
The actual news here... by InvisibleClergy · 2012-11-13 08:01 · Score: 4, Insightful

...is that Facebook is actually having to deal with the consequences of their shady shenanigans!
Cuban is bluffing... by Anonymous Coward · 2012-11-13 08:01 · Score: 4, Interesting

Seriously, MySpace?!
1. Re:Cuban is bluffing... by fuzzyfuzzyfungus · 2012-11-13 08:03 · Score: 5, Funny
  
  Seriously, MySpace?!
  Dude, MySpace offered him a gigabyte of complementary bling .gifs for his page. That much ice is worth, like, ten zillion internet dollars.
Not a bad deal by Anonymous Coward · 2012-11-13 08:01 · Score: 3, Interesting

1,000,000 users / $3000 = $0.003 per user
Low low price! by zill · 2012-11-13 08:02 · Score: 5, Funny

MySpace will charge you $3,000 to reach all 10 people who are still using MySpace.
1. Re:Low low price! by fuzzyfuzzyfungus · 2012-11-13 08:14 · Score: 4, Funny
  
  MySpace will charge you $3,000 to reach all 10 people who are still using MySpace.
  Why pay that when I could just purchase a controlling interest in Myspace by digging between my couch cushions?
But by Anonymous Coward · 2012-11-13 08:04 · Score: 3, Insightful

He has no quarems with his $60 million private plane that generates no ROI. But $3,000 that generates more revenue?! Outrageous!
1. Re:But by TubeSteak · 2012-11-13 09:02 · Score: 3, Insightful
  
  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.
  
  --
  [Fuck Beta]
  o0t!
MySpace? by hduff · 2012-11-13 08:07 · Score: 4, Funny

So the Mavs will be offering nude player pics and I-Pod playlists?

--
"I believe in Karma. That means I can do bad things to people all day long and I assume they deserve it." : Dogbert
"FB Trying To Fight Spam"... yeah, sure. by c0lo · 2012-11-13 08:07 · Score: 4, Interesting

From TFA

Facebook constantly tinkers with EdgeRank to make it more effective, says product manager Will Cathcart. The algorithm change in September was a bigger change than usual, Cathcart says, but its goal was simply to cut down on spam in people's news feed.

FB: "Unless you pay for delivery, we'll be fighting your spam".
End result:
* the "network socialite" doesn't actually "socialize" anymore - it's advertising
* the others will still be served spam
Must be that FB is really desperate for revenue.

--
Questions raise, answers kill. Raise questions to stay alive.
Why do companies use FaceBook anyway? by magic+maverick+ · 2012-11-13 08:09 · Score: 5, Insightful

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.

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HELP MY ACCOUNT HAS BEEN HACKED BY AN ILLIBERAL ART STUDENT SET TO DESTROY THE INTERWEBZ!
1. Re:Why do companies use FaceBook anyway? by Thud457 · 2012-11-13 09:04 · Score: 3, Funny
  
  It's kind of creepy that some corp will give you stuff if you "friend" them.
  Like that rich kid in school that nobody really actually likes.
  
  --
  the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
Re:I think something is missing here... by buchalka · 2012-11-13 08:36 · Score: 3, Informative

Forgive me if I'm incorrect here... But Facebook isn't trying to charge him to post on his page with 1 million fans; Facebook is trying to charge him for "promoting" [read: advertising] his post more prominently in peoples timelines and around the site.
I don't have a problem with this. You let Facebook's news feed dynamic work for free just like everyone else, your you pay up to reach others. Why is he pitching such a hissy fit over advertising not being free?
Facebook are now charging you to get access to your own fans per post, this is not extra advertising. Whenever you post something on facebook only a small subset will get your content injected into their news feed unless you cough up the extra money so that more/all of them see it.
This is something they only added a few months ago. They want to charge this every time you post as well.
So I don't blame him for getting a bit upset at least here as this is something that facebook have taken away e.g. it was free and now they charge for it. To be fair though, they never gave you 100% coverage of your posts into fans feeds before, but now it's a really low "free" coverage and you have to pay to get the vast majority of people who are already following you to see your content.

--
Games Programmer And Designer
Re:what ever happened to hosting your own site? by Anonymous Coward · 2012-11-13 08:54 · Score: 4, Funny

A billion users on Facebook happened.
But 950,000,000 of those are fake and 49,000,000 of the rest haven't logged in for six months.
Facebook is just so 2010.
Any expense is against the point by orthancstone · 2012-11-13 09:08 · Score: 4, Insightful

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.