STARTUPS: Consumer Engagement Framework

In today's world of Web 2.0 startups there seems to be a formula that goes something like this - Get Users, Drive Usage and then Monetize. How far and how fast and how much money you might need depends entirely on your situation. I am developing a handbook for startups which lays out an approach on how to establish a successful focus for building product capabilities, marketing plan, launch strategy and of course - establishing a profitable revenue model. The following is a generic framework that can be used to help plan your company and establish a dashboard measurement program to optimize your efforts. The entire focus revolves around satisfying and delighting your users, so they come back and also recommend your offering. Once this milestone is achieved - your monetization programs will be easy to turn-up.

(Click on the diagram above to expand it.)

5 Steps for Consumer Engagement


1. Acquisition

Determining which marketing channels (marketing mix) will provide the lowest cost and the highest percentage of conversion will be a critical first step. This is also called your reach programs and will evolve through an ongoing series to executions, tests and optimizations to find your optimal targets and learn how best to effectively attract them. Don't assume that because you built it, they will come.

2. Activation

Just because user's have landed on your site does not mean they are convinced or even understand what you are offering. Getting users to try your service will be a learning process. Try landing pages with A/B testing and iterate continuously. Certain segments will respond to certain messaging and user experiences. Determine your most meaningful user segments and targeting rules will strengthen your competitive position.

3. Retention

Your company should have an engaging and exciting pulse. Consider the natural rhythms of this.. event based, daily, weekly or monthly. Every touch point with you brand demonstrates your company's personality and soul. Apple gets this, you should too! Try to find the right touch frequency and consider having something to say of value that is relevant or personalized in your emails, newsletters and alerts. Have the right message at the right point in time to the right customers. Remember that you are in a two-way conversation with your customers and should facilitate experiences that allow free flowing communications.

4. Referral

This is your most cost effect marketing tool - Your customers. Once they are "enjoying your service", make sure they have tools to promote it. Make it super easy to share and in a variety of ways. Viral and referrals is increasingly becoming an important channel for marketers as peer and social influence is more trusted then traditional corporate marketing.

5. Monetize

In the day's of Web 1.0, lots of attention was put on this area, with little success. Today, the models of advertising, commerce and subscriptions are well established and accepted by the marketplace. Please be cautious though, if your Web 2.0 Startup focuses too much initially on monetization you may never capture the consumer 's trust thus preventing your company from getting out of the starting gate. Conversely, if you don't have a plan to monetize your business, you may have a phenomenally popular site but it can't easily be monetized.

This framework is meant to be customized for your specific user and business situation. There is no one size fits all here, but there are some common engagement strategies that have been proven by many of the newest internet companies (Google, Facebook, Digg etc). Learn from their successes and go forwards with yours.

TECH: Monetizing and Marketing Thru Widgets

Lots of continuing discussion everywhere, about Widgets. Widgets are the new cool. Everyone agrees they are a big phenomenon that’s here to stay. That said let's revisit this trend.

In their current form, widgets are the next step in the trend towards disaggregation of content at the production end and aggregation of content by the consumer. This is why they are here to stay. They will also go mobile, partly because the form factor is a fit for small screens. Most in the mobile space, from Nokia (Widsets) to Opera (Opera Widgets) are exploring the concept. There is even a W3C TR for Widgets 1.0. Widgetbox’s directory has about 7,000 widgets. And, yes, there is volume. RockYou is pushing 100M/day.

So, in all of this, where is the money?

Let’s first consider some of the models for monetizing widgets:

• Several widgets can be packaged with an ad unit next to them.
• Widgets can embed advertising in their content.
• They can show promotional campaigns, competitions or other pay-for-placement content.
• Widgets can tie into affiliate networks, e.g., buy this product on Amazon.
• They can collect valuable data, e.g., MyBlogLog.

