innovation playground Idris Mootee

Another Look At Facebook 'Widgetnomics'

Yesterday I was invited to speak at the Rotman School of Management on Marketing 2.0 and there were a lot of questions and interests around Facebook and monetizing widgets.  Many marketers (and MBA school students) are strategizing about the next cool idea to build tiny branded applications on top of Facebook Platform, then they can step back as users download and distribute so they can sit back and watch it grow.

One student was showing frustration on how impossible it is for them to make money. A lot of people were jumping onto it without a good understanding of the econonmics and some students questioned why people continue to do. I gave them an analogy that many people move to Hollywood but how many really end up becoming a star.  The point is people love doing it even without the money.  Since Facebook started adopting its open-access policy, it has grown to more than 37 million active users. And hrough a partnership with Microsoft, Facebook now places interactive ads on the left and sometimes on the bottom of users' personal pages. In addition to selling its own flyer-like ads that can be posted to particular networks, and it places sponsored info in its "news feed" section, which updates users on the recent activity of others in their network.

Facebook is not worried about third-party developers cannibalizing demand for its own advertising. There is plenty of money to go around. According to eMarketer, advertisers will spend $900 mm on social networks this year. By 2011, that number will reach more than $2.5 billion. Yes $2.5 billion. The top three players will gram 70% of all revenue with Facebook and MySpace being the top two. But having said that, here’s one app does raise some serious strategic issues.

Since Facebook does not allow users to sell ads on their profile pages for obviously reasons. But a Montreal start-up Weblo since created widget that allows people to sell space on their pages in Facebook and others MySpace and YouTube.  The company believes that users are content creators and therefore they should be allowed to do that. Weblo started the service in Oct. In the past month the number of people using it on Facebook has grown from 200 to  more than 1,500.  Expect that number to go up.

Facebook does allow people and companies that design widgets for use on the site to sell ads in the widget interface page, called the “canvas page.” But those widget companies cannot sell ads on the profile pages, either.  Weblo shares ad revenues with the people who let it place ads on their pages.  The question is how long will Facebook allows this go on if it gains momentum, particular after their Beacon announcement over the past month.

Back to our ‘widgetnormics’ discussions which I wrote about two months ago here,  let’s do some quick calculations on these business models. Let’s say a 4-5% daily active rate and 3 pageviews per visit (I think this is a reasonable assumption), an app developer with a $0.50 RPM would need to get to around 900m installs to get to $25m run rate.

If we look at the app with the most installed-base on Facebook - Slide’s Superwall which has around 21m installs. Clearly, so called 'broad reach' app developers need to develop 1/ multiple (2/ high engagement ans stickly apps (ie higher active rates and pageviews/visit than these assumptions) 3/across multiple social networks to be able to get close to this revenue target.  So it is not about one trick pony. Using the same activity and pageview assumptions, an app developer with a $10 RPM would need 46m installs to get to $25m in revenue. Apps with endemic ad opportunities can easily realize this level of RPM but will still need to be in more than two major social networks to get to those installed base. It simply doesn’t make sense to limit your app on Facebook alone. Social network platforms are avenues for distribution, and app developers should be taking advantage of all of them. They need to be cross-platformed. So back to the drawing board for your Facebook widget big ideas.

GOOD NEWS. APPLE SUB-NOTEBOOK IS COMING: There are lots of rumor from multiple sources that Apple sub-notebook is finally coming to the market in 3 months and will be priced at $1500(not bad), there are also plans about a 3G iPhoe to follow.  I have been waiting for this for a while as the current MacBook is a little way too heavy for me (compare to my IBM X series tablet), a new 13 inch (many are guessing that it is 12 inch) LED screen and is 50% thinner than the current MacBook, it uses NAND flash memory instead of a traditional hard disk drive. I should pre-order a few now. I think they will come in black instead of white or silver grey. Have a great weekend!

Branding In the Post-Modern Culture When Consumer Transcend The State Of Being The Subject In A Society

Brands are transforming themselves and I would argue they are becoming more and more important. They exist beyond the ads and the products, they are trying to find new ways to get inside your home and be part of your life in the form branded content, branded entertainment, branded utilities and branded space. L’Equipe, the Parisian based daily sports newspaper invented the tour de France only to sell more newspapers, its branded content with a pinch of engagement.

New social forms have emerged from all kinds of new network-based social behavior.  These conversations between customer that are previously unknown to each other to the extent where over 50 million people are able to interact in a single online space, generating billions of web site page impressions every month.  The question is how should brand play a role here. These social webs are exploding everywhere and this can no longer be ignored by any brand. 

The structural nature of consumption of information and content are in a state of flux as we enter a world where content will be increasingly delivered through all kinds of networks that can be personalized and entirely self-scheduled. In that world, the viewer – not the broadcaster – whoever that may be, will decide what is consumed, when, how, when, and with whom you share it with.

We are in a transition from interruption and intrusion to engagement. When distribution is trivial, unlimited, and available to all comers, marketing to a captive audience sitting on a cough in front of a box is the thing of the past and creating "quality" product/service/content is paramount. Content is now a part of any product (and its experiences). Consumers will consume only what‘s relevant and what entertain them most, not what is marketed to you them in a repetitive fashion. By providing branded experiences, brand can extend engagement rather than disrupts it, by doing so it strengthens its contextual involvement and connection with the consumer.

With the emergence and convergence of the mobile phone and the internet and location-base-system we suddenly have immediate access to our co-workers, our friends and family members and know where they are at any point of time. We are getting used to living in a connected age where we naturally and increasingly draw on our participation in various networks for information, assistance, information and support.

The language of our post-modern world is not broadcast-branded-content pushed to our TV box that we consume passively. This kind of traditional marketing has become adversarial in the eyes of customers. Customers have changed and adapted to this new always-on, always connected, media fragmented world, where they seek value by searching, where they are not waiting for you to interrupt them with unwanted messaging, where they look to their peers for voices of authority. The behavior of sharing user-generated-videos will evolve and new behavior will emerge.  What we are seeing in YouTube I called it “socialcasting”. Does this signal the end of broadcasting? Consumer will spend more and more time interacting with each other and mashing-up content rather than passively watching low quality content. I think we have yet to see the full impact of this phenomenon. This will determine the new of our post-modern culture which I define as follow:

- Immediacy

- Flexibility

- Portability

- Permeability

- Fluidity

- Interactivity

- Mashability

- Ownerablity

This postmodern culture is characterized by the density, the intensity, and the fragmentation of the instances of communication, by hyperreality that continuously creates fresh vidoes and meanings based on the same signifiers, and by the incredible array of brands and products that impose their own rules and procedures as a way of life. The postmodern consumer thus transcends the state of being the subject positioned in society to satisfy one's individual needs. And everything seems so hyperreal's. Please share your thoughts.