Paul Wallbank – Brilliant Communications

Category: new media

  • Is Groupon the small business saviour?

    Is Groupon the small business saviour?

    Since Google’s rejected offer of $6 billion dollars to buy deal of the day website Groupon, there’s been a lot of discussion of just what Groupon and the hundreds of similar services mean to online commerce and small business.

    Groupon’s CEO, Andrew Mason, even went as far as to declare his organisation the “saviour of small business” on the Charlie Rose show.

    John Battelle, founder of The Industry Standard and co-founding editor of Wired, examines Groupon’s business model on his Searchblog and concludes it will be the small business platform for the mobile Internet just as Google are to the web and Yellow Pages were to the telephone.

    The problem with these ideas is scale. If every small business had the capacity and wanted to be on Groupon, the service simply couldn’t cope and the model breaks down.

    In my area there are, according to the Yellow Pages, 115 hairdressers in my district. Even if Groupon were able to geographically target me to my neighbourhood, they’d need a third of the year just to cover hair stylists which is tough luck for the lawn mowing services, plumbers, patisseries and other small businesses that may also want to advertise on Groupon.

    Which takes us to customer motivation, when I’m looking for a haircut, hedge clipping, cleared drain or chocolate gateaux I’m not particular driven by finding a bargain – if I do that’s great – but it’s not my motivation to buy.

    Groupon, and the other deal of the day sites, are driven by customers looking for discounts, and the key to business survival – particularly in retail – is not to depend on discounts to drive your business. So business models that rely on discount hungry customers, or cashflow desperate merchants, are always going to be limited.

    Groupon is a great business and it may well turn out to be worth $6 billion or even $36 billion. The barriers to entry are not so low as anyone who thinks executing an idea like this is “easy” doesn’t understand the work involved in building a local sales team like those of Groupon or Yellow Pages.

    It could well be that Google wanted to buy Groupon simply for that sales team. The failure of Google to properly execute on their terrific local search product has baffled me for some time and the only explanation I can put down to it is what Silicon Alley Insider’s Ron Burk attributes to Cash Cow Disease, where companies like Google and Microsoft find themselves paralysed by the rivers of cash flowing into their businesses.

    Deal of the day sites have an important role to play for businesses looking at demand management or clearing inventory and Groupon is a good business just like Clipper Magazine or Shop-A-Dockets, but to claim they are going to be the next great revolution for small business is giving too much importance to these channels.

    There’s no doubt though that small businesses will be the big winner when we get local search on the web right. When we get it right we’ll probably see the hyperlocalisation model for the media start to take off as well. So it could save two industries.

    Groupon though is not the small business messiah we’re looking for.

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  • the new gatekeepers

    the new gatekeepers

    As the net matures, are we seeing a new phalanx of gatekeepers gathering to complement the old ones?

    Four companies striving to control great parts of the Internet economy; Google in the search market, Facebook for social media, Amazon in e-commerce and Apple in mobility.

    Of the four, Apple seems to be the furthest along this path as the iTunes store coupled with the market take up of iPad, iPhone and iPod combination are beginning to dominate the mobile device segment of the Internet.

    This is illustrated by two stories in recent days; the first is News Corporation’s deal to develop a dedicated iPad “newspaper” and the other Robert Scoble’s description of how Application developers are increasingly focused on the Apple platform.

    The telling part of Scoble’s story is where he speculates how the tech media could be being rendered irrelevant by Apple’s control of the iTunes store, he goes on to say;

    “Do app developers need the press anymore?

    They tell me yes, but not for the reason you might think.

    What’s the reason? Well, they suspect that Apple’s team is watching the press for which apps get discussed and hyped up.”

    Scoble’s article is interesting in how Apple’s dominance of the distribution chain allows them to bypass other media channels; why go to Facebook or Google, let alone your local newpaper to find out what the hottest new apps are?

    Even more fascinating is how Apple’s control of its distribution channels ties in with its dominant hardware platform, this is the online equivalent to one company owning the paper mill, the presses, the trucks and the news stands then forcing every magazine and newspaper publisher to work them.

    It’s instructive that despite the real risk that Apple could end dictating all terms to those who rely on iTunes as their publishing platform, newspaper publishers are locking themselves onto this world. This is despite the publishers spending the last two decades shoring up profitability by reducing margins to their news sellers and delivery agents.

    Despite these risks, News Corporation isn’t holding back after Rupert Murdoch described the iPad as “a fantastic invention”, across the empire various outlets are promoting their iPad applications, including the New York Post, London Sun and the Sydney Daily Telegraph.

    It will be very interesting to see how this alliance between an old and a new media empire will turn out.

    Meanwhile the new empires are jostling each other where they meet, Google’s latest spat with Facebook over data is just one of many skirmishes and we can expect to see many more as the big four explore the boundaries of their businesses.

    The real question for us is how do we see ourselves working with these empires. Will we reject them, or will we accept that doing business with Facebook, Google, Apple and Amazon is the easiest way of getting on with our online lives?

    If it’s the latter then we’ll have seen the old gatekeepers of the media, retail and communications simply replaced by new, bigger toll collectors.

