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You gave you away October 21, 2009

Posted by David Gillespie in business strategy.
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3 comments

A few days ago I posted a presentation on where I think this space is headed. On slide 191 (yes 191) I mention something called The Three Musketeers rule, All For One or One For All. The former is siloed value creation, the latter creates value for an ecosystem.

I realised in the shower last night (keep it clean people) I had actually been thinking about this since November when I drew the below image:

I believe the Internet is, on a DNA-level, structured to create value for an ecosystem, and I believe this is why we’re seeing traditional business having a hard time playing in the new landscape, with models being destroyed and a new kind of value creation making waves.

This is also why I’m still on the fence about Facebook over the long term. Nobody can deny their growth or do anything other than applaud getting to profitability. But I feel on an instinctive level the model is All For One, it’s old media dressed up in shiny new threads, it’s a system that creates value for Facebook alone, and it’s questionable if any value is created outside of its walls.

In the presentation I included a slide of companies who are operating with a One For All approach:

Looking for a model?

Looking for a model?

If over time it transitions into One For All it will be interesting to watch. As it stands now, I can’t help but feel it is organised against the natural order of the Internet, which is open and connected. We’re seeing what happens when you do that across all kinds of industries, and it being an Internet darling does not exclude it from the same principles.

Even Rome fell people.

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Eyes on the prize: what is your company’s core offering? March 3, 2008

Posted by David Gillespie in digital strategy, marketing, web 2.0.
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1 comment so far

I’m a big believer in a business being free to focus on its core product(s). If it ain’t what you do, then it ain’t what you do! Far too many times I’ve seen companies get distracted by an interesting piece of technology or an idea outside their scope or ability to act on. When that happens, your core product suffers, and your competitors who may have been running a distant second seem to close the gap over night.

It isn’t simply a case of distraction though, outsourcing can also land your ability to succeed and innovate in the hands of people who don’t share your priorities, goals, or values. What that means is a devaluing of your offering in the eyes of the people you’re hoping to sell to. An inconsistent experience you can’t directly impact means your brand comes to be associated with, at best, a level of impotence in affecting positive change for its own offering, and at worst, a frustrating end-user experience. On top of the impotence. With a good measure of GAF* thrown in.

The same idea applies to brand extension. Let’s compare Google and eBay, two titans from Web 1.0. One seemingly goes from strength to strength with an occasional bit of conjecture, and another is mired in a mix of end-user apathy and anger, with top-tier management failing to set a cohesive direction. Google’s acquisitions may seem puzzling at times from the outside, however each purchase (with the occasional exception) can fairly readily be tied back into search, and eventually monetised.

Contrast this with eBay’s acquisition of promising-but-troubled VOIP provider Skype back in 2005. 2 1/2 years on this seems like a move geared around nabbing promising tech before someone else does, and not around how such a service better positions eBay to grow. Now both services are languishing with indifference and open hostility, and the purchase is little more than a land-grab in hindsight.

The trouble with a land-grab is eventually the people who actually own the land show up and cause trouble. In this case the digital natives are fighting back, services like Etsy crop up and move in on markets that could have and maybe should have been eBay’s. All due to the company losing focus, and the same can be said for Yahoo!, parts of Microsoft, and a myriad of players in the offline space too.

Times like this some old-school business lessons can come in handy. Echoed in Fred Wilson’s post about the New York Times, Jack Welch’s mantra to his VPs was be number one or two in your market, otherwise get out. Seth Godin says in his book The Dip “being the best in the world is seriously underrated”. And as I say up top, “If it ain’t what you do, then it ain’t what you do!”

Anyone have examples that fit into the above they’d care to share?

Facebook; advertising heaven or hell? February 26, 2008

Posted by David Gillespie in digital strategy, intent, marketing, web 2.0.
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15 comments

I read somewhere recently – I think Seth Godin said it – if you were to set out with the express purpose of creating the worst possible environment online for advertising, you would wind up with something pretty similar to Facebook. I’m not entirely convinced that’s accurate, but I’m also not entirely convinced it isn’t. While you certainly have millions of pairs of eyeballs, what you need is an intention economy:

The Intention Economy grows around buyers, not sellers. It leverages the simple fact that buyers are the first source of money, and that they come ready-made. You don’t need advertising to make them.

The Intention Economy is about markets, not marketing. You don’t need marketing to make Intention Markets.

The Intention Economy is built around truly open markets, not a collection of silos. In The Intention Economy, customers don’t have to fly from silo to silo, like a bees from flower to flower, collecting deal info (and unavoidable hype) like so much pollen. In The Intention Economy, the buyer notifies the market of the intent to buy, and sellers compete for the buyer’s purchase. Simple as that.

Thanks Doc. Let’s look at that for a second. The Intention Economy grows around buyers, not sellers. Ok, so we need buyers. Are people buyers on Facebook? Have you ever purchased anything from it? I haven’t. I’m not in a consumer mindset when I’m there, at least not one that involves me parting with my hard-earned. There’s certainly an argument to say Facebook users are consuming any time they are logged on, but I question the notion that can be monetised; I’m consuming social interactions with my friends, I’m not viewing it as a platform for purchases.

