Measuring the impact of Facebook’s new initiatives September 26, 2011Posted by David Card in Uncategorized.
Tags: apps ecosystem, far-reaching social infrastructure, media usage, platforms, real-time feeds
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Facebook’s f8 developer event dominated the news this week, but most coverage focused on individual announcements and missed the big picture. Facebook revamped its platform for developers but also wove that in with earlier user interface initiatives to make a far-reaching social infrastructure that extends outside Facebook’s “walled garden.” This architecture could have a big impact on content and media usage, and just might launch a lifestyle apps market on the same scale as social gaming.
Individually, the new initiatives are interesting, but how they interact reveals Facebook’s innovation and huge ambition. Note how the platform is constructed to broadcast activities that appear in users’ feeds, sorted by a new algorithm aimed at encouraging discovery and more activity, a true virtuous circle.
- Activity feeds. Immediately prior to f8, Facebook overhauled the way users see friends’ activities and updates on the main news feed, adding a real-time “ticker” and auto-populating Smart Lists. At f8, it introduced Timeline, which adds to user profiles time-based context, application activities and a “whole new aesthetic,” according to CEO Mark Zuckerberg.
- Social apps platform. Facebook extended its Open Graph protocol and plug-ins so that developers can create apps that run within Facebook, on mobile devices or on their sites that send user activity updates back to those feeds without requiring a user to use a Like or share button.
- Ranking algorithm. To keep those feeds relevant, Facebook introduced Graph Rank, a personalized sorting algorithm for app activities tuned for each feed.
Prospects for adoption
The multiheaded feed management that’s the heart of Facebook’s UI is probably still too complex, and users are predictably complaining. Will users choose to auto-share, on and off Facebook? Many won’t, but based on how effective the Like button is and the simplicity of the new sharing opt-in, I’m guessing a lot will. Facebook will likely generate more entertainment activity tracking than check-in apps like GetGlue and Miso do on their own. If they haven’t already, those companies should jump to support the new Facebook features.
Facebook invited Spotify and Netflix onstage, but it’s also making a big pitch for startups to develop new apps, the aim being to jump-start a whole new class of lifestyle apps like recipes and Nike’s running monitor. Its not-so-subtle pitch: Look what we did for Zynga. Facebook thinks these new apps — especially when running on mobile devices — can take great advantage of auto-sharing for discovery. And it’s hinting that startups won’t need to buy as much paid search from Google (or even Facebook ads) or invest in SEO to game Google’s secret PageRank algorithm to build their audience. Facebook claims its analytics will let developers optimize the functions on their apps that increase activities and thus make them show up more often in Facebook feeds.
But even without auto-sharing, Facebook is becoming a big traffic driver for news sites. Most media companies want to maximize usage of their own sites, where they have better control over advertising than they would with a Facebook native app. Mathew Ingram points out that they don’t have to live within the Facebook walled garden to take advantage of the new features. Yahoo News shows how. Media and entertainment sites — and startups that can afford it — should experiment with both options and build hooks into native apps that drive users to the main site for a richer experience or more content.
Facebook’s ambition and hubris are massive. But its potential role as kingmaker for startup apps is real, and its ability to drive traffic proven. Players in entertainment and lifestyle can’t afford to ignore its platform and audience.
Question of the week
Yahoo, AOL and Microsoft’s premium ad exchange just might work September 19, 2011Posted by David Card in Uncategorized.
Tags: ad exchanges, ad networks, Advertising exchange, display-advertising exchange, Maxifier, Media, online ad sales, online advertising, online publishers, personal finance home page, real time
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Last week, Yahoo, AOL and Microsoft pitched the idea of a premium online display-advertising exchange to advertisers and brand-name publishers. The object would be to raise the value of their ad inventory and compete more effectively against Google and Facebook, which are both gaining share in online ad sales. Could this trio of portals pull it off and rejuvenate their sluggish businesses?
