Facebook, Twitter et al.: Have they crossed the chasm?

I thought it might be interesting to do an analysis on where the social networking sites are on the technology adoption cycle. Has Myspace crossed the chasm? Is Facebook in early majority or late majority? Where are Twitter and LinkedIn? And how do they compare to other modern consumer technologies like Smartphones?

The first thing I did was look at the number of total Internet users in the US. Then, I looked at the data of registered users for each of the social networking sites. After running the numbers, this is what I got:

Interesting thing to observe is that Twitter and LinkedIn are still in the early market phase. They haven’t yet crossed the chasm. Mostly technology enthusiasts and visionaries are using the product in the US. The customers at this point recognize that the technology is new and unproven and has the potential for a breakthrough.

It seems to me that Myspace was unable to cross the chasm. They died just before entering the bowling alley. Most companies fail to cross the chasm because pragmatists do not see a complete solution to their problem and there is no group of reference that have formed that they trust. We all remember the privacy concerns on Myspace.

Smartphones are a perfect example of how a technology moves from a bowling alley to the tornado phase. In the tornado phase, a mass market emerges where the product is swept into a tornado of demand. After this phase is over, a market leader will evolve. Interesting to see who wins – Apple, RIM or Google? One key to success in the Tornado phase is to expand the sales channel as fast as possible in order to capture market share at the expense of the competition. That means Apple has to partner with Verizon or RIM & Google will win the battle in the end.

And then comes Facebook in Main Street. In this phase the technology go a price decline. How is this applicable to Facebook since it was FREE from the very beginning? Does it mean declining perceived value? Most importantly, the market leader gets challenged in Main Street either with new technology or price competitive products. It will be interesting to see if Facebook can reach the Total Assimilation phase; it should be an easy ride.

It is anybody’s guess about the technologies in “Total Assimilation” Phase. Here are some examples:

Filed under: technology, web 2.0, chasm, facebook, technology adoption cycle, twitter

Google challenged?

You probably have heard about Twitter’s new ad platform by now. Jeremiah Owyang has done a great analysis on his blog.

But this is not rocket science. I was expecting something really out of the box from Twitter. Not only I, but also hundred others have predicted the same. This is what I wrote in August 2009:

“Whereas Twitter is a whole different story. They just launched their Twitter search. So what?

Let me give you an example. I want to buy kindle. I do a search on “Google”. I get the usual websites trying to market the product. I don’t know what customers are talking about. I go to Twitter – I do a search on “kindle” and voila:

And now I want to buy the product. I see the ads on the right – I click on it (Engagement Rate from Twitter will be high so you can charge more CPC) and there you go – a new revenue stream for Twitter.

Even if Twitter gets a 10% market share of the search ad spend – that’s a $2B cash flow growing at 17%. Not bad? There is your $20B valuation.”

But, instead of CPC, the model is based on CPM. I am kind of wondering how they are going to come up with CPM pricing (probably use industry standard cost per impression). CPC should have been more interesting. If my theory were right, we would see higher bids for keywords on Twitter than on Google. Because of 2 main reasons:

1>   You value real time information more than old stale information
2>   You value information from real people more than inanimate pages.

Secondly, I am wondering what the market size is. Is there any data on how many searches are looking for real time information? If it is 10% that means Twitter grabs 10% of Google’s market share. I don’t think Twitter will increase the online advertising TAM but would rather take it from Google (Marketing budget is the same) – so this is a threat to Google for sure. I don’t think we can put this in the category of social media advertising.

It will be interesting to see how Google reacts.

Write it down!! I foresee a Google Acquisition soon and I predict a billion dollar acquisition.

Filed under: marketing, technology, web 2.0, Google, online advertising, twitter, valuation

Spokeo or Spooky?

Call me old school or a privacy nut!! I did panic when my address and phone number popped up on Spokeo.com. Who wouldn’t? Imagine having a teenage daughter at home as this father complained on the Spokeo facebook fan page:

I am pissed too. I am curious, how did they get my address? I don’t have my address listed in any of the social networking sites. And even if I have it, it is marked “private” and not to be shared with anyone. One of my buddies has his old address listed, which makes me suspicious if they are getting that information from a credit agency.

And the most interesting part, when you read about the company:

“The concept of Spokeo started in 2005. As a Stanford student, Harrison liked to jump around different social networks.  At that time, most of his friends had profiles on MySpace, some blogged on Xanga, and his dormmates were constantly sharing YouTube videos. Harrison was having trouble keeping up, so he rounded his college friends together to build a so-called social network aggregator. Working out of Harrison’s parents’ basement, Harrison and his friends publicly launched this pioneering concept on Techcrunch in late 2006.”

And I was foolish enough to drop a line at techcrunch that they should report about this. Silly me!!

