Archive for August, 2007

Facebook Apps: Short Term Success, Long Term Failure

Thursday, August 30th, 2007

Facebook new logoAs Mark Evans points out in a recent post, there is a Facebook application “gold rush” taking place right now. Everyone and their dog is scrambling to launch an app to capitalize on this fad opportunity. Many are seeing astonishing growth – from zero to tens of thousands of users in a mere couple days. But is this truly sustainable? Even more importantly, is it really worth it? I don’t think so. But don’t tell that to Facebook or the application creators.

Anything that vaults to stratospheric popularity levels in a short period of time is bound to see a fall-out or backlash of some kind eventually. In this case, the novelty of apps will eventually wear off. Some may disagree, but I would wager that ‘superpoking’ and ‘throwing food’ are only cool for so long. Frankly, I’m already tired of all these ridiculous app invites after only a couple months.

The promise of monetization or a sale is what is driving this boom. But let’s be honest here – how many will actually profit from a sale or achieve reasonable revenues? My guess is under 1%. In other words, Facebook is almost creating a false sense of hope for developers. Subsequently, facebook profits from additional PR, user growth, and developer evangelism.

To me, Facebook applications are no more than a marketing funnel to an outside web presence. If you plan on making the app the entire business, you are walking a dangerously fine line. Forever more, you will be at the mercy of Facebook. If they decide to change course, you could be screwed.

My intuition tells me that the introduction of the developer platform was simply a move by the company to create short terms success and fuel PR ahead of an IPO or potential sale. Let’s analyze this further:

  1. Facebook launches the developer platform.
  2. Developers experience exponential growth and boast about their success.
  3. The press takes notice; widespread PR ensues.
  4. More developers jump on the bandwagon.
  5. A positive feedback loop is created: success feeds PR, which fuels further applications. Repeat.
  6. Eventually, a bubble is created as the app market is saturated and over-crowded. The dilution leads to a fall-out.

In other words, I believe that the developer platform is a short term ‘stunt’ to raise awareness and exposure for the company. Over the long term, I see the move as being more detrimental than beneficial. I, for one, am already starting to get disgruntled by the addition of clutter and useless knick-knacks. The Facebook crowd, for the most part, is an older group. Such silly applications should be left for the MySpace or hi5 crowd. They degrade the quality of the experience. A seeming endless amount of scrolling is now needed to browse most profile pages. Is this the Facebook that we all remember?

Note: I refuse to make any parallels to MySpace or Geocities just yet…

Hulu – A Legitimate Threat to YouTube

Wednesday, August 29th, 2007

Hulu logoToday, News Corp and NBC Universal announced the name of their much anticipated YouTube killer – Hulu. A couple of weeks ago, the unnamed venture raised $100 million via Providence Equity Partners in exchange for 10% of the company. A quick math calculation equates the valuation to a whopping $1 billion. While many scoffed at this ridiculous valuation, I’m not so quick to count out this potential industry player.

Why is YouTube as big as it is? Obviously their video widget provided a viral marketing channel, but that only funnels potential users to the site. It still doesn’t explain the ‘stickiness’ and allure of the video-sharing portal. Nonetheless, it quickly becomes clear that illegal content is the driving force. YouTube is nothing with it. Millions of users hit the site everyday to watch music videos, TV shows, and movie clips. Not many care that Joe from Connecticut can juggle. The only exception I can think of are how-to videos. These non-commercial, useful UGC clips provide value to the viewer, regardless of whether you know the creator or not.

So how can Hulu compete against YouTube and the other big boys? Simple. Hulu has one thing that nearly all of other video sharing sites lack – the rights to production-quality content*. Sure, YouTube and others will continue to stream illegal content, but is this truly a sustainable long-term strategy? I’m not so convinced. What catapulted YouTube to the top in the first place may ultimately lead to its demise in the end. This is imminent flaw of social media. Just ask Digg.

So now anyone can watch legitimate, high-quality episodes of Heroes, madTV, 24, The Office, Family Guy, and Las Vegas (to name a few) for free, on-demand, anywhere in the world? Sounds pretty compelling to me. What does all this mean for traditional TV? Well, traditional folk can still view News Corp/NBC programming via the old tube, whereas tech-savvy users will turn to the Internet. Moreover, if you were to miss a given episode on TV or you happened stuck in Kenya without a TV, you can still tune in and watch on Hulu.

This brings up another huge advantage that Hulu has over the competition – a stunning revenue model. Hulu can command huge ad dollars and premium CPMs as they have complete control over the content. Furthermore, the site can leverage pre-existing relationships with advertisers at News Corp and NBC Universal. As opposed to traditional TV where viewers can’t click or ‘follow’ the ads, this form of programming is interactive and opens the door to new advertising opportunities. This conversion process is not only more effective, but also measurable.

It’s still too early to speculate the potential features and functionality of the offering. For what it’s worth, the portal may only stream old episodes or segments of episodes. I highly doubt this, but we will soon find out. Hulu isn’t currently operational. The home page is simply a landing page where interested parties can enter their e-mail to get a sneak peek of the BETA product when the time comes (apparently sometime in October according to Hulu).

