Category: social media

Overstuffing the social media goose

Businesses are struggling with too many online services

“Small business has to get on Pinterest” urges the social media advisor.

“Oh no, not another of these social media thingummies” thinks the business owner or marketing manager.

Pinterest is just the latest of a dozen online services that businesses have been urged to join in recent years. An incomplete list would include the following;

  • Pinterest
  • Google Plus
  • Facebook
  • Facebook Timeline
  • Quora
  • Color
  • Yelp
  • Tumblr
  • Google Places
  • True Local
  • Blogging
  • LinkedIn
  • LinkedIn Groups
  • Twitter

The question for the time poor business owner or under resourced manager is “where do I find the hours for all this?”

It’s not just smaller businesses either – most corporations don’t have the resources to dedicate to all of these services, let alone provide the 24×7 coverage many are beginning to expect.

When it comes to online services and social media businesses owners and managers are like geese being stuffed for foie gras, they’ve had so much stuffed down their necks they can barely move.

Like the foie gras ducks, businesses have become glassy eyed – when someone tells them they have to sign up to another online service they just switch off.

We’ve reached the point where are too many networks for event the most underemployed social media expert to handle.

For those advocating social networking or other online services for business, it’s time to start acknowledging the time poor reality of most businesses and consider exactly which services are best suited for the organisation.

In businesss it’s not time to switch off, that could be the worst thing to do as so many new ways of talking with customers are developing.

Instead of feeling overwhelmed, it’s time to start carefully considering which services will work best with your markets, products and staff and choose carefully.

The days of just charging into the latest social media sensation are over, these services are growing up and they have to prove its worthwhile for businesses – or individuals – to invest their time.

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The allure of free data

It’s user generated, but is it worthwhile.

It looks like a nice business model, you get users to generate your content for you. Many of the new digital media empires like YouTube, Facebook and Foursquare are built upon it.

The Register’s Simon Sharwood looked at the downside of this business model – junk data.

Even the most well intentioned users makes mistakes with thing like addresses and that’s before you get mischief makers or competitors putting in false information.

There’s another aspect too, what one person thinks is relevant may not be to other users or to the people running the service, Simon cites the dozens of “mom’s kitchens” on Foursquare.

For those who’ve added their mom’s house, that’s relevant and maybe even funny to them.

All of this illustrates the downside to the free, User Generated Content (UGC) model; you have to accept what the users give you.

Which means it isn’t free – it has to be collated, processed and the noise has to be filtered out.

At worst, somebody has to make the decision what is relevant and what has to go. This isn’t easy and, as Google found with their Name Wars, can upset a lot of users if it isn’t handled well.

Nothing in life is truly free and with data becoming increasingly important to business it’s worthwhile considering the quality of that free or cheap stuff you get from the net.

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When history bites

Our social media past can easily come to haunt us.

In a strange way Peter Watson, the Australian Labor Party election candidate disendorsed and expelled for his homophobic views, is a trend setter for his generation.

Mr Watson was caught out by the unsavoury views he’d posted on Facebook and other online forums. That he defended what he had written “when I was like 14, 15 years old, so we’re talking about four, five years ago” made matters worse.

Our digital footprints – material about us on the web or in social media sites – sometimes show we’ve strayed into places we’d rather admit to.

There’s plenty of others who have posted things that will bite them later when they apply of jobs or seek political office.

It will be interesting to see how society and the media adapt to our histories and the dumb stuff we did as teenagers being freely available, Mr Watson is an early casualty of that adjustment process.

One of the more disturbing aspects of the Peter Watson case is his political party’s failure to do the most basic of checks on their candidate’s background. Something that again illustrates just how out of touch the nation’s political structures are with modern society.

When we talk about disruption, we often focus on the jobs, business and social aspects of that change. One thing we often forget is that social upheaval directly affects political parties.

Political parties who fail to adapt to the needs of their society become irrelevant and fail.

So maybe Peter Watson has, through sheer dumb luck, found himself on the right side of history in being expelled from a political party that doesn’t know how to use Google search.

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ABC702 Weekends: Facebook and your Family

How do we use social media safely and effectively.

For the first 702Sydney Weekend program for the year ABC 702 Sydney Paul Wallbank and Ian Rogerson looked at how to use Facebook safely.

Facebook and other social media services are becoming an increasingly important part of our lives, so it’s important we understand the benefits and the risks involved in using the web.

All the details of what we discussed in the program are available at the Facebook and Your Family post.

One listener’s question we said we’d get back to was Emma who asked about Microsoft Word stopping her Mac from closing down.

This is usually due to problems with an office plug in or the normal template. To attempt to fix the template, follow the instructions at the Word Mac site.

As Ian suggested, it may be time to consider a more up to date program as Office 2001 is seriously outdated.

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Paying the piper – the cost of the internet’s walled gardens

The web’s walled gardens have a real business cost

With the web increasingly dominated by four major, and many minor, fiefdoms the cost of being part of those groups is gradually becoming clear.

As part of Facebook filings in advance of their public float they published the key agreements with their developer partners including that with games provider Zygna, technology journalist Tom Foremski has a disturbing look at Facebook’s conditions that illustrate the costs and risks.

In terms of the costs, Tom identifies Clause 2.1 of Facebook’s “Statement of Rights and Responsibilities” – shown as Annex 1 in the Developers  as probably the biggest price for all content creators;

… you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook (“IP License”). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

So by sharing something on Facebook, you grant Facebook the right to do what they like with what you’ve created. That’s something worth thinking about.

