36 posts tagged “advertisement”
Each time the Widget site receives a "delivery call", it is expected to generate revenue.
[+]A new term: Widget
Widget is another popular new term after Blog and SNS. So far, there seems to be no proper Chinese equivalent to it. Literally, it can be translated into something like "small tool", or "fancy things", which somehow sound weird and cannot explain its functionality and impact.
On the sidebars of many blogs, particularly independent blogs, we can often see many fancy things, like a beautiful clock, or a weather forecast column, or news headline updates. These fancy things, which occupy small spaces on the web page and offer a variety of functions, are one kind of Widgets.
Of course, there are Widgets that can be downloaded and installed into your PC or cell phone. You also can download Widgets from many portals, including Microsoft, Google and Yahoo! and install them onto MSN Space, Google Personal or My Yahoo. These, however, are beyond the scope of this article, which only focuses on independent sites to offer Widget service like http://Widgetbox.com.
Why, then, do most of Widgets used by independent Blogs, rather than those empowered by large blog service providers (e.g., MSN Space)? The reason is most blog service providers do not allow bloggers to add Javascript into their blogs, while most Widgets were written by Javascprit code to be embedded into blog web pages.
In addition, it takes considerable expertise to insert Widgets. An ordinary Internet user would have to do a lot of learning before being able to put Widgets on his/her Blog. Most individuals who build their own Blog sites are familiar with such expertise. However, such difficulty is not yet to become an obstacle to the infiltration of Widgets across the Internet in many countries. There have emerged a lot of sites that offer Widget services.
In China, however, Widget is not so popular, mainly for two reasons: 1) given the Internet environment in the country, it is hard for an ordinary Internet user to build his/her own Blog site. In the United States, from applying for the domain name to leasing a host to activating the blog system to making the payment, everything can be done online. 2) Many international Blog service providers begin to allow embedded Javascript, which increases the possibility of Widgets being used.
[+]Operation model of Widget service
Widget service operators provide Widgets with diversified functions. To embed the Widgets onto their own Blogs, Internet users need to copy the corresponding Javascript onto their own Blogs. When the web page of a Blog is viewed, the Javascript code was triggered to retrieve the corresponding Widget from the service provider site and send it back to the web page where embedded.
This is the underlying mechanism of Widgets. A site offering Widget services is like a large warehouse, which sends a shipment whenever it receives a delivery call. Eventually, the goods are displayed in stores around the street. The problem is that nobody is going to visit the warehouse itself. Hence there appears a paradox of business operation: the sites of Widget service providers themselves do not have high traffic.
The traffic have gone to thousands of Blogs. The bandwidth budgets of the Widget service providers are used entirely for the transmission of Widgets to Blogs. According to my own experience in Widget service provision, Blogs that rank top 30% in terms of the total "deliveries" consumes 90% of the delivery calls, which is close to the proportion of the traditional 80:20 rule.
The website I build to offer Widget service is: http://www.rankwidget.com.
The function of this particular Widget is to show the Alexa ranking or the Google Pagerank of the Blog web page where it is put. I have operated the site for half a year now. At its peak, my site provided services to about 50,000 websites, delivering 200,000 times each day. (because advertisement was introduced later, the volume dropped to one third of the original level, with about 60,000 times delivered each day.)
Such niche market-targeted Widget cannot expect to have a lot of users, so 200,000 delivery times per day is a fairly satisfactory figure. The problem is that the site (rankwidget.com) has very low traffic itself - with less than 1,000 page views each day. We cannot expect to have many visitors to the "warehouse". The question is: how do operators of such an emerging application make money? After all, the bandwidth cost is a tangible expenditure every month.
[+]How do Widget operators make money?
You can take a look at a real operation of the Widget on: http://english.digitalwall.com. Open the web page and move to the bottom left corner, where your browser would bring out a pop up ad window behind your browser. When you move your mouse onto the Widget, a "bubble ad" appears. These are the operation models of the Widget I have tried. (Now the site no longer has bubble ads.)
With the 60,000 page views of the Widget site, the pop-under ad window ads would be displayed 2,500 times (most browsers have default pop-up ad blockers, which would significantly reduce the number of display time), resulting in a click rate as low as 0.2%. With the CPM or CPC-based billing approach widely adopted in the United States, I, as the operator of the Widget site, will end up in starvation.
The mindset is simple: each time a Widget site receives a "delivery call", it is expected to generate revenue, as each time there's a bandwidth cost. Hence advertising becomes a model worth trying. However, as the Widget brings disturbing ads, many Blogger prefer not to use it.
The Internet is really an unreasonable business environment. Users don't care about what operation cost you have. When I used pop-under ad windows, I had to face tides of fury of many Bloggers. Later on, I replaced it with a milder model: bubble ad, which was a big innovation (it seemed that nobody had tried it before), but the income was far away from satisfaction.
I am still exploring profit models for the Widget. In this field, I can be counted as one of the pioneers worldwide. With the thriving of SNS, many sites are following the lead of Facebook along a path toward Open API. In the future, the focus of the Widget is expected to extend from Blog to SNS. How to help this emerging service to find a profit model has become an interesting topic.
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Prev : Great Changes in Wireless Internet Industry (4) Apple's Strategy
- Today in History
Initial Experience of Widget's Profit Model - 2008/05/04
A gradual blending of old and new.
[+] Web 2.0 is direct marketing
In the traditional business world, it may not be difficult for start-ups to innovate or produce good products, but it surely takes much more efforts for them to channel products to end-users. Finding a channel may not be very hard, but it would cost you dearly. Capitalist who own channels are tough guys to deal with.
Ten years ago the emergence of the Internet brought some changes for the first time. For Internet start-ups, their products are websites, and their services can reach end users directly. They don't need other channels. This was how the advantage of the capital-intensive newspaper industry, which controlled the distribution channel, gradually dissolved. The Web 1.0 world has taken its place.
This new channel of the Internet has impacted on traditional media, traditional business models and also traditional communications. Generally, in the Web 1.0 era, there are a lot of people with only a small capital starting their businesses. They can do so because they've found a low-cost marketing channel to break the blockade set by traditional capitalists.
Yet after 10 years, some startups, such as Yahoo!, have become new capitalists. They control the distribution channels and suffocate the chances of new Internet startups, which have to buy expensive advertisements from "traditional" channels - Web 1.0 websites - to draw visitors to their websites.
Many years ago in the traditional business world, there was a new channel called direct marketing. It was about bypassing the traditional distribution channel by marketing through social networks. Today with so many tycoons in the Internet, how can we avoid them and do business in a low cost way?
The answer lies in social networks. Web 2.0 startups make ingenious use of social networks or interpersonal relationship to do low-cost marketing. To market through social networks is a very smart strategy. Without this, we won't see significant growth in these new websites' user-base and traffic.
[+] Back to the basics is the key to growth
Many people have the experience of buying products via direct marketing, but they don't have much confidence in it. People who participate in the direct marketing system constantly come and go, making it not very stable. Web 2.0 services attract new users through interpersonal relationship in a similar way. Moreover, a brilliant marketing strategy still cannot solve the inherent problems of products.
The first article of this series talks about two problems of Web 2.0 websites. The first is high user churn rate, and the second is that once users decide to leave, they won't turn to other competitors but will quit all websites/services of similar kind for good.
For a website operator, this has two implications. Firstly, users who leave your competing websites won't go to yours, which means you have to target at first-timers. Think about those users who are still new to the market, and they are the ones your products should be designed for.
