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

Posted by Soulskill on 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.'"

26 of 299 comments (clear)

  1. Congratulations, Mr. Cuban! by game+kid · · Score: 4, Funny

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

    --
    You can hold down the "B" button for continuous firing.
  2. That is cheap by Billly+Gates · · 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.

    --
    http://saveie6.com/
    1. Re:That is cheap by Hatta · · 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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      Give me Classic Slashdot or give me death!
    2. Re:That is cheap by fuzzyfuzzyfungus · · 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...

    3. Re:That is cheap by scottbomb · · 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.

    4. Re:That is cheap by Billly+Gates · · 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/
    5. Re:That is cheap by rtfa-troll · · 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.

      --
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    6. Re:That is cheap by Nikker · · 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.
    7. Re:That is cheap by Enderandrew · · 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.
    8. Re:That is cheap by _xeno_ · · 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.
    9. Re:That is cheap by TheRaven64 · · 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
    10. Re:That is cheap by jvkjvk · · 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"?

    11. Re:That is cheap by Anonymous Coward · · 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/

    12. Re:That is cheap by byjove · · 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.

    13. Re:That is cheap by TheRedSeven · · 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.

    14. Re:That is cheap by vux984 · · 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.

  3. The actual news here... by InvisibleClergy · · Score: 4, Insightful

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

  4. Cuban is bluffing... by Anonymous Coward · · Score: 4, Interesting

    Seriously, MySpace?!

    1. Re:Cuban is bluffing... by fuzzyfuzzyfungus · · 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.

  5. Low low price! by zill · · 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 · · 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?

  6. MySpace? by hduff · · 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
  7. "FB Trying To Fight Spam"... yeah, sure. by c0lo · · 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.
  8. Why do companies use FaceBook anyway? by magic+maverick+ · · 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!
  9. Re:what ever happened to hosting your own site? by Anonymous Coward · · 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.

  10. Any expense is against the point by orthancstone · · 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.