Archive for the ‘marketing’ Category

Open Vs. Closed Communities

Saturday, February 24th, 2007

Most agree that the more users you have, the better. Interestingly enough, this is not always the case. Another misconception arises around pricing. Most would like to offer their services free of charge at all cost (no pun intended). Once again, this is not always the best option. Often times, a smaller, closed, paid community may offer more advantages than a larger open community.

Nowadays, it’s almost unheard of to charge for a service. Google AdSense is a staple. Advertising is considered the main revenue stream for most start-ups. This eliminates the commitment and barriers to entry for new users. By alienating potential users with a fee, the company may be bypassing a high percentage of their target market.

However, there is a quasi-hybrid version. Free trial periods eliminate the financial burden and provide a glimpse into the service. Forcing the ‘blind jump’ upon new visitors is not only dangerous, but unacceptable in this day and age.

Many services offer a free, ad-supported version or a premium, ad-free subscription with additional features. For the most part, users are satisfied with with the former option. But power users and those annoyed by ads may pay the usually small premium. But what do paid, closed networks offer that is often overlooked?


By limiting a network to paying customers, the service is able to elude (for the most part) spammers and illegitimate users, as well as uneducated and inactive users. If a credit card is being billed monthly, you’ll quickly find out who your power users are.

Implementing a paid system should in theory lead to a higher quality network, which in turn should lead to a more respected, credible name. This branding strategy further solidifies the outward facing image in terms of quality.

I’m not saying that all networks should be closed, or multi-level, or even free for that matter. Each individual site or community must determine which path is most appropriate. If a paid option is considered, there must be a significant value proposition for the user. The service must provide differentiation and a strong bond with the user, otherwise they are prone to switch to a competitor or simply drop the service altogether. If a user can’t live without your service or depends upon it very highly, you’re on the right track. It’s quite possible that the user is willing to pay.

New companies must decide which revenue model to adopt. Obviously, a case-by-case analysis must be performed. But the important thing for new companies to understand is that it is okay to charge if you feel the service merits the fee. Not all companies can and should be monetized by Google.

Satellite Radio Deal = Sirius Regulatory Fiasco

Wednesday, February 21st, 2007

XM Satellite Radio and Sirius Satellite Radio merger logoAfter numerous months of speculation, satellite radio titans XM and Sirius have agreed to tie the knot. This new media monolith has not yet announced a new name, although Xirius might be an interesting thought. The marriage creates an entity with a market cap of $13 billion (including $1.6 billion in debt) and a subscriber base of over 13 million. Current Sirius CEO, Mel Karmazin, will remain CEO of the new company, while XM chairman Gary Parsons will retain his position after the merger as well. Current XM CEO, Hugh Panero, is expected to step down after the deal is finalized. This is probably a good call as he has received bad press as of late, amid allegations he provided positive outlook knowing full well the targets would not be met. This doesn’t sound all that bad until you hear that he also sold millions of dollars worth of shares during that time.

As you can imagine, the merger is expected to create economies of scale, hence cost savings. I would expect big lay-offs to come. The most important number for both companies up until this point has been the user acquisition cost. This deal is expected to cut that expense significantly. Furthermore, the union will produce a greater variety of subscriber products and flexibility within packages.

As both players accumulate bigger losses on their balance sheets, it was only a matter of time before they banded together to do what had to be done. Some call it a last ditch attempt. The companies call is a strategic move.

But wait. Stop the press. Will the deal actually go through? I HIGHLY doubt it.

The satellite radio industry is quite interesting. Why? Because they’re are only two players. Forget market share or niches. There are only two players in the industry, period. What other special-case industries can lay the same claim. Very few… only the soft drink and airline manufacturing industries off the top of my head.

Now if Pepsi and Coca-Cola were to merge, I’m sure all hell would break lose. Conspiracies theories would run amok and regulators would absolutely not let such a deal pass. The same is true of Boeing and Airbus. Collaboration as such eliminates competition completely and provides the opportunity for inflated pricing, as no other alternatives. Just take a look at Microsoft Windows…

To say the two companies face regulatory hurdles is the understatement of the year. In order for the merger to pass, FCC chairman Kevin Martin says ”the companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices.” Hmmm… it could happen. But I bet it would unfold like any government candidate platform. Short-term lies to attain long-term gains.

In any case, knowing the state of ethics in corporate America nowadays, the merger will pass with little or no scrutiny. 

The 37signals Way

Friday, February 16th, 2007

37signals logoLet me tell you about a small Chicago company named 37signals. Not only have they created some of the most functional apps on the net (Backpack, Campfire, Basecamp, Ta-da List, Writeboard), but they’ve also managed to produce one of the most successful tech job boards and a corporate blog. Oh, did I mention they also pioneered Ruby On Rails, a highly popular, widely-touted, open-source web-application framework?