Secondly, users will leave sooner or later, so most importantly you should strive to capture heavy users. Only heavy users would migrate among Web 2.0 websites of similar kind or try new websites. An important step for your website to succeed is to seize this group of users.
Once a website can control a certain group of heavy users, it can then start to think about how to either make profits or stay small and survive gracefully, like all successful community websites. However, is there any way to expand the user-base by drawing in less-active users?
My suggestion is, get rid of the strong community atmosphere and cultural ambiance! They are incompatible with things that can meet people's basic needs, such as storage, tools and content.
These things, simply put, are products of Web 1.0.
[+] Next step: storage, tools and content
The founder of Facebook Mark Zuckerbery once said that Facebook is not a social network but a social tool. His words are often interpreted as "Facebook as an operating system or platform," and Facebook's open API implies such possibilities.
His words are impressive because he points out concisely that the key to get big is to serve as a "platform." My understanding of his words is that platforms and tools are things that have little to do with culture. They can be used by anyone and don't require users to change their habits.
You use Gmail to write emails and MSN to send messages very easily. These tools don't have much to do with culture (at least not as much as online community websites.) Operators who have been focused on developing a vibrant online community to retain active users need to think about what are the tools that are not so hot but can be used by all.
Instant messaging (IM), a tool that is highly related to social activities, is one example. For the past ten years, the IM market has been very stable. If a social networking service (SNS) provider with several hundred million users launches a new IM tool, it may have the potential to change the market dynamics.
In addition, people get tired of social activities once in a while. Maybe a user just needs a space to store their photos, documents and bookmarks. S/he doesn't want anyone to know the URL of his/her homepage or to bother her/him with status alerts. Is it possible that a SNS website can provide such functions?
Storage is one of such basic needs. Some active users may be happily busy with various social activities all day long, but there are still more people who need only basic services. What will make a user to keep on visiting a website once s/he gets tired of online social activities? Maybe s/he just needs a space to store pictures.
Active users visit a website because they need the social network there; other users do so simply because this is where they store their stuff.
[+] Web 2.0 evolution is about to complete
The third thing is content. This is easier to understand, and many Web 2.0 websites are doing it. For those who are not keen on social activities, let's give them some content. Using tags to aggregate content is a common method.
So at the end you'll find that Web 2.0 is still about the four pillars of the Internet, which I mentioned years ago: content, community, communication, and commerce.
In Web 1.0, a website operator would start from providing content and then functions of online community, communications and commerce. In Web 2.0, an operator would start from developing communities and then content and communications tools and lastly commerce.
We finally get a clear picture of Web 2.0 in the context of our time. It's about a grand evolution of websites all over the world. The result will not be about replacing old websites with new ones, but a gradual blending of old and new.
Whatever it is in Web x.0, it is all to be used by people. And the humanity of people do not change.
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Prev : Web 2.0 Finale (2) Websites With a Specific Culture Can't Grow Big
- Today in History
Web 2.0 Finale (3) Finally blended in Web 1.0 - 2008/01/06
The Fourth Generation of Internet Marketing (3) IM Marketing - 2007/01/07
The Internet in the future will become a place for group therapy.
[+] Emotional products in the physical world
There are many ways to sell "happiness." One is to write a book on "happiness" (hedonics), turn it into some kind of study and sell it in bookstores. Or, you can package it in a mineral water advertisement and represent the bottle of water as an indispensable thing when families and friends get together happily.
In a fiercely competitive car market, a car dealer seeks to boost sales by presenting its car as "the only car that equipped happiness." In a trendy sitcom, the leading actor would win the heart of thousands of female audience by calling," I swear I'll bring you happiness."
This is the power of "emotional products," Marketing experts in the traditional business world have long noticed that the key to a consumer's purchasing decision, sometimes, is not the function or price of the product, but something that can trigger certain memory or emotion deep inside the mind of a consumer.
For those who buy the book/mineral water/car/trendy sitcom DVD, do they then live happily ever after? No. More precisely, their feeling of happiness reaches completion right at the moment of consumption. Emotional products that cannot achieve such effect would definitely fail.
Certainly you can say that emotions are added value to the above mentioned products; they are not the products themselves. Yet after ten years of development of the Internet, we begin to see that "emotion" per se can become a product and has the potential to change the look of the business world.
Yes, the dawn of emotion economics is upon us. In the past, "It" is the added value of some products; now "It" will become a product and will revel "Its" value through the form of Web 2.0. Strong emotions will become a kind of belief, so the reference for emotion economics will be religion.
[+] Internet from physical to spiritual
I sort out the characteristics of traditional Internet, Web 2.0, and Web 2.0 Next in the following chart. Simply put, the mission of the Internet will evolve from "carrying information" to "carrying emotion."
From eCommerce to emotion-centric websites, ordered from left to right of the chart above, we can see that during these 10 years, the Internet has evolved from more physical to more virtual and from material to spiritual.
Though eCommerce is an important business of the Internet, 70% of the operation, such as warehousing, logistics and payment processing, is done in the offline world in a way similar to that of mail order or brick-and-mortar retail stores.
Information processing is a critical issue in Web 1.0. The lessening of the problem of product information asymmetry has led to the emergence of eCommerce. Users can compare prices online with just a click, and they can easily find product information or even other people's experience of the product before making purchasing decisions.
Web 1.0 media have moved a lot of content online and even produce their own in order to reduce the cost of acquiring information. Too much information however creates the problem of overload. Then there is the search engine that provides precision to help filter undesired information.
In this phase, the trait of the Internet as a "tool" is very obvious. People use the Internet to make their life more convenient, with a focus on how to "improve efficiency." As a result, many traditional business models are gradually replaced by the Internet for better efficiency.
[+] Web 2.0 Next: the emergence of "emotion centric websites"
Blog ushers in the era of Web 2.0, empowered people to publish their own work - the so-called "individual publishing" - for the first time. There is no problem for us to download information anymore; now it's time for us to upload and express our voice.
Such characteristic then starts to push Blog to the way of Social Networking. People of similar interests and tastes are gathered and get to know each other through well-designed guidance. Content on Blogs only provide an excuse for people to start a talk.
Well, the kind of blogs mentioned above are only those that are focused on content sharing. The number of bloggers is increasing, and it is impossible that every one of them is good at writing or photography. As a result, a lot of bloggers are just letting off their feelings of these days. Normally there are only a few words on the Blogs.
Yes it's about emotions. So what to do next is to lead the people who have similar or opposite emotions to get gather and allow their emotions to vent and thus reach completion through some kinds of rituals or activities.
Just like the one who buys "the only car that equipped happiness" - his desire for a happy family reaches completion at the moment when he pays for it. It is easier for us on the Internet than in the physical world.
What kinds of (good and bad) emotions and desires do people have? They may include:
- Hope. (It's said that among all living beings, only humans will have hopes.)
- Happiness. (Longing and expectation for happiness that one lacks or desires.)
- Hatred. (To smooth it away through some kind of ritual.)
- To be loved, cared and blessed (and thus gain strength).
- To know if there are other people in the world who have similar weird thoughts or particular experience or so on.
- To enjoy solitude (while keep in touch with the world!)
- To fulfill the desire and enjoy the excitement to peep and to be peeped.
- To satisfy the sense of vanity or accomplishment (or to find motivation to catch up) through comparing with others.
- To do good and help others (everyone wants to do a little good as long as s/he has a chance.)
- A secret whim to "kuso" or to do non-sense reckless doings (and enjoy the pleasant sensation to break the rules and customs of the society).