But please, someone please explain to me the business value of this. Why would anyone buy information about a particular person? I can’t imagine anyone other than pedophiles and stalkers.

If you are interested about the founder, here is all the information I have using spokeo.com (ha!! irony?):

Harrison Tang
15119 San Pablo Ave
San Jose, California 95127
(408) 254-9572

He is an asian, an engineer with a college degree. It seems like he still lives with his parents.

P.S. If you are scared about the information listed on this site, click on privacy at the bottom and remove your listing. I feel that this site is a lawsuit waiting to happen.

Filed under: startup, web 2.0, privacy, spooky

Where am I going wrong?

Someone just called me and asked, “Do you know how much VCs have invested in Digg?” I said, “Probably a few million”. “Few million? Look it up”. I said, “How much?”. “$40MM!!” “Holy moly…”

Is it based on revenues? Future revenues? Capital requirement? What?
I think I am pretty bad at Math. I look at the VC investments in web 2.0 startups and try to do the math. Something just doesn’t add up:

Digg – $40M
Yelp – $56M
Slide – $78M
LinkedIn – $103M
Ning – $119M
Twitter – $160M
Zynga – $219M
Facebook – $716M (Big Daddy of all start-ups)

What could justify a $40M investment in Digg (with hardly any revenue stream) versus a $56M investment in Yelp (with good revenue streams)? Are the VCs so desperate to keep the companies alive that they are unwilling to forego sunk costs? Are they funding losses and lengthening the lives of these companies which would have died long before.

Let’s compare these investments to the funds raised by star tech companies in the 1990s (before they went IPO):

Yahoo – $3M
Excite – $3.25M
Ebay – $5M
Google – $25.1M
Juniper – $60.2M (Hardware company and requires capital investment)

Where am I going wrong? Even inflation cannot account for such a disparity. OR is it just the damn recession that has lengthened the IPO cycle?

Food for thought?

Filed under: entrepreneurship, startup, web 2.0, facebook, twitter, valuation, venture capital, web 2.0

Another Great Viral Interactive Video

Who is the hero of this world?
Click Here

Filed under: marketing, technology, web 2.0, viral

2010 Predictions: An Early Report Card

I wrote a post in late 2009 where I highlighted 10 predictions for the year 2010. I thought now would be a good time to check, how are we doing with each of these predictions. Though it’s too early, I think I didn’t give any data to back up my predictions. In this post, I will look at the first 2 months of 2010 and dig up facts which backs my predictions.

1. Mobile Smartphones become ubiquitous

According to a recent study, IDC pegs fourth-quarter smartphone sales at 54.5 million units, up 39% from the same period a year earlier. For the year, smartphones hit 174.2 million units, up 15.1% from 2008, and accounted for 15.4% of all mobile phones shipped in 2009.
Drilling down on Smartphone numbers

2.  Mobile Data Traffic triples or quadruples

According to a latest study by Cisco, mobile data traffic to increase 39 times from 2009 to 2014. If you do the math from the graph, traffic doubles in 2010 and triples in 2011. You can find the study here.

3. More and more content moves online

This is pretty obvious from the tremendous growth of mobile and internet traffic, especially video. According to Mediacom, 2% of TV viewing in UK is online and if you add user generated content, you can triple that figure.

Another interesting development is that Dish Network is moving online with “TV Anywhere”. According to Dish Network, the consumer preference is shifting to online viewing.

Economist recently came out with an article suggesting that newspapers will persuade online readers to pay in 2010. It is a reality that more and more newspapers are moving towards an online subscription model.

4. More experimentation around Social Media Monetization

This is a no-brainer and has to happen with all the pressures around real revenue models in 2010. Twitter recently announced that it is launching a new ad platform. And read this article from Mashable around Facebook Monetization.

My hunch: we will see more experiments this year.

5. Consumer Privacy becomes a key concern

We have all heard the privacy buzz around Google Buzz and the media frenzy around PleaseRobMe. Most importantly, even the Congress is thinking about passing a bill on Online Privacy: Protecting Consumer Privacy Online.

6. More Startups Challenge Facebook

I don’t know about this one. The only product I can think of, which has come close to challenging Facebook, is Google Buzz. Too early to say, but I bet more competition in the coming months, mostly from Asia.

7. Real time Search starts revenue generation

“Real-time search has been the “Holy Grail” of search providers like Microsoft and Google, and the resulting growth of Twitter traffic demonstrates that there is a lucrative opportunity there for those who learn to effectively harness social networking.” – PCWorld

And most importantly, the Twitter pact with Google, Bing and most recently Yahoo all points towards the importance of real-time search.

