Category: social media

Do you like your rights?

Liking a brand’s Facebook page cost you your right to sue which is a risk to the social media service

Could liking a brand’s Facebook page cost you your right to sue?

The New York Times has a story on how corporations are subtly changing the wordings on websites and social media pages in an effort to make it harder for customers to challenge the business in court.

It’s quite cheeky attempting to strip people who ‘like’ a Facebook page of their rights to take action against a company, it even strikes at the heart of building an online community around a brand.

The whole point of accumulating real life followers behind a brand’s social media presence is to create a band of fans; by creating suspicion, business destroy the goodwill behind that exercise and possibly render it useless.

It will be interesting to see how Facebook react to this behaviour as intimidating users and discouraging them from liking brands is a direct threat to their business model, it’s hard to see them not changing their own terms to make this corporate behaviour a breach of their own terms of service.

For consumers though it’s a reminder that corporations, at least those who operate on twentieth-century mass market principles, aren’t really their friends.

Update: Since posting this piece, General Mills has backed down on its policy but the point still remains that unfair and over legalistic terms and conditions threaten social media platforms.

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No country for small business

Online advertising for small business is wide open again as the Internet empires focus on big business.

Facebook’s latest changes to its layout creates more problems for small business using social media as the real estate available on its site for eyeballs gets smaller.

The social media giant has been catching criticism recently for changes to its algorithm that make it harder for businesses to be seen online.

In the hospitality industry, discontent was articulated by the Eat 24 website which closed its Facebook Page down after finding the problems too hard.

With the changes to the online advertising feed, it makes it even harder for small business to be seen on the platform as reduced space means higher prices for the space that remains available.

It’s hard to see small businesses getting much traction with the changes when they’re up against big brands with large budgets.

On the other hand for the big brands, the importance of proper targeting becomes even greater as wasting

A challenge for small business

The big problem now for small business is where do you advertise where the customers are?

A decade or so ago, this was a no-brainer – the local service or retail business advertised in the local newspaper or Yellow Pages. Customers went there and, despite their chronic inefficiencies, they worked.

Now with Facebook’s changes, it’s harder for customers to follow small business and this is a particular problem for hospitality where updates are hard.

The failure of Google

Google should have owned this market with Google Places however the service has been neglected as the company folded the business listing service into the Plus social media platform.

Today it’s hard to see where small business is going to achieve organic reach – unpaid appearances in social media and search – or paid reach as the competition with deep pocketed big brands is fierce.

Services like Yelp! were for a while a possible alternative but increasingly the deals they are stitching up deals with companies like Yahoo! and Australia’s Sensis are marginalising small business.

So the online world is getting harder for small business to get their message out onto online channels.

For the moment that’s a problem although it’s an interesting opportunity for an entrepreneur – possibly even a media company – to exploit.

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Context and the digital divide

Paul Mabray, founder of US online monitoring service Vintek, sees a digital divide developing as businesses struggle with social media big data and Facebook.

“This is the most difficult time in history to be a wine maker, declares Paul Mabray, Chief Strategy Office and founder of Vintank.

“Never has the wine industry been as competitive as it is today.”

Update: The Wine Communicators of Australia, who sponsored Mabray’s visit, have posted Paul’s presentation that covers this post’s theme in more detail.

Mabray’s business monitors social media for wineries and collects information on wine enthusiasts. Since Vintank’s founding in 2008 the service has collected information on over thirteen million people and their tastes in wine.

Rewriting the rule book

Social media, or social Customer Relationship Management (sCRM), is what Mabray sees as being part of the future of the wine industry that’s evolving from a model developed in the 1970s which started to break down with the financial crisis of 2009.

“In the old days there was a playbook originating with Robert Mondavi in the 1970s which is create amazing wine, you get amazing reviews and you go find wholesalers who bring this wine to the market.”

“As a result of the global proliferation of brands the increase of awareness and consumption patterns where people like wine more, those playbooks didn’t work in 2009 when the crisis started.”

