Just read an interesting Business Week article today on Facebook's strategy in the current doom & gloom economy. While the article details why Facebook keeps persuading a "spend now make profit later" strategy it also reveals a interesting take on Facebook's planned revenue streams :
Facebook hopes to make money in three ways.
- Online advertising is far and away the most important, accounting for an estimated $200 million to $225 million in revenues this year.
- The company is also selling digital goods—electronic versions of guitars, flowers, and the like that Facebook friends give each other. Charging $1 apiece for these goods will generate $30 million to $40 million this year, estimates venture capitalist Jeremy Liew.
- The third leg of Facebook's business may be the most controversial. The company is seriously considering a plan to take a cut of money from the software developers who create applications for the site.
Original article "Facebook's Land Grab in the Face of a Downturn", here.
This is the presentation that venture capital firm Sequoia Capital gave to the companies it's funding, three days ago. A couple of hours later, the presentation was already "leaked" on slideshare.
Although there are no big scoops inside, the presentation manages to counter two popular beliefs related to the current crisis. One being the belief that the current crisis can be traced back to a single cause, the other is the belief that most startups won't survive the credit crunch. For the correct answers, have a read...
While we increasingly work, shop, conversate and play online, it's easy to think of the web as an abstract system where data gets wirelessly beamed around the world. Last weeks' Alexandria cable incident revealed that the worldwide web relies still heavy on vulnerable undersea cables. Click here to magnify the Internet's undersea world map. Or if you really want to dig in the subject, order 2008 Submarine Cable Map here.
That's quite an interesting statistic. WOMMA blog writes:
According to the study "Social Shopping Study 2007," which is set to be released by PowerReviews on Nov. 12, 65% of online buyers are identified as "social researchers" and actively seek out online review information before making a product purchase. Seventy-eight percent of this group spend more than ten minutes reading customer reviews, and 86% of them say reviews are "extremely" or "very" important.
Columbia University sociology professor Duncan Watts profiled himself as a non-believer of viral communication earlier this year with an article in the Harvard Business Review. His paper got finally picked up by Advertising Age last week, read it here.
Watts' research questioned the effectivity of so-called two-tiered (or trickle down) communication strategies, where a campaign to a small group of influencers spreads to a wider audience in a second stage. Watts found out that with every consecutive step the initial message waters down to virtually nil. The solution he suggests is to spread the initial message to a large group of easily persuadable people to reach a critical mass that in its turn will cause a "trickle up"-effect.
Satish of Naked NYC comes up with a different solution : where he doesn't start from "the message" but from different "message units" that are spread at random throughout a given group of influentials, counting on the effect that these influentials will feed from each other. He gives the rapid rise of Firefox as an example where different bits of information quickly built momentum within a large group of influentials, leading them even into co-creating the browser up to its current state.
So does viral marketing work? I think it comes down to your definition of communication. For a very long time viral marketing has been sold as the alternative for traditional marketing. Both definitions however start from the same communication paradigm, being that a brand beams out messages to people (whether they're influential or not). If you're a follower of this paradigm I think viral marketing is just an excuse "to do something without having the budget" and that Duncan Watts conclusions hold true.
If however, like us, you believe that communication is more than top-down messaging, every piece of communication becomes viral. This means that you should never consider your target audience as a passive receiver but as an active participant. The traditional view on viral marketing recommends the use of shocking or absurd humour but there is so much more ; for example by adding a utility factor, by being culturally relevant or by plainly creating a context that stimulates discussion among consumers.
Logos, a Bible software company (yes, Bible software!), did some number crunching on the different names used in the Bible. Guess what they found, the long tail. Check out the graph below (click for full screen). The most popular names are obviously 1) Jesus 2) David 3) Moses.