8. Commoditization of Hardware Equipment & Primary Differentiation through Applications

This is not a new phenomenon and has been happening for the last 2 decades. Recently, the mobile hardware industry is a victim: Apple Gross Margins shrink from 42% to 36% in the last 2 years. Also the PC and Server Industry is getting affected: In FY Q4 2009, Dell reported shrinking Gross Margins.

And read this very interesting article on Software Innovation: The new frontier of competitive differentiation.

9. Web Startups built around businesses and real revenue models

You don’t have to listen to me, listen to Dave Mcclure. He recently wrote about this transition in his blog:
“We have largely WASTED an entire web decade of time, energy & venture capital on extremely inefficient revenue models.  There have been a few interesting examples of startups acquired in the 00′s for large amounts due to amazing growth (eGroups, MySpace, Skype, YouTube) or advertising potential (aQuantive, DoubleClick, AdMob, RightMedia).  However, mostly the decade has been an uninterrupted string of uninspiring business models and small-time acquisitions of Web 2.0 startups filled with rainbows & unicorns, rather than those based on simple, transactional revenue models.”

10. Industry consolidation among iPhone/Android application builders

I don’t have much data point on this prediction other than the FreeVerse Acquisition by Ngmoco which has stirred fears among iPhone fans. I see this as the beginning of the iPhone developer consolidation in 2010: keep your eyes open.

Though I wrote the 2010 prediction post at that time qualitatively, I think I have provided enough data points on this post to prove that some of my predictions might come true this year.

Filed under: startup, technology, web 2.0, 2010 prediction

Breakthrough Marketing

Have you noticed the strange Facebook Status Updates lately? “Show your support for breast cancer…” or “If you know someone who suffers from prostrate cancer… “ or “Do you care about cancer?” or “Read the first sentence in page 5 and put it in your status message..” Mostly it was status updates about raising awareness around a social issue or people having fun with their pictures (80s week or Doppelganger week).

Last week I noticed another viral status update spreading through Facebook like fire. Some of my friends posted: “Go to urbandictionary.com, type in your first name, copy and paste this as your status, and put the first entry for your name under comments.” And then there were funny banter around what each of their first names meant.

I am confident it was a product of a brilliant marketer, probably someone at urbandictionary.com. I started poking into Alexa and Compete just to see the effect on web traffic to urbandictionary.com. Alexa says traffic has gone up by 25% in the last 3 months starting in November. In November, compete says there were 3.7M unique visitors; that makes it 4.6M unique visitors in February. A whopping increase of a million in the last month itself.

This is the power of viral/social-media marketing. It is no more true that you need to spend a million dollars in order to get your name out there. Another very good case study is mancrunch.com. It is rumored that the company didn’t have the money ($2.5M to $3.0M for a 30 second CBS spot during super bowl) to run the ad but they applied anyway betting that CBS will reject the ad. As a result, they got tons of free press and media coverage without spending a single dime.

This is what I call – Breakthrough Marketing.

Filed under: marketing, technology, web 2.0, facebook, mancrunch, urbandictionary, viral

Viral Marketing Part Duex

In the last post I talked about how viral marketing is unpredictable. You never know how a video becomes viral. Most of it is dependent on the following factors:

• Title: Search-ability? Most searched words?
• Snapshot: Attention grabber?
• Description: Sounds Interesting?
• Tags: Search-ability?
• Music: Catchy?
• Related: Will it show up in related videos?
• Payoff: What’s the payoff in the end?

Now look at this video:

We launched this video 10 months back when we launched a new product called the Cisco Spam & Virus Blocker. The video didn’t get much traction. We expected it to get more hits because we thought that the theme was interesting and the video was well executed.

We re-launched the video few days backs:

We changed the title from “Weird things happen in office” to “Strange things happen at the office”. We changed the music. We edited to highlight the product better. And most importantly, the payoff was much better than the previous video.

Suddenly this video has become viral. We are scratching our heads to understand what might have triggered it. The theme is more or less the same. Was it the music? The payoff? Did we touch an influential node (famous blogger, celebrity like Kawasaki) in the social graph? Was it just the timing? What do you think?

Update 11/25:
Cisco Blocker Video on Adage’s Viral Video Chart of the Week in #8:
http://adage.com/digital/article?article_id=140714

Filed under: marketing, web 2.0, cisco, video, viral, web marketing

Viral Marketing

Viral Marketing is no easy feat. It’s very hard to predict what’s going to become viral. Actually naming anything “viral” even before it becomes viral is an oxymoron. So, if anyone tells you – I am working on a viral marketing project, do this for me, roll your eyes. “Viral” cannot be created, it happens.

But it’s not just art; it’s science as well. Most importantly, if you are working on a “viral” project, make sure you can track the metrics from the top of the funnel to the bottom so that you can show success or failure. Many marketers forget that and focus too much on the creativity part. Remember, even if you are not successful, it is important that you have some key learning from the campaign or else how will you objectify the investment.

