We're not financial analysts, but if we had to point out the one Achilles Heel of Facebook, it's this: Brands can basically advertise for free on the site by creating "applications" that ostensibly function as ads. Witness the "TopShop Fashion Fix" application (one of Faran's favorites), where every time you click, a new stream of TopShop outfits are unloaded onto your screen - then you vote on your favorites, and challenge your friends to do the same. There are hundreds of others, but the latest is particularly interesting: The Louis Vuitton application. You send Louis Vuitton "gifts" to your friends - basically just graphics of expensive and very branded LV merchandise - then wait for them to do the same thing back to you. The more "gifts" you get, the more Louis Vuitton stuff appears on your profile - and the more "gifts" you send, the more new "merchandise" you're allowed to preview. Setting up this application probably cost the Louis Vuitton people $5000 - assuming they hired an outside techie and didn't get the LVMH in-house computer team to design it. Meanwhile, they'll make hundreds of thousands of virtual dollars back in brand extension, product placement, and the priceless experience of getting young men and women to interact with their brand, even if they're not setting foot in an LV boutique. We'd go so far as to say Facebook is losing money by allowing branded applications to exist on its network. But whatever, as long as we can play Scrabulous, we don't really care. PS: If you haven't joined the Fashionista Facebook group, there's really no excuse by now!
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