- Greed (and jealousy and desire to monopolize that comes along.)
- Innocence and the desire to be like a kid. (This is why Little Prince is so popular.)
- The hobby to collect things (We are all more or less obsessed with collecting some things.) and fetishism.
- Hesitation when faced with choices and desire to pry into the future. (This is why fortune telling is so popular.)
- ...
The more subtleness of human nature you observe, the more you can grasp the essence and spirit of emotion economics. What will people get gather for, and what kind of emotion will they pay for its completion? Through creative packaging, the items listed above can be developed into interesting and colorful "emotion centric websites."
Simply put, the Internet in the future will become a place for group therapy.
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Prev : The Spirit of Web 2.0 New Media Lies in "Inter-personal Communication"
- Today in History
The Next Step for Web 2.0 (1) The Dawn of Emotion Economics - 2007/08/26
The Web 2.0 Revolution (2) the Emergence of New Media - 2006/08/27
The Web 2.0 Revolution (1) the Root Cause is Cost - 2006/08/20
Envisioning China's 3G Market (1) 3G Will Not Increase ARPU - 2005/08/28
PDA in Siege (2) Bottlenecks of the Smart Phone - 2004/08/22
The meaning of "new media" is about giving up traditional broadcasting media and enabling interactive, inter-personal communication in a world that is turning into an intimate global village.
[+] Social networks become a new channel for branding
In the earlier stage of online advertising, website operators would ask advertisers to pay for 1.3 million exposures. Soon the CPC (cost per click) model became popular, and website operators started to tell advertisers to pay for 1.3 million clicks.
In the case of traditional advertising, it is aimed to produce an impression of the brand on you by repetitive exposures, so that you'll remember to buy this product when you do shopping in a store. In the earlier stage of the Internet, online advertising followed this thinking, and advertisers were told that the branding effect existed even if users did not click on the advertisements. Although it does not sound very persuasive, it still sells to big brand advertisers having huge budgets.
In spite of the growing popularity of CPC model, which has taken a good share of the market of medium and small advertisers, advertisements sold on the basis of exposures still can pull the money out of big advertisers' pockets.
Now we are entering the era of Web 2.0, yet major brand advertisers and website operators still stick to the old-fashioned concepts and 1.0 mindset. In fact, online marketing has entered the era of "pay for 1.3 million users' in-depth participation."
The point here is "inter-personal communication," which is exactly the strength and spirit of Web 2.0. Simply put, traditional advertising is about "I play and you watch," while Web 2.0 advertising is about "I tell you, you tell her/him, and the brand quickly spreads in the social networks."
[+] The Pepsi case
Here I'm going to share with you a recent case, which is classic in Web 2.0 marketing. The event in this case lasted for one month, attracting 1.3 million users to register, 120 million votes in total, and 6.8 bulletin board messages posted by users.
This event was the annual online event of Pepsi, which was called "Your Picture Appear on a Can." That is, contestants submitted their pictures and got selected by consumer votes. Those who garnered the highest votes can put their pictures on the Pepsi can.
The competition was divided into two stages. At the first stage, Pepsi together with five participating websites held tryouts respectively. One participating website, 51.com, attracted as many as 1.3 million users, which was more than twice as many as the total of the other four websites, to join the competition.
Such contrast was largely because that 51.com is completely a Web 2.0 website, which is characterized by real-time interaction. Therefore we need to look at the difference between this particular website and other traditional blogs websites.
First of all, 51.com is a kind of Social Networking Service, including blogs, photo albums and online communities. Users write their online diaries while reading others', and they can set up their own "friend list."
[+] How brands spread in a Web 2.0 website?
Not like traditional blog websites, 51.com does not emphasize on content. For many blog websites, the first page after logging in is the user's own article, but for 51.com, the first page tells you who have visited, who on your friend's list are online or have posted a new article.
This increases user interaction on 51.com. The system will inform you about who visits your article shortly. If you link to a visitor's blog and leave a comment, the system will inform that visitor about your visit, which may trigger another visit to your blog. This is how spontaneous personal interaction begins.
Because of such real-time interactivity strengthened by immediate system alerts about your friends' activities, users of 51.com almost get hooked on the website. This makes 51.com a robust platform for "inter-personal communication." An online campaign can spread very quickly on this platform.
In this Pepsi campaign, 51.com first pushed the news of this campaign through various channels to draw people in. For everyone signed up for the competition, there would be an article with a big picture "Vote Me for Pepsi Star" automatically produced by the system on the front page of the contestant's blog.
The posting of this new blog article would trigger a notification to those on the blogger's friends list. When these people came to visit, they would learn about Pepsi's new event. Some of them might become contestants and thus set off another round of notification....
[+] Interaction and alliances among social networks amplify the effects of communication
As such, the spread of inter-personal communication takes place in 51.com with a terrifying speed. Here we see the manifestation of "Six Degree of Separation," which is a popular theory normally associated to social networking, particularly for a business purpose.
At the first stage of the Pepsi star competition, there were also other participating blog service providers. Yet they did not take the advantage of real-time interaction; instead, they relied on the traditional method of one-way broadcasting, which is much less effective in spreading the message and drawing in more users.
Most interestingly, there were quite a few voluntary activities going on among the user communities of 51.com, which was beyond expectation. Here are some examples:
1) Those who did not join the competition tried to canvass for their friends who were contestants on their blogs. This helped increase exposure of the event.
2) Users of 51.com can start their own groups. Some group owners can be very powerful, as the size of these groups can reach some tens of thousands under good management. Group owners could ask members to vote and canvass for them.
3) Groups can form alliances. For example, First Alliance of 51.com has as many as 2 million members. Each group within the alliance could select its own candidate to compete for representing the entire alliance, with the support of its 2 million members, to compete in the Pepsi contest.
[+] Web 2.0 marketing is about inter-personal communication
Many people argued that such competition was nothing more than beauty contest. However, to everybody's surprise, the winner of 51.com tryout was a monk nicknamed "silly hermit." In fact, his picture has been on the Pepsi can before you read this article.
Yet it is not that surprising. Firstly, 51.com with 80 million registered users of various kinds is a small society of itself. Moreover, users' voluntary concerted action as shown in the above-mentioned example can be applied in many aspects.
For those participated in this event through joining the competition or voting or canvassing for contestants, together their friends within six degrees of separation, the brand of Pepsi will remain imprinted in their mind for a long time. What Pepsi got in this campaign was 1.3 million heavily engaged users, which had much greater effect than 1.3 million banner clicks.
Did you notice that the model of Web 2.0 marketing is basic inter-personal communication! Inter-personal communication works very slowly in the real world, so we need mass media such as television to do mass communication.
Yet, because of the birth of Web 2.0, the cost for inter-personal communication has dropped substantially and the efficiency has increased. Therefore we see a very paradoxical thing that marketing communication will go back to the basic model of inter-personal communication from traditional "broadcasting" media of mass communication.
These days we hear a lot of "new media" things from the media and people in the industries. What this term really means is about giving up traditional broadcasting media and enabling interactive, inter-personal communication in a world that is turning into an intimate global village.
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Prev : From Idea to Business (2) How to Estimate Your Income and Cost?
Next : The Next Step for Web 2.0 (1) The Dawn of Emotion Economics
- Today in History
The Spirit of Web 2.0 New Media Lies in "Inter-personal Communication" - 2007/08/05
The Good Old Days of ECommerce - 2005/08/08
The Web 2.0 websites know more about you than yourself.
