In the past weeks, Facebook has ridden an incredible wave of public relations successes, garnering cover stories on Time and Newsweek, as well as benefiting from Robert Scoble’s constant beating drum. The message: Facebook is the Future. But is it really? Or is it just the latest flash in the pan (MySpace, AOL, etc.)?

Businesses need to avoid falling victim to a social media rush caused by this new found love for the closed network with an open API. Facebook offers opportunity, but businesses should approach it with a sober mindset. Marketing needs to occur because a business’s community is there, not because Facebook is “cool.”

Facebook’s growth is impressive with 34 million users since 2004. But closed walls limit the full potential of content, sometimes applications don’t work, and ad click through rates are unproven at best. The only thing that Facebook has proven is that it’s the contact manager technology of Now (informal discussion on Pownce indicates the luster is waning), and that it has a great PR team.

Marketing on Facebook

The core issue: Is Facebook the right place for a business to market itself? Does Facebook 1) have the community that matters to that particular business, and 2) is it the right medium to market within? Facebook ads don’t work that well, so marketing has come down to creating apps with Facebook’s open API and networking within the contacts, including creating relevant groups and discussions.

Both of these core marketing activities have one key problem. From Time’s article, “People have to consent to have contact with or even see others on the network.”

That means both have significant risk to a business. Just like every other social media intiative, if the community doesn’t care, then the business has wasted its resources. Given application overkill, if an initiative doesn’t build obvious value for the community, it’s likely to fail.

“I have seen many people who developed the apps based on the hype fall flat,” said Unless someone is sure that theirs will be a killer app, there is a good chance they will end up wasting their time on it,” said Krishnan Subramanian. “A perfect example is Zoho. I made a post saying that Zoho could be the killer app on Facebook.

“…even Zoho people thought the same way,” Krish continued. “They came up with an app, but only around 2500 facebook users are using it. It didn’t turn out to be a killer app we envisaged. Only those people who got into the initial wave could reach millions of users. Now [that Facebook] has hit the plateau, it takes a killer product and lot of time to be as successful.”

Networking has its issues, too. In particular, some contacts are beginning to become less enthused with all of the activity. “But to me, calling someone a ‘friend’ is a form of endorsement,” said Shel Israel in a post on whether or not he says yes to Facebook friend requests. “It tells others that I say you are okay.”

As the rush continues it is likely more and more folks will opt out of business overtures. Plus efforts on Facebook may not only be broadcasted to deaf ears, they stay within the closed Facebook network. Thus marketing efforts are limited to only Facebook users, and not the larger communities and conversations in the blogosphere, MySpace and other networks.

“I have to admit, I personally experienced the deepening of a business relationship using Facebook the other day, something that likely would not have happened on the blogs,” said Direct2Dell team member Richard Binhammer. “Facebook has some great features that further realize the benefits of Web 2.0 and conversations. But it is also a walled garden where you can only converse with select people and in some respects feels a bit like a television station where everyone is broadcasting messages, including me by the way.”

Moving Forward

Businesses should look at Facebook as an opportunity. If their community is active on Facebook. But they should do so with eyes wide open, and select opportunities intelligently that will impact their core communities. Not because Facebook is hot.

Further, keep in mind that Facebook excitement is fast and furious right now. None of this takes into account how the dust will settle once the fanaticism cools off, and people get used to the platform. Will the original core audience of college kids and grads leave Facebook? Will LinkedIn rise with its IPO? Will another network rise, just like Facebook did, and AOL and MySpace before it?

“I just wonder what kinds of lines will be drawn,” said Jacob Chapel, a developer on Pownce. “Are more people going to keep flocking to Facebook because it’s the next best thing? Or realize that because of it’s closed nature that it really was dead on arrival?”

We’ll continue this thread by discussing some Facebook best marketing practices with a Now Is Gone post next week.