Monday, September 21, 2009

What is a Facebook friend worth?

ONLINE social networks are handy not just as a means of wasting time but also as a communications tool for business. Dell, a computer-maker, has made $3m in sales from Twitter since it started "tweeting" about its outlet that sells refurbished computers in 2007. Marketers are eager to use fast-growing networks to tout their products. An Australian online-marketing company, uSocial, wants to help them—for a price. On September 16th the firm started selling Facebook friends and fans.

After trawling Facebook for users by criteria like age, location and interests, uSocial then recommends potential friends to companies, who approach them directly. A firm pays $727 for each 5,000 users who agree to be its friend, or 15 cents each. "Fans", who merely express support for a firm, are cheaper.

It is not the first time uSocial has tried to sell the benefits of popular online destinations to marketers. It sells votes on websites such as Digg, which let people share content and vote on which articles should appear on the site's front page. It also sells Twitter "followers" (people who follow a user's updates) to companies looking for some positive buzz. Those websites disapprove. So does Facebook, which may try to bar uSocial from its service.

Social networks provide "the most powerful form of advertising there is", claims Leon Hill, uSocial's boss. But not everyone thinks uSocial's idea of selling friends makes for good marketing. Andrew Petersen of the Kenan-Flagler Business School at the University of North Carolina reckons that purchasing friends or fans does not establish brand loyalty and may actually hurt a firm's image by making it seem desperate.

Websites like Twitter and Facebook might lose some of their popularity if users feel they have become a forum for advertising rather than gossip. It is also in their interest to make sure uSocial does not claim profits that could be theirs. Facebook, which said on September 15th that it has 300m users, has struggled to make money from them. It recently launched a type of advertising that allows companies to target potential customers by letting users click on an advert to become that company's fan. The new offering from uSocial competes directly with this revenue source. No wonder uSocial does not have many friends of its own.

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