[+] You are putting labels on yourself for everyone to see
In the first article of this series, I already mentioned that people are the only thing that Web 2.0 is trying to sell. Yet how people can become a product for sale, or, to put it in a simpler way, how information about people can produce values, which ultimately can be attached with a price?
When we realize that the core of Web 2.0 services is relation building, the way we describe people will become more diversified. For example, you may be asked to provide information such as sex, age, residence area or even annual income when you register at some websites.
Such statistics can be employed by website operators in running their businesses. For instance, content websites can analyze the age distribution of their users of different content channels, and e-commerce websites can examine the shopping frequency and expenses of users of different sexes.
Yet very often website operators would feel unsatisfied with the clarity of such information. They would only wish that users would put labels on themselves, declaring: "I am interested in whitening skincare products," "I am a fan of some pop singer," "I am obsessed with Nike sneakers." Nice and clear, and no wild guess any more.
Actually, all of us can find quite a few of these labels to describe ourselves. You can give a try as well, and I assure you that you'll end up with a lot of labels. Yet you probably don't know that these labels are very valuable and craved by many people.
Now you may want to keep these labels to yourself. Unfortunately they are already exposed. I once said that the bookmarks you collected online and the tags you attach to your Blog articles are all descriptions about yourself instead of the "subjects" concerned. You are putting labels on yourself for everyone to see.
[+] Web 2.0 is a huge miner for personal data
Through content and tags contributed by every Web 2.0 user, it is easy to find "potential buyers for Nike sneakers" through preliminary analysis. So what would you think whether sports shoes suppliers would want such information? In a word, Web 2.0 is a huge miner for personal data.
You may say it sounds like Google's Adsense. If a Blog article contains key phrases, say, "sports shoes," then advertisements related to sports shoes would appear at the side. However, Adsense targets at Blog visitors, but what we are talking about here is Bloggers.
It's very likely that you do not know who these Blog visitors are. You show them the advertisement simply because they are viewing an article about sports shoes. Because of this correlation, you can still expect a click-through rate of above 1% over the advertisement.
Yet, the Blogger may have written 10 articles about sports shoes, which can be known from his tags. Why not target on this Blogger as well as many others, or to set up a Nike fan club specifically for this group of Bloggers?
Big Blog service providers have huge database of Blog tags or the like. In fact, you can find similar things in any Web 2.0 services such as sharing of photo albums or bookmarks or social networking websites. The deeper you dig into the data, the higher value you'll find in the data.
In addition to user data statistics in Web 1.0 and tag analysis in Web 2.0, there are still two critical factors that lead us into an even higher level in mining the value of personal data: psychological qualities and behavioral qualities.
[+] Psychological quality indexes will soon play an important role
Birds of a feather flock together. We can tell what kind of person one is from the friends one makes. Furthermore, one's activities in a Web 2.0 website, including the number of Blogs one visits in a month, the number of messages one leaves in those Blogs and the types of tags one uses, also reveal how active one is as well as other psychological qualities.
Therefore, website operator can put a label on you accordingly, like "activity index: 8," "positiveness index: 6," "anxiety index: 3," "pressure index: 10" and so on. Here I have to point out that these psychological quality indexes will soon play an important role in Web 2.0, which develops on the basis of sociology.
Web 2.0 website operators have been managing online communities by predicting how user would interact with each other. Psychological quality indexes however are a different thing. Firstly, it's about how to quantify behaviors; secondly it needs to employ sociology to, for instance, define anxiety index.
Finally, it requires a brand new algorithm. In other words, the PageRank algorithm currently applied in search engines (to generate the importance index of a web page) can not be used to calculate complex psychological and behavioral qualities of people.
Why research on this subject? One reason is to provide a superior guidance for promoting user interaction in Web 2.0 communities; the other is to enable better targeted advertising. For example, users of a high pressure index may be a good target for "relaxing music."
[+] High precision marketing enabled by people search engines
All the top Internet companies in the world have noticed this development, but how to address it is a question. The most challenging part is the huge quantity - we are talking about tagging 100 million users with their psychological qualities and analyzing these tags. How many servers will be required to run the calculation?
Before there is any technical breakthrough, we've seen some Internet companies make their move by adopting the simplest yet most practical solution - the people search engine I mentioned earlier. Among them, Ucloo.com, the only one of the kind in China, has been running for almost three years.
The founder of Ucloo.com set up this technology-centric company because he sees the value of personal data. The company uses a program to search through web pages, collect personal data scattered everywhere and sort out the data belong to the same person.
Did you post messages on some forums? Was your name on some university recruits lists before? Have you left your mobile number or bank account number at action websites? Although you are anonymous, Ucloo.com can somehow figure out that these sets of data all refer to you.
Data such as companies you worked for, schools you studied at, classmates and colleagues you've had, stars you like, children, properties and so on, would all be collected under your name. According to the data you have made public online, Ucloo.com has put various labels on you all over.
Ucloo.com does not sell data; instead it uses data as the basis for advertising delivery. For example, if some advertiser wishes to deliver advertisements to young college grads, Ucloo.com can identify this group of targets and deliver advertisement. It has been proven that the response rate of Ucloo.com is much higher than that of traditional online advertisement.
[+] Privacy concern vs. desire to peek
People search engines have been a reality for years, with at least ten of them. Every one of them is making profits except for Spock.com, which has got funded by venture capital since last year. In addition to language, the biggest difference between Spock.com and Ucloo.com is where they think the data should come from.
Spock.com requires users to register and at the same time provide information of your account names and passwords at MSN, Yahoo!, MySpace, Facebook, Friendster and other social networking websites. Its intention is to associate these accounts and consolidate the data that belongs to you.
I was very hesitant when registering at that website and wondered why I should provide all this information. Spock.com asked me my email accounts at Hotmail, Gmail and Yahoo!, which I thought was outrageous.
On the other hand, Ucloo.com uses search engine technology to look for you, including photos and video files online. It is difficult to say which is better or worse, but apparently, users would feel reluctant to give away their personal data.
Users are very strange: none of them wants to be exposed by people search engine, yet each of them would try to search his name online and see what would come out. (I bet you would go to Ucloo.com to search your name quietly before finishing reading this article.)
Is there any technical obstacle that prevents Google or Microsoft from doing the same thing? In fact anyone with deep pockets can do it. However, there is critical difference between people search engine and PageRank algorithm. Moreover, it has been years since any people search engine started to accumulate personal data. It takes time to catch up.
[+] Summary of the series
The series of "Web 2.0, think again," which one of my good friends described as groundbreaking, has come to a period here. It has been exactly a year since I published the article confessing that I had neglected Web 2.0.
Over the year I have been groping after Web 2.0 and making up for what I had missed. The five articles in the series are the crystallization of my efforts, which I hope you find satisfactory and helpful in pointing out the trend.
Meanwhile I would like pose a question not necessarily related to business: with Web 2.0, the cost of interpersonal communication has been declining, yet are people getting closer to one other? Maybe people are still living within their small circles and, like I said before, getting together sharing feelings with others of similar attributes?
Is the world we know growing more open or closed? Are we getting clearer about ourselves, or quite the opposite? Will there be one day when marketers know better about you than yourself?
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Prev : Web 2.0 Think Again (4) "Private Property" and "Class Inequality" Next : From Idea to Business (1) How to Estimate Your User Number?
- Today in History
Web 2.0 Think Again (5) Unearth the Value of "People" - 2007/06/24
Ultimate Mobile Device (2) Competition of Handheld Game Console - 2005/06/26
Think again on how relations are built and maintained.
