39 posts tagged “advertising”
After open platform comes the matter of profit share.
It is predictable that the open platform would change the existing dynamics of the industry. For example, we have seen many third parties developing applications for the social network websites in China - 51.com and Xiaonei. They can of course do the same thing for bigger players like Baidou or qq.com if they decided to open their platforms. Yet, is it possible that 51.com and Xiaonei develop applications imbedded in Baidou and qq.com?
Moreover, what if 51.com and Xiaonei develop applications to be imbedded in each other's websites? In that case, which is the big brother, and which is the little one? The relationship will become so complicated that in the end there will surely be many tangible and intangible clauses and terms made to prevent competitors from cutting ground by using imbedded applications. However, as far as social network service providers are concerned, to what extent should they open their platforms?
Some social network websites make it clear in their contracts with third party developers that applications in specific areas (such as recruitment and travel services) are not to be opened because the big brothers want to do it themselves, now or later. These areas are not supposed to be touched by little ones. Such cherry picking mindset is rather paradoxical - can this be called open?
In fact, social network websites need not to be afraid of opening themselves, as long as they get a good hold of their core value. The internet was born to be open, and online service providers should embrace this reality. They should open themselves except for their core. Yet, eventually what is the core value of social network?
[+] Only the core that should not be opened
From the surface, the tangible products of social network services are blogs, photo upload, friend lists and so on. Yet we should know clearly that the value of social network underneath these products lies in two parts - data storage and social relationship. The former is users' tangible asset and the latter the intangible.
A social network website's user may store blog articles s/he has been working for threes years and photos for one year at the website. Guess if s/he would run away from that website? Many people see the glamorous part of social network service providers but hardly their efforts in providing basic data storage functions. To be a platform operator or a big brother in social network services, data storage is the basic work, which needs to be under full control.
In addition to basic data storage, the intangible asset of users' social relationship needs to be taken good care too. The key for social network services to become sticky and irresistible for users lies in interpersonal interaction, which allows users to know what their friends are doing online easily. As long as social network service operators have god hold of users' social relationship, they don't need to be afraid of opening up.
In other words, it is OK to have third parties to develop applications except in areas involved in basic data storage or in ways intended to steal or transfer user's social relationship. This can be compared with the opening up of state-owned enterprises. It takes thorough consideration to decide which parts are about basic applications that should not be opened and which parts can be opened in moderation.
[+] Five tasks for open platform
After open platform comes the issue of profit share. A social network website operator should help third-party developers revolve problems and earn profits in the following areas:
1) Promotion. A social network website operator should provide a mechanism through which new services or applications can promote themselves while those not favored by users can be naturally weeded out.
2) Advertising revenue. For instance, a website can work with Google Adsense, a popular online advertising solution to web publishers in China, and let third-party developers keep all of the advertising revenue they bring in instead of sharing with them.
3) User payment. Users may be willing to pay for applications such as games, and social network websites should provide a solution to help application developers with user payment.
For the points mentioned above, 51.com has taken the initiative to provide solutions. 51.com opens its virtual money API to third-party developers, and by working with the sales channel of prepaid game cards of the game developer, Giant, users can top up easily. This is an attractive advantage for developers.
4) Basic web hosting. For developers to start offering their services at a lower cost, provision of basic web hosting may be necessary.
5) Investment or acquisition opportunity. A good application can be a good potential investment target; especially if it can be applied in a number of various social network websites and accumulate a huge amount of users. By provide funding opportunities at the initial stage, the website operator can help a application developer to grow and reserve a good investment opportunity for the future.
Open platform unveils a new competition for users. Social network websites wish to grow bigger, but at the same time they are worried to lose their turf. The top priority is to know yourself well. Your best chance lies in opening up yourself to the outside but preserving your core, and for this you need a good profit share system. At the end, you may even need to open up your user data to others to ensure lasting growth.
Yet, why do social network websites need to open their user data which they have made every effort to gather?
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Prev : Openness, where is it going to take us? (2)
Next : Openness, where is it going to take us? (4)
- Today in History
Openness, where is it going to take us? (3) - 2008/11/23
Mobile TV Market (2) the Subtle Role of Telecom Operators - 2007/11/25
Great Future of Wireless Broadband (3) Scarce Resources - 2006/11/26
Google's Choice (2) Lessons for the Software Giant - 2005/11/20
VoIP (1) It's a Fool Not to Make Telecom Money - 2004/11/28
It is more possible to become a stable, low-growth market. Therefore, it's no use being hasty.
[+] Will the advent of 3G lead to a reshuffle of WAP market?
Despite continuous setbacks since 2000, telecom operators have never stopped efforts in the mobile Internet market. Theoretically, Moternet, the WAP portal of the largest mobile operator in the world, China Mobile should have the heaviest traffic volume in the world. After all, it has such a huge subscriber base. This, however, is not the reality.
From an iResearch report, Handset-enabled Internet Activities in China in 2008, we can see that Sina, Baidu and Tencent are among the most visited WAP sites in China. There are even a few independent 3G WAP portals. Thanks to their huge PC-based user bases, traditional Internet players seem to have a chance to challenge telecom operators.
Will the advent of 3G lead to a reshuffle of the market? Despite the fierce battle for subscribers, New China Mobile, New China Telecom and New China Unicom have not changed their visions of transforming from "communication service providers" into "information service providers". Key to this effort will be WAP. Will other WAP sites score another goal along with the promotion of 3G?
