Marketing Mystic

Twitter and the conundrum of 'free' (social sites)

After a couple of highly frenetic work weeks and several crazy road trips later, I am finally back in the blogging scene.

Given the recent uproar over Twitter outages, the question begs to be asked (and answered), if you aren't willing to pay for a service, should you be whining when it doesn't deliver? What, if any, should your expectations be from a free service? Conversely, if you are a free site/platform, how do you justify additional investment in your company, if you don't have any means of generating revenue?

This is a huge challenge for free social sites like Twitter. Good news is that you have millions of users, bad news is you have millions of users but no revenue. And if there's no revenue, it's heck of a lot more daunting to keep scaling to meet the needs of your burgeoning user base.

There's where the venture funding helps, but sooner or later, Twitter (and free social sites like Facebook, Orkut, Friendster, and others) will have to figure out a way to make money. I think it's quite dicey when the valuation of these social sites is based on freeloading users who don't want to pay to use the site. Given that none of these sites like Twitter, Facebook have figured out a way to monetize this freeloading user base, the popular option seems to be advertising.

I have my own doubts about advertising as a sustainable revenue model for social sites. Especially, if the intent of any social site is to entertain and engage the user, driving them off the site with links to another site seems highly counterintuitive.

Therein lies the biggest challenge for these free sites, it's all fine and dandy as long as the venture funds keep flowing in, all the site has to do is focus on getting more users (and of course, make sure the site doesn't crash under all the traffic). Acquiring users for a free service is the easy part, but this story will get much more interesting when these free sites are forced to support themselves like some of the other 'growed up' social sites like LinkedIn.

Om Malik of GigaOM suggests charging power users like Robert Scoble, who according to Malik overwhelm the microblogging site. I think that's a great idea, but how long do you think users will stick around if they have to pay for what they are used to getting for free?   

TiEcon 2008 panel on 'Taking on the incumbents'

Moderator(s):

Guy Kawasaki, Garage Technology Ventures

Panelist(s):

Chris Larsen, Prosper Marketplace, Inc.

Peter Luethi, Jet Airways India Ltd.

Sanjiv Malhotra, Oorja Protonics

Marten Mickos, Sun Microsystems Inc.

                               

This is the first time that I’ve ever heard or seen Guy Kawasaki in person. He sure is funny and sharp as heck. Overall, the panel wasn’t all that interesting but Guy was extremely entertaining with his quips on how ‘German service is an oxymoron’ and in this web 2.0 world , ‘nothing’s a secret but there’s no verification either’. Most hilarious was when he kept trying to get Peter Luethi (Jet Airways) to confess which airline he would use if he were flying to London. I think the discussion would have been all more interesting, if he was on the panel rather than moderating it. Here are my key takeaways from this discussion:

Operate under the radar.

Incumbents usually have the attitude that the newcomers are not worth bothering about. This works in favor of the newcomers, who can fly under the radar and grow quickly until they get to a point when the competitors start noticing them but they are big enough either to thwart them or get acquired. Marten Mickos (formerly of MySQL) was very entertaining and offered some great insights. MySQL approached Oracle and Microsoft both to find an ally in its effort to take on IBM. (MySQL was acquired by Sun Microsystems).

If you can’t kill them, partner with them.

If your market has multiple incumbents. Consider partnering with one competitor and offer something that they are not able to offer. In other words, complement an incumbent’s existing offerings rather than taking on the incumbent head on.

Your enemy’s enemy is your best friend.

Don’t try to go it alone. If you have multiple incumbents, partner with one competitor to take on the other. Understand your market’s competitive dynamics and leverage that to create synergies that help your growth.

Rally support from your customer.

Find the underserved need in your target market and fill that gap. Go to the customer directly and create demand for your product by focusing on that. Jet Airways is trying to fill the need that no other airline currently, which is to bring back the ‘luxury’ in aviation by offering amenities and facilities that make air travel more enjoyable.

TiEcon 2008 panel on 'Creating Buzz'

Scaling: Building Buzz and Winning Customers

   

Moderator:

  Matt Marshall, VentureBeat

Panelists:

  James Joaquin, Bridgescale Partners

  Krishna 'Kittu' Kolluri, New Enterprise Associates
  Dave McClure, Stanford University
  Indu Navar, Serus Corporation

 

This was a great discussion on how to create buzz and acquire customers. Here's a brief list of key takeaways from this panel:

- Influence the influencers. Invite bloggers, analysts, reporters, and your other key influencers into your world, share information on your business/product so they can evangelize your business for you.