I look forward to catching of glimpse of this potential industry-changing venture. Many aren’t giving it a chance, but I wouldn’t be so quick to make a judgment just yet.

*Note: As far as I know, there will be no user-generated content (UGC) on the site. It will strictly consist of company-owned premium content. Please inform me if you know otherwise.

I Digg The New Interface

Monday, August 27th, 2007

Digg logoThis evening, Digg launched an all new interface. The new design is even more clear and intuitive than before. Some of the changes include:

  • The ability to view both news and videos on a single page. This is due to feedback received indicating a high interest in videos.
  • Tweaks to the page and story summary layouts.
  • Streamlined navigation.
  • Increased customization options.
  • Simple one-click bury with no explanation needed.

All in all, small cosmetics changes such as added icons, new colour palettes, and shuffled page elements add to the overall clean experience. The service description has moved from the right sidebar to the main navigation column. This provides more concise site messaging for new visitors, as well as a clear call-to-action for potential new users (i.e. Join now). As a side note, Digg continues to minimize page views by maximizing AJAX functionality.

From a more broad prespective, I think Digg is trying to bring the service mainstream. The dead simple navigation and clear messaging indicate a marketing push to regular folk. That being said, it also appears as though Digg is making a big push toward monetization. A very large, prominent inline rectangle ad is now visible on the home page. Article pages are also riddled with two ads – both a leaderboard and an inline rectangle ad. It will be interested to see how the Digg community reacts to such changes.

From an initial glance, I really like the new changes. Digg has done a really good job of simplifying the experience, yet adding functionality. Such a counterintuitive feat can only be the result of brilliance. Kudos to the Digg team.

How To Launch A Web Service

Monday, August 27th, 2007

Come launch day, your marketing department shouldn’t and running around like chickens. They should be relaxing and breathing a sigh of relief. Ok, I may be exaggerating a bit, but not by much.

The basic premise is this: all Internet marketing and advertising campaigns should be ready to go before launch day. That way, once the day arrives, a metaphorical switch can be flicked to activate the marketing machine.

What does this means? Well, some or all of the following should be ready prior to launch:

  • PR initiatives (including a press release)
  • Ad campaigns (online and offline)
  • Blogger relationships
  • Internal marketing functions
  • Branding/positioning/messaging
  • Search engine optimization
  • Web analytics
  • Company blog
  • Contest(s)

So when launch day finally comes, you can simply ‘flick the switch’.

Some traffic will come from one-time sources (i.e. press release, news story, etc..), while some will come from residual sources (i.e. search engines, current users, etc…). The list above translates to traffic from the following sources:

  • News sites
  • Offline publications (newspapers, magazines)
  • Blogs
  • Current users
  • Search engines

Such diverse sources will ensure a steady, consistent influx of traffic. The reliance on a single avenue is always risky, as it may not provide the intended outcome. Any marketing campaign should include multiple traffic funnels to maximize exposure and overall efforts. Often, the main, pre-determined source of traffic doesn’t live up to expectations and some overlooked avenue ends up driving a bulk of the traffic.

Is The BETA Invite System Flawed?

Thursday, August 23rd, 2007

BETA logoHere is a stunning revelation: the BETA invite system has nothing to do with actual testing. Rather, it is simply a marketing ploy aimed at attracting new users. Is this truly a stunning revelation? Or did I just state the obvious?

Historically, a start-up would quietly seek out BETA users to test the product. These individuals would try to break it and take note of any bugs. Feedback was key. This was back in a time when the BETA system was legitimate. Does this sound like a typical ‘BETA tester’ of today? It seems that every start-up graduates from the cliched ‘stealth mode’ to the cliched ‘BETA mode’ at some point. Nowadays, these terms are so common that their marketing value has diminished to zero. In other words, these buzz words do not attract the attention and exposure that they once did. Furthermore, the misuse of the term ‘BETA’ is so widespread that rectification cannot be achieved.

Not surprisingly however, this tactic has been succesfully leveraged many times in the past, most notably by Gmail. More recently, Joost caused quite a stir with a similar strategy. But such a system is just not cool any more. People frown upon BETA logos and invite systems. They have become overused to the point of saturation.

BETA products are supposed to be full of bugs. They are supposed to contain errors. But nowadays, it seems that these BETA products are shipped in perfect condition. Why? Because they are intended for the end user, not the supposed BETA tester. Think about it. Who uses a BETA product nowadays? Everyone. This isn’t the way it’s supposed to be. If everyone is truly ready to use the product, the ‘BETA’ badge should be dropped. Here’s the way the system should work: if a company is truly in need of BETA users, they should methodically seek out a specific subset of people, rather than proclaim the need over a figurative megaphone. This will attract the wrong crowd.

So just how hot is the BETA invite market? Well, many hard-to-acquire invites have landed on eBay and sold for much higher than their actual value ($0). In addition, TechCrunch recently purchased InviteShare, a BETA invite-sharing community. Interest in the area is obvious and this will further change the shape of this newfangled marketplace/industry.

To close, I have some words of wisdom for any new start-up… “The BETA invite marketing tactic has been played out. It’s really not that sweet any more. Do us all a favour and drop the BETA… Ok? All the best.”