What we might not have understood correctly is the fact that, with the advent of 3G, the WAP market might have a stable and slow growth, instead of a sweeping revolution. Therefore, it's no use being hasty. It seems that, at the present time, the conditions for a sweeping revolution are not yet in place.
[+] The development of the WAP user base is a long-term process
First, if the 3 new operators do not offer substantially lower WAP rates, there would be no momentum for WAP users to upgrade to 3G, as no major change is expected to the contents offered by WAP sites. There might be more video and mobile TV services, but the key to the acceptance of users is still the fee rate.
The problem is that only telecom operators could decide the fee rates. Other Internet players have no say in it. In view of the current competition picture, the operators are expected to cut 3G WAP fee rates to some extent. But as I said, only substantial cut in voice fee rates could significantly increase the 3G user base, which is essential for a sharp increase in 3G WAP user base.
Secondly, does a substantial increase of 3G user base mean the same for WAP user base? Experience of telecom operators indicates that a large portion of the first 3G mobile phone subscribers would be WAP users of the 2G time. In other words, as a 2G WAP user becomes 3G WAP user, there would be no increase in the total WAP user number in the market.
In the long term, with intensive 3G promotion efforts of operators, all users will eventually give up 2G (whether voluntarily or forced to do so). The process, however, might not be as fast as you and I have thought. Considering the WAP service, which might be offered as an accessory service, the development of the WAP market could be even slower. The key to the speed of growth is the fee rate, not the number of Gs.
[+] The pain in business models
Why have telecom operators not been able to make good WAP sites? Based on my 5 years of experience in an operator, I could see that the root of the problem is their business models. For telecom operators, there's no free service. Every service should generate revenue, which ideally should be collected from end-users with phone bills. One dollar from each user would add up to an amazingly large amount for the hundreds of millions of income.
WAP services are duplicates of those of the Internet, whose basic business model is to offer free service and gain revenue from advertising. Sharp conflicts are expected for the business model transformation, not to mention the difficulty of changing the mindset of staff in a short time. Telecom operators need to regard themselves as media players before establishing ad departments to gain ad revenue. For them, that's too much.
This business model would have nothing to do with the number of Gs. For WAP, if the business model were transformed to that of media in the 2G time, Monternet could have done it very well even without 3G. Now we are back to the basic question: which is scored "better", higher ARPU or advertising income? If the former, there will not be any change.
It does not mean that telecom operators have to give up fee-based music or image download services, which are, in fact, the revenue sources of the traditional Internet companies, too. Yet, if operators cannot think of anything else, their business growth would be limited. For example, Nokia is seeking cooperation with telecom operators even as it has its own advertising network.
Why didn't operators make the proposal first? Because they are still using the old mindsets. Any business you don't do, somebody else in the business chain would do. Nokia Advertising Network is a manifestation of the company's resolution to transit from the manufacturing industry to the service (particularly the Internet service) industry. Do New China Mobile, New China Unicom and New China Telecom have the same resolution?
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Prev : New Landscape in China's Telecom Market (7) The Pricing of 3G Value-added Services
- Today in History
New Landscape in China's Telecom Market (8) WAP Sector Is Slowing Down - 2008/08/10
PDA in Siege (1) The Attack of Notebooks - 2004/08/15
Operators always seek to avoid direct discount.
[+] The 3G war in Taiwan started 5 years ago.
In the previous sessions, I envisioned the post-restructuring 3G fee rate war in mainland China, and provided suggestions on the offensive and defensive strategies for operators. However, as those are just general discussions, it is hard for ordinary people to understand the remarkable aspects of the strategies. Now let's forget about New China Telecom, New China Mobile and New China Unicom, and take a look at the 3G price war that has been ongoing in Taiwan for 5 years.
Taiwan is a place with a GSM penetration rate higher than 100%. In other words, it has more GSM phone numbers than its entire population. Thanks to white hot competitions in the market, the public has been well educated about the "on-net" and "off-net" fee rates. Calls between subscribers of the same operator are entitled to 50% off "on-net fee rates".
Just take a look at the fee rate lists of operators in Taiwan, and you will see this is an inherent logic of their billing practice. As a result, the larger an operator is, the more powerful its ability to attract new and retain existing subscribers. The public knows that, for example, being a subscriber of Chunghwa Telecom, you have better chance of calling somebody who happens to be a subscriber of the same operator and being entitled to preferential (on-net) fee rates.
At the beginning, emerging operators were not able to take a bite from the existing subscriber bases of the "Big 3", i.e., Chunghwa Telecom, Far Eastone Telecom and Taiwan Mobile. The first attack was launched by Taiwan's first 3G operator: Asia Pacific Broadband Wireless Communications Inc. (APBW) In July 2003, APBW launched its value-added brand QMA and two expensive 3G handset models, believing that the first 3G subscribers would arrive soon for its rich portfolio of applications.
[+] Free calls for on-net subscribers
It was not long before APBW found that its 3G vision was a beautiful mistake. Unable to achieve its sales target with expensive handsets and value-added services, the operator soon started its phase-II operation. With free handsets and a stunning offer of "free calls between on-net subscribers", it triggered a price war. Free on-net calls meant that calls between any two 3G subscribers of APBW were free of charge.
The bloody price war did not trap the Big 3, which, as public companies, could not stand the consequent ugly finance statements. In addition, with strong brands, they did not feel the need of an immediate response. Many lovers and students joined the subscriber base of APBW in couple for the free on-net calls. They turned out to be the first subscribers of APBW.
