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Using communities for marketing

By | Advertising, Business models, Community, From mobile, Social networks | 10 Comments

There was an article on Techdirt on Friday pointing to an interesting paper about how Swedish record labels engage fan communities as part of their marketing efforts. Apparently they do so pretty successfully, which is good to hear.

The raison d’etre for the paper is to say that this shouldn’t be thought of as exploitation in the ‘clever music labels get fans to do free work’ sense. Rather, we should see fans as individuals who make rational trade-offs about the value they put-in and take-out from their relationships with brands, a lot of which is non-monetary. Moreover they are conscious of the risk of exploitation and take steps to protect themselves.

I warm to this view of fans (or any member of any community) as intelligent people with feelings and complex motivations. That is much closer to reality than the one-dimensional money focused view of some economists and the ‘witless pawn to be exploited’ view of some other commentators.

The notion of ‘fan communities’ working with product companies (aka brand owners) for mutual benefit is, of course, applicable beyond music, as is the notion of the value equation.

I am hearing more and more examples of companies creating communities around products that on the face of it might not seem interesting enough to generate engagement, but which have come up with seemingly compelling value equations. It is early days yet for many of these and it will be interesting to see how they develop, but I like the way they are thinking.

This sort of development could herald a shift in the way marketing budgets are allocated away from buying media and towards hiring community management personnel.

If anyone knows of any good lists and/or stats for projects like this I’d be keen to see it.

From mobile stuck in my hotel room in China, so apologies for the lack of links and formatting.

Communities are enabled, not created

By | From mobile | 12 Comments

Posted by mobile phone:
There is a good post from Mike on Techdirt this morning which discusses the why’s and wherefore’s of newspapers arresting their decline by building communities.

http://techdirt.com/articles/20080711/1644431654.shtml

I agree with his central assertion that newspapers have traditionally been communities to a limited extent via local advertising and classifieds, and that part of their problem is they have historically seen themselves almost entirely as content creators rather than community managers.

He is also spot on in saying that simply throwing a few community features onto the site won’t achieve anything.

As he says:

“You build community …. by enabling a group of people to do what they want”

I would add that you also need to give it a sense of purpose and some values. In the case of a newspaper the purpose is likely to be commenting on news, sharing news and furthering the debate, often with a political agenda, and the values are likely to come from the publication. Certainly that is how it seems in the vibrant community the Guardian has created in the UK. As one of the commenters to Mike’s post pointed out serious news and commentry are a more solid base for discussion and community than sex, scandal and other over-hyped tittle-tattle.

There is also no guarantee of success – I have been thinking of lots of biological analogies for community creation, and the best I’ve come up with is the breeding of rare animals in a zoo. You have to create the right conditions, male + female animal, right ages, suitable environment, good food etc – ie lots of important preparatory work – and then you just have to hope that nature takes its course. So it is with communities.

I also like Mike’s closing sentence:

“Newspapers should look to see what they can do to enable a community to form and then get out of the way”

I’m thinking a lot at the moment about communities and business at the moment, and in a wider context than just newspapers. Any thoughts, comments and help much appreciated.

Tottenham 2 Chelsea 1

By | From mobile | 4 Comments

Posted by mobile phone:
As a Chelsea fan I’m gutted. We didn’t maximise our chances today. IMHO we would have controlled the game better if we had started Ballack and Cole, plus somehow the team suddenly looks like they have never met before. I’ve never seen so many mis-placed passes.

I’m expecting Avram’s call for help any minute now…..

Well played Spurs.

European venture increasingly favours hi-risk, hi-return investments

By | From mobile | 6 Comments

Posted by mobile phone:
This is from the latest Go4Venture report (no link because I’m on my Blackberry);

*The market is increasingly driven by larger deals, with 22 transactions of more than EUR 20mn in 2007, compared to 15 in 2006 and 2005, and only 5 in 2004. This reflects European VCs growing taste for high risk/high reward transactions, which is closer to the behavior of their Silicon Valley brethren.

In my opinion we are moving in the right direction. Adopting a home-run mentality is the best way forward.

opportunity in casual games

By | From mobile | 6 Comments

Posted by mobile phone:
I’m here at the Casual Games conference in Amsterdam and things are buzzing. Casual games is not a new industry, but it is one that is in a lot of flux – and that often spells opportunity.

Furthermore, change is happening on two levels, which together might just make it difficult for the existing market leaders to compete.

First, the gameplay is changing. Over the last couple of years narrative and character have been an increasingly prominent part of some of the more successful games, and going forward my guess is that change will be compounded by introduction of social network features, multiplayer and 3D.

Second, the business model is changing. Distribution is moving from portals to social networks and revenue is shifting from subs/per box/per download to virtual goods, advertising and probably still some subs.

That is a lot of change.

the big money is in owning audiences

By | From mobile | No Comments

Posted by mobile phone:
Reading about the Microsoft-Yahoo! Bid in the FT this morning I got a reminder of a fact that I guess we all know and understand:

On the web the value is where the traffic is.

All the biggest web companies own their audience, with Google and Yahoo! Being the best examples. Similarly all the best recent startup successes have belonged to companies with massive traffic (admittedly with questionable monetisation) – I’m thinking about Skype, YouTube and Facebook.

