Nisan Gabbay’s Betair case study is up to his usual high standard. He describes Betfair’s success (which has been spectacular – shares last changed hands at a valuation of $3.2bn) and what they did to get there. The post is longish, but I highly recommend a full read.
At the end he identifies five themes present at Betfair which are “common across successful internet companies”:
- They offer a low cost alternative to a high cost service – bookmakers
- Users are able to make money or even earn a living using their service
- They targeted a niche which turned out to be larger than expected and built out from there
- They jumpstarted user acquisition through a distribution partnership – they had a deal with Racing Post Britain’s leading horse racing paper
- They had a story which lent itself well to mainstream PR
Last month Nisan suggested that I post about what it takes to get a consumer internet site to critical mass. It is a difficult topic (if it was easy to get a new site to critical mass everyone would be doing it, right?) but Nisan himself has prompted me to write this half answer with his Betfair case study.
My thoughts expand upon the notion of taking a niche and building out from there, I’m also drawing on some of the comments on the case study. It sounds like Betfair were a bit prescient/lucky in that the niche they targeted turned out to be larger than most people expected – emulating that might be tough, but the strategy of kick starting growth by identifying a niche group of power users and marketing to them aggressively is a sound one. Running with that for a sec:
- If you can’t identify a (potential) group of power users for your service then that might tell you something in itself – you should also have a clear value proposition for them. On Betfair it is better odds than at the bookmaker for heavy gamblers, on LastFM it is more efficient discovery of new bands for music fans, on eBay it is an expanded market for small traders, on Flickr it is professional photographers, etc. etc.
- Power users have the most to gain from a service and so will be most tolerant of glitches and early design issues, they will also help you iron them out – they will be your best early adopters
- The tactic for attracting power users to your site will depend on where you are pulling them from – Betfair was pulling them from bookmakers so offline marketing was critical, MySpace was operating in a more established online market and so focused more efforts online – some more about that here.
Understanding what I would call the ‘essence’ of your service is important. On markets like Betfair and eBay it is liquidity. On a pure social network like Myspace it is a feeling of buzz and being in a cool place. On applied social networks buzz is still important but a sense of authority on the content area is required as well. On Flickr it is great photos, on LastFM the authority comes from being able to see other people who listen to the same obscure bands as you.
Designing the site to deliver this ‘essence’ in the early days may mean you don’t go for broad applicability. To ensure adequate liquidity Betfair focused activity by starting with a limited number of betting categories. Similarly UK based eating and drinking out site TrustedPlaces has focused initially on London to ensure there is enough buzz and content. This is kind of like opening a small bar which is awesome with 200 people in it then growing by adding rooms.
Marketing should be micro-targeted at people who will provide the essence. Betfair went after heavy gamblers with discount offers, for example. DontStayIn does this well for clubbers in the UK by having photographers outside clubs – regular clubbers check back to look for their photo.