[+] Challenges for social networking websites
The only thing that matters in Web 2.0 is relations and the build-up and maintenance of relations. However, to expect that relations will happen just by giving users relation-building tools is going to cause troubles. We need to have good understanding of human nature.
The most striking examples are some social networking (or business networking) websites like Linkist or OpenBC (currently Xing.com). These services, based on the well-known Six Degrees of Separation, are aimed to fulfill the needs of business people to extend their networking.
I know you and you know your friends, and these friends have their own friends. So by following these relation chains, I should need six intermediaries at most to get to know anyone in the world, according to the theory of Six Degrees of Separation.
People who have tried such services may be excited about their ability to help you get in touch with a huge number of strangers, who are your friends' friends, within a short time. However, when the number of people on my contact list of one of these services exceeded 200, I quit it.
A year or so passed, I found that there were only two or three names on my list remained active, and most of them rarely used the service. Undoubtedly, social networking is in great demand for business people. There must be some reason why these people became indifferent to the service.
[+] Think again on how "relations" are built and maintained
Think about your daily business life. You should see that "social networks" are build upon interests, which would normally exist where there are business relations. Take a look at your business cards holder or address book: those you contact most often should very likely be your clients or partners because you have common interests with these people.
Think about the various kinds of business gatherings you've been to. How many business cards you've got there are of any use to you in making business contacts? Some people would spend time and efforts to scan and file business cards (the so-called digital business network management), but at the end of the day the only thing they can do was forward jokes to these people once in a while.
Let's face the reality! When the relations between two persons would not last if they can find no business to do with the other. When accosting somebody, you would need a reason. The biggest problem for social networking websites is users can't find good reasons to start a talk and maintain relations with others.
Business people are very pragmatic. They will not spend time in building connections that are meaningless to them. The people you meet in social networking websites are practically total stranger who do not have any business to do with you, so your relations are doomed to be short-lived. Frankly, business people are already too busy managing their social networks in their off-line life.
Some social networking websites discover that their users have become lukewarm, so they develop tools like social bookmarking, which allows users to submit and digg news articles or videos for others to view and make recommendation. It indeed brings pleasure to some people during their boring working hours, but how much it can help establish relations is a question.
[+] Contact methods, a sure way to relationships?
10 years ago I was as a well-known "social butterfly" flitting from one industry gathering to another exchanging business cards. Now when I attend this kind of event, I would just sit quietly in some corner and leave unnoticed when it's over.
It is of no use even if you get 100 business cards in such circumstances because you don't have any business to do with them. Even if you keep these business cards very carefully and you do make a phone call to one of these names, s/he may never remember where or when s/he has met you. Is this the kind of relations you need?
If you want to meet certain people, you can always find someone to introduce you instead of attempting to meet them in public occasions. On the other hand, those who want to do business with you can always find some way to find you. The only thing that matters is whether there is any business to do or not.
There is also a scenario in such gatherings: you can always see some unimportant people busy exchanging business cards with big shots. Do you know how important people deal with the business cards stuffing into their hands? No, you don't want to know.
What will you do with the business cards of these big shots? Will you forward jokes to them? No. Will you talk about business opportunity worth of some thousand US dollars? No. Will you call him/her for some chitchat? No. Add him/her to your MSN, but are you sure it's not his/her secretary who is replying your message?
[+] Business networking: no business, no relations!
Same things happen on social networking websites where there are people busy in collecting business cards and knowing big shots. To a certain extent, social networking websites are very much like virtual business cards holders - though you may have as many as 700 contacts, none of them is in good use.
The variety of users on the Internet is practically the representation of the scenario you'll bump into in any typical public events in the business world. The kind of social contacts happening in such public occasions are not very helpful in establishing and maintaining relations if there are no business opportunities involved.
Yes, it is a bleak truth. Technology evolves but human nature remains the same. Web 2.0 entrepreneurs may create perfect websites sometimes, but they tend to forget that "Web 2.0 business is driven by human nature,' and all functions need to address to the wants and needs of the humanity.
Presently, social networking websites allow users to categorize and manage their connections, enable them to get in contact with certain persons by means of search functions or though common acquaintances and provide online forums for exchange of opinions. The point is this is never the way business people establish and maintain their relations.
If social networking websites cannot assist users to "establish" and "maintain" relations, and they are but virtual business cards holders with no storage limits. Such contacts are not connections. Our observation is that, for the very pragmatic business people, "no business, no relations!"
[+] Bottlenecks of friends making services
Social networking services can be divided into the following categories - business networking, friends making, interests communities and dating websites. Among these friends making websites may be familiar to you for such websites have existed since the time of Web 1.0.
Typically these websites would have a search engine for users to enter criteria such as gender, age, locations and so on, along with advanced search functions to filter results based on specific terms like education, personal interests and hobbies. They are to provide friends making service with very specific targets.
Yet as we all know, friends making websites are constantly faced with the problem of retaining their users, so they need to budget for "buying" new users by means of advertisements. Website operators are very clear how much they need to spend to acquire a new user.
This is the destiny of friends making websites. Singles come to these websites to look for their Mr./Miss right and leave when they get the contact methods. There are even more people who invest two months leave disappointedly with no gain.
Typically, a user would first register at these friends making websites, enter their personal information such as interests, occupation or even income level, search for someone "with photos uploaded to the websites" and then attempt to start a talk. How likely can s/he succeed in building up relations in this way?
[+] Sharing common feelings is the first step to build up relations
When you search for a female aged 25-30 in the bustling downtown area, you would have some idea about what kind of figure and look she should have in your mind. When you finally find one, you may just come forward and ask to make friends with her. Yet this is not a very effective approach and you are very likely to be rejected.
Yet a tougher situation may be what you should do if you get a green light from her. Many men are hesitant to accost women not because they are afraid of being turned down but because they don't know "what to do next if they succeed." This is the problem friends making websites need to work out.
You need a reason to accost a stranger. Advanced search engines may provide users with specific results from, but at the end they still need to know "what they should do to make the first move." It does not promise a happy ending when accosting someone simply because you know what she looks like, her birthday, age, interests and occupation and so on.
This is why many friends making websites are thinking about providing Blog services. These operators find that matching service won't work by just relying on external criteria, which alone are not enough for developing relations.
In fact, personality may be a stronger factor when in comes to relations building. The key is how to present the personality of each user. Blog services may be a good idea - let users share their diaries online! You may be able to find something in common to start a talk with others by reading their blogs.
"Sharing common feelings" is the first step for users to build relations with each other and a good way to maintain relations.
[+] The issue of relations building for traditional online services
A friend who's running an online learning website for years asked me about Web 2.0 the other day. He sensed that this should be a trend and he was thinking to introduce online community features to his website. In addition, friends in the e-commerce business also wrote me about the same issue.
Still, we need to look at "relations!" What kinds of relations are there between the shoppers on a B2C shopping websites? Is it necessary to build up relations? What would lead to the first contact between them? What kind of relations would there be? Can such relations last for long?
"Relations" are the key that demands our attention when talking about Web 2.0, including online learning websites. As a matter of fact, online learning service providers may think it a good idea to build up online learning communities for their websites. Yet we are yet to see successful examples for such communities.
Similarly, we need to ask is there any need for students attending to the same class to establish relations? On what circumstances do they feel the need to do so? What about forming relations with lecturers? How long can the relations last? Only when the linkage between these questions is found can we expect the emergence of online communities.
The same logic can be applied to many other scenarios. For example, do the people looking for similar kind of jobs on job search websites have the need to establish relations? Do those who watch the same video online feel the desire to form relations? How can they do so and how the relations can be maintained?