- Let the metrics lead your way. Most people agree that marketing is a combination of art and science. Having clearly-defined metrics will ensure your costs are in alignment with the projected returns. Pick a few key conversion metrics that represent your customer and that increase value to you and increase your value to your customer.

- Use analytics to make decisions. Test different pages, messaging, keywords and use conversion metrics to determine which ones are working and which don’t.

- PR is often overrated. Find creative ways to create higher returns on a low budget. PR can be very helpful but it comes at a steep price and it’s ineffective if your product is not ready or it sucks. WOM is extremely effective for marketing on a shoe-string budget. Some quick and dirty (and cheap ways) to build buzz - daily blogging by employees, hire out-of-work writers to write up your PR, hand out funky t-shirts, or any other creative giveaways to get folks talking about your business/product.

- Make sure your product is ready and your marketing campaign is effective. Get statistically relevant data on your customer, iterate, and go to market quickly. Depending on how large your audience is, use the most effective medium. Word of Mouth is extremely effective in driving adoption on a bootstrap budget. Design your marketing campaigns to hit as many of these as following - High Volume (#), Low Cost ($), High Conversion (%).

- Great buzz isn't everything. Last but not the least, remember that great buzz doesn’t necessarily mean it will translate to online activity that you want. So don’t go crazy on just creating buzz, make sure you focus on whether it also translates into activity that you want.

PS: Check out Dave McClure’s blog for some great content (He’s brilliant!!!) 

Does Second Life need a corporate makeover?

I got on the virtual world bandwagon a few years back and tried Second Life, but it didn't stick. It was too much work, too confusing, not enough motivation, so I gave up. Recently, I decided to give it another try, so I logged back in. I was pleasantly surprised to see that the UI is sleeker and it's not as confusing as before, that being said, the learning curve is still darn steep.

 

LA Times recently did a great story on companies who are on Second Life and they all seem to be veteran technology companies. It's obvious from the home page that SL is serious about pitching to businesses, and they have managed to get some well-known brand names IBM, Sun Microsystems, and Intel among the major brand names on the platform.The marketing/business strategy for SL is to bring on businesses who leverage it for internal communication and drive traffic by pitching the site to their employees and customers. However, in order to make it a sustainable success, SL needs to bring more businesses on board.

Few years back, SL had created a huge buzz as the coolest place in cyberspace and consumer companies were flocking to it in droves. However, the companies soon realized that the virtual world audience was more extreme than the mainstream. The LA times story says,

Where people are, marketers want to be. Two years ago, companies such as American Apparel and footwear maker Adidas started filling Second Life with stores and buildings. The virtual world's early inhabitants, who largely disdain anything with a corporate tinge, rebelled by launching terrorist attacks and starting gunfights in the shops. Faced with empty storefronts and ridicule, many companies pulled out.

The first time I logged in a few years back, I was confronted by a gal who asked me if I had any money. Then I ran into another gal who warned me against hitting on her boyfriend. WTF?! This time around, I got invited to a sex dungeon and I don't even want to know what's coming the next time I log in. Since organizations have their own private island/location, they are 'protected' from the riff-raff of the surrounding worlds but it doesn't help the site's image, if it continues to be associated with insidious content.

I think, Second LIfe would drive a higher rate of adoption if they cleaned up their risque image. There's a serious disconnect between the audience they are trying to woo and images portrayed on the site. The tattoo-covered gangsta-looking dude right above their pitch on 'Your Organization in Second Life' on the home page doesn't exactly evoke warm-fuzzy feelings. How conducive are corporations to let their employees slink around semi-nude and replete with piercings, even if it is in the virtual world?

I think someone at SL should take a serious look at:
a) Make it easier for mainstream businesses (the non-geek companies) to get started on SL
b) Yes, sex sells and that's what made SL so notorious in the first place, but if that's not the business it wants to be in, SL should either get rid of the sexually explicit content or launch a new brand/site with a cleaner image. 

