Facebook, which today is awash with 80 million users, is much like the Internet was before Google helped users find what they were looking for in the dark matter that was the World Wide Web. Still, many regard social networking as the next marketing frontier, and social networking sites, such as Facebook and the younger-oriented MySpace, seem to be the places to start.
Enter Visa, which, with some newly streamlined software from Mountain View, Calif.-based Google, aims to provide a little order to Facebook by bringing almost half a million small-business owners into one area of the site, known as The Visa Business Network, which launched in June. For now, Visa says, it's just there to help small-business owners connect with each other and manage their businesses, not to turn a profit.
Everything on The Visa Business Network is free, according to Alex Craddock, head of small-business marketing for San Francisco-based Visa. That includes a range of business software, including Google's answer to Microsoft (Redmond, Wash.) Office. The network also features editorial content targeted at small-business owners, such as podcasts supplied by The Wall Street Journal.
According to Craddock, the next stage of the Business Network's development, however, will enable purchase transactions using Visa cards, which would earn money for the company. The timing for adding transaction processing to the network and the fee structure haven't been determined, he says.
A Captive Audience
In its current form, The Visa Business Network offers banks an easy way to find small businesses online -- with the possibility of providing bank-branded content, links back to the banks' own sites and direct marketing offers. "Every single one of the top 10 banks wants to do something," Craddock says, adding that, as resources allow, Visa will engage the entire industry. "We've gone beyond the biggest and we're now working with regional banks."
Of the 10,000 small businesses that joined the site in its first two weeks of operation, about 10 are banks, Craddock reports. They range from $423-million-in-assets Stoneham Bank (Stoneham, Mass.), to an individual banker from global giant HSBC (London).
"The numbers already are proving this has real value," contends Craddock. "We recognized a significant application in Facebook to help small businesses find each other." Craddock notes that Visa is giving the first 20,000 businesses to register on the network a $100 credit to advertise on Facebook, at a cost of $2 million.
Debbie Williamson, senior analyst of social networking with eMarketer in New York, describes the first effort to organize businesses -- large or small -- within Facebook as "interesting." Williamson says that she registered for the Visa network and obtained a $100 credit toward advertising her independent consultancy. "It's very simple to join; it took all of 5 minutes or less," she says. "It's almost a win-win," Williamson continues, explaining that the venture offers banks a new way to reach businesses, businesses a new way to reach each other, and Facebook extra advertising.
Still, Williamson says, the initial success of Visa's network will depend on whether the Facebook advertising Visa is giving away seems to work for participating businesses. "If the [Facebook] advertising doesn't work, then the companies will move on," she asserts.
Visa's Craddock, however, rebuffs the suggestion that free advertising may explain the 10,000 registrants. That's not the draw, he insists, noting that 70 percent of registrants already have revisited the site and most users spend more than 7 minutes on the site per visit.
The most used element of the network, according to Craddock, is the ability to find other businesses. "The fact that they're connecting [with each other] is worth so much more than the $100," he says, adding that participants can even use Google Maps to literally put themselves on the (virtual) map.
Visa is "transforming the traditional Facebook model" of consumer-to-consumer interaction, according to Christine Barry, research director with Boston-based Aite Group. "Facebook has the potential to become a crucial advertising medium by allowing users to become 'fans' of the business and serve as a referral to all of their friends," she said in a statement. "Initiatives such as Bank of America's Online Community -- and more recently, Visa Business Network -- strive to position the institutions as a trusted adviser," offering a central location in which to network with other business owners and share unbiased information.