Why are they so successful at doing so many different things? It’s simple. The answer is… they’re simple.

They run a lean operation, both in terms of manpower and product specifications. This is not to say the products lack functionality or sophistication. It simply states that the interfaces and designs are clean, and that only the necessary features are included - nothing over the top or extraneous.

So how come no-one else is taking a similar approaching to web applications? Beats me…

Their simple, easy-to-use apps are setting the industry standard in an industry that doesn’t exist. Obviously, other companies are pitching their project management, collaborative writing, real-time chat, and organizational tools, but none seem to be competing on the same level. Or maybe 37signals has simply created a niche and taken 100% ownership of it.

Moving along…

Their revenue model is ingenious. They actually CHARGE people. Unlike many web 2.0 outfits that are monetized via Google AdSense and run-of-the-mill ads, 37signals actually charges users once they’ve tried the product and determined that the basic feature set is insufficient. In other words, no financial commitment is made until the user determines that the given product has a basic level of functionality, but that the premium version is the optimal choice. Only then, does 37signals achieve a transaction. Surprisingly, people WILL pay for a good product - even for software, in this day and age.

As I have said, I am still unsure as to why another company hasn’t come along and tried to accomplish the same thing as 37signals. Eventually, others will clue in. But in the short term, I think there is a very real opportunity for a small, lean start-up to step in and create simple web-based apps that are not only clean, but functional. Competing in a different realm than 37signals may be a good option, but there are countless other small niches to be conquered. In doing so, the venture may be able to achieve the web 2.0 unthinkable… revenues. Or in a utopian world… profits.

Driving Indirect, Unqualified Traffic

Thursday, February 8th, 2007

Search engine optimization, natural linking, and trackbacks are good ways to drive free, qualified traffic. Visitors are usually genuinely interested in the content and may decide to add your blog to their RSS reader. This is great. But what if you want to drive even more traffic that may not be AS qualified, but has the potential to be interested in your content?

Huh? What does that mean? I’m talking about quantity rather quality. Obviously the aforementioned traffic streams will provide a consistent influx. But how do you drive extra, residual traffic?

After analyzing my web statistics on a regular basis, I’ve come to realize that MappingTheWeb drives a considerable amount of graphic via image searches. In other words, Google Image searches (most notably) provide visits.

Now although these visitors aren’t exactly qualified traffic, a small percentage will explore your content and find an interest in it. If bandwidth and hosting costs are not an issue, most blog owners would prefer as much traffic as possible - whether they become regular readers or not.

For this reason, I always tag my images very well. Providing a title and description in WordPress is quite easy. I do so for all uploaded images.

In most cases, I am uploading the logos of web 2.0 companies. These drive a fair amount of traffic, namely the YouTube logo. However, other graphics and pics squander some long-tail traffic, which adds up over time.

Therefore, a suggestion for blog owners who publish mostly text would be to add pictures, images, photos, and graphics. Describe them in detail. Check your incoming referrals and SEO stats. You should see some positive results.

How To Reach The Tipping Point

Wednesday, January 31st, 2007

Every modern-day home business libraray seems to contain at least one or two titles by Seth Godin, Guy Kawasaki, and/or Malcolm Gladwell. Together, these new-age business revolutionaries have paved the way for a for a new type or marketing and thought-process.

Gladwell’s first title, The Tipping Point, gained widespread acclaim and went on to hit the bestseller list. A cult-like following ensued. The same can be said for the former two authors, but years earlier. In any case, there is a common thread among their books that entails the idea of evangelists, connectors, ’sneezers’, mavens, and influencers. These are the people who will not only use your product, but rave about it to others. These are your loyal fans, your army. But reaching them has always been a problem. Until the advent of the Internet…



Much has been said about the micro-communities, niches, and target groups that marketers strive to reach. Offline, locating these tight-knit groups is next to impossible. Even in a case where a marketer is able to reach the intended audience, messages are more often than not ignored or over-looked. Finally, the level of interaction leaves much to be desired.

Enter The Blogosphere

What if a marketer was able to tap a pre-existing network that of micro-communities that were focused around a specific niche or topic? What if there were search tools to simplify the process even further? Locating your influencers and evangelists, and creating product conversations would be much easier. The process could in theory be broken down into a set of steps. This ‘art’ of marketing is all of a sudden a science.

The blogosphere and blog search engines are the stuff that dreams are made of - for marketers. Add to that blog directories and ranking systems, and not only can a marketing strategy be tailored around a specific group, but around the status or hierarchy of a given group.

For obvious reasons, I am not going to outline the entire marketing process, but you can begin to see how valuable the blogosphere and an accompanying toolkit can be.

Use it wisely and treat these users like gold. The Tipping Point is closer than it appears…