Not all Web 2.0 services will have to provide social networking features, yet it is true that the establishment and maintenance of relations are the basis of Web 2.0. At the end of the day, it is surely helpful to spend more efforts in figuring out how relations come into being and what lies behind relations.
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Prev : Web 2.0 Think Again (2) Upper-class Society and Lower-class Society Next : Web 2.0 Think Again (4) "Private Property" and "Class Inequality"
- Today in History
Web 2.0 Think Again (3) A Reason to "accost" Someone Online - 2007/06/03
"The personalized RSS Feed subscription URL" is the ultimate solution to the issue of user tracking.
[+] The preciseness challenge for RSS subscription marketing
As a matter of fact, RSS subscription marketing is not able to track users' activities because of its open feature. Currently, most of website operators provide open RSS Feed URLs that could be obtained and added to the reader software by everyone.
The idea of one-to-one marketing, the most advocated personalized marketing in the Internet age, thus collapses because website operators are not able to identify subscribers, not mention to track and analyze their post-subscription behavior. That is the preciseness challenge for RSS subscription marketing.
Before we find solutions to that problem, let's look back at how previous Internet marketing tracks subscribers. First of all, newsletter subscribers have to leave their email addresses or register to become members. Therefore we have the basis to identify users: user name or email address.
When a website operator sends out newsletters or marketing emails, the typical way is to insert a transparent image in the email in order to track whether the user has opened this email. When the image is displayed on the user's screen, the server on the operator's end will create an access record.
The image is imperceptible since it's transparent. Actually, the user's email address or user name has already been sent back to the server at the moment when the image is displayed. Therefore, the website operator knows which user has opened this email.
After identifying who has opened this email and comparing with the user's registration information, it is not a problem at all for the website operator to obtain information such as the gender ratio of the user group, its age distribution, even previous website shopping records of the user, etc.
[+] The tracking method of traditional email marketing
In addition, the email sent out may have many links in it, which in fact may carry the reader's personal identification information such as the user's name or email address. When the reader clicks on these links, the operator will know which member has clicked on which link.
Therefore, it is completely possible to analyze which members open the marketing emails after they receive them, which links they click on and what they do on the website. The similar system can even track how many times the reader forwards the email to others.
For a user of the Internet, the above sounds horrible, doesn't it? Such things are taking place in your daily life but you are just not aware of them. However, current anti-spam mail systems are becoming smarter. They start to help you filter those images that contain tracking technologies.
At the beginning, the anti-spam mail technology is used to get rid of spam mails. But nowadays, even the most honest website operators are severely impacted. Sometimes, even the registration confirmation email or inquiry email for recovering the user's forgotten password could not be delivered, not mention those marketing emails.
RSS is an emerging way to keep in touch with users. But its anonymity bothers operators a lot. However, operators are still able to track users' reading behavior as long as they make some changes to the RSS subscription method.
The key point, which I believe, is called "personalized RSS Feed URL".
[+] Introducing "personalized RSS Feed"
You can find the typical open RSS Feed on many websites, such as:
Digital Wall (English version): http://english.digitalwall.com/rss20/rss_eng.xml
Obviously, this kind of RSS subscription website doesn't have personal identification information. When 30,000 users subscribe to the above websites through their RSS reader software, the operator cannot tell who they are.
If the URL of RSS Feed is changed to:
http://english.digitalwall.com/rss20/rss_eng.may@yahoo.com.xml
Do you notice that I added a personal identification information - email address in the RSS Feed URL? In other words, "personalized RSS Feed URL" is the ultimate solution to the issue of user tracking, that is, to issue each person a different RSS Feed.
Website operators should use the personalized RSS Feed URL instead of the open one. Those who want to become subscribers have to register as a member or leave email addresses in order to obtain the unique RSS Feed. It is up to the user to choose from email subscription or personalized RSS Feed.
Website operators might be afraid. Will that establish an obstacle to subscription? I have to point out that operators used to ask users to register membership or leave their email addresses to become subscribers. What is the difference from the personalized RSS Feed?
It's easier for the website operators who already have newsletter subscribers or members to transit from email subscription to RSS subscription. By creating a unique RSS subscription URL for each user, the operator can inform the user of this option every time when he logs in.
The subsequent analysis of users' reading behavior is similar to that of email marketing. As long as the user is identified, it is easy to perform any analysis. So far, a RSS advertising market is emerging: to insert advertisement in RSS Feed according to the user's identification information.
[+] The privacy issue
The above proposal might be rejected by fundamentalists who think that it violates the idea of RSS open message publishing. Years ago, when emails were used as spam mails for the first time, fundamentalists reacted drastically, but spam mails became part of our daily life at last.
In fact, most things prevail out of commercial demand. It has been at least seven years since website operators started to do user analysis through their email reading behavior, not mention that Amazon started very early to analyze users' shopping habits through their website surfing behavior long time ago.
Will that violate the right of users' privacy? It is the same to ask whether the email tracking technology violates the right of privacy. Now that the former has existed for such a long time, probably the latter will develop rapidly as long as there is strong commercial demand.
The difference is that basically the control is retained in readers' hand with RSS subscription. As long as readers find out that the content is not good or the advertisement is too much or even the update is too frequent, they can keep themselves from disturbance by simply unsubscribing from the reader software. This feature will constrain operators who use RSS marketing not to abuse it.
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Prev : The Fourth Generation of Internet Marketing (1) RSS Marketing Next : The Fourth Generation of Internet Marketing (3) IM Marketing
- Today in History
The Fourth Generation of Internet Marketing (2) RSS Tracking - 2006/12/24
Dream of "Digital Furniture" Store - 2003/12/28
Is there still any reliable way to distribute information in the disordered world of Internet?
[+] Emails are not reliable
In a busy office, Chen is confirming with the client on the phone whether the price list has been received which is just sent by fax. Fax as an outdated technology is not so reliable. Loss of documents happens from time to time. Telephone follow-up is therefore necessary.
Meanwhile, Li, who sits next to Chen, is apologizing on the phone to the client, because he had thought the client had received the email he sent out, but obviously the client does not. The client is outraged. Li ensures that the email has already been sent out. Although feeling aggrieved, Li has to make apology.
Ms. Zheng, who sits behind, has just purchased a purse from the net. The browser shows the transaction is successfully completed, but she still has not received the confirmation email from the online shopping site. She calls the customer service, they send the email again, but she still fails to receive it.
Secretary Tao wants to subscribe to several newsletters to learn more industry knowledge. The website indicates that the registration won't be successful until she clicks the link in the confirmation email. But she does not receive it even after waiting for the entire afternoon. So, she wants to change the email address, but is not allowed to login to do so because she has not obtained the membership yet.
The company's IT manager has just sent out an email, stating that the anti-spam mail system he recently brought in performs extremely well, and saves a lot of money for the company to process spam mails. The others are going to an uproar at that, because bunches of their emails have been filtered by the system.
[+] Worries of website operators
Ironically, people who purchase anti-spam software to get rid of the increasing spam mails often find friends' emails in the spam mail box. The software is useless if the user reduces its sensitivity, because by doing so, he has to filter hundreds of spam mails by hand every day.
From the perspective of the website operator, the traditional website design is based on the principle of 'emails are going to be received'. However, now they have to reconsider the website design and additional service costs under the assumption that emails could not be received.
I used to see an shopping website teaching users how to set up the white list function in their Yahoo! email box to receive member newsletters and marketing messages from the website. The power and effect of marketing has been largely reduced by doing so, because few people will bother to set up that function.