Creating separate worlds/islands helps corporate-types avoid having to deal with rest of the chaos that is SL, but until it cleans up its act, SL's risque brand image will always work against it, especially when it's trying to bring on new businesses.

Why enterprise social networks don't work

Knowledge Management has been around since the 90s and every so often it makes a prime-time re-appearance. Last week it was on Techcrunch, who featured UK-based Trampoline system's Sonar Dashboard, a social network utility for large companies being touted as 'Facebook for business'. Adding a coolness factor to the social enterprise networks by riding on the coat tails of a popular social site is a clever PR ploy but here's why I am not buying into the hype.

I am a big fan of knowledge-capture/share systems but no matter what fancy name you come up with, these systems have the same fundamental issues. We all know that employees aren't just sitting there waiting for a cool tool so they can share their information with thousands of co-workers. Sure they update their Facebook profile gazillion times a day, but that's personal and it's fun. In the professional context, what's the incentive for keeping your profile updated? And do you want to be the slacker who's constantly overloading the corporate site with boring details of his/her inconsequential project?

Trampoline Systems acknowledges this lack of inclination on part of the employees and says,

Automation is critical to enterprise social computing. Employees are less inclined to update profiles at work in comparison to consumer social networking. SONAR Dashboard is connected to SONAR Server, which analyses a company’s email and documents to discover the key themes and relationships hidden in electronic information.

TBH, this 'automation' reeks of corporate snooping. Over the last year, I interacted with at least 20 different teams in my organization and every day I find new individuals who impact my work. Unless you read my emails, you probably won't know what I am doing or the projects that I am working on. So I am leery about how effectual this feature really is going to be. The text in the screenshots of the Sonar Dashboard or social maps (even those on Techcrunch) is not legible, so it's impossible to tell what these relationships or the profiles really look like or what information is being extracted 'automatically'. That just adds to the intrigue and ambiguity of their product and how it really works.

Some companies already have social 'sharing' features built into their intranet, where employees can add pictures, profile information, discuss questions, but you typically see the same handful of folks posting information most of the time. So the companies need to figure out how to encourage mainstream adoption, ie. how to get a critical mass of their employees to use and leverage the social network to make it meaningful.

Lastly, there's a question of churn. I can see how the Sonar Dashboard could map my relationships to other divisions/groups and that's valuable but those relationships are constantly evolving, people leave the companies or take up new roles, so the question is how regularly will these maps be kept updated?

I saw all the accolades that Trampoline has received, so naturally, I was curious as to who their customers are. There seem to be only a couple of firms who've signed up so far.

Trampoline’s clients include the Raytheon Company, a top 5 global management consultancy and the UK Foreign Office.

I can see this Sonar Dashboard and others like it, being very effective in a company with low churn and fairly stable processes and Raytheon seems to fit that description. In addition, law and consultancy firms also would highly benefit from this system, given the knowledge-intense nature of their business. However, companies in fast-paced environments, where things are a bit more fluid, would have a tremendous challenge in getting such a system implemented and getting any value from these types of systems.

I think it's essential for larger companies to put some system into place encourage information-sharing and making it easier for employees to tap into their geographically-dispersed knowledge base. Call me old-fashioned, but I think there needs to be a cultural shift and incentives should be put into place to get employees to share information. As much as I think technology is great, but it can't solve a company's process and cultural problems. If the company culture is not inclined towards collaboration and sharing, no fancy-schmancy system is going to help the company. Any technology, including social-networking utility is a means to an end, not the end unto itself.

Nintendo Wii mainstream marketing woes

While Nintendo Wii sales continue to outpace the Xbox and PS3 machine sales, the Wii games aren't doing that well, says New York Times.

Typically, the discussion in the tech world revolves around how to get your product into the mainstream, but Nintendo has an unique dilemma. Its hardware has gone mainstream, but this demographic is not as fanatical about new games as is Nintendo's hardcore gamer base. The NY Times says,

"Some major retail chains — including Wal-Mart and Toys “R” Us — have already begun bundling the Smash Bros. game with Wii machines for sales online, a sign that the base of hard-core gamers who went looking for the game has been depleted."

