Just a quick note: While read/writeweb writes about information overload and how it has caused a productivity loss of $650 billion, Google boasts about having indexed 1 trillion (1,000,000,000,000) Websites. Add Email, twitter, SMS and possibly even paper producst like books and newspapers, the amount of information available – or battling for our attention – is enormous these days.
Tools for searching (or: finding), aggregation, filtering and blocking will become ever more important.
Fixed price models were a thing of the last 100 years – now we all thought that auction platforms like ebay would revert to variable price models. Not so. Even worse: ebay might have been a fad, argues Nick Carr, citing an article of business week.
Auctions were once a pillar of e-commerce. People didn’t simply shop on eBay. They hunted, they fought, they sweated, they won. These days, consumers are less enamored of the hassle of auctions, preferring to buy stuff quickly at a fixed price.
In fact, fixed price is gaining ground:
At the current pace, this may be the first year that eBay generates more revenue from fixed-price sales than from auctions, analysts say. „The bloom is well off the rose with regard to the online-auction thing,“ says Tim Boyd, an analyst with American Technology Research. „Auctions are losing a ton of share, and fixed price has been gaining pretty steadily.“
With users increasingly being able to research prices online, the need for speculating at an auction site decreases. At some point it’s pretty clear what a gadget should cost – so why bother bidding in an auction in which probably everyone has the same knowledge about the likely price ceiling? Why not buy it right away somewhere else?
Interesting thought: decreasing information assymetry will lead to an increase in fixed price deals (online, where things are comparable within a mouse click). Make sense, somehow.
[update: ReadWriteWeb has some more background to this.]
Mitch Joel pointed me to a business week article about advertising in social networks. In the same post he also links to a blogpost claiming social media sites need advertising.
In short: time spent on social networks is declining, for whatever reason – one could of course be increased advertising on these platforms. So this could be a problem for advertisers in the near future. Secondly: social networks need advertising, the same way media has always been ad supported.
But it’s not only the fact that user numbers are going down, ads on social networks are also less effective than on regular websites:
Many of the people who hang out on MySpace, Facebook, and other sites pay little to no attention to the ads because they’re more interested in kibitzing with their friends. Social networks have some of the lowest response rates on the Web, advertisers and ad placement firms say. Marketers say as few as 4 in 10,000 people who see their ads on social networking sites click on them, compared with 20 in 10,000 across the Web.
The solution to this is new targeting mechanisms, to serve users more relevant messages.
Last fall, both rolled out programs allowing marketers to pitch products to people in hundreds of categories of interest, such as fashion and sports. News Corp. President Peter Chernin said on Feb. 4 that response rates on MySpace improved as much as 300%.
Could be a solution. But at the end of the day, this whole approach still tries to use old answers to new problems. How about taking an approach that looks beyond plain advertising? How about introducing branded widgets, services, or exclusive whatevers to these platforms, so that brands can provide an added value to the interaction between users?
I am thinking of such things as the Red Bull Rosham Bull Challenge in facebook, which is a game that two users can play against each other. Or even just plain and simple things like the fact that you can sponsor digital gifts in facebook. There still is lots of potential for these kind of approaches.
Oh, and from a business model perspective: I don’t think social networks need advertising support. At least not to the extent that their business models are in danger if there is no proper ad solution in place.
Think about the German platform Xing.com. There you have a choice of paying a monthly premium for additional services – one of which is the fact that you don’t get to see any ads.
There could also be other models, like changing the business model slightly and starting e-commerce around certain product groups (i.e. certain information-based, digital products or even real products).
These problems are not really new. But what this whole discussion shows, is simply the fact that social networks have, all of a sudden, exposed the need for new marketing approaches much clearer than any of the previous developments on the web.
Doing some research regarding viral marketing, I stumbled upon the following 5 posts, here is a summary of each:
- 4 myths of viral marketing: it is a replacement for television (most videos won’t get millions of viewers), a viral video is a digital strategy (what happens after the video has been watched?), putting a video on YouTube is a digital strategy (most videos don’t really go viral without some help or trigger), bloggers are just waiting for videos they can write about (because there is so little other information around in this world).