To analyze how monetization might work we have to look at the content value chain. There are widget builders. There are the page owners (think bloggers and folks who own a profile on a soc networking site). There are the publishers (site owners). There may or may not be a widget distribution/syndication network in the middle.

Widgets are content and widgets builders can extract value based on whether that content is unique, valuable and relevant. Nothing new here but the form factor. Content owners can let widgets spread in order to drive traffic back to their sites or they can decide to monetize valuable content. What’s new with widgets is the need/opportunity to syndicate at the level of the Net as opposed to through a small set of pre-negotiated relationships. This poses some distribution and measurement challenges.

For most page owners, widgets are bling. Direct monetization doesn’t make sense. The average casual blogger gets 150-250 hits/month. The average “pro” blogger gets 800-1000 hits/month. The average social network profile gets less than 100 hits/month. There is no meaningful eCPM that makes direct monetization relevant for the average page owner.

The opportunity for widget distribution / syndication / management platforms is to help address the above mentioned problems that arise when you try to match X widget builders with Y site owners and their Z millions of users, namely:

• Discovery of widgets (content) that is relevant for people with specific interests. This is not trivial as it involves not just search but also recommendation. How else can you help widget developers “move” new widgets onto pages? As the number of widgets on the Net grows, the value of these services will increase.
• Easy distribution of the widgets, from putting them on pages to enabling actions (say, working around MySpace’s Flash linking restrictions) to making sure that content is served fast. As widgets become commonplace and some standards (formal or de facto) emerge, the value-add here will decrease.
• Measurement, measurement, measurement. And analytics, which are not easy to do in a broad syndication environment. There is a lot of value in this for two reasons. First, from the standpoint of traffic rating agencies, widgets count as page views. That won’t last. Eventually, someone will realize that serving 4 square inches of content is not the same as serving 100 square inches. Second, widgets will penetrate real estate that’s not monetizable. For example, I don’t want to make money from my blog but I may put some widgets on it. From a behavioral targeting standpoint, widget distribution networks may get better data than even some of the very large ad networks.
• Monetization enablement + audit. No rocket science here but someone needs to make money move through the content value chain.
• Widget marketing services, from SEO to SEM to viral distribution enablement. A widget syndication network may have the best data to optimize these. Some type of fee or pay-for-placement structure has to be put in place amongst widget developers to address prioritization conflicts.

From the markers perspective, I have spoken with several of my clients who are very marketing savvy and they continue to be skeptical about any significant marketing spending in this space. There is a measurement, ROI, and accountability issue that still remains to be solved. There is a vibrant spirit to tinker and experiment to see what works.

The widgetized future is just beginning!

CrunchBase Information

OpenSocial

MyBlogLog

Widgetbox

Information provided by CrunchBase

SOCIAL: Monetizing the Social Graph

The blogosphere is loaded up with all flavors of Facebook Advertising analysis, and much handwringing over the notion of users expressing their enthusiasm for Diet Coke or “American Gangster” on their Facebook page and Coca-Cola or Universal Pictures placing ads in the newsfeed as the items are spooled to their social graph. (Beyond Facebook, it’s not hard to imagine a contextual ad showing up every time you Twitter something. Twitter “I am drinking beer with friends” and a Budweiser ad shows up. Now imagine the Twitter revolt.)

Cutting through the hype, Facebook Ads (description here) are the latest twist on viral marketing, taking advantage of the social graph, creating what Nick Carr cleverly calls “social graft.”

Nick wrote:
Marketing is conversational, says Zuckerberg, and advertising is social. There is no intimacy that is not a branding opportunity, no friendship that can’t be monetized, no kiss that doesn’t carry an exchange of value. The cluetrain has reached its last stop, its terminus, the end of the line. From the Facebook press release: “Facebook’s ad system serves Social Ads that combine social actions from your friends – such as a purchase of a product or review of a restaurant – with an advertiser’s message.” The social graph, it turns out, is a platform for social graft.

