Social Viral Commerce and the Leads Business
I once again strolled over to Axel’s blog for something and it reminded my that I wanted to write something in reply to his Viral Social Commerce posts. With just having finished a bit of planning to get the current sprint done and the next one spec’d I thought it’s a good time as any. :)
First of all I really like his postings in general, and these two really rang a bell as they are so clearly linked to what we do here. Let’s take one specific part:
_Even more market volume may be created by_ _opening the advertising market to new segments_ _that, until now, had a high cost barrier towards advertising, for example in the Long Tail of smaller and mid-sized companies, or in niche markets which had to rely on direct marketing because there was no medium for them to address at sales efficient cost on a large scale._
I agree with him that user generated content companies have a different cost structure and might hence be able to live on lower CPM advertising than a big old-school publisher. This lower CPM advertising can then also come from smaller companies, but the problem that comes in there is that smaller companies do not have the resources, or knowledge, to run web campaigns. It’s just not their business and shouldn’t be. Above that several millionen small business can’t talk to agencies to handle their advertising buying. It needs to be easy, understandable and with measurable performance. And if you do it right and target it right, it is actually far from lower end CPMs. The last bit is where he also agrees.
_on-demand fully trackable horizontal niche long tail CPA advertising_
_[…] My point in this Blog post is that there have to be, and there will be_ _business models beyond advertising_ _and they are starting to emerge. Essentially these will be transaction based and will be centered either around the handling of goods in an e-commerce sense (that is already being seen in a number of start-ups) for example, by_ _itravel_ _, but there will also more and more be transaction platforms centered around services, much in the sourcing logic mentioned above._
Hell yes. The thing is that the trackability of online media really allows for performance based advertising. I started an internet statistics company in 1996, so I do love statistics. :) But where does this lead. Facebook will convert a lot worse on a CPM basis than some other big publisher, but I will not have to negotiate deals with Facebook other than a revenue share and targeting systems will make sure that the right ads run at the right time and in the right place. Through the CPA model I move from an advertising channel to a sales channel and the budget there is a lot different. Above that, it is understandable for smaller publishers. I get the contact data of somebody interested in my services. No need for a web site, adwords campaign pro, SEO, campaign management, Flash Ads, … . All taken care of.
There is still one problem though, millions of small advertisers. That is where another strength of the internet comes in, aggregation. There might be lots of different small advertisers but many times they can be aggregated around services and they themselves serve only their local market. This is what Ormigo does. We give small advertisers a way to attract new customers in their local market, and aggregate them to become really powerful marketing force with real budget that is relevant even for the biggest players out there. Especially for services this is possible.
In his next post he goes into a bit more detail.
_So cutting back on Web 2.0 technology by seeking not a mash-up of all the functionalities that happen to be the talk of the town and instead looking for ways to create real value with Web 2.0 technologies requires, first, an analysis not of Web 2.0, of these technologies or even of the Web 2.0 early adopter crowd._
This is something I have been repeating for a long time. Most of these Web 2.0 features, be it social networking, tagging, user generated content, … are features, not a product in itself. You have to address a need, help somebody that has a problem, and sometimes, some of these new capabilities will allow you to do just that a lot more efficiently. People are wondering why we are becoming a social network, and I can only tell them that it’s a side effect. We help local merchants get new customers, and that leads to social interaction, and that leads to more customers, and more knowledge, and better matching of clients and merchants. That is also why social networking capabilities have not been our first step, and are still under developed.
_Marketing then becomes not just a communication task but becomes much more a framework for the company’s role as the_
_host of a community of customers_ _._
Good words to end this. The achievement is reaching an equilibrium between users, customers and publishers. For us, a potential field to achieve this is the local market. It’s interesting for all three and Web 2.0 enables clear benefits for all. Standard ads are just a start. Much more can come from this. As others have said, Web 3.0 will be about agents, among others. Interesting times ahead.