Many folks speculate why Google has overtaken Yahoo! in search or why Facebook has dominated in social networking, versus Friendster. I believe there’s one key factor— if you’re running a technology company, you need a technologist at the helm.  Larry and Sergey of Google were Ph Ds (or about to be) in Computer Science.  The last few folks who have run Yahoo! were anything but technology people– one was a film executive, one was a financial analyst, and another is a professional manager.  Running a technology company requires a deep understanding of what’s coming next in a rapidly changing world.  And to not have a keen pulse is to drive in a dangerous fog.

Facebook was founded by Mark Zuckerberg, a young computer science genius– not a 55 year old male who is good at manipulating spreadsheets.  If you see a social networking start-up being founded by 55 year old males who are probably not even on Facebook– run the other direction as fast as you can.  The folks who can best guide a company are those who connect deeply with their customer base.  How can you start and manage a company if you don’t use the product yourself?  Even the guy who runs Hair Club for Men is also a client, so the commercial goes.

Of the technology companies we see fail, it’s not just age.  Often it’s also a lack of having a balanced core team.  Salespeople hire salespeople.  Engineers tend to like to hang out with other engineers.  It just works that way somehow, as people hire folks who are like them.  But to operate a technology firm, you need folks who are experts in sales, engineering, marketing, finance, and other disciplines.  And the technologist should be king in the technology company, in the same way that Nike was started and run by a star athlete, Phil Knight.   Does Frito Lay have a technologist at the helm?  No, they have a marketing person, since that’s the firm’s core expertise.

So watch out for technology companies that don’t have any engineers in sight or believe that engineers are commodity products that can be contracted out or hired offshore.  If you are a business person and are thinking of starting a company in the Internet space, my advice to you is to quickly find a technical co-founder.  You’ll thank me later for this advice.  

A great entrepreneur knows what he knows- and more importantly, knows what he doesn’t know– finding someone to complement him or her.  If you’re an engineer, find a strong marketing/sales ally and make him a business partner.  Your freelancer will give you great results for a couple months, maybe longer– but eventually will flake out on you, which is why they’re freelancing.  

Are you a technologist— and if not, do you have a technologist that is part of your founding team or is at least a CTO level person?  If you are one of these companies that’s lacking a technologist, but wondering why you may be having trouble executing, I hope this article helps shed some light on why.

A Rice University study last week claims that Facebook is an effective marketing tool because of these stats, comparing the Facebook fans versus their general customer base:

• Made 36 percent more visits to DG’s stores each month.
• Spent 45 percent more of their eating-out dollars at DG.
• Spent 33 percent more at DG’s stores.
• Had 14 percent higher emotional attachment to the DG brand.
• Had 41 percent greater psychological loyalty toward DG.

At first, this sounds great– these Facebook users are more loyal and spend more money with this restaurant chain.  But as you learn in first semester college statistics– correlation is not causation.  The folks who fanned your page are likely already your strongest supporters– it wasn’t because they fanned your page that they all of a sudden started spending more money at your restaurants.  

Consider the fact that the percentage of people who visit the emergency room and die is higher than the percentage of random people who don’t go to hospitals, yet still die.  Clearly, there is a correlation between going to the hospital and dying, but that doesn’t mean if you’re sick or injured that you should avoid the hospital.   People who go to the hospital are already sick, so it’s not fair to compare them against the normal healthy population.

In the same way, of course the first fans to your Facebook page are not representative of your general customer base.  It’s your friends, coworkers, and folks closer to you.  OF COURSE these fans are strong supporters, especially since this particular study had a tiny sample size.

Does that mean you shouldn’t do Facebook or that fans are of low value?  Quite the opposite.  It means that after your initial wave of fans (which are your most loyal supporters), then you begin to attract the mainstream fans of your product or service.  These are the people who may have heard of you, but aren’t raving fans yet.  And it’s the viral loop of friends telling friends who then tell other friends– all the while spreading via the wall and word of mouth– that you get MASSIVE ROI.