With the old marketing playbook not working, wineries had to find other methods to connect to their markets and social media has become one of the key channels.

Now the challenge in the wine industry, like all sectors, is dealing with the massive amount of data coming in though social media and other channels.

The cacophony of data

“If you rewind to when social media came out, everyone had these stream based things and the noise factor was so heavy,” says Mabray.

“For small businesses this creates an ‘analysis to paralysis’ where they’d rather not do anything.”

Mabray sees paralysis as a problem for all organisations, particularly for big brands who are being overwhelmed by data.

“The cacophony of data at a brand level is just too much,” he says.

“It’s as noisy as all get go and I think the transition is to break Big Data down into small bite size pieces for businesses to digest is the future, it shouldn’t be the businesses problem, it should be the software companies’.”

A growing digital divide

Mabray sees a divide developing between the producers who are embracing technology and those who aren’t, “the efficiencies attributed to technology are obvious whether they’re using CRM, business intelligence or other components.”

“The people who are doing this are recognising the growth and saying ‘hey, this stuff actually works! If I feed the horse it runs.”

While Mabray is focused on digital media and the wine industry, similar factors are work in other industries and technology sectors; whether it’s data collected by farm sensors to posts on Instagram or Facebook.

Facebook blues

Mabray is less than impressed with Facebook and sees businesses concentrating on the social media service as making a mistake.

“I think that every social media platform that’s been developed had such a strong emphasis on consumer to consumer interaction that they’ve left the business behind, despite thinking that business will pay the bills.”

“As a result almost every single business application that’s come from these social media companies has met with hiccups. That’s because it wasn’t part of the original plan.”

Facebook in particular is problematic in his view, “it’s like setting up a kiosk in the supermall of the world.”

The business anger towards Facebook’s recent changes is due to the effort companies have put into the platform, Mabray believes; “everyone’s angry about Facebook because we put so much into getting the data there.”

“We said ‘go meet us on Facebook’, we spent money collecting the items and manufacturing the content to attract people and now we have to spend money to get the attention of the people we attracted to the service in the first place.”

Despite the downsides of social media Mabray sees customer support as one of the key areas the services. “It’s easy to do in 140 characters.”

Context is king

“Everything come back to context. There’s this phrase that ‘content is king’,” Mabray says. “Context is king.”

“Anyone can produce content. It’s a bull market for free content. We have content pollution – there’s so much junk to wade through.

Mabray’s advice to business is to listen to the market: “Customers are in control more than they have ever been in human history: Google flattens the world and social media amplifies it.”

For wineries, like most other industries, the opportunity is to deal with that flat, amplified world.

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Building better horseshoes

Is Twitter chasing the wrong business model?

Twitter is considering dropping hashtags and the @ symbol reports Business Insider.

Such a move, which would enrage the services’ loyal user base, is aimed at trying to spark the interest of inactive users after the company reported a lower than expected active user number in last quarter’s earnings report.

Twitter’s user number have stalled with sign ups being an anemic 4% and the vast bulk of its registered accounts are inactive — if the service is to have credibility as a competitor against Facebook then it’s going to have a lot stronger growth.

Comparing the service though to Facebook may be a mistake though, the two platforms being very different making facile comparisons between them dangerous.

There’s also the problem that Twitter seems to be locked into an older advertising industry model; the company is obsessed about piggy backing upon television and big sporting events.

It’s akin to nineteenth Century blacksmiths deciding the motor car was nothing more than a good way to deliver horseshoes.

There is always the possibility that the ways of advertising on social media isn’t as lucrative as the broadcast industry. If may be that Twitter just isn’t worth what the stockmarket thinks it is.

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Zuckerberg meets the telcos

What do telco executives hope to learn from Facebook’s Mark Zuckerberg?

One of the fascinations of this blog is how telecommunications executives desperately fight against the idea of their service being a basic utility.

