Tech firms hop on Facebook’s wave
Facebook famously started in a Harvard University dorm before decamping for California’s Silicon Valley to become one of the world’s most influential companies. But that has not stopped local companies like Brand Networks Inc. from riding its coattails.
Half ad agency, half software company, Boston-based Brand Networks develops Facebook apps for Starbucks Corp., JetBlue Airways, and other clients that want access to Facebook’s 800 million active users.
“Facebook is the new World Wide Web,’’ said Jamie Tedford, founder of Brand Networks, which has 25 employees and has doubled its revenue each year since it started creating Facebook apps in 2007.
A growing number of companies are placing a big bet on the social network and creating a burgeoning Facebook economy that extends far beyond Silicon Valley, as Facebook evolves from a site on which classmates reconnect to the Web’s center of gravity.
Boston’s piece of this social media domain - ranging from software development to marketing prowess - is small, compared with New York’s or San Francisco’s, but thriving. While business software, computer networking, and data management have traditionally been strengths for the local technology sector, more social media companies are emerging, analysts say.
“Boston is coming on pretty strong, accurately sizing up the opportunities in social media,’’ said Rich Levandov, managing director of Avalon Ventures, a Cambridge venture capital firm that specializes in technology and life sciences start-ups. “Anyone who is thinking of business now has to think about it three ways: the open Web, mobile, and Facebook.’’
Here’s why: Facebook is a gold mine for advertisers. Its users spend more time on the site than anywhere else on the Internet. The average US Facebook user logs almost eight hours a month on the site, more than the average user of Google, Yahoo, YouTube, and AOL combined, according to Nielsen Co., which measures Internet usage.
Facebook already is a place where more than a quarter of all online display ads - such as banner ads on websites - are seen, giving the company an estimated $2 billion in US ad revenue this year, according to eMarketer Inc., which tracks online advertising.
What makes Facebook’s dominance even more remarkable is that it is still a fairly young company. Harvard undergraduate Mark Zuckerberg cofounded Facebook in 2004 and moved to Palo Alto, Calif., where he expanded the company with investor funding. In Boston tech circles, the loss of Facebook is a commonly heard lament, but at a recent conference at Stanford University for technology start-ups, Zuckerberg said if he could go back in time, he might have stayed.
Today, Zuckerberg returns to Harvard on a recruiting trip for Facebook, his first official visit to campus since he dropped out.
Ric Calvillo, a serial technology entrepreneur in Boston, decided last year to help launch a company built entirely around Facebook advertising. One of his earlier ventures, Conley Corp., was sold to EMC Corp., the Hopkinton data-storage giant. The others, Incipient Inc. and Maxcess Inc., weren’t so successful.
Nanigans Inc., Calvillo’s fourth start-up, develops software that puts advertisements on Facebook, giving advertisers the ability to precisely market products and services to users. Its bare-bones office overlooking Boston Common has about 35 employees, many of whom sit laptop-to-laptop on folding tables, with someone at work no matter what the hour is.
“You have to consider Facebook,’’ Calvillo said. “It’s reached a critical mass.’’
For Awareness Inc., a Burlington software company, Facebook’s ubiquity is driving sales of its technology that lets companies track what is being said about them in social media forums.
“Businesses struggle with how to adapt to new social networks,’’ said Mike Lewis, vice president of marketing.
The company started out building blogs when few knew how, but switched gears when blogging software became free online. As social media blossomed, he found that companies still needed tools to navigate the Internet. The software they create helps customers such as Major League Baseball and Sony Corp. publish across Facebook, Twitter, or YouTube and analyze comments about their brands.
Vivox Inc., of Natick, has provided voice communication over the Web since 2005. It partnered with T-Mobile USA Inc. to bring a voice-chat application called Bobsled to Facebook in April. It gives Facebook users the ability to do what Skype does: turn a computer into a phone. According to Vivox, 88 percent of users in a survey said they wanted to talk with friends while on Facebook.
“The thing about Facebook that you just can’t ignore is that there are 800 million users there,’’ said Rob Frasca, chief marketing officer of Vivox. “Every time you build a consumer product, you have to pay attention to it and you have to accommodate that social network because it’s so powerful.’’
How big could a company built around Facebook get? Consider Zynga Inc., the San Francisco game maker behind FarmVille. Zynga is expected to go public this year and raise as much as $2 billion. It also has a Harvard Square office, where Adventure World, Zynga’s newest Facebook game, was created.
Ethan Beard, director of the developer platform network at Facebook, said the company works with outside developers because ultimately it’s about improving the online experience.
“We tend to help the social businesses become big and the big businesses become social,’’ he said. “The key to really driving value for your business is to really create a social experience.’’
But is there risk involved in developing a business around a social media platform that could be overtaken by the Next Big Thing? Just try to remember the last time you were on Friendster or MySpace.
“There is risk,’’ said Sean Corcoran, a social media analyst at Cambridge-based Forrester Research, “but the opportunity is so big it probably outweighs the risk.’’
M ichael B. Farrell can be reached at firstname.lastname@example.org.