Archive for May 25, 2011

LinkedIn’s share of life

Last week, the share price of social network LinkedIn soared on its first day of IPO – up to over $90 from $45 – bringing the company value to over $10 billion. LinkedIn has captured a large “share of life” of its 100 million users – a community larger than Japan. Extracting value from such a big share of life is hard work, and even harder is to sustain and grow this value. eCommerce sites can learn from LinkedIn how to focus on a share of life of their users they can chew, meaning: turn it into valuable information for their users and themselves.

Network effects of social media are overestimated

LinkedIns Freemium Model

LinkedIn's Revenue : A Freemium Model

With 100 million members, LinkedIn is one of the largest social networks in the world and claims to be adding 1 million new members each week.

Those who invested in LinkedIn may have based their share price estimate on Metcalfe’s law of network effects which says that the value of a network grows proportionally to the square of its size, meaning very fast.

But Metcalfe’s Law does not directly apply to social networks because they are not pure communication networks but rather social media.  As a social media, LinkedIn’ value depends on the value of its content. LinkedIn derives its revenue from subscriptions and advertising. Currently 41% of its revenue comes from hiring solutions — essentially premium database access sold to employers, 27% from premium subscriptions to employees and 32% from advertising.

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F-Marketing & F-Commerce are not f-words

I could not resist the pun with the f-word (Wikipedia link for the non-native US speakers among us). In this post, I discuss the F-Commerce and F-Marketing buzzwords and tell you about great sources of information on these topics.

F-Marketing stands for Facebook Marketing, more often called FB-Marketing than F-Marketing. FB-Marketing is huge and falls under Social Media Marketing, often abbreviated as SMM.

F-Commerce seems to be the preferred short form for Facebook Commerce, which I haven’t seen referred to as FB-Commerce (unclear why).

– Another abbreviation is WOM for Word-Of-Mouth Marketing which is used to talk about online viral marketing, mostly by PR agencies.

Like all Internet innovations, SMM, FB-Marketing and F-Commerce deserve a whole army of observers, commentators and consultants, including this blog. I have counted in my own database of sources over 50 blogs dedicated to these issues. This is not counting the many more general online marketing sites that include sections on these issues.

I like blogs because they’re often very rich in content. Among the SMM, FB-Marketing and F-Commerce blogs quite a few are pretty good. Being social themselves, they invite expert guest contributors and freely share their wisdom.

My favorite ones are the very hands-on ones. Some target small and medium-sized businesses but everybody can get insights from them because they contain easy-to-read tutorials and give very practical tips. Here they are 10: Read more

Unconditional innovation: love lessons

True innovation is like true love: it is unconditional.

I’m coining the phrase “unconditional innovation” for lack of better words to translate the unconditional commitment to innovation that sets companies like Amazon and Google apart. I’m talking about companies which repeatedly push innovation to the point of disruption and reinvent themselves.

Most companies, in fact most of us as individuals, too, “fall in love” with innovation. We’re in it for the fun and the glamour, not the hard work and the pain. It’s more like a flirt, a short-lived affair that we end as soon as reality hits. Yes, we love our customers; but why give them what they really need if none of our competitors does? Why rock the boat? Why not wait until somebody else tries it out for us? Read more

Amazon: the empire hidden in plain sight

faberNovel Presentation about Amazon

faberNovel Slidedeck: Amazon the Hidden Empire

Innovation agency faberNovel has published a great presentation about Amazon which is prominently featured on slideshare.

This comprehensive 72 slide long deck called “Amazon.com: the Hidden Empire” reviews Amazon’s history and analyzes what faberNovel calls Amazon’s “three digital engines”:

1. CEO Jeff Bezos’ perfect understanding of the limitless nature of the Internet.
2. Amazon’s efforts to gain customers via multiple entry points and “own” them.
3. The seamlessly integrated ecosystem built by Amazon to create customer lock-in.

Over the years Amazon has remained my eCommerce beacon, a company I’ve admired both as an observer and as a customer. Read more

Google as the arbiter of good taste

When I was working at Forrester Research, each publication had a designated content editor whom we jokingly referred to as “the ultimate arbiter of good taste“: he or she had the final word on what deserved publishing and what did not.

I was reminded of this by Google’s “More guidance on building high-quality sites” published on 6 May 2011 by Amit Singhal, head of search quality, on Google Webmaster Central Blog. Read more

SERPs: battle for the top unlikely to abate

The Web’s unlimited shelf space is a myth. In reality (argh!), the Web is a battlefield and companies fiercely compete for scarce premium positions in organic search results because consumers have neither the time nor the patience to explore the millions of other choices. That’s why Search Engine Optimization (SEO) is still obsessed with the first page (i.e. top 10 search results) among Search Engine Results Pages (SERPs). Research shows that this won’t change better soon.

Optify Average Click-Through-Rate (CTR) by Search Results Position Curve

Optify Average Click-Through-Rate (CTR) by Search Results Position Curve

Research from Optify, cited by Le Journal du Net shows that the top 3 results on Google’s first page still concentrate nearly 60% of average Click-Through-Rates (CTRs), with 37,2% on the first position alone. The average CTR on the first page is more than six times higher than the average CTR on the second page. The data is US-only and pre-Panda.
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Bubble or Trouble?

Are we experiencing a second Internet bubble?
The answer is clearly: yes.

When group buying, flash sales and straightforward B2C sites like Groupon, Ideeli and Lot18 raise money by the 100’s or 10’s of million dollars in ultra competitive markets, it means that too much money is chasing too few investment opportunities. Many start-ups are caught in a race to grow by acquisition (of traffic, of competitors…), to sell out before even attempting to break even, to IPO before everyone else does… Read more