The Big 3 seemed to be so confident that they waited until the end of 2005 to launch their own 3G services. Their strategies were simple: just regarding 3G as a value-added service of 2G. They offered similar fee rates for 3G, except for the mobile Internet service. Up until then, there had not been an all-out 3G price war, as existing operators had been defensive, instead of offensive in the 3G market.
In December 2005, a new 3G operator, VIBO Telecom launched its business operation. Like APBW, VIBO Telecom tried to build its subscribe base from scratch. With lessons learned from APBW, VIBO Telecom did not expect too much from value-added 3G services. Instead, it posed for a price war right from the beginning by offering a package "Everybody On-net".
[+] Same fee rates for on-net and off-net calls
"Everybody On-net" was just the opposite of free on-net calls. The following are a few examples of the differences:
General 3G: NTD X/second for off-net calls and NTD 0.5X/second for on-net calls (like the case of 2G);
APBW: NTD X/second for off-net calls, free of charge for on-net calls
VIBO Telecom: NTD 0.5X/second for off-net calls, NTD 0.5X/second for on-net calls (the same price for on-net and off-net calls, "uniform rates")
As mobile subscribers in Taiwan tended to believe that using services of major operators means better chance of enjoying the 50% discount on-net rates, "Everybody On-net" was actually an attempt to tell consumers that, with VIBO Telecom, they could have 50% discount rates for both on-net and off-net calls. As a matter of fact, VIBO Telecom's price war was to offer 50% discount for off-net fee rates.
"Everybody On-net" led to the counterattack from the Big 3. The first to respond was Taiwan Mobile, which offered a "Local Life" package, dividing Taiwan into 5 regions. Calls within each region were entitled to uniform fee rates similar to those of VIBO Telecom. However, out of the selected region, the cost of communication would rise sharply.
It was really a smart action. It squeezed VIBO Telecom out of the spot light of "uniform rates" without too much compromise in actual fee rates. The region-specific preferential rate package was not as lethal as the 50% discount of VIBO Telecom. However, the strong brand of Taiwan Mobile helped to prevent its subscribers from switching to VIBO Telecom.
[+] Big brands sat tight
For Taiwan Mobile, it was a successful defense. For APBW, however, it was an alert. It followed suit immediately by launching the brand new "Wonder 4" package, ,which, like that of Taiwan Mobile, divided Taiwan into just 4 regions, and offered lower rates than "Local Life". In this package, on-net calls were no longer free. It gave APBW a chance to get rid of the double-edged sword of free on-net calls.
By far the 3G price war really begun, only Far Eastone Telecom and Chunghwa Telecom still sat tight. Instead of introducing new 3G packages, Far Eastone Telecom offered "get one free minute for each minute of on-net calls" promotion for the its existing package. In other words, it was another 50% off based on the existing 50% discount rate.
Far Eastone Telecom promotion: NTD X/second for off-net calls, NTD 0.25X/second (roughly) for on-net calls.
In face of deep cuts in off-net fee rates by rivals, Far Eastone Telecom chose to increase discount for its on-net rates to consolidate its subscriber base. Chunghwa Telecom launched an intensive TV advertising campaign for its F2 (Friend and Family) package, which offered ultra-low rates for calls between each group of 10 mobile subscribers and 6 local fixed line subscribers. Leveraging its advantages in the local phone market, Chunghwa Telecom consolidated its subscriber base, while responding to the 3G price war in a roundabout way.
It is not until lately that Chunghwa Telecom eventually joins the price war by introducing "uniform fee rates for on-net and off-net calls". Yet it has been 3 years since VIBO Telecom triggered the price war, it is true that market leaders are hurt by the proposition of VIBO Telecom. However, with strong brands, they can afford to be the last ones to join the price war.
[+] Being cheap is just an excuse
Aren't we talking about 3G? How comes that price war takes the place of value-added services as the prime role? As I have said, regarding value-added services as the prime role of 3G is a beautiful mistake. The fact is value-added services are only an excuse for operators to avoid price wars. Whether in Taiwan or in mainland China, 3G price wars are inevitable, so long as price killers exist in the market.
In addition, operators are always seeking ways to avoid direct discounts. For them, the best solution is to make consumers feel an offering is cheap, which is actually not. "Being cheap is just an excuse". This is what I have learned from my experience in designing the "Everybody On-net" package at VIBO Telecom and the consequent price war. Consumers will never know the real planning of the operators behind the fee rates.
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Prev : New Landscape in China's Telecom Market (5) Fee Rates of 3G Services
- Today in History
New Landscape in China's Telecom Market (6) Insight into 3G Price War in Taiwan - 2008/07/20
From Idea to Business (2) How to Estimate Your Income and Cost? - 2007/07/22
New Era of Online Advertising (2) from Exposure to Deal - 2006/07/23
Ultimate Mobile Device (5) Universal User Experience - 2005/07/24
Would existing GSM subscribers be its assets or liabilities?
[+] New China Mobile as the forerunner
In a winner-takes-all market, the forerunner would have considerable leading edge. The New China Mobile with its TD-SCDMA, the New China Unicom with its WCDMA and the new China Telecom with its CDMA2000, which is going to be the forerunner? The bargaining for mergers between operators will last for some time, but the one who completes the merger first might not end up being the forerunner.