The initial marketing of the Wii gaming platform was phenomenal, everyone and his grannie got themselves one. However, this demographic is content with one or two games. There's no fervent desire to own every new game on the market, unlike the typical gamer who's craving the next new game. The NY Times says,

"The average Wii owner buys only 3.7 games a year, compared with 4.7 for Xbox 360 owners and 4.6 for PlayStation 3 owners, said a Wedbush Morgan analyst, Michael Pachter."

I think this is where competitors like Microsoft and Sony have an advantage. While the sales of their game hardware may not be as spectacular as the Wii, but they will probably make up for it in their new game sales.This is where marketing genius of Nintendo falls short, it hasn't devoted as much as effort in marketing its games to this broad demographic as it did for selling the hardware. Mainstream market requires mainstream/traditional advertising. It definitely needs to put its money where it's audience is. I mean how likely is the typical mom and pop crowd to go to 1up.com or any other gaming site? Not very.

I can't tell if the 'mainstreaming' of Wii was a strategic decision or Nintendo just stumbled onto it. While, this move could alienate Nintendo from the core gamer base but on the other hand, I think it is carving out an unique market positioning which might serve it well.

If you look at the site design, marketing for PS3 and Xbox (both hardware and games), their relative market positioning is very clear.

 

No prizes for guessing which one is aimed at the young male gamer and which is squarely aimed at geeks. 

It doesn't matter what your positioning is, as long you have one and it's very clear in your marketing and product development.  So what's next for Nintendo? The company is no longer going after the hardcore gamer crowd. It's launching Wii Fit, an exercise game designed for the couch potatoes and soccer moms, ie. the Oprah crowd. Mr.Pachter says,

“It’s definitely aimed at the Oprah crowd. I bet they sell a million units a week for every pound that Oprah says she lost on it.”

If the increase in revenue from this new 'Oprah' demographic makes up for the loss in revenue from the average gamer (new game sales), then this positioning might just pay off for Nintendo in the long run.

RSS and mainstream adoption

Louis Gray shared this great commentary by Brian Clark on Google Reader (via Friendfeed) today. Brian is perplexed why RSS hasn't gone mainstream yet.

Email still has its problems, and they’re not getting any better. But the public at large either doesn’t care about RSS, or doesn’t know they’re using it (a la My Yahoo, etc).

Many technology (product) evangelists get too hung up on the technology and miss the point, which is - technology is a means to an end, not the end unto itself. In this case, it's the need for information that's important and the underlying technology itself is irrelevant, unless you are the developer. Even if RSS goes 'mainstream' (if it hasn't already), will folks know it as RSS? Does it really matter?

Brian goes on to say,

That’s why I’m happy to see projects like Guy Kawasaki’s Alltop. It’s completely powered by RSS feeds, but it’s all behind the curtain. People want access to information… they don’t care about the underlying technology.

I couldn't agree more. I think the fundamental question here is - What drives adoption of any technology in the mainstream? Prominent technology bloggers, innovators, early adopters play a critical role in creating awareness for new technologies. They are akin to early explorers of uncharted territories, blazing trails to exciting new worlds.

However, not everyone is keen on swimming across crocodile-infested waters for thrills. The masses need a bridge. The 'bridge-builders' are folks like Guy Kawasaki who are developing easy-to-use applications/sites aimed at fulfilling a need.

And as long as the car can go 0-60mph in (insert desired number here) seconds, does the average Joe Schmoe really care what's under the hood? I highly doubt it.

Blogging is a 'killer' business, says NY Times

The NY times reports on the intensity of blogging and how the 24/7 Internet world is taking an emotional and physical toll on bloggers' health. The web workers are apparently,

"...toiling under great physical and emotional stress created by the around-the-clock Internet economy that demands a constant stream of news and comment."

It also cites how some prominent bloggers have had either died of heart disease or are at serious health risk.

"Two weeks ago in North Lauderdale, Fla., funeral services were held for Russell Shaw, a prolific blogger on technology subjects who died at 60 of a heart attack. In December, another tech blogger, Marc Orchant, died at 50 of a massive coronary. A third, Om Malik, 41, survived a heart attack in December."

I agree that blogging is intense but give me a break, how is this different or even as stressful as some journalist reporting from Iraq or Afghanistan? Now that's intense.