For anybody trying to make a living off Facebook, it’s important to consider they also retain the right to throw you off the service at any time. From clause 4.10 of the Statement Of Rights Annex;

If you select a username for your account we reserve the right to remove or reclaim it if we believe appropriate (such as when a trademark owner complains about a username that does not closely relate to a user’s actual name).

So get into a trademark dispute with a big corporation – and often their lawyers cast a very wide net on potential similar spellings – and your account is shut down.

There’s also the specifics of the Zynga agreement that should concern anyone investing in the games company. Right at the beginning of the agreement we see this clause;

The parties further acknowledge that Zynga is making a significant commitment to the Facebook Platform (i.e., using Facebook as the exclusive Social Platform on the Zynga Properties and granting FB certain title exclusivities to Zynga games on the Facebook Platform). In exchange for such commitment, [*] the parties have committed to set certain growth targets for monthly unique users of Covered Zynga Games.

So Zynga is closely tied into the fortunes of Facebook, we knew that on a business level but now we know just how deep and binding the agreements are.

We should be clear, all the major social media and online services have similar clauses on intellectual property and copyright infringements; there’s no shortage of businesses who’ve been caught out by eBay or Paypal and plenty of people found their Google accounts shut down by their obsession with real names.

For all businesses the message is clear – be careful before committing totally to one online platform or another. Should you end up in a dispute, or find you’ve backed the wrong service, it may be a very costly process to get your company off that platform.

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The Internet Kool-Aide Machine

Don’t buy the hype when you read about the hot new product

Every few months, the web lights up with hype about the latest technology or website. For a few weeks, every tech conversation mentions this hot new product.

Almost always this hype is driven by the company in question duchessing a few key “opinion leaders” in the tech, social media or other circles. These folk start writing up this product and, if they are lucky, the stories get picked up by the broader media and the product becomes “hot.”

The aim is to find the greater fools, for the investors and founders of these business they want to cash out by selling the operation to a bigger entity.

When you read the hype about the latest user generated, online sharing social media service that’s growing at a remarkable rate be aware you’re actually seeing a pitch to a big company being framed along the lines that “you can’t afford to miss out.”

By all means sign up to the service to have a look but don’t buy the hype and remember you’re not the customer – the gullible big business manager looking for the next big thing is.

Image courtesy of Blary54 through sxh.hu

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Valuing Facebook

Is Facebook really worth fifty billion dollars?

After over a year of speculation, Facebook has finally announced the terms of its US stock market float, valuing the company at $50 billion dollars according to Facebook’s SEC filing.

The financial details that we’ve speculated over are now public and we can now make more than informed guesses about what Facebook is worth.

What jumps out when first looking at Facebook’s financial figures is the exponential growth in their revenue from 153 million dollars in 2007 to $3,700 million last year. A twenty-fold increase over four years.

Expenses though haven’t grown at the same rate going from 277 million to 1.95 billion over the same period. Like all bigger social media and web 2.0 companies, sales and marketing is the biggest expense.

The Google Experience

The closest comparison to Facebook is Google’s float in 2004. Google floated at a market capitalisation of 23 billion dollars on a reported revenue in their SEC statement of 389 million.

At the time, Google’s profit margins were substantially lower with costs coming in at 234 million. These figures alone indicate Facebook today is a better prospect that Google was at the time of being floated.

Google today is valued at $190 billion on a revenue of $38 billion and a profit of $25 billion. On those measures, Facebook investors will be expecting that exponential growth to continue.

Growing Income

How Facebook continues to grow their revenue is the big question. Currently over half of their revenue comes from advertising in the United States and the bulk of the rest from Canada, Australia and Western Europe.

If online advertising continues to grow spectacularly, as a  2010 Morgan Stanley research paper illustrated then  Facebook, as the biggest social medial platform, will get a large slice of that $50 billion global market opportunity. This in itself would justify their valuation.

One of Facebook’s biggest growth opportunities comes from games. Already Zynga, the developers of Farmville and Mafia Wars, contribute 12% of Facebook’s revenues.

The global games business is valued at 60 billion dollars and much of this market is moving to web based, online platforms. Facebook’s 30% cut of income from games on their service is another lucrative revenue stream with few operating costs.

While advertising remains Facebook’s main income stream, other payments from games and online payments went from almost 0 in 2010 to nearly 17% of income at the end of 2011.

The threats

This isn’t to say Facebook doesn’t face any threats in their businesses. The concentration of income from North America, Europe and Australia exposes how the service is a first world phenomenon, although they have high penetration rates in some countries like Chile and hope to achieve similar in India.

Social media though is a fast moving field and there are plenty of opportunities for upstart businesses to displace Facebook just as MySpace faded away.

In their established markets there’s the question of how sustainable social media as an advertising platform is; until recently social media was a novelty to most households and still is to businesses and advertisers.

User fatigue is possible in the mature markets and Facebook – along with other social media services – not achieve the advertising revenue they hope.

Privacy issues are also another concern; as users realise the value of their private information it may be that they demand more for it than seeing where their friends are drinking or playing an online game for free.

Overall though, Facebook does appear to be worth the 50 billion dollar valuation when compared to other similar businesses like Google and is probably more sensibly priced than recent other IPOs like Groupon and Zynga.

Whether the service will deliver on its promise remains to be seen, but those are the risks when investing in new industries.

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