Also, most of the time, marketers don’t think about the end-result. What’s the goal of the viral marketing campaign? Do you want to raise awareness? Generate Leads? Based on your goal, the vehicles you use and the tactics you implement will be different.

Let me walk you through a very successful campaign we did here at Cisco to illustrate that. The power of networking and communications solutions is not necessarily well known among small business (5 – 250 employees) decision makers. They know Cisco, but may not know what we do, and specifically, what we can do for them. The idea of the campaign was to raise awareness among small business customers around Cisco small business solutions and pique their interest to provide contact information so that we can nurture them and entice them to buy our solution in the future.

Our objectives were straightforward:

1. Educate small business decision makers on the power of networking technologies to enable their businesses to succeed using humor

2. Demonstrate that these robust capabilities are well within reach of a small business’ budget and resources

3. Build a scalable marketing program that would enable us and our partners to drive demand, close sales opportunities, and create broader awareness for Cisco as a solution provider for small business.

4. Generate interest and excitement in Cisco’s solutions where you find small businesses—not at conferences once or twice a year, but on-demand, on the web.

We posted the “Peace of Mind” viral video on multiple video syndication sites across the web like MetaCafe and YouTube. It was also posted on internal Cisco sites, Cisco.com and partner sites. The concept of the video was to relay using humor how the Cisco small business portfolio provides peace of mind with reliable and trustworthy networking solutions.

Small Businesses who watched the video were enticed to come to the “Peace of Mind” landing page to watch more such videos. We also used banner ads with the theme “Peace of Mind” and Google paid search to direct traffic to the landing page. In the landing page, we had two offers – one for customers interested to buy the networking solution and one who were still not ready to buy.The customers who were ready to buy Cisco solutions were qualified by a third party telemarketing firm and passed on to partners to be followed up. The customers who were not ready to buy subscribed to our monthly Innovators newsletters to be further nurtured.

The end-results were phenomenal:

• 500,000 video hits on metacafe.com; digged 113 times; 58 comments
• More than 200,000 video hits on Youtube; 33 comments
• More than a million video hits on the internet; syndicated in more than 100 sites and 25 languages
• More than 5000 additional visitors on Cisco.com in 3 months and 88% new traffic
• 5000 new “Innovators” Subscribers
• More than 200 networking solution leads in the US
• Featured on UK and France small business Web sites
• 64% more traffic on Latin America Web site and 27% more online leads

Some key takeaways from this campaign:

• It is very important that you think through the objective of the campaign
• You measure every single touch point with your audience
• The audience has a pay-off at the end of the video as well as the landing page
• The landing page has compelling offers to engage the audience
• You deliver on your promise and experience throughout the customer journey

Filed under: marketing, web 2.0, cisco, marketing, metrics, video, viral, web marketing

Enterprise Social Media & Monetization

A study by Deloitte says that 94% of enterprises will invest in social media despite recession. A 2009 Forrester study by Jeremiah Owyang concluded that despite recession, more than 50% of marketers will increase their spending on social media. A very recent study by Enterprise Innovation found that 57% of the respondents still regard TV as the most trustworthy and influential media due to its popularity and ability to generate word-of-mouth effectively, however, social media, the youngest media option came in a very close second (55%), leading 14% ahead of print media. So, what?

I see more and more enterprises seeing the value of social media to reach customers, especially businesses catering to consumers. A presence in Facebook, Twitter or Youtube is a must. Dell says that it has earned $3M from Twitter. To quote New York Times: “Dell joins companies like Starbucks, JetBlue and Whole Foods as one of the most active corporate Twitter users. “It’s a great way to fix customer problems and hear what customers have to say, it’s a great feedback forum and it leads to sales — how can you miss?” said Richard Binhammer, who works in Dell’s corporate affairs office and is active on its Twitter accounts.” How much did Twitter made? $0

I fail to understand why can’t Twitter, Facebook or Youtube charge enterprises for an enterprise verified account. It’s as simple as what Yelp is doing with local businesses – give them a platform to talk to consumers, customize their pages and provide valuable statistics. It’s a win-win for both. And consumers have nothing to lose as long as their privacy is not invaded. I see a mutual healthy relationship:

- Youtube, Twitter and Facebook gets a subscription fee and provide valuable communication platform to the enterprises
- Enterprises use the platform to communicate and advertise
- Consumers pay nothing; use the information as necessary and not get spammed by advertisements

I see this as the only possible way for monetization of social media. One of the big three has to lead the way. The question is whom and when?

Or the social media will remain a fad forever. It’s time to act and act now.

Filed under: technology, web 2.0, enterprise, facebook, monetization, social media, twitter, youtube