Yesterday, I was surprised to see a 3G ad of China Mobile on a Focus Media LCD in an office building in Shanghai. The ad has two implications: 1) 3G video phone is really cool; and 2) at the end of the ad, it is mentioned that TD-SCDMA is being tested, implying that it will be launched soon. The ad indicates that China Mobile is taking the lead.
The ad gives me a few inspirations. First, telecom operators around the world have a common idea in mind when they launch their 3G services: "video phone is a selling point." It seems that Chinese operators are no difference (but they do not know, as a matter of fact, consumers resist the service). The 3G war once waged among telecom operators in Taiwan seems to be about to start once again in the mainland.
Second, it seems that TD-SCDMA would be the last 3G version worldwide. Other versions, including WCDMA and CDMA2000, have been in commercial operation for years and very mature by now. The 3G ad of China Mobile seems to be a forerunner. However, when they could introduce compelling TD-SCDMA offerings is another thing.
[+] New China Mobile faces the same challenges that Hutchison once did
Hutchison is the 3G forerunner worldwide. When Mr. Li Ka-shing tried to develop Three, the telecom operator in Europe, he encountered a lot of challenges from the very beginning. First, with only 3 cell phone models, Three offered consumers very limited choices. We have to admit that consumers need very simple reasons to buy things. Cell phones with appealing appearances are a big reason for switching to 3G. Limited choices would affect sales.
In addition, its initial market positioning toward business people was another problem. Among the 3 models, one was focused on the video phone function, and another one on the email feature. While capable of satisfying some of the requirements, these phones ignored the most fundamental requirement of the business people "making phone calls successfully". As a new entrant, WCDMA had only limited coverage. That means there were a lot of places where its signals could not reach.
In addition to the coverage of signals, there was also the problem of the compatibility between cell phones and telecom networks. Although both telecom equipment suppliers and cell phone manufacturers complied with standards, it was the first time for the two to collide head on in the business environment. Three's cell phone supplier NEC sent a team to Europe dedicatedly to assist Three to adjust the cell phones in line with the 3G networks.
The clumsy process resulted in customer complaints and damage to the Three brand. As TD-SCDMA has been away from the public sight before, its business operation ability is much doubted. Assuming the mission of promoting the Chinese standard, New China Mobile might become the last operator to launch 3G. Therefore, it is necessary to learn from existing experience and lessons, so as to avoid mistakes of other operators.
[+] Would existing GSM subscribers be its assets or liabilities?
At the new start line, do the 3 operators each carry a burden on its back? The GSM customer base of New China Mobile is both an asset and a liability. It is an asset because New China Mobile could attract those with higher value among the existing customers to become its 3G subscribers. New China Mobile has undoubted edge to promote 3G at its own existing outlets.
On the other hand, it is a liability because discounted rates will have to be offered to attract existing subscribers to use 3G services. Of course, it would be better to attract subscribers of other operators. However, if its 3G subscribers are derived from the existing GSM customer base, the total revenue would decrease. In general, with the launch of 3G, the operator would earn less, instead of more.
In summary, New China Mobile would face 3 challenges: 1) how to attract more cell phone manufacturers to make TD-SCDMA phones, ideally with enough models to cover different price levels; 2) how to maintain the existing GSM rates while attracting more users of 3G; 3) how to ensure the quality of 3G calls, i.e., how to ensure the roaming of the calls to its GSM network in areas beyond the reach of TD-SCDMA signals.
Appealing as they are, other value-added services, such as mobile Internet, won't be available before overcoming the above challenges. The much hated video phone might be only a selling point for advertising. At the late stage of the 3G war, operators around the world are no longer boasting about their value-added services. Instead, they begin to focus on voice fee rate discounts.
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Prev : New Landscape in China's Telecom Market (1) Winner Takes All Next : New Landscape in China's Telecom Market (3) Who's Gonna Be the Price Killer?
- Today in History
New Landscape in China's Telecom Market (3) Who's Gonna Be the Price Killer? - 2008/06/29
New Landscape in China's Telecom Market (2) Opportunities and Burdens for New China Mobile - 2008/06/22
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
Viral marketing will be the key word for marketing in the Web 2.0 time.
[+]The history of SNS
Last month, AOL's purchasd Bebo, the largest social networking site in Britain, for USD 850 million in cash. That once again highlighted the value of SNS (Social Networking Service). In the United States, Bebo is the No.3 social networking site, behind MySpace and Facebook, with more than 40 million users around the world.
Further back, News Corp acquired MySpace with USD 580 million in 2005; Microsoft paid USD 240 million for merely 1.6% stakes in Facebook. The first deal seems to be too hasty for MySpace and too juicy for News Corp. What, indeed, is the most attractive aspect about SNS to investors?
SNS is really a confusing concept when mentioned together with dating sites, community sites or Blog. Even SNS operators do not view themselves as dating sites, community sites or Blog sites. While those sites have been in place since the Web 1.0 time, or at least the end of that time, SNS focuses on inter-personal relations, and therefore is a mixture of all above.
Finally, it seems that only ambiguous terms such as "personal space" could differentiate SNS from those traditional concepts. In terms of functionality, SNS enables blog, photo album, friends, community (or group) as basic functions. With the intentional guide of the operators, users could visit the blogs and photo albums of others, eventually activating the social networking function.
In terms of social networking behavior, SNS depends on the migration of offline personal relations to online platforms to combine with those of others to build a larger relation network. While using the service primarily to interact with acquaintances, users might meet strangers for deeper communication intentionally or unintentionally, resulting in larger social communities. Hence, interpersonal relations could be maintained by paying attention to the activities of each other.