Should you scratch a tough, hardbitten telco executive; you’ll find a sensitive soul who desperately wants to be seen as a swashbuckling media tycoon or cool startup wunderkind rather than the manager of a staid old telephone company.

Once you understand the buried desired of telco executives, it’s not surprising that Facebook founder Mark Zuckerberg was invited to give the opening keynote of the 2014 Mobile World Congress.

Sadly for the Telcos it wasn’t good news as the real life tycoon and wunderkind described how Whatsapp, the startup he acquired for $16 billion last week, is going to introduce voice services in the near future.

Having seen messaging services like Whatsapp slowly strangle the telecommunications industry golden goose that was SMS, the telcos now face lucrative voice services being further eroded by these Over The Top smartphone apps.

Which leaves them with data, the lowest margin service in the telco stable.

Far from being the bravest man in Silicon Valley, Mark Zuckerberg is the telco industry’s future. Which is why the industry’s executives want to find ways to profit from developments like machine to machine (M2M) communications and media ventures.

The worry though is most of the new telco opportunities don’t appear to anywhere near as profitable as now declining or stagnant services that have been so lucrative in the past.

Which makes Ericsson’s partnership with Facebook in developing an Innovation Lab for the internet.com initiative intruiging.

The objective of Internet.com is to make the internet more accessible to more of the world, which again threatens incumbent telco models.

Transmitting data—even a text message or a simple web page—requires bandwidth, something that’s scarce in many parts of the world. Partners will invest in tools and software to improve data compression capabilities and make data networks and services run more efficiently.

Efficient, compressed data means even less revenue for the operators so it’s no wonder they’re looking at those alternate revenue streams.

No telco executive is likely to starve in the near future, but as revenues stagnate in their established markets it’s no wonder the industry’s leaders are wondering whether it’s worthwhile hitching their fortunes to Facebook’s success.

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Has the social media bubble popped?

Poor LinkedIn and Twitter earnings could be marking the end of the social media bubble

Last week Facebook’s stock soared after the company reported better than expected earnings on its advertising services.

It seemed that the social media sites had finally cracked the code on how to make money out of their billions of enthusiastic users.

This week sees a different story as both Twitter and LinkedIn disappointed investors with missed revenues targets in their quarterly earnings reports.

Twitter’s blues

For Twitter the market reaction was merciless – the stock price dropped 24% – as a $500 million loss in it’s first quarter of trading on the stock market is not a good look.

In Twitter’s defense, all of that loss was due to the cost of acquisitions being booked by the company. In 2013 the social media site spent over $500 million buying out various advertising, curation and and analytics services.

The question now for Twitter is whether they can weld together a profitable platform from the collections of businesses they’ve acquired and start delivering a return to investors.

A miss for LinkedIn

LinkedIn has a similar bent towards acquisitions having announced its purchase of data analytics company Bright on the same day as its disappointing results, however the company’s undershooting expectations was because of lower than expected revenues.

‘Disappointing’ is an interesting word in the context of LinkedIn as revenues were up 47% over the previous year.

What possibly should have been more concerning for analysts than the headline revenue number are Linkedin’s soaring costs of doing business – both sales & marketing and product development costs were up 50% year on year – which cut profits by over two thirds.

The most worrying part of LinkedIn’s earnings miss is the company’s price to earnings ratio. Currently the stock trades at an eye-watering P/E of 1,000 which implies investors are expecting a lot more revenue into the business.

Over-inflated expectations

It’s hard to argue that social media stocks aren’t in a bubble with those multiples. Even Facebook trades a hefty one hundred times earnings despite its improved revenues.

Perhaps the simple fact is we’re expecting too much from social media services; they are good businesses, but maybe they’ll never be the fantastic profit machines that Apple, Google or Microsoft have been.

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Buzzfeed and the cat problem

Can Buzzfeed become social media’s New York Times?

Last week, the viral news site Buzzfeed launched its Australian operation with a visit from Scott Lamb, the company’s Vice President for International operations.