Contrast that though with businesses who are advertising, are they viewing the Facebook ecosystem as a marketplace? I don’t have hard data to back this up but I’m willing to say yes, based on moves a little-known start-up out of Redmond, Washington made last year. Marketers are seeing the numbers and frothing at the mouth to turn that in to revenue. How one does that and even IF one does that aren’t being considered at all.

The Intention Economy apparently comes ready made, it doesn’t require advertising to manufacture it. What would Facebook be without advertising? Aside of course form hundreds of millions of dollars poorer?  Probably much smaller, since it would have had no way to foot the bill for its massive growth, save for taking on more cash from VCs worried about missing the next Google. And if it was much smaller, how many fewer radars would it be on? You lose the Fast Company, Newsweek, Business Week. You are suddenly still collegiate and walled and not innovating at the pace your market capitalization (suggested or otherwise) allows you to. Facebook’s growth is built on the promise of an Intention Economy in spite of the fact all evidence points to the absence of such a thing.

Lets continue: The Intention Economy is about markets, not marketing. You don’t need marketing to make Intention Markets. This again takes us back to the core issue of how people behave when it comes to commercially consumable goods on Facebook. If I have missed the train on this I look forward to finding out, but I don’t see a dip in Amazon’s trading, I don’t hear about slumps in eBay’s number of auctions (not ones that aren’t brought about by their own ineptitude anyway). Contrast this with little known but rapidly growing Etsy, a site built around the trade of goods that are 100% hand-made. Commerce is core in its business model, coupled with a feel-good, natural vibe that is hard to come by online. I don’t want to talk about it too much, suffice to say the service is brilliant and should be visited (right after we finish here).

Etsy doesn’t need to risk disenfranchising its user-base in order to move towards profitability; the inherent small-business nature of its offering allows it to grow organically, improve and expand as it needs to. I was at a wedding recently and a friend was talking about a marketing plan, saying “Give me$20 million and we’ll achieve “x”, $10 million and we’ll achieve “y“, but $5 million and we won’t even get off the ground.” Facebook needs to grow at its current pace in order to achieve its goals, it needs an Intention Economy to be established and fast, lest the rest of the world pick up on the fact that there currently is no profitable business there, at least not on the scale they are currently operating on. Etsy could stay its current size and be a success, and I imagine that’s quite alright with everyone involved.

The Intention Economy is built around truly open markets, not a collection of silos. In The Intention Economy, customers don’t have to fly from silo to silo, like a bees from flower to flower, collecting deal info (and unavoidable hype) like so much pollen. This one goes without saying. Facebook are making moves towards an open platform, surprisingly still sitting out in front of Google who, for the first time perhaps ever, was caught sleeping. The same way Microsoft missed the internet, Google seems to have missed the promise of social networking and what an open playing field can mean. They are of course a little more concerned with owning your phone than your MySpace page, probably because they already have all the access there they need.

Regardless, while Facebook slowly makes moves away from being a silo, they are still being very careful to make sure they remain a focal-point for your interactions. Using an Amazon Facebook application which you’ve plugged in to your Bebo page isn’t a negative for them; continuing to use Amazon as you are, or using an application that runs via someone else’s network is. If Facebook’s usage levels or visitation starts to decline or even just level off as it eventually must, look for some dramatic moves on their part, particularly if the Intention Economy is still nowhere to be seen.

Lastly, In The Intention Economy, the buyer notifies the market of the intent to buy, and sellers compete for the buyer’s purchase. Simple as that. Right now we don’t have that, we have sellers competing simply for the buyer’s attention. This seems simply ludicrous when you consider:

  • A Facebook user’s attention not up for grabs, not by sellers anyway. They are here for social interaction. Before we get into notions of what constitutes a ridiculous notion of “proper” social interaction (which people usually take to be face-to-face), the rules are different now. The key take away though is the rules aren’t just different for people under 30, people 50+ are interacting in this way too, ith plenty of them getting married. The web has enabled this sort of interaction, the song however, remains the same.
  • There is no intention to buy. Ever see teenagers at a shopping centre, hanging out and not buying anything? Look for this behaviour to continue (funnily enough). Marketers looking to capture that intention are going about it in the wrong capacity. Yes, a person is a fan of the TV show Lost. Yes, you have that on DVD and you can sell it to them. No, they do not want to buy that now. They want to buy it when they want to watch it, so you had better make sure you know enough about your audience to be in the right place at the right time (Hint: the right place is not Facebook, the right time is when they are not on Facebook).
  • Imagine for a moment that Facebook was actually a readily monetisable and viable market place; sellers would be competing purely with the rest of a user’s wall. Vampires, Texas Hold’Em Poker, travel widgets, pokes and haggis being thrown, videos playing and songs streaming from iLike. What could your product possibly offer that competes with all of that?

The ironic pat of it all though, is you cannot afford to not be a part of it, if only because if you’re not, your CEO is going to hear about it from his kids and consider that a mandate for action. Social media runs much wider, and there are opportunities inherent in it. But Facebook? Setup a free fan page and see if your audience finds you. If they do, then that’s a conversation worth having.

As we all know now, markets are conversations, and you get to fight another day.

(P.S. I would love to hear from some folk who have tried monetising FB and what their experience has been.)