An ad exchange is a “network of ad networks” that allows advertisers to buy big volumes of “remnant” inventory in real time in a highly automated fashion. Online publishers reserve their best ad spots, like large-format rich-media units that run on topic home pages, to be sold directly by their sales force. As I write this, Yahoo is showing a top-of-the-page banner plus related a rich-media unit from Transamerica on its personal finance home page.
Ad networks and exchanges can suffer from quality problems by mixing in mediocre content sites and not giving advertisers control over where their ads run. That matters a great deal to brand advertisers who want the halo effect of associating their messages with classy content.
How they could make it work
To address that quality issue, topic specialists and traditional media companies like NBC Universal and IDG have created private exchanges. But much of the industry momentum is toward the big, automated offerings like Google’s DoubleClick Exchange. So how could this trio succeed?
- Build a common platform. Details are vague, but I suspect this will be a real ad exchange, rather than just inventory shared across their networks or sales forces. To deliver the necessary flexibility and reduced complexity of ad buying, targeting and optimizing, they’ll have to pick a common technology platform. Microsoft already gave up on its own AdECN exchange in favor of AppNexus, and the trio could deliver a solution quickly if they ran their exchange through AppNexus.
- Raise inventory quality. The trio needs to deliver higher-quality inventory than the competition. That means attracting other publishers: Yahoo has been good at newspaper advertising relationships. Getting publisher participants to reduce the overall number of ads per page would help, too, by giving the remaining ads more attention. And perhaps the trio could introduce some snazzier ad types into the mix — AOL’s large-format Project Devil is struggling because it’s the only one using it.
Google claims it already offers a premium exchange. But if that’s the case, why does it have to buy AdMeld? Most of Google’s display prowess doesn’t come from brand advertising but from cost-per-click DoubleClick and AdSense network sales. Facebook doesn’t have an ad network yet, so it keeps every dollar spent. But Facebook’s strength comes from volume rather than price, due to the huge amount of time its users spend online.
If the trio could put such an exchange together within six months, they would have distinct advantages over Google and Facebook in servicing brand advertisers: similar or better reach, high-quality inventory and potential bundles with direct sales and sponsorships. Right now, the advertisers do not seem to be blown away. But few have actually heard the pitch yet, and no doubt the trio is still working out a lot of details.
Besides solving technology and governance issues, it’s always difficult for online publishers to manage an ad network alongside its sales force. The trio themselves — as well as their potential partners — will have to apply sales management and analytical discipline to make a premium exchange work. They’ll need to double down on page yield management processes and tools from companies like PubMatic, Maxifier and Microsoft. And they should consider protecting sales bonuses from “competitive” network sales to designated customers. If the portals can deliver the premium platform as described, advertisers and other publishers won’t ignore it. That could shift several hundred million dollars and two or three percentage points of market share per year away from Google and Facebook.
Question of the week
There’s more than one way to build a professional social network September 12, 2011Posted by David Card in Uncategorized.
Tags: China, Dan Serfaty, enterprise communications, Monster.com, professional social networks, Saleforce.com
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Last week, Viadeo, “the LinkedIn of France” and a GigaOM Euro 20 company, introduced an API via a developer contest. When LinkedIn went public, Viadeo withdrew its own IPO, but Viadeo has grown to 35 million members and has aggressive plans, especially for China. The company’s strategy is differentiated enough, especially in emerging markets, for it to make a run at LinkedIn.
Viadeo CEO Dan Serfaty told me the company was strongest in France, Italy and Spain, as well as in China, through its Tianji acquisition. It opened a U.S. office last year. But it isn’t aiming to gain U.S. market share versus LinkedIn, which claims that less than half of its 116 million members are in the U.S. Rather, Viadeo targets expatriates.
Product and API strategies
Both companies’ APIs are more focused on activities that happen outside their platform than on cultivating apps. Each wants to drive traffic back to its site with a Facebook Connect–like strategy, but LinkedIn has been at it longer and has grander ambitions.