Facebook is great for demand creation– to help spread word about your brand through folks who already love you.  Demand collection is showing ads to people who are about to buy.  That’s where social media and search work well together.  The AIDA funnel (Awareness, Interest, Desire, Action) shows that social media owns the first 3 phases and that search owns the last.  You have to generate awareness of your brand and also be there when they are ready to finally buy via Google.  

Thus, your Facebook ads are not “better” than paid search, nor is your Facebook Fan Page a better opportunity than your regular website.  You might as well argue that the steering wheel in a car is more important than the gas pedal.  You need both– it’s not an either or situation where they work together.

Stay tuned tomorrow for when we quantify the value of  your Facebook presence, starting first with determining “The Gap”– the difference between your offline brand strength and your online presence.

Apple iAd Steve Jobs demo

You see the above video?  In it, Steve Jobs is showing off the new Apple iAds, a direct competitor to Google AdSense and other ads that “just suck” on mobile devices.  For the desktop, “search is where it’s at,” asserts Jobs– but mobile devices are about apps, not search.  Given that the average iphone or ipod touch user spends 30 minutes a day on their device, if you show ads every 3 minutes, that’s 10 ads per user per day.  With 100 million users, you have 1 billion ad impressions per day.

Jobs claims that iAds are superior to traditional text ads because they are more engaging and interactive– possessing the emotional content of TV, but with perhaps even more interactivity than the web and TV (which has no interactivity). iAds also are built into the iphone operating system, so that when shown, they do not yank the user out of where they were, but are built right in.  He asserts that iAds will have a higher CTR because of this.

Then Steve Jobs went on to demonstrate a couple showcase ads that Apple made– one with Toy Story 3 and then a Nike ad.  Both featured video, a game, an app download, photo gallery, and other ad widgets.  Very impressive and clearly not something that a small business could ever dream of affording to create– any more than they could produce the next Pirates of the Caribbean film.

WHAT DOES THIS MEAN FOR LOCAL BUSINESSES?

As a local business, your advertising dollars have to drive more business– measured in phone calls, coupon redemptions, information requests, and more people walking into your store, office, restaurant or establishment.  These iAds are basically supercharged TV commercials that don’t encourage conversion.  You’re not trying to promote a theatrical release, the new 2010 Air Jordan shoe, or other entertainment product.   If you’re a dentist, personal injury attorney, roofer, veterinarian, or other type of local business– odds are that your business is not quite as exciting.

For BlitzLocal, we think that driving you more measurable business is quite exciting.  However, the iAd will not be relevant to small business until there are pre-made templates that allow businesses to create video with no more than a few clicks. If you think getting small businesses to create a 90 character text ads for Google AdWords is hard, try getting them to customize an interactive experience.

Enter Google to the rescue from out of the blue– Search Stories gives us a glimpse of how simple templates might actually work.  Watch my 30 second example here. Now imagine if businesses could fill out a single registration form, upload a few images, choose a music type, and BAM— they have an interactive video experience that can be posted to their Facebook, Google AdWords, Google TV Ads (yes, you can buy network TV time from AdWords), Facebook, and perhaps even the iPhone (if they ever allowed flash, as opposed to HMTL5).

In terms of the advertising battle between Google and Apple– I pick Google to continue to win in the small business space, while Apple grows with big brands that have big budgets.  The key to unlocking the local markets is simplicity– and while Apple is renowned for creating simplicity in user interface design, they do not have a demonstrated track record in advertising yet.  Players such as AdReady and TurnHere are making inroads in templated display ads and video, but have a long ways to go.

The point of being on a mobile device is taking advantage of a consumer that is on the move and likely to be spending money.  The phone knows where you are, so why not have a template that incorporates location into a local lead gen template?  Clearly, Apple is going after the big advertisers that don’t care about location, except for a token mapping application.  But for the millions of local small businesses out there– it’s a wide open field.

If anyone has experience with iAds or wants to add to this discussion, I welcome comments.