How to Reach Social Media Critical Mass November 8, 2010Posted by David Card in Uncategorized.
Tags: consumer adoption, consumer adoptions, consumers, geolocation, location-based services, microblogging, Social, social gaming
When it comes to consumer technologies, how big is big enough? When do they really start to gain momentum, and what happens when they do? These are questions of critical mass — the magical tipping point when user adoption starts producing that old cliche, hockey-stick growth that fosters sustainable businesses.
Last week, a new consumer survey by the Pew Research Center inspired many to ask those questions about location-based services, which, to-date have achieved only single-digit penetration of the online population. And while we have a little ways to go in considering how location can achieve critical mass, it’s worth considering just what defines it and how companies can achieve it.
Critical Mass Means Two Things
When a new consumer medium or technology reaches critical mass, two things happen: Adoption accelerates and new businesses or markets emerge. Historically, critical mass tends to occur when about 15 percent of households or users adopt the new technology.
VCRs illustrate the classic example of critical mass. In the early 1980s, U.S. household adoption of VCRs hit 15 to 20 percent. When that happened, a whole new business around home video rental was created. Blockbuster was born. Adoption accelerated and rental revenues flowed.
Social network usage showed a similar pattern. In 2005, social and professional networks like Friendster, MySpace and LinkedIn were used by fewer than 15 percent of the online population. Two years later, MySpace was generating more page views than Yahoo, and cutting billion-dollar ad deals with Google.
VCRs also illustrate another characteristic of products or services that reach critical mass: sometimes their core value proposition changes. While the original base of VCRs was sold for the purpose of time-shifting programming, their ultimate success came from a completely different utility. Time-shifting was attractive enough for the first 15 percent of households, but the ever-present blinking clock shows that home video rental was the VCR’s real killer app.
Social Media Technologies at Critical Mass
Location-based services have not reached consumer critical mass. However, other social media technologies that are reaching that point right now include:
- Social gaming. Using Facebook as a launchpad, games like Zynga’s FarmVille and Mafia Wars have reached critical mass in the U.S. Unsurprisingly, they’ve become advertising and promotional vehicles for brand-name marketers like McDonald’s, and may finally prove the value of micro-transactions and virtual currency.
- Micro-blogging. We’re really talking about Twitter here. Adoption is near or at critical mass. Some question whether Twitter will ever be truly mainstream, but it’s already gone from being tech- and social media news-only to celebrity-watching. Twitter’s just figuring out monetization, but feed-based user interfaces and news dissemination are two areas that micro-blogging has driven.
- Social commerce. Groupon told me they have 15 million subscribers in North America, and that’s getting pretty close to 10 percent of the U.S. adult population. The daily deal aspect of social commerce is close to critical mass; cheap, effective customer acquisition by local couponing is about to arrive.
Things to Remember
A few other aspects of the critical mass concept bear noting:
- Although it shares some characteristics, like rapid growth, critical mass is not the same as the network effect. Network-effect markets increase in value exponentially with adoption, and lend themselves to winner-take-all outcomes.
- That seemingly magic 15 percent figure is based on the target market. Technologies can achieve critical mass and “in-market scale” within particular audiences based on things like geography, common interests and lifestyle.
- That said, there are many markets that depend on absolute numbers of users. For example, major brand advertisers have little interest in audiences under 1 million, no matter how targeted they might seem.