[+]How to convert page views into revenue
With more than 40 million users around the world, Bebo is worth USD 850 million. In China, the largest social networking sites, e.g., Tecent Q Zone and 51.com, have more than 100 million users, yet none is deemed to be worth that much. What, indeed, is the commercial value of the social networking sites? At the present time, it seems, the value lies primarily in being purchased.
Thanks to the high interactivity among its users, social networking sites have far more page views than conventional portals. What's more, each user would keep an eye on the presence of his/her friends, resulting in a much longer average online time. Many SNS users log onto the site as soon as they get off work/class, and remain connected until they go to sleep. How to convert the addiction into revenue?
There are 3 possible ways: 1) through Internet advertising; 2) by providing users with fee-based value-added services; 3) by offering e-commerce services in the communities and collecting commissions from transactions. In the foreseeable future, any social networking site is expected to reap revenue through all of these 3 approaches. The only difference lies in the revenue proportion because of different primary users of each SNS site
One of the most distinct features of SNS is its distribution by word-of-mouth. An article by a common person on MySpace or Facebook would get widely spread through his friends, or friends of friends. Such effect is what advertisers have been dreaming for, as distribution by word-of-mouth is the most cost-effective approach.
In the Web 1.0 time, however, this kind of viral marketing was only a result of sheer luck, rather than deliberate planning. Without a platform to operate on, most advertisers had to pay for the views of their ads, allowing their budgets to be washed away by the visit traffic of the portals. While the focus of Internet advertising in Web 1.0 time was target advertising, it would be viral advertising enabled by SNS in the Web 2.0 time.
At the 2008 Annual Conference for the New Economy hosted by iResearch, I gave a speech titled "The Key Word for Marketing in Web 2.0: Viral marketing". You can find and watch the video at: http://v.iresearch.cn/data/20080425/79812.shtml
[+]Impacting the traditional Internet advertising model
However, the business model has trouble facing advertisers, who generally accept it as a cost-effective approach. For example, one million clicks at a portal or one million users' interaction at a social networking platform, which one do you prefer? For online advertisers, the answer is the latter. The question is, however, how do you charge them for the one million users' interaction?
Currently, SNS is still not able to compete with portals by means of CPM or CPC. With surprisingly good results but no billing method available for SNS, there has appeared a weird phenomenon of "free interaction for ad exposure or clicks purchased". Unable to generate income from its most valuable part, SNS is not yet ready to compete with portals for users by means of CPC.
For advertisers, word-of-mouth-based distribution is the most cost-effective marketing method, as well as one of the reasons for them to move their budgets from portals to SNS. In addition, there's not yet a unified standard in the industry for billing by results. An event might have one million participants, however the extent of involvement varies substantially. There is not a simple and intuitive measurement like CPM or CPC.
Currently, advertisers are still testing SNS marketing, while SNS operators are exploring new billing methods. Therefore, there's a huge potential. Eventually, it becomes a process of negotiation between sales reps and advertisers, and the final result depends on who is going to convince whom. The criteria for advertising effect in the Web 1.0 time is no longer able to keep up with the market changes, but the Web 2.0 criteria are yet to be developed.
Viral marketing will be the key word for marketing in the Web 2.0 time, as SNS will become a platform enabling word-of-mouth-based distribution among advertisers. Share and recommendation by friends would enable higher market awareness and better marketing effect. What we don't have yet is a set of criteria to measure the marketing result, as CPM and CPC, which derived from traditional media, are obviously out-of-date.
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Prev : Initial Experience of Widget's Profit Model
- Today in History
Glimpse into Profit Model of SNS-based Advertising - 2008/05/11
3G Time Comes (8) Who Are First Users of 3G? - 2003/05/18
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
Nokia must turn itself into a platform, which must be more open than existing ones.
[+] Handset operating systems are getting increasingly unimportant.
In the mobile communication industry, Nokia is a legend of invincibility. According to the data released at the end of January, Nokia sold 134 million handsets in the 4th quarter of last year, with a market share as large as 40%, way ahead the 15% of Samsung, the closest follower.
If you were the CEO of Nokia, you would think: "can I further do something with these users?" when you see the data. Lucrative as the handset business is, isn't it better to squeeze something more out of the users? Internet becomes a target.
For years, Nokia has been dedicated to the development of its handset operating system Symbian and a series of smart phones to battle with Microsoft - with eye-catching sales. Worldwide, 60% of the smart phones are driven by Symbian. Only 11% use Windows Mobile.
What's clear is, however, amid the tide of wireless Internet, handset operating systems are getting increasingly unimportant. It is not that players on the stage will give up operating systems, but they have found that the ability to provide services is even more important.
If, as described in the previous section, Yahoo! introduces Yahoo! Go to enable service delivery across operating systems on the wireless Internet, and Google's operating system becomes available to handset developers for free. Where is the value of those different operating systems? The users would care nothing else but the services available.
Apple iPhone is an amazing product. But the central topic is not the operating system iPhone uses. In terms of sales, it would have a long way to go before becoming a threat to the market leader Nokia. However, iPhone's ability to drive sales with its music service is something that Nokia cannot afford to ignore.
[+] Nokia moves into the Internet market.