- 7 deadly sins of advertising via viral video: Make a white and brown cow (instead of a purple, remarkable cow), pretend you’re not advertising (hoping it doesn’t backfire or gets ignored), spend a fortune on production (instead of a good idea), tell consumer instead of engage them (it’s not an adaptation of a 30 sec. spot), do a video contest because everyone else does (soon enough, it will get ever more difficult to activate consumers to the umpteenth contest), set unrealistic conversion measures (it’s not about conversion anyway, in most cases), throw in the towel and decide to just advertise around viral videos (at least to both in partnership).
- Why everyone wants viral video: 57 million Americans watch online video content every day. That’s 19% of the online population. 13% of American adults report they have downloaded or watched video ads! Two out of three viewers ages 18-29 send links to video files, compared with half of Americans age 30 and older. Forty-two percent of the 18-29 year-olds send video links a few times per month or more
- Is mass marketing important for viral success: Duncan Watts has modeled the viral phenomenon stating that it is not as contagious as we would like it to be. The circle of influence of superspreaders is far smaller than we thought, which this paper is about, and campaigns are subject to complete randomness, which makes this a channel in need of support of planned (i.e. media supported) advertising. Not true writes Nigel Hollis, saying that the stickiniess factor of the creative is not subject to randomness, as it can be pre-tested in focus groups.
- Is word of mouth a discipline or a channel: Discipline: Word of mouth marketing takes belief (based on understanding and knowledge) and discipline. Channel: The media buying companies and some advertising agencies want to see WOM as a channel. Discipline: To deliver on the promise of social media, word of mouth marketing, influencer marketing, conversation marketing – whatever part of WOM you want to emphasize – we need a simple, shared approach to measurement that compares well to what brand managers are used to. Channel: Many ad-based marketers see viral video as the answer to their WOM aspirations. And the conclusion: Word of mouth is a broad discipline like advertising or public relations. It requires technique and methodologies that are particularly relevant to do it well. It is possible to treat it like a channel by tacking on some WOM tactic to a larger advertising program, but it may not pay off in comparison to those more traditional marketing tactics.
Clever, very clever indeed. Google announces the Open Hand Set Alliance and liberates the 33 participating mobile phone operators from the claws of proprietary systems. From the Google Blog:
Android is the first truly open and comprehensive platform for mobile devices. It includes an operating system, user-interface and applications — all of the software to run a mobile phone, but without the proprietary obstacles that have hindered mobile innovation. We have developed Android in cooperation with the Open Handset Alliance, which consists of more than 30 technology and mobile leaders including Motorola, Qualcomm, HTC and T-Mobile.
It appears to carry very similar objectives as OpenSocial which was announced only last week. Google seems to favour open standards, so that the web as a plattform and mobile phones as the future personal device for everything will stay open and free. This should enable innovation to the benefit of the user, no doubt about that! But it might also serve Google quite well.
Why? I can only guess: Googles revenue models are still mostly built on advertising. So Google needs scalability in customer reach, which they can only keep increasing with ready access to information and users. As social networks are obviously becoming the dominating platforms for users to interact with, and mobile devices probably being the first choice for going „online“, then Google needs to be able to freely play on these grounds.
In the future, I think the key to revenue will most likely not reside in just delivering content, i.e. producing or transporting it, since there will be soooo much of it. And it is very labour intensive to produce it. Instead, it is much more efficient to
- intelligently aggregate and sort content (which Google already does)
- adequately aligning this content to the needs, preferences – and most importantly: intentions of the users.
Regarding the second point, I think it is fairly obvious that Google should be way ahead of the competition in gathering the necessary user data. Think about Google Toolbar, Google Analytics and Google AdSense, nevermind the main site, the search engine itself. They should have better tracking data than anybody else, which they can put to work for solving the second point above.
One thing that can stop the (nearly) endless scaling of Google’s model into the long tail of every single social media profile and mobile device is „artificial“ restrictions such as walled gardens and operating systems. So: very clever to launch initiatives to at least partially open up social networks and mobile phone operating systems.