We’ll find out soon whether Facebookers will embrace the concept, accepting the blurring of their content and ad content and helping to fulfill Facebook’s business goals.

Brands will try to become intimate with Facebookers, enticing them to associate themselves with a product or service. If you love your Prius, become Toyota’s friend…and you’ll be able to stay up-to-date on the latest Prius news and games, meet other Prius fans, make ads for Toyota and maybe even get a free tuneup. I prefer just to drive my Prius.

Facebook founder Mark Zuckerberg is right. “Nothing influences a person more than the recommendation of a trusted friend,” he said during the rollout of social ads yesterday. But giving brands/advertisers somewhat equal (Facebook members have some controls) access to the social graph could be viewed as an intrusion into the relationships people establish with each other. On the other hand, Facebookers may just view it as another application on the service.

When I buy a movie ticket via Fandango, the transaction can be turned into a newsfeed item spooled to my social graph. Can I get a discount on the Fandango fee for messaging my social graph about my Fandango ticket? Maybe users get a cut of the action, for colluding with advertisers? But then, they might start gaming the system to increase their bounty.

Facebook Ads is a logical next step, but also an experiment. Google has mastered the art of monetizing search to market cap of $231 billion. MySpace is innovating with its HyperTargeting. With the taint of social graft, Facebook has come up with a way to monetize people in the form of its rapidly growing membership, profile data and social graph. Perhaps it will grow into its $15 billion valuation.

Now we can sit back or lean forward to see how Facebook responds to OpenSocial and how Google responds to Facebook’s people-based targeted advertising.

TECH: New Design Patterns = New Opportunities

I just finished reading the new book “the Google Story” and have been thinking about "Web 2.0", "The Long Tail" and the rise of "Remix Culture". There is definitely something significantly different about today’s internet and now begins the hard work of separating the Hype for the Reality. Is the new web landscape going to be profitible for the smaller and nichier businesses? Is the playing field begining to level as services are freely exchanged in a more organic fashion. Is this the end of the microsoft era and the beginning of the.. google era??? I would venture to say that every marketing machine is reving up it's respective “Web 2.0” story, which is interesting as there's still a huge amount of disagreement about just what Web 2.0 means.

From a technical standpoint there is clearly a new set of "Web 2.0 design patterns" and technologies (Web Services, RSS, AJAX, OpenSource). New user paradigms such as Collective Intellegence, Social Media and all things living ditigally online. The business models can monetize the long tail market through ad revenue or upsell services from their free base offering. Google has shown that using algorithms to automate all aspects of the business model is essential to scale and survival in the long term. Something is clearly happening here.....

Shedding More Light with the following 3 concept illustrations:

1. Web 2.0 Examples (Source: O’Reilly)

Web 1.0		Web 2.0
DoubleClick	-->	Google AdSense
Ofoto	-->	Flickr
Akamai	-->	BitTorrent
mp3.com	-->	Napster
Britannica Online	-->	Wikipedia
personal websites	-->	Blogging
evite	-->	upcoming.org and EVDB
domain name speculation	-->	search engine optimization
page views	-->	cost per click
screen scraping	-->	web services
publishing	-->	Participation
content management systems	-->	Wikis
directories (taxonomy)	-->	tagging ("folksonomy")
stickiness	-->	Syndication

2. Web 2.0 Visualization (Source: O’Reilly)

You can visualize Web 2.0 as a set of principles, practices and technologies.

3. Web 2.0 Check List

• Give us your email address, we'll let you know when it's ready!
• Public beta alpha
• Tags
• Feeds for everything
• Built with Rails
• Sprinkled with Ajax
• Yellow fade
• Blue gradients
• Big icons
• Big fonts
• Big input boxes
• REST API
• Google Maps mashup
• Share with a friend
• TypePad blog for a peek inside the team
• Feature screencasts
• Hackathons for new features
• Development wiki
• Business model optimized for the long tail
• It's Free!/AdSense revenue stream