As the “media company for the social age” in Scott’s words, Buzzfeed has led the way in ‘viral media’.

The viral media model revolves around audience reach, and revenue, being measured on the amount of sharing on social media services like Facebook and Twitter rather than how many people view or visit their websites.

Buzzfeed’s Cat problem

For Buzzfeed attracting this traffic mean cats – people love sharing pictures of cats on the web.

While Scott likes cats as much as any of his readers, he describes the industry as facing a ‘cat problem’.

“The cat problem is that we all love cats, but they’re also a barrier to taking the internet seriously,” Scott said. “It’s true for Buzzfeed and it’s true for a lot of other websites as well.”

Cats may be both a problem and a boon for Buzzfeed but there’s more to the business with Scott describing to the Sydney audience what he saw as the four myths of online media;

  1. Long form writing doesn’t work on the web
  2. Paying attention to clicks leads to lowest common denominator stories
  3. Social is merely a box you need to check
  4. Creating sharing content is easy and trivial

There’s no doubt that item four is hard, although how much harder re-purposing stuff found on the web is compared to creating original content is open to question.

Point three is a given for Buzzfeed given its business model and there would be few media sites that weren’t concerned about how often their stories aren’t shared on social media.

Being taken seriously though weighs heavily on Buzzfeed so it was the two first points that Scott emphasised in his Sydney presentation.

Long form journalism

Scott was proud to show off  BuzzRead stories like Why I Bought A House In Detroit For $500 or The Most Dangerous Sentence in US History to show the site’s credibility as a reputable, considered venue for long form journalism, just like the New York Times.

The problem for Buzzfeed’s aspirations though is the US Presidential story received 1,400 tweets and just over four thousand Facebook shares, the Detroit story gained five thousand tweets and 29,000 shares.

On the other hand, a quiz on what city should you live in received 578,000 shares and 26,000 tweets. For the record, I got London which is something I’m ambivalent about but certainly beats getting Murmansk.

That meme proved so good that Buzz Feed repeated it a week later with a what sort of job you should have quiz.

You can’t blame them for exploiting a meme, particularly one that gets half a million shares.

Scott though didn’t see the traffic mismatch between the worthy and the tabloid as being a problem; “we know we can’t equate an 8,000 world article to a quiz,” Scott said. “In terms of our business model our revenue isn’t tied to page views.”

“There is incentive for us to get as many a views for an 8,000 word article as possible.”

Riding the Facebook tiger

Regardless of the viability of 8,000 words articles, the real problem for Buzzfeed in its aspirations to become a virally shared New York Times is the site’s reliance on Facebook.

Relying on Facebook is path to disappointment, the service has shown it’s quite willing to burn partners, including advertisers, small businesses and users in the interests of its own corporate interests.

For Buzzfeed, the assumption the media site’s corporate interests will always align with Facebook’s is brave assumption.

Another problem for Buzzfeed is content, the bulk of the site’s material and what drives most sharing are posts that gather pictures from the web – primarily Facebook.

Using other people’s content lies at the core of viral sharing sites and most of Buzzfeed’s competitors shamelessly steal material from other websites, particularly Buzzfeed, in the aim to drive shares from gullible users.

Buzzfeed itself isn’t immune from that risk, with a photographer suing the site for $3.6 million over a photograph used in one of its lists.

Risks in the model

On the scale of risks to Buzzfeed not being seen as an viral version of the New York Times is quite low; the real risks are of being overtaken by a savvier competitor, falling victim to a Facebook change of policy, or simply turning out to be a transition effect in an industry that’s undergoing massive and rapid change.

The aspiration of Buzzfeed becoming a New York Times is probably irrelevant anyway, most Facebook users don’t care about long form journalism – they like cats.

In an era where the public wants animal pictures and celebrity scandals – who needs to be the New York Times?

Perhaps the cat problem isn’t a problem, but the future for media channels like Buzzfeed.

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