According to data released by Google internally in January 2008, during the 2007 Christmas season, page views of Google through iPhone was next only to that through the Symbian smart phones. iPhone's share of the smart phone market was as low as 2%, while that of Symbian was 63%.
What's the reflection it would give Nokia? Obviously, iPhone offers better Internet experience than Nokia - easier to use, more user-friendly browser functions. Maybe Apple is better able to attract users with high demand for Internet accessing to buy its smart phones.
To Nokia, both the improvements to the interface and the selling model of handsets bound with Internet services are shockingly new. A player that has been traditionally regarded a computer manufacturer is now one step into the telecom industry after a successful transformation into an Internet service provider and a consumer electronic product manufacturer.
What will be the right move for Nokia to infiltrate into the territories of its rivals? The first idea would be to provide proprietary contents, which could be obtained through M&A or through partnerships. Fortunately, many Internet players are interested in getting their services available on Nokia phones.
Therefore, Nokia introduced a series of services, including Nokia Search, Nokia Maps and Nokia Music. Most of the services, however, require download of special software into handsets in prior, and are not compatible with all Nokia handset models. Therefore, pre-installation of the software becomes a necessary means to sell handsets.
Nokia Search is a service offered jointly with search engines such as Google, while Nokia Music is a fee-based online music store through partnerships with leading labels - something similar to the iTunes music store of Apple. To Internet players, Nokia is both a partner and a rival.
Nokia service list: http://europe.nokia.com/A4496273
[+] WidSets: an open platform that pulls together the Internet world
It takes time to build such services. To establish itself in the Internet world as soon as possible, Nokia will have to pull the entire Internet over to its side. Don't forget that the Internet is a huge eco-system that needs a common leader to open the gate to the world of wireless Internet.
Nokia must turn itself into a platform, which must be more open than existing ones, to enable the upload of any service, regardless of the handset operating system - Symbian, or whatever else. If the handset operating system is no longer important, sticking onto Symbian would become Achilles' heel.
To Internet players that Nokia wants to pull over to its side, the prospect of handset-based Internet services available on any handset is a deadly attraction. Perhaps it was based on this idea that Nokia introduced its open platform WidSets.
For handsets, this open platform is a small Java program. Any handset that supports Java can run the software. Theoretically, Internet players would be able to provide services to all Java-enabling handsets, so long as the services are developed on the basis of the small program.
In terms of operation logics, what WidSets offers is similar to that Yahoo! Go does. Internet service providers could ignore the specifications of various handsets and make their services available on the wireless Internet through simple programs, so long as the receiving handsets have WidSets.
Currently, a number of leading Internet players, such as Wikipedia, Blogger and Flickr, as well as news media including Routers and BBC have started to develop applications on the Widsets platform. In addition, many amateur players are developing small games on it for downloading by users. Obviously, application development has become an easy thing.
Download WidSets at: https://www.widsets.com/widgets
[+] Can handsets be free?
Theoretically, Nokia's WidSets can be installed into a GPhone, or an iPhone, so long as it supports Java. In this regard, what operating system a handset uses is really unimportant. Why then is Google still sticking on the development of its own handset operating system?
What's really in the mind of Google, perhaps, is to extend its advantages in online advertising. By knitting Google services closer with handset functions, it would be able to continue its leadership in the handset-based advertising market as the wireless Internet population grows, or even use the income to offer cheaper or free handsets.
Of course, Nokia and other handset manufacturers would hate the idea. Instead of selling products, they would have to depend on advertising to make money. Will this wild dream of Google become true? First of all, handsets will never really be free. They are just paid by somebody else.
Telecom operators were once bill payers that made handsets free through bound service contracts with consumers, who were thereby requested to pay subscriptions, which they had no way to cancel for a given period of time. With the subsidies of telecom operators and Google, it is indeed possible to further drive down the prices of handsets.
If the appearance of GPhone means that telecom operators would pay less subsidy, that's absolutely good news for them. The problem is it will have to be paid, either by telecom operators, or by Google, because handset manufacturers such as Nokia will not sell handsets at prices below costs.
If Google pays the subsidy to make handsets free, it will have to earn the money back from follow-on handset-based ads. To spend the money before there's an income, is this a good deal? Google will have a huge amount of cash to give away as subsidy. It seems exactly what powerful telecom operators did in the previous years.
Compared with those of Yahoo! and Nokia, Google's wireless Internet plan seems more like a big bet.
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Prev : Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy
Next : Great Changes in Wireless Internet Industry (4) Apple's Strategy
- Today in History
Great Changes in Wireless Internet Industry (3) Nokia's Strategy - 2008/03/23
Predictions on China Internet Market (5) Search Engines - 2006/03/26
Media, Community, and Blog (4) Production-Marketing Relations - 2005/03/27
Media, Community, and Blog (3) Deconstruct Blog - 2005/03/20
Stop Internet Marketing (3) All Determination; No Distribution - 2004/03/21
3G Time Comes (3) SMS, Email and MMS - 2003/03/23
Success or not, Google has made a smart move to bid for the license.
[+] The conflict of mindsets of two industries
Rumors about Google's introduction of GPhone have been flowing around for quite a long time, but never confirmed. Nobody had any idea about how ambitious Google's blueprint was until it announced to bid for FCC 700MHz spectrum and to launch the Android mobile platform.
Mobile operators are in a fortress that Internet players have been unable to conquer so far - largely due to the gap between the basic business modes of the two industries. In the mind of telecom operators, there's nothing to be offered free. Once launched on a telecom platform, any service would entail a cost and should generate an income.