The reminder I got from the FT was this:

“Google’s search engine and other ‘owned and operated’ wbsites account for 92% of its net revenue, up from 81% three years ago. ”

Clearly I believe in the possibility of building successful businesses on an ad network model. Our investment in buy.at is testament to that, and the evidence of Doubleclick and other companies also proves the point.

But the 92% figure in the above quote tells us where the big money is. That means Adsense on third party sites is less than 8% of Google’s revenues. (I can’t check that number today, but the FT is unambiguous.)

The big money follows the traffic.

And search is the biggest traffic play of all. I think that is the main driver behind the Microsoft move on Yahoo! Ballmer has been saying for a while now that search needs to get much better, but he has struggled to deliver much because he lacks the query volume he needs to innovate effectively.
This is the perspiration approach to innovation in search. Regular readers will know I think there might be mileage in relying on inspiration instead – particularly in the area of social search.

Ballmer’s belief in the need for innovation in search and the potential of the market strengthen my conviction in this area.

Google doing too much?

By | From mobile | 6 Comments

Posted by mobile phone:
Today I received a reminder of the breadth of Google’s ambitions. I met two very different companies who both see Google playing an important role in their markets. One was an exchange for offline media and the other was a mobile handset manufacturer.

Ambitions in these two areas go alongside the huge number of other initiatives Google has – including OpenSocial, Google Earth, virtual worlds, Google Gadgets, etc etc

I am all for ambition, but for me it needs to be combined with focus. I love Google, and use a number of their products every day – but the strategy consultant inside me will be amazed if they can execute well on so many fronts. Just look at Yahoo! Over the last 5 years.

IMHO focus is always best. I would always make difficult choices and focus on only the most promising couple of initiatives.

Espescially in a start up.

Conversations to drive TV to the web

By | From mobile | No Comments

Posted by mobile phone:
Regular readers will know I have been wondering for a while now what it is that will get people watching TV via the web. The existing product is good, not perfect, but evidently good enough for an awful lot of people. To frame the question another way I have been wondering what will be powerful enough to get people to bother to wire up their TVs to the internet and switch away from their existing cable or satellite service provider.

The obvious answers are price and/or content – Skype did it in telephony with a free service and desirable content unavailable elsewhere would be pretty compelling.

The problem is that both of these are very hard to deliver on. The best content is expensive and it is tough for internet startups to compete with established providers who have much bigger balance sheets and can amortise the costs of programmes across a much larger customer base.

I’m gussing that this is partly why Joost raised so much money.

Little things like instant messaging and exclusive niche content will help as well, and these are also available on Joost, but somehow I don’t feel these will be enough.

Iheard a new answer to this question at LeWeb today (new for me anyway) was that it will be conversations. The idea is that much like blogs for text videos from outside the ‘fat head’ of content could be a force for change. The emphasis in these programmes is on content (message, meaning, viewing experience) over traditional production values. As such they are cheap to produce and can respond to each other in conversations, and even link to each other in video now with technology from Coull or Asterpix.

This sort of vibrant content is being produced in increasing volumes by the likes of Scoble (whose weapon of choice increasingly seems to be an N95) and Intruders.tv. It will only ever get a small percentage share of the market (although that could still be big in dollar terms) but it might be enough to kick off the behavioural change I was describing at the beginning of this post.

Big personality helps a site

By | From mobile | No Comments

Posted by mobile phone:
I blogged a couple of weeks ago about how having a cool personality can really help a site. I gave a couple of examples but as I sit here at LeWeb listening to Kevin Rose I realise I forgot to mention Digg, which is possibly the best example of all.

Company growing pains

By | From mobile | 2 Comments

Posted by mobile phone:
Many of you will have observed how companies go through a big personality shift as they grow. I’ve always explained that by the simple logic of size – as a company gets bigger there is more stuff going on and as it gets too much for people to keep in their heads you get a shift to a more process oriented culture.

Reading Gladwell’s Tipping Point yesterday I thought his ‘law of 150’ added something to this assessment. Simply put, the law is based on empirical observation that in groups larger than 150 people communication starts to break down and schisms start appearing. It seems that with groups up to that size we can cope mentally with knowing everyone and keeping a check on all the relationships within the group, but at around 150 we hit some kind of natural limit and it becomes too complicated. (Incidentally, the 150 limit is apparently a function of the size of our neocortex – other primates with smaller neocortex’s live in correspondingly smaller groups.)

In my experience the change comes for startups somewhere in the 50-100 employees range (and it is often a traumatic change). As most small companies depend on intimate relationships with a number of people who aren’t on payroll it is unsurprising that this is less than Gladwell’s 150.

Tangentially related is the notion that we subconciously use each other as external memory devices. As Gladwell explains it, we naturally optimise by remembering the things that stick in our brains most easily and relying on people close to us to remember the things that stick naturally with them. This resonates with me and I can easily see how my wife and I divide up the list of things we need to remember between us (it is actually embarrassingly gender stereotypical so I won’t go into it here, but you get the picture). The interesting thing is that as a result you become bad at remembering the things that other people are good at. The optimal solution for you (and the group) is for you not to bother with that stuff – so you’re brain simply doesn’t.

I bring this up here for the insight it gives into the notion of of organisational memory and the wrench a small company feels when a founder or long-standing senior exec leaves the business.