Archive for November, 2006

Can I Get a Piggyback?

Tuesday, November 21st, 2006

No, this isn’t a flashback to grade 2 recess. It’s a new business strategy that has become Piggymore and more popular.

The idea is this: why build an existing user base from scratch when you can leverage a pre-existing one? Seems rather straight-forward, but many companies fail to take advantage of this.

Given that there are already many social networks and established online communities, why not milk these for all they’re worth? Several hundreds, if not thousands, of business models have been built off eBay, Amazon, MySpace, Craigslist, Yahoo, Google, and so on. Though these diverse tier 1 players may not provide a really well targeted, segmented group, you may want to look at some of the tier 2 or 3 players, which may still garner millions of users and heavy traffic.

A large part of YouTube’s success can be attributed to MySpace. The embeddable video player provided branded exposure and access to a new distribution channel for the video start-up.

As a general rule, widgets are a great way to take advantage of an existing user base and provide viral distribution. And in this case, the network may come in the form of a blog’s readership.

Though this is simply one strategy a start-up may choose to follow, it is definitely one that all should at least consider. 

Research Online, Purchase Offline

Monday, November 20th, 2006

Though the Internet has become an essential product research tool for the average consumer, the majority of purchases still occur offline.

Studies and polls show that consumers enjoy the wealth of information that the net has to offer, but prefer to complete the buying process offline. Many prefer the ability to visually see and touch the product, while others prefer to get the product then and there.

A study done by ComScore, in conjunction with Yahoo, indicates that 92% of consumer electronic purchases take place offline.

Though the two aforementioned articles were written early this year, the basic underlying principle remains the same. People are still more comfortable purchasing offline at bricks-and-mortar stores.

Will this trend continue? Short term, I believe so. Longer term however, as the general population becomes more comfortable with online purchasing and e-commerce, we will slowly see a shift. Nonetheless, there will always be a segment of the population who prefers to shop in an offline, physical setting.

So what’s the point of all of this? Well, with many Internet marketing strategies, measurement and post-strategy analysis is conducted. This is done to determine the ROI of each marketing initiative. From there, the strategy can be tweaked depending on what works and what doesn’t.

What web statistics/metrics/data can’t report are offline statistics and conversions. In some cases, tracking numbers, promo codes, coupons, special phone numbers, etc… can be used to measure conversions on a certain level, but these are inaccurate at best. A new system and/or company with new technology and tracking mechanisms will be crucial to the evolution of the buying cycle. This will not only allow companies to better track their marketing initiatives, but also bridge the gap between online and offline itself. The seamless integration of the two worlds will create innovative tracking mechanisms and mind-boggling marketing ideas.

The advertising cycle has moved from CPM, to CPC, to CPA. We are currently between the CPC and CPA stages. But what’s next? Or… what else do we need to be able to track? Offline conversions, of course.

Though most people research online, most buy offline. If we can somehow track this cycle and bridge the gap, expect big things to come.

A Look at Micropayments

Friday, November 17th, 2006

In my mind, a trend that we will continue to see in the evolution of the web is micropayments. Wikipedia defines a micropayment as a “means for transferring very small amounts of money, in situations where collecting such small amounts of money with the usual payment systems is impractical, or very expensive, in terms of the amount of money being collected”. Now let’s delve deeper.

Who are some very successful players in the new web today? Google and eBay are two heavy-hitters, among others. These two companies don’t make bank from huge purchases where large amounts of money get transferred from hand to hand. They make the majority of their revenues from small transaction that range from $0.05 to $5.00.

Google’s model is solely ad based. Advertisers pay, say $0.25, per click. On the other Google logoside, publishers receive anywhere from cents to a couple dollars (on average) per CPM. These are not huge sums of money, but their recurrences help drive large revenues. In other words, the volume of these transactions more than make up for their small amounts.

eBay relies on commissions - often under $10. Though these $2 or $3 transaction fees eBay logoseem minimal, they add up over time. Due to incredible volumes and mass selling, the company is able to gross billions in revenues per year - and this rate continues to grow.

The psychology behind micropayments is very interesting. People seem much less willing to pay $70 once, than $1 seventy times. Just think about your cell phone bill. Sure, your plan may proclaim $30 a month, but after service charges, text messaging fees, excess minutes, and that 2 hour drunken long distance call with your ex-girlfriend, you’re looking at a $100 bill. A far cry from $30.

These small charges sneak up on us like the expiry date on my 4-litre jug of milk. But from a company perspective, they are ingenious. The psychology allows you to swindle tons of money out of unsuspecting conscious, yet naive consumers.

Sounds like a damn good model to me. Where do I sign up?

Content is King

Thursday, November 16th, 2006

It is becoming more and more apparent that a media-oriented website (music, videos, photos) needs to, number one, focus on content. Everything else can come later. The interface, user experience, support, blah blah are all secondary to the content itself.

This is nothing new, but something often overlooked and in many cases ignored. The companies who are able to reward publishers of good content will succeed. Those who fail to do so will crumble in their dust.

Why does everyone go to YouTube? Their experience is great? It may be, but that’s not YouTube logothe reason. People go to YouTube because they know they can find any video they want. At least in my experiences, 99% of the time I searched for a video on YouTube, I found it. The other 1% was mostly due to copyright infringement, in which case the site had to take down the content.

Flickr is a great site too, in terms of user experience and interface. But yet again, it is not Flickr logothe real reason why so many flock to this photo sharing mecca. The quality photos and beautiful stills are the reason.

I’m going to be really honest here. MySpace is ugly as sh*t. It’s the new GeoCities. I’m MySpace logosick of the flashing text, tiled backgrounds, and completely customizable layouts. I nearly had a seizure the other day checking out a profile. Nonetheless, bands and singers have populated the site with millions upon millions of songs, mixes, and tracks - and this community continues to grow at an astonishing rate. Why? The music, of course.

Even sites not focused on media, such as Craigslist and Wikipedia, are great examples. They’re both not overly attractive, eye-catching sites. But people use them because of the content, whether it be a job posting or an encyclopedia entry.

The moral of the story is to focus content above all else. I know that this has been mentioned over and over in the blogosphere, but I don’t think it can be downplayed one bit. Anyone who overlooks this concept will be flattened in no time. Mark my word.

Web 2.0 Rumour Mill - Canadian Style

Wednesday, November 15th, 2006

Acquisition rumours have been swirling throughout the web 2.0 world in recent days. Two start-ups, BubbleShare and StumbleUpon, have been noted as being possible take-over targets in the very near future.

First up, TechCrunch reports that BubbleShare has been in talks with News Corp., the BubbleShare logoparent company of MySpace. Details and information is still very preliminary, but the deal is rumoured to be under $5 million. The Toronto-based photo sharing start-up is only about two years old.

Check out GigaOM and Maple Leaf 2.0 for more info on the possibility of a deal.

Second up, we have StumbleUpon, an Alberta-based start-up which has relocated to the StumbleUpon logoValley. Reports indicate that the company recently approached at least one possible company to be acquired. The company is looking for $50 million.

No concrete details of any deal have been disclosed and the CEO refused to comment on the rumours. It will be interesting and exciting to watch this innovative, successful company continue to prosper.

It’s great to see all the attention focused on a few aspiring Canadian start-ups. I hope this trend continues as there are many tech gems in Canada that our neighbours down south are unaware of.