Realizing that email as a way of Internet marketing is doomed to fade away, I have studied the ranking methodology of search engines since early 2005, and wrote three articles entitled "The Third Generation of Internet marketing: Search Engine Marketing" in April of the same year, and used the skills in those articles till now.
Improving the ranking on search engines will help websites to constantly attract visits. But that is only helpful to obtain new clients. For the old ones, email is still an important tool, but becoming increasingly ineffective. It is really worrying to see the reach rate of the newsletter keeps going down.
[+] Microsoft IE 7.0 paves the way for the prevalence of RSS
The first generation of Internet marketing is the purchase of the website banner advertisement starting from 1998. The second generation refers to the email marketing coming afterward, while the third generation is called search engine marketing. Then what else to do after all of the three approaches have been used up?
Or I should ask in this way: in such a disordered Internet, is there still any reliable way to distribute information? I used to count on the newly emerging dissemination method - RSS. My website - Digital Wall - started to provide RSS subscription in 2004. Currently, the pageview of RSS almost accounts for half of that of the website.
In spite of that, RSS is still a subscription method difficult to explain, and needs to install special reader software. It sounds difficult to expect ordinary readers or consumers to download and install certain software in order to subscribe to newsletter.
In addition, I think that the user interface of RSS is a big issue. In the instant when the visitor clicks the 'RSS' or 'XML' icon, the XML markup language pops up, and that is too overwhelming to make the subscription intuitive.
The good news is that Microsoft IE 7.0 has embedded RSS subscription function and provides more user-friendly interface and gets rid of the long strings of XML. With the gradual update of the browser version, users will no longer need to download and learn how to use additional readers.
[+] Those who can analyze RSS users will grasp business opportunities
Although the subscription procedure of RSS is not so intuitive, website operators at least do not need to write user instructions for different RSS readers, instead they can only provide the illustration for IE 7.0. Therefore, operators should be prepared with the advent of IE 7.0 as soon as possible.
It can be seen that, for website operators, RSS subscription will gradually replace email. While for users, RSS is a way to regain the right of use, because they can receive the latest messages without leaving any information on the website.
However, that brings a new problem for website operators. Before, receivers' activities could be traced by the hyperlinks embedded in the email, such as whether they kept shopping on the website, whether they were male or female, how old they were, etc.
Since RSS is based on open subscription, registered members do not need to leave any information. Therefore, operators are not able to know who the subscribers are, not mention to analyze their activities after receiving new messages. Operators are nearly uninformed, because they can only measure the result of the marketing on the basis of RSS pageview.
If any website operator could solve the issue of RSS subscriber behavior analysis regarding to Internet marketing and website operation, they will grasp huge business opportunities, because the email marketing has faded away. In a user-as-king era prompted by browsers, RSS will become the new mainstream.
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Prev : Great Future of Wireless Broadband (4) WiMax, 3G and 4G Next : The Fourth Generation of Internet Marketing (2) RSS Tracking
- Today in History
The Fourth Generation of Internet Marketing (1) RSS Marketing - 2006/12/17
Internet and Books (2) the Supply for Content Exceeds the Demand - 2005/12/11
VoIP (4) Dual-network Handsets Will Die of Subsidies - 2004/12/19
VoIP (3) Phone Number Is Vital - 2004/12/12
The B2C model won't disappear, so we need to think about how business patterns are likely to change when the cost of bandwidth, of online user communication more precisely, is in a downward trend.
[+] C2C eCommerce is in line with the Web 2.0 spirit
Among all the various applications rising with the diffusion of the Internet, eCommerce, particularly the B2C model, has the least to do with the Internet. While a consumer does place an order online, the vendor conducts the following procedures completely in the physical world - there is little to do with the Internet.
So we finally come to realize that Amazon is actually a retailer. It focuses on reducing stock and operational cost, lowering the cost of goods through bulk purchases, and lifting sales by promotion campaigns, just like any traditional retailers. Its gross margin is practically at the same level of the traditional retailing business - nothing much to expect here.
On the other hand, C2C model is more relevant to the Internet world. What operators like eBay provide was simply a transaction platform for numerous small buyers and sellers. Apparently, the model of e-market, which is formed by gathering many individual users, can expand at a much faster rate.
This was the time when Internet forerunners first learned about the power of the Internet. In the C2C model, the most costly problems, i.e. inventory stocking and logistics, of the B2C model is thrown back to small buyers and sellers.
By matching buyers and sellers, B2C operators are able to collect fees of posting items or advertisements. Online auction services have been in full bloom these days. At the time when it's just sprouted, there was no such term as Web 2.0, but who would say it's not Web 2.0?
[+] Craigslist replaces eBay, not newspaper classifieds
After ten years of development of the Internet, users now are able to get more bandwidth with less money. This is beyond question. As discussed earlier, when the cost of bandwidth drops to a critical point, new intermediaries will arise and old ones be challenged. Let's never forget the true meaning of Web 2.0:
The root of the Internet revolution is but one thing - the ever declining cost of digital storage and transmission bandwidth. Socially, it is reflected on "the continuously falling cost of interpersonal communication; on the business side", it is "the gradual disintegration of enterprises which used to thrive on their monopoly of capital and information".
Following the step of auction websites, classifieds websites such as Craigslist in the U.S. has become a popular new paradigm. The success factor of Craigslist is that, it shares with users the savings obtained from the declining bandwidth cost over the past decade.
Ebay's users will be charged for making transactions on it, but most Craigslist's users don't need to pay for their classifieds posted on the website. Yet Craigslist, a high-traffic C2C website, can still survive without being beat down by the massive bandwidth consumption. This tells us how much the bandwidth cost has dropped these days that it has affected the way business is done on the Net.
Most reports about Craigslist center on its huge influence on traditional newspaper classifieds. Yet to me Craigslist is indeed a newer breed of intermediary which challenges the position of auctions websites like eBay, an once-new intermediary that took the place of traditional businesses many years ago.
[+] How the Web 2.0 spirit is infused into eCommerce
So, does it mean that all old B2C websites need to start doing C2C business in order to adapt to Web 2.0? Not at all. ON the contrary, this is exactly what we should avoid, because B2C model will not disappear. Instead we need to think about how the way of doing business may change when the bandwidth cost, or the cost of communication among Internet users, continues to fall.
Take the tourism for example. We all know that selling air tickets or tour packages online has been the most popular line of eCommerce. Yet we also know that a group tour can be a torture to many of us, because the tourist agency can only offer an ordinary tour plan with very few characteristics. It is almost impossible to offer a tailor-made package, since it is very costly to gather a group of people who have similar requirements to travel together.
Well, this is exactly where we see an opportunity for Web 2.0. The "declining cost of communication among people" has made it possible for an agency to find a group of similar interests and age to tour together.
Through proper execution, it is likely to find enough people who would like to join a tour, even for not very popular routes, in a very short time at a fairly low cost. This will lead to the downfall of discounted packaged tours and the rise of unique boutique tours. Who in the tourism business will be able to seize the power of web2.0?
[+] Apply Web 2.0 to reduce the cost of B2C eCommerce
B2C eCommerce is characterized by low gross margin similar to traditional retailing business, therefore B2C operators will care more about cost control than those running other types of websites. If the introduction of Web 2.0 services will only lead to the increase of bandwidth cost, then it's really not a good idea to go after Web 2.0.