Serfaty says Viadeo has three types of developers that it wants to partner with beyond its open API. But it feels like it’s only gone after building brand awareness via telcos and enterprise communications companies like Cisco and Salesforce.com. Perhaps the contest will introduce it to developers that might build money-making apps or data and traffic exchanging relationships. In contrast, LinkedIn already has 30,000 developers using its APIs and 100,000 publishers using its share button, and it recently launched a job application plug-in. The two may have similar API objectives, but LinkedIn is ahead in attracting developers, and because of its user base and its own collection of company information, it can support richer functionality.
Both companies are trying to increase day-to-day usage by offering personalized news and a few personal productivity apps. And each has a mobile offering to increase usage frequency, though with few innovations. Their end strategies are different, though. LinkedIn wants increased activity to show more targeted advertising. Viadeo wants to make its network less about job hunting and more about other business relationships. It says its local market focus drives it to offer different features for a given region. For example, in India it offers horoscopes and is working on integrating SMS messaging. LinkedIn is more one-size-fits-all.
Different revenue mix
The subtly different product approaches have resulted in very different business models. For the second quarter of 2011, 48 percent of LinkedIn’s $121 million in revenue was from hiring solutions, 32 percent from advertising and 20 percent from subscriptions. In contrast, Viadeo, which keeps its total revenue figure private, focuses on subscriptions: Its mix is 30 percent hiring, 20 percent advertising and 50 percent subscriptions.
Serfaty claims to have an almost 10 percent conversion rate for paid subscriptions. That’s very high for online services. It’s likely due to Viadeo’ de-emphasis of hiring and partly attributable to a low price (6 Euros per month). Viadeo offers unlimited connecting/introductions, while LinkedIn saves some of that value for its hiring products for recruiters. If Viadeo can prove its worth for, say, delivering sales leads, a membership model would be less vulnerable to economic swings than an ad- and hiring-based one. LinkedIn’s efforts to make itself into a marketplace via ads and company pages is further along than Viadeo’s, but they haven’t paid off yet.
Integration and two-way data exchange with enterprise applications like Salesforce and SharePoint will be critical for professional networking. We’re already seeing feature-set divergence for social platforms that are internal versus customer-facing. Meanwhile, companies like BranchOut and Monster are building Facebook apps for jobs and networking. And Facebook, Google and LinkedIn are all vying to be the home of authenticated identity.
LinkedIn dominates the U.S., is further along with its API development and has the scale advantage. But it needs to be big in individual country markets to achieve a network effect. Viadeo’s more-localized approach could pay off in high-growth markets like India, Brazil and China. But it will have to bring more enterprise apps and business service opportunities to its users, the way Salesforce.com, for example, acquired its Jigsaw crowdsourced sales leads database.
Question of the week
Focusing social platforms for enterprise collaboration September 5, 2011Posted by David Card in Uncategorized.
Tags: enterprise, enterprise collaboration, media monitoring, media platforms, social communications
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Last week Salesforce.com taglined its Dreamforce user conference “Welcome to the social enterprise” and introduced a handful of features for its Chatter social communications tool. Gartner forecasts that spending on social CRM will grow to $820 million worldwide in 2011, up from $625 million in 2010. Companies like Jive Software and Telligent are jockeying with IBM, Microsoft and Cisco for IT spending on social platforms that are used for both employee collaboration and consumer marketing objectives. As competition heats up, vendors must implement more focused strategies on feature sets, packaging, pricing and integration.
Packaging features for corporate customers
Last week I wrote about how to optimize social platform strategies for community marketing. For corporate customers, Jive and Telligent are ahead in the specialization game. Jive offers different configurations for corporate communication, sales support and customer support in addition to social media monitoring. Telligent packages different suites aimed at enterprise collaboration and community marketing. These packages are sometimes only subtly different, but they emphasize employee skills profiles and business intelligence capture, leaving analytics and sentiment measurement for the marketing packages.
