In Special-Purpose Communities Steak Trumps Sizzle

A consulting project I'm working on includes helping a global brand optimize and grow a special-purpose professional networking community. After the community had been in place a couple of months the client wanted to ask members what new features they'd like to see. Normally I'm all about putting the customer first, but in this case I thought it was the wrong approach. When you're building a social network in a niche market the steak should come first: get the fundamentals right. Leave the sizzle for later.

First, it's important not to set expectations you can't fulfill. In this case, the client is using a hosted solution built around a template with a limited feature set. Giving community members an open-ended invitation to suggest features the client can't deliver has a high probability of disappointment. They're likely to start listing fun or flashy applications that caught their eye on Facebook...the type of thing that builds engagement once you're a loyal member but may not correlate to establishing the core value that motivates someone to join and return in the first place.

In the early going it's smarter to concentrate on a straightforward presentation (think Google) of basic activities that create value, such as sharing questions and information and facilitating connections between people who want to find each other. Discussion groups, blogs, wikis, ratings, Q&A, and some type of personal matching engine are a good start. Early on, focus marketing efforts on building usage of essential features rather than on proliferating functionality. If the underlying concept of your community is on target, people will sign up and return with or without the extra bells and whistles. After it reaches critical mass and is yielding a positive ROI you can invest in sizzle to generate more usage and time on site.

Furthermore, while it never hurts to open communication channels and invite people to talk back, when you're operating online you don't need surveys to reveal the activities people like best. With recall more perfect than any questionnaire responses, your web analytics disclose what features people do and don't use, where they spend the most time, when they visit, and the paths they take through your site. To understand how your community is working, dive into site stats.

Here's a great example of how, in the world of special-purpose online communities, steak trumps sizzle. Just this week some former colleagues in Brazil launched a community for IT and telecom professionals, CW Connect. To get the community up and running quickly they chose a US vendor's hosted solution. In some cases, page templates unavoidably and a bit awkwardly mix English and Portuguese. But instead of stressing over imperfections, my friends focused on the opportunity of launching the first professional networking site in their market in Brazil. Instead of Facebook "feature envy" they kept it simple. The plan paid off: Brazilian IT and telecom professionals who haven't had a venue for making connections and sharing solutions are flocking to CW Connect. CW Connect is starting with a good steak, which means there will be opportunities for lots more sizzle in the future.

Life After Facebook: Alternative Futures for Social Networking

I had an interesting discussion today about the future of social networking. It got me thinking that this functionality is being applied in two opposite directions. One you might call the Facebook-style umbrella approach. The other is more a la carte.

Sites such as Facebook are aggregating every social connection and sharing feature they can think of under one roof. Everything you’d want to do with your friends, relatives, business contacts, and other acquaintances—or even people who aren’t yet acquaintances but whom you’d probably like to know—is facilitated or enabled under a single social networking brand. It’s very