Let's recall the case of eBay. Are there any things other than the costs logistics and warehousing that we can throw back to online shoppers? How can we make the best use of the trend of Web 2.0 to lower the operational cost in the name of consumer participation, and achieve a win-win situation for both operators and consumers?
Take the example of tourism mentioned above. Wiki applications may be very suitable for sharing individual travel experience. So, is it possible that a travel agency can reduce the number inbound calls for customer service and further lift its online sales through these applications that enable consumers to share their content voluntarily?
Here I would like to leave these questions to B2C eCommerce operators. If you still think that Web 2.0 means those terms like Blog, or RSS, or SNS, and you have no idea how these terms can be associated with your own business, then please allow me to remind you once again: the key is cost.
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Prev : The Web 2.0 Revolution (8) Transformation of the Telecom Industry Next : The Web 2.0 Revolution (10) the Big Future of Web 3.0
- Today in History
The Web 2.0 Revolution (9) New ECommerce - 2006/10/29
The Web 2.0 Revolution (8) Transformation of the Telecom Industry - 2006/10/22
When the cost "to find a certain type of people" has dropped to a critical level, new intermediary will emerge, which will surely impact on conventional businesses.
[+] Online job sites has taken the place of newspaper job advertisements
There are two major sources of classified revenue for traditional newspapers: one is job advertisements, and the other is real estate advertisements. Both have been encroached by the Internet during the Web 1.0 period. Online job sites, which has grasped a significant share of job advertisements from newspapers, has managed to reap profits very soon and has become a model.
Long time ago, a job seeker needed to buy newspapers, and those companies in search for employees could only afford to post job advertisements on newspapers for usually several days. It took some luck to find a good job or a good employee. In other words, the cost for both parties to find their counterpart was relatively high.
Newspaper as media could charge higher for advertisements since they monopolize the channel for both parties to access information. Yet the emergence of online job sites has changed the phenomenon of information asymmetry. Companies looking for talents need only to pay a relatively small fee to post job advertisements even for months.
Through the automatic matching service by the system, a large number of CVs will be sent to you everyday for your screening. For job seekers, they can get the employment information from many companies. The cost to match jobs seekers and talent seekers used to be high, but the low matching cost on the Internet has changed this.
In the Web 1.0 period, we first tasted the cost-saving benefits brought forth by the Internet. Old intermediaries have been replaced with new ones coming onto the stage. The key behind this is that new intermediaries can provide more efficient matching service with a lower cost. And the information is liberated completely.
[+] Head hunters still good in business
Yet, after ten years of development, online job sites still can't make any breakthrough in one area - the market for middle and senior positions. Generally, companies will seek the assistance of online job sites when looking for basic level employees; but if they want to find suitable people for a position like vice president, online job sites are not their preferred channel.
For job seekers above a certain age or senior position, it is practically impossible to find a job through online job sites. This is because the market for senior positions has the following characteristics: First, senior level people don't like to be exposed, and they do mind their CVs being browsed freely by some companies.
Second, Companies too don't like to expose the information about their recruiting middle and senior level people, because competitors may detect their future developments. Third, as both sides are very cautious, recruitment for senior positions is often done through acquaintances.
So far online job sites can only address to the demand for basic level positions. Some online job sites have moved up to the segment of middle positions (like senior managers or experts with good salaries), yet they haven't posed a threat to head hunters that have been dominating this segment.
Based on the above characteristics, it may cost companies big money to find people for middle or senior positions. A head hunter may charge a company as much as several times the monthly pay of the talent it helps recruit as reward. This handsome reward comes from another form of information monopoly and is pretty.
[+] Personal references instead of head hunters
Companies are prepared to pay a good deal for recruiting people for middle and senior positions. Yet when the cost of storage and bandwidth continues to drop so as to enable the staging of Web 2.0, head hunters will start to be affected. Let's never forget about what really means by Web 2.0:
The root of the Internet revolution is but one thing - the ever declining cost of digital storage and transmission bandwidth. Socially, it is reflected on "the continuously falling cost of interpersonal communication; on the business side", it is "the gradual disintegration of enterprises which used to thrive on their monopoly of capital and information".
We have seen such a service launched by online job sites: users are encouraged to refer candidates for a specific middle or senior positions and will be rewarded for successful reference. Some social networking websites have launched trial runs of similar service. They also offered rewards for successful reference.
Instead of paying handsome money to head hunters, now companies need only to give away a reward of about one tenth the money for recruiting people. Everyone has her or his own network; to get the reward or to introduce good jobs to friends, s/he will refer suitable candidates naturally.
The reason why this model can work is that "the cost of interpersonal communication continues to fall," so it will cost less to find the people through people than through head hunters! As I have mentioned earlier, the arrival of Web 2.0 will force many B2C companies to be conquered by C2C.
[+] New business models and new intermediaries
As we have just entered the period of Web 2.0, it is still not clear whether the above models can work or not. The trend is clear, but there may be many ways to implement an idea. Yet it can be expected that middle level positions will be the first to be affected, and senior positions above the level of vice president will still be dominated by head hunters.
The most critical factor is the quality of people referred through social networking websites. Head hunters as intermediaries are responsible mainly for quality assurance as so to save the time of both parties - this is the value of their existence.
For online job sites or social networking websites, if they want to play a role in the middle level manpower market via their offering of C2C social networking service, they will have to work on the above mentioned details and ensure the quality of the talents recommended via this channel, so that companies will not have to cope with a large number of unqualified applicants coming through these websites.
Furthermore, online job sites or social networking websites may establish upstream/downstream relations with conventional head hunters in a supply chain. In other words, these websites will not directly charge companies seeking talents, but they can charge head hunters for offering a talent pool. Head hunters may do a preliminary screening and provide a shortlist to companies in need.
Head hunter can spare a part of their rewards earned for successful matching from the company, the talent seeker, to these online job sites. This business method is taking place in the current transition period. It may become a workable business model. But in the long run, this will surely have impact on the business of head hunters.
[+] Web 2.0: it's all about cost
Most people, when looking at Web 2.0, are dazzled by many fancy terms, among which social networking websites and classifieds websites are two most popular categories. The former attempts to practice the so-called Six Degrees of Separation, which is to allow any people to meet other people on the Internet and thus to expand their social networks.
The question is, how can social networking websites generate revenues once they succeed in helping people know each other? One critical factor behind the scene is: "the cost of personal communication keeps dropping." So it is a lot less costly to find a certain type of people through social networks of people.
Recently in the U.S. there comes a kind of loan websites which are to help people borrow money from other people instead of acquaintances or banks. Rules are set up to ensure the quality of both parties and to lower the risks of lending money to strangers. Imagine how high the cost would be to find a reliable stranger and borrow him money when such service is not available?
In fact, there are quite a few loan brokers who help people borrow money from banks and charge commission from loan takers for successful cases. If there is a website that can help matching individual loan borrowers and lenders at a lower cost, this will definitely affect the business of brokers.
Thanks to the falling cost of computer storage and network bandwidth, the cost of personal communication continues to decline as well. When the cost "to find a certain type of people" has dropped to a critical level, new intermediary will emerge, which will surely impact on conventional businesses. This is the approach to take what we think about Web 2.0.
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Prev : The Web 2.0 Revolution (6) Struggle of the Press Industry Next : The Web 2.0 Revolution (8) Transformation of the Telecom Industry
- Today in History
The Web 2.0 Revolution (7) Death of the Intermediaries - 2006/10/15
Another Picture of Digital Home Market - 2005/10/16
Corporate Website a Handful (3) Strategic Alliance Why? - 2003/10/12