Therefore, when the ringtone download service is released on WAP portal, telecom operators charge the users two types of fees, one for data transmission and the other for use of the content. While the former is most likely to be integrated into monthly packages, the latter is actually collected for content providers.
For a long time, telecom operators have no idea about how to deal with Yahoo! or Google search boxes at WAP portals. Unlike ringtone download, this is a service that you cannot charge users for. If the search boxes are put up by Internet players for marketing purpose, should they pay telecom operators for that?
So when the webpage you get using Google on your cell phone shows an ad, your telecom operator will share a portion from the advertising income. This cooperation model turns Internet companies into a secondary role. What else can they do since the telecom operators control the Internet access?
There are two ways to force telecom operators to recognize their status: either from the upper stream or the lower stream of the industry. One case for the former is Google's bid for wireless spectrum to assume the role of a telecom operator; and that of the latter is Apple's introduction of iPhone - bound music to reach into the pocket of consumers.
[+] Google's overall deployment
Google' s bid for FCC 700MHz wireless spectrum is far more important than its launch of Android mobile platform. Previously, Google had urged FCC to accept a yardstick that "all bidders for the spectrum should offer open access."
The request got the support of FCC. Essentially, it demands that the winner of the bid should have the ability to provide access to any terminal device connecting to networks of the spectrum. Instead of discrimination, the operators should treat all terminal devices equally.
FCC is a neutral party. Its mission is to facilitate the development and effective competition of the communication industry. To open the industry wider to more players is, obviously, in conformity with this mission. As Google stood out with the proposal, telecom operators, who had been accustomed to stand-alone business operation, were at a loss for even not knowing how to rebut it.
However, how could it be possible to allow so many different terminal devices free access to the Internet? So Google, along with the 34 founding members of Open Handset Alliance, introduced Android, a device-independent handset software development platform..
Why were the 34 companies, including heavy-weight players such as Motorola and Qualcomm, and even telecom operator T-Mobile involved from the very beginning? Had Google not announced to bid for the license and urged FCC to accept the Open Access standard, they wouldn't be there so fast!
Google made a smart move. The result of the bidding is yet to be announced, and the open handset platform would have to stand up to existing rivals such as Symbian and Windows Mobile. Nevertheless, it is a good beginning. Nobody could afford to ignore the power of Google.
[+] The license bid is critical
The next step of Google might depend on the result of the license bid. In the first place, if Google wins the bid and becomes a new telecom operator, it would be able to integrate the entire industrial chain, from the upper stream to the lower stream, with the assistance of Open Handset Alliance. The most optimistic prospect would be a performance multiplier.
Google will be able to foster the basic customers for its own handset platform, while its allies would target client groups for their handsets and services, and terminals introduce closer-knitted services with Google. With economies of scale, more investments can be made for R&D to eventually build a healthy cycle.
Of course, it will take Google a lot of money and time to learn about the trade. Telecom is a century-old industry and won't be so easy for Google to understand in a short time. Head hunting might be a good option, but conflict with Google's existing business culture would be possible.
If the learning curve is too long, Google might be mired in the new business. Telecom is a capital-intensive business that takes a lot of initial investments. Google's financial statements would not look so pretty by the time.
More troublesome, in this industry, successful business modes cannot be duplicated. Google might be able to get the wireless spectrum of the United States, but it has no way to get those of all countries in the world. Telecom is a highly localized industry, which means that Google is unlikely to duplicate or export business modes to other parts of the world.
The only viable way is M&A, or financial takeover of local telecom operators just like other transnational telecom giants have been doing. This, however, won't happen before Google's telecom business becomes profitable. How can a money-losing business sell its business mode? Where does it get the money needed?
[+] The Android platform turns out to be a headache of developers
In my view, it would be better for Google not to get the wireless spectrum license. It would be too much to raise cows just for drinking milk. Even if Google doesn't get the license, Open Handset Alliance and its Android platform would still be valuable assets.
As Open Access has been accepted by FCC as a requirement for all players, Google could use the alliance and the platform as its chips to cooperate with the telecom operators that win the license. By abandoning the quest for a telecom operator, Google would be less as a threat to other operators, which would be helpful for cooperation.
By taking the highland to show its determination for the license bid, to create a powerful pressure and facilitate the establishment of Open Handset Alliance, Google has made a really smart move, regardless of the result of the bid.
Of course, there will be challenges. For Google, the biggest is how to attract more telecom operators into the alliance and to boost the enthusiasm of handset manufacturers to develop GPhone. Its rivals will include the formidable Symbian and Windows Mobile.
Handset manufacturers and software/application developers, in the meantime, are frowning at the platform. On the open Internet, Google is undoubtedly the leader. In the field of handset development platform, however, it is just one of the options.
What the developers are concerned about is, if the Google platform is not powerful enough to take the loin's share of the handset market, it would turn out to be one more standard that the developers would have to support. For them, the existing platforms are enough to be painful about. And here comes another.
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Prev : Web 2.0 Finale (3) Finally blended in Web 1.0
Next : Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy
- Today in History
Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy - 2008/03/09
Great Changes in Wireless Internet Industry (1) Google's Strategy - 2008/03/02
Predictions on China Internet Market (2) Subscriber Number Is King - 2006/03/05
Media, Community, and Blog (1) The Beginning of the Story - 2005/03/06
Stop Internet Marketing (1) All Market; No Marketing - 2004/03/07
3G Time Comes (1) What Is 3G? - 2003/03/09
Easy profits from virtual business are what Web 2.0 should aim at.