Salesforce.com is a little later to specialization, and some of the new Chatter features scheduled to ship in late 2011 are catch-up offerings. But it is building features that will suit collaboration nicely, including real-time elements like presence management and screen-sharing, as well as an approval function that could be used for things like signing off on documents, sales discounts and new hires. Chatter is also adding Microsoft SharePoint integration, but that’s a basic requirement that competitors like Jive, Telligent, Yammer and Box.net have already implemented.
Integration is the key word for differentiating corporate social media from customer- or consumer-facing products. Unlike customer communities, which are relatively new, there’s a huge installed base of legacy enterprise applications and databases that social media must plug into. Besides enterprise software from Oracle, IBM and SAP, social collaboration must be able to access information and insert messages into the dominant enterprise communications tools: Microsoft’s Outlook and Active Directory services. Likewise, social platforms must integrate with corporate management and monitoring tools like those from IBM/Tivoli and Hewlett-Packard. Application deployment and provisioning are especially tricky in environments that mix cloud-hosted and local enterprise resources.
Social platforms aimed at enterprise collaboration must fine-tune their strategies around:
- Groups. Mainstream social networks take varied approaches to groups. Though it’s not aiming at enterprise collaboration, Facebook’s symmetric approach (people know they’re in a group and must accept an invitation) is better suited to workplace collaboration than the asymmetric style of Twitter or Google+. Invitations and supervisor controls can help with potential security issues, especially if, as Salesforce.com is working on, collaborators want to mingle employees and customers.
- Message filtering. Message feeds will quickly be overwhelmed without filtering devices. Group and topic tagging is one obvious answer – Jive’s Proximal Labs acquisition filters based on that – and competitors should emulate LinkedIn’s or Google Priority Mail’s data mining and filtering algorithms rather than Facebook’s. That’s because collaboration messages and tasks need to be driven by responsibilities, assignments and skills at least as much as by interaction frequency and self-expressed interest.
- Partners. One path to enterprise integration is through consulting and services partners. For example, Jive works with several of the big IT consultancies as well as specialists like Dachis Group and Razorfish. Social marketing platforms should seek them out, too, along with more traditional agency partners.
- Pricing. Social media has used consumerization tactics and freemium pricing as a Trojan horse entrée into enterprises. But IT managers need more familiar enterprise pricing models to be able to compare and budget social technologies alongside legacy IT solutions.
Although Salesforce likes gamification, I’m not convinced that badges and points are crucial for social collaboration. Likewise, marketing features may work as Facebook apps, but even Millennials think public social networks aren’t for corporate communication. If the youth of today sees that kind of distinction, social platform features will likely diverge even more over time.
Question of the week
GigaOM Pro at Mobilize September 2, 2011Posted by David Card in Uncategorized.
Tags: application ecosystems, applications, Mobile, mobile platforms
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GigaOM’s big mobile event, Mobilize, will be coming to San Francisco on September 26th and 27th. There, industry luminaries and our analysts and writers will look at the new opportunities presented by the intersection of cloud computing and the mobile Web. Here at Pro we’re compiling an anthology of analysis on mobile topics including platforms, advertising, commerce and payments. Keep an eye out for our coverage.
While you’re at the conference, be sure to save time to meet with some of our GigaOM Pro analysts. Bob Egan, JP Finnell, Phil Hendrix, Laurie Lamberth, Chetan Sharma and others will be there. They will be doing interviews and panels onstage, and they’ll be networking between sessions. Research VP Mike Wolf and I will also be around. Track the Pro team down and ask us your toughest questions.
The Pro team will be hanging out at the GigaOM Pro booth and at the cocktail events, and we’d love to chat about GigaOM Pro or anything else on your mind. We are always looking to hear from our subscribers about how we can better supply you with the info and analysis you need to make critical business decisions. So be sure to swing by the Pro booth and say hello.