There are some like Michael Arrington, the popular Techcrunch founder and co-editor/blogger, who NY Times says is close to a nervous breakdown.

Mr. Arrington says he has gained 30 pounds in the last three years, developed a severe sleeping disorder and turned his home into an office for him and four employees. “At some point, I’ll have a nervous breakdown and be admitted to the hospital, or something else will happen.”

Given that 13-15hr workdays are becoming typical (even outside the Silicon Valley), I would say blogging is probably no different than any other high-stress profession. The blogging community hardly has a monopoly on stressed-out, workalcholics with less-than ideal fitness and diet routines. I blog (infrequently) in addition to my 13hr-work day at my day job and it's not easy. If I weren't smart about it, I probably wouldn't have a life. That doesn't help my blog ranking either, but that's just how it goes. No matter, what your profession, if you can't handle the heat, get out of the kitchen.

That being said, I completely agree that frenetic pace of the Internet makes the madness more so. The proliferation of social sites and tools like Twitter, Facebook, and feed aggregators have made incessant communication and consumption so easy. Constant demand for information has created extreme competition in the online world. Now that the blogs are competing with the traditional news media for content, bloggers have to keep running (blogging) to stay in the same place. The computer and the blogger/bloggee(?) have become the modern-day versions of television and the couch potato. If you don't have something interesting to say all the time, you're irrelevant.

And that reminds me, gentle readers... it's time to go work out :-)

Is Techcrunch the Rainmaker of the online world?

I found this hilarious - Techcrunch speculated and then later confirmed that the only technology behind TagCow's photo-tagging service was NO technology, ie. humans. Even while they were being mocked, TagCow was gloating (why not?!) about being 'Techcrunched' on their site, apparently there is no thing as bad publicity, even in the online world.

 

I am in awe of the tremendous influence that Techcrunch wields in the online world and the potential impact it can have on a fledgling site's success. No amount of money can buy the kind of traffic that Techcrunch can drive to your site and if your site crashes because of the unexpected humongous spike in traffic - it seems to be a badge of honor (still don't get how creating a bad customer experience can be a good thing). However, that's huge publicity, it's powerful, and most of all, it's FREE.

What Michael Arrington, the founder and co-editor, says does matter but whether it means the 'Techcrunched' site will continue to be successful once the herd moves on to the next 'big thing' is anyone's guess.

Google introduces YouTube Insight for video publishers

I recently ran into someone who's interviewing for some marketing-type position at Google/YouTube in a few weeks. One question, I would love to ask the execs there is how are the brilliant minds (at Google/YouTube) planning to monetize the hugely popular site? I am not too envious of anyone who is stuck with the ultimate responsibility for monetizing this site. I mean, think about it - how easy is it to make people pay for something they're used to getting for free?

That's when I noticed this MarketingVOX article announcing Google's free new analytic tool, YouTube Insight for the video publishers,

YouTube has debuted YouTube Insight, a suite of analytic tools that provide audience trends on videos that publishers have uploaded. YouTube already offers comments, ratings and a ranking for each clip. Insight adds context to where viewers come from and when they watched a given video.

I think this is a great way to boost retention/loyalty of its video publishing community. It also gives the search giant, the demographic insights needed to provide more targeted advertising. Some revenue-sharing type model perhaps may also be in the works? 

Tracy Chan, Product Manager for YouTube Insight suggested that YouTube could be used for testing of movie trailers by studios and it is already being used by music bands to plan future performances,

Chan described how a Hollywood studio marketing a movie to YouTube viewers might put up several trailers designed to appeal to different users....He described how bands testing the new service have discovered pockets of their fans they didn't know existed and have begun planning future music tours based on this data.

The major flaw with this plan, however well-intentioned, is the assumption that the YouTube (free-loader) demographic is typical of the movie-going (paying) audience and the results from any test on the YouTube audience is a good behavioral indicator of the offline movie-going audience.

That being said, the analytics tool is definitely step in the right direction. But I can't help but wonder what on earth took them so long? Especially given that they could have easily leveraged Google Analytics backbone for this, couldn't they?!

PS: Here's a NY Times article rationalizing why companies 'acquire' innovation and why the acquisition still makes sense even if these companies are unable to monetize or gain any synergies from their acquisition.