[+] Changes in money flow, logistics flow and information flow
After 10 years of development of the Internet, people have become very familiar with the terms of "money flow, logistics flow and information flow." Especially in the area of eCommerce, the three flows can generate much business value. Some businesses are very successful by taking advantage of only one of the three flows.
Although "logistics flow" is a bridge between the Internet and the physical world, its importance has reduced with the introduction of Web 2.0. On the other hand, "money flow" and "information flow", though remain unchanged in forms, have experienced significant change in essence.
In Web 1.0 era, we spent great efforts to enable the money flow to move smoothly between the Internet and the physical world, so that financial tools in the physical world, such as credit cards or ATM cards, can be applied online, and that there are C2C payment tools such as Paypal.
We think a lot about how information should be transmitted (results are e-mails and real-time massaging tools) and gathered (results are portals and content websites) and how to cope with information asymmetry by inventing new business models (results are online job site and online auction).
The Internet has driven the cost of information transmission down. The revolution in money flow, logistics flow and information flow has made the Internet world as it is today. Yet we have sensed an emerging force of the fourth flow - the emotion flow -, which is about to change the three flows.
[+] Emotion flow will bring forth "the emotion highway" and "the media of emotion"
In the past, when you were done with a piece of online news, you were done with it. Maybe there were some people who would leave a comment below the news, but most people left quietly. Then some website operators made some changes to allow readers to score the importance of the news from one to ten points. Yet few people chose to leave a score.
The scoring system has finally been simplified to two options: "push" and "bury." If you are in favor of an article, you push. That is how the news article popularity website, digg.com, in the US succeeds. Then, we start to see news websites provide a function to allow readers to express their feelings about news articles like " happy," "sad," "confused" and so on.
The dawn of the Internet Next is upon us. Indeed, what really matters is not information per se, but what people think of the information and furthermore, how they "feel" about it. A simple "agree" or "disagree" is not enough.
You must have seen in commercials a network of beaming cables through which information flows freely. The so-called "information superhighway" has embodied people's imagination of the Internet. Now what is ahead of us is "emotion superhighway."
There must be many ways to reflect people's emotions flowing around global networks and represent these emotions on websites. Blog have been seen as grassroots media, and social networking websites a tool for social networking or meeting friends. Web 2.0 Next application will be "emotion media."
[+] Emotion: the next thing Web 2.0 is to deal with
Wanna know the moods flowing on the Internet globally? Check out http: //worldmood.info/. This service simplifies moods into smiley face and frowny face. Maybe it can be used to predict stock market performance - isn't it the sum of investors' confidence and moods?
In the time of emotion economics, the ability to control a tremendous amount emotional data will be highly valuable. We do know that emotions affect our consumption behaviors, but we do not have a chance to quantify the relations between emotions and consumption. Web 2.0 may provide a solution.
Indeed, it is very difficult to control a huge amount of personal emotional data. Yet it may work if we focus only on a specific kind of emotion and develop an emotion-centric website. Instead of attracting heavy traffic and drawing revenues from advertising, the strategy of focus survives by selling virtual products. Examples are:
Flowers for Hope: http: //www.flowersforhope.com/garden/ This website allows you to make a wish. Each wish is represented by a flower. Other people can water your flowers, while you can also check out other people's wishes. You know that you are not alone. Your wishes are being taken care of.
Secret: http: //secret.moumentei.com/ This is a very simple website in terms of technology and interface design. Yet it offers thrills to peepers and exhibitionists and even the peeped. I marveled at my first sight of this website.
[+] As emotional products get more popular, micro payment becomes a challenge
With the emergence of emotion flow applications, the selling of virtual products will become a major revenue source for Web 2.0 websites mentioned above. Some people are willing to spend 1 US dollar for a virtual object to express their detestation or some small money just to play kids online. "Emotion" has become a real product.
At the time of purchasing a virtual emotional product, the expression of an emotion, or psychological therapy, is completed. That is the magic of emotional products. A successful design of emotional products is really a test of creativity and understanding of human nature.
However, how do you pay small money like 1 US dollar, by credit card or ATM card? Virtual emotional products are absolutely linked to impulsive spending. Entry of long credit card numbers and repetitive confirmation can kill that impulse of spending.
In Web 2.0, micro payment becomes a challenge, because the profit from each virtual product is too small to make up for the credit card processing fee. Those who can solve the problem of micro payment will be able to reap the profits of the long tail of virtual emotional products.
Emotion flow will get even more important in Web 2.0 Next. Before, people discuss on whether online users would be willing to pay for information or the use of information processing tools. Now, people who can control the emotion flow of online users will have a chance to pull the money out of users' pockets.
As virtual emotional products get more popular, dependence on logistics would only decrease. Why? Because it is all about psychological satisfaction, and there is no physical thing involved - no delivery, no guarantee and no product return. Easy profits from virtual business are what Web 2.0 should aim at.
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Prev : The Next Step for Web 2.0 (1) The Dawn of Emotion Economics Next : The Next Step for Web 2.0 (3) Collective Will Is the Cornerstone of Everything
- Today in History
The Next Step for Web 2.0 (2) The Fourth Flow: Emotion Flow - 2007/09/02
Envisioning China's 3G Market (2) 3G License & Market Strategy - 2005/09/04
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