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  • the price on our heads

    the price on our heads

    Over 500 million people have signed up on Facebook, trading their privacy for the ability to connect with friends and online communities. In turn, Facebook has built that massive group of people into an asset worth an estimated $41 billion dollars. But does it rely on us selling our privacy too cheaply?

    A common factor in many of our communication channels in the last fifty years has been how we, as a group, have been prepared to trade something personal in return for a cheap service.

    Broadcast media’s model offers us free or – in the case of newspapers, magazines and Pay TV – subsidised news, sport and entertainment in return for shrill or intrusive commercials that usually wastes our time.

    Similarly with social media tools, in return for a free and easy way to find friends and relatives, we trade our privacy for targeted online advertising which can be so precise a commercial can be designed just for one individual.

    The social media advertising model is on many levels a great idea, it cuts out irrelevant messages to the consumer and for the advertiser it’s more effective than the “throw it against the wall and see what sticks” methods of the broadcast advertising world.

    A weakness in social media advertising in that it relies on users being prepared to trade away their privacy. Until now, all of us have been fairly relaxed about this despite the evidence mounting that giving away all our privacy and access to our networks often has costs to our reputations and friendships.

    That cost can be great,  with the worst case seeing people lose jobs, friendships or even their liberty for something that they, or one of their friends, thought was quite innocent.

    Under the old trade off, we could turn off the TV or not buy a magazine if we found the advertising too distracting or offensive. With new media we can’t recover our privacy once it’s been given away.

    As we begin to understand the nature of our connected society and the values of our online reputations, we’ll expect a better price for our privacy. The challenge for platforms like Facebook and other social media tools over the next few years will be to convince us that these trade offs and potential risks are worthwhile for the benefits they offer.

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  • Eight online tips for franchising

    The world wide reach of the web has always been a problem for territory based franchises. As a consequence, many franchise networks have a token web presence which they use mainly as a recruitment tool for new franchisees.

    An aversion to the web presents a difficulty for these franchisees as most customers are now online. By not actively using the net, those locally based franchise chains are finding themselves at a disadvantage to their non-franchised competitors.

    The franchising industry’s problem was illustrated last week by Ben who called into to my ABC radio spot last week on Internet business trends to ask about how a territory based lawn mowing franchisee can use the web.

    Ben’s question raised some important points that franchise holders — and anyone considering entering a franchise — should check to make sure that business is competing in today’s marketplace.

    Does the franchise have an individual page for each territory?

    Each franchise area should it’s own page within the chain’s site. While the contact details can redirect back to the central phone or form, the territory page should include some local testimonials and few other localised features.

    Is the home page regularly updated?

    A static index page that rarely changes isn’t attractive to search engines or customers. A vibrant business should be updating their page regularly. This is particularly true if there is a substantial network of franchisees.

    How does the site rank?

    When searching for the product or service the franchise sells, how high does the franchise’s page come up. If it doesn’t appear in the first page, then the franchise isn’t working.

    Does local search work?

    Type in a search for the franchise’s product and an established territory such as “lawn mowing Footscray”. If the Footscray franchise doesn’t appear in the local listings then the franchisor hasn’t listed their sites in the local search listings.

    What does the site sell?

    In researching this article, I found the biggest franchised lawn mowing chain appears in paid ads for “buy a lawn mowing franchise” but not for a actual lawn mowing. A site or digital strategy designed to sell franchises is good for the franchisor but doesn’t do much for the franchisee looking for customers.

    Is the franchise engaging with social media?

    Whether you trust social media or not, the market is talking about you on forums, blogs, Facebook, Twitter and other channels. A great example of this was Oporto last weekend. A franchise needs to be engaging with customers, critics and fans.

    Where are the franchisees?

    Are the franchisees listing themselves? This is always a worrying sign that a franchise isn’t controlling its marketing properly. On the other hand, if their personal profiles aren’t appearing on sites like LinkedIn, it can indicate too tight a control on franchises.

    What is their media strategy?

    The whole point of buying a franchise is to have a ready made brand and marketing strategy. If a franchise is locked into a print mindset with only at best a token online presence then they aren’t going where the customers are. Have a look at the online versus print effort before signing up.

    Many franchisors are playing by 1990s rules. Which was great for the last twenty years, but the old models are evolved as customers and potential franchisees have changed the way they shop and do business.

    The web and social media are more than just a passing fad or a blunt advertising and marketing tool. They are a key part of your business identity and are being used by suppliers, recruiters, job seekers and commercial partners to figure out whether you are worth doing business with.

    A franchise that doesn’t use today’s media tools is stuck in yesterday’s market.

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  • ABC Radio Newcastle 1233 and Hunter Valley: Choosing your online friends

    The Internet and the online networking tools that run on it bring a whole new set of challenges to families, communities and businesses. The recent Facebook Groups controversy is the latest and shows some of the risks with being too friendly with online strangers.

    Carol Duncan and Paul Wallbank discussed why you need to be careful with the people you befriend online from 2.40pm this Wednesday, October 13 on ABC Radio Newcastle 1233 and Hunter Valley stations.

    You can listen to the program from the copy saved on Carol’s ABC blog. If you have any questions, contact us or tweet a question to @carolduncan or @paulwallbank.

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