I had a great time reading though blog posts this morning. I am going to try and combine a few of the things I read and explain to you why web 2.0 thinking is becoming more and more mediocre.
Let’s start out with a TechCrunch post on a new product called MicroSocialAds from a company called Ads-Click. MicroSocialAds allows any Facebook user to display advertisement on his Facebook page, thus being able to spam any of the friends he might have left. There is an upside of course, you get a revenue share. Each time a “friend”clicks on an ad, you get a stunning 80% of the ad revenues. WOW. Erik Schonfeld from TechCrunch ends the article with:
In fact, MicroSocialAds are not limited to Facebook. The personal ads also work with MSN Messenger, and will soon be available on Twitter, Yahoo IM, Skype, and OpenSocial. If you have no problem spamming your friends, or if the ads could be micro-targeted by you to the point where they don’t feel like ads, but more like personal product suggestions, then they might actually work out. The concept, though, certainly blurs the line between the social and the commercial. They need to be social enough so that they are palatable to the people expected to add them to their social communications, but commercial enough that they offer a return for advertisers.
Let’s get one thing straight. Spamming “so-called” friends with advertisement is a bad, bad, bad idea. Not just because you won’t earn a decent living out of it (any fool can do the math on that, you would need HUGE amounts of traffic to earn a living). Not just because you would lose all trust and credibility from the people that are in your network and subjected to your ads (lets call them “Facebook friends” for the lack of a better description. And trust and credibility seems a bit important when a company tries to leverage “Facebook friends referrals”. Not because the company that brings you this marvelous revenue opportunity is named Ad-click. Ad-click, the name of the company probably describes their business model perfectly. Any investor investing in a company that optimizes ad clicks (unless the company is Google) should be rethinking it’s investment.
But the real reason this is a bad, bad, bad idea is of course that the ads within Facebook provide the user no real value. Making it the worst possible business model you could get involved in. A business model without the slightest idea of user value creation is a faulty business model. I was therefore relieved to find a posting by Howard Linzon who talks about a web 2.0 company that does understand user value. They have stayed away from the free but ad-based business model and actually charge customers. These customers are happy to pay of course, because they receive value. Can’t think of a better business model. And as Howard shows, they still have all the advantages any web 2.0 company has, like for example being able to create viral campaigns.
Then I read (yet another) great post by Doc Searl, one of the people I watch closely when it comes to envisioning the next step in web evolutions. He writes an excellent post called “the only real social networks are personal ones”. In this post he answers the question “should a brand join or create a social network?”. He says:
Forgive me for being an old fart, but today’s “social networks” look to me like yesterday’s online services. Remember AOL, Prodigy, Compuserve and the rest? Facebook to me is just AOL done right. Or done over, better. But it’s still a walled garden. It’s still somebody’s private space. Me, I’d rather take it outside, where the conversation is free and open to anybody.
And he continues with four reasons why social networks and brands don’t ft together:
First, I’m not sure a “brand” can get social at all. The term was borrowed from the cattle industry in the first place, and will never escape that legacy, now matter how much lipstick we put on the branding iron.
Second, the notion of “brands” either “building” or “joining” social networks strikes me as inherently promotional in either case, and therefore compromised as a “social” effort. Speaking personally, I wouldn’t join a social network any brand built, and I wouldn’t want any brand trying to join one I built. But that’s just me. Your socializing may vary. (And, by the way, if I wear a t-shirt with some company’s name on it, that doesn’t mean I belong to that company’s “network”. It means I’m wearing a t-shirt that was clean that morning.)
Third, I’m not sure social networks are “built” in any case. Seems to me they’re more organic than structural. Maybe I’m getting too academic here, but I don’t think so. Words have meanings, and those meanings matter. When I think about my social networks — and I have many — I don’t see them as things, or places. I see them as collections of people I know. The best collections of those for me aren’t on facebook or LinkedIn. They’re in my IM buddy list and my email address book. Even if I can extend those two lists into a “social graph” (a term that drives me up a wall), and somehow federate them into these mostly-commercial things we call “social networks” on the Web, I don’t see those “networks” as structures. I see them as people. Huge difference. Critical difference.
Fourth, the thing companies need to do most is stop being all “strategic” about how their people communicate. Stop running all speech through official orifices. Some businesses have highly regulated speech, to be sure. Pharmaceuticals come to mind. But most companies would benefit from having their employees talk about what they do. Yet there are still too many companies where employees can’t say a damn thing without clearing it somehow. And in too many companies employees give up because the company’s communications policy is modeled on a fort, complete with firewalls that would put the average dictatorship to shame. If a company wants to get social, they should let their employees talk. And trust them.
I think Doc is right about this. I have written before about the $16 Bln advertisement trap web 2.0 has gotten into. The free but ad-based web model is the most used web 2.0 business model, but if you are not Google, you might as well stay away from it. There are few companies that make a good living out of it and Google currently takes up 75% of that market. Not just because they execute so well. They provide the user with ads when it actually serves a purpose. The Google ad itself has user value. Ad-clicking is a terrible revenue driver, unless the use intentionally is looking to find or buy something.
Jordan Mitchel writes about the earlier released eMarketer figures saying that the on-line ad-revenues will increase to a stunning $42 Bln in 2011. Another eMarketer study also reveals that ad-spent in social networks will increase 37% to almost 4Bln in 2011. What strikes him, and me, is that the value of a click on an ad in an social network is very low.
Current web 2.0 thinking is mediocre and born out of laziness and opportunism. We have seen some companies growing remarkably fast in social networks, leading to crazy valuations. Web entrepreneurs all seem to have found the same holey grail. Providing a free service and stalk the user with ads, in the hope of becoming large and valuable very quickly and then getting the business sold to Google, Yahoo or Microsoft. While this certainly has helped a few of them becoming extremely rich, most businesses started this way are not sustainable. I’m not against ads at all. But you need to think about where to use them. Web 2.0 entrepreneurs seem to ignore the most basic rule to earn a living, forgetting to provide the user with value. And if you do that, you might just get other people to notice that and produce hilarious video’s (unfortunately with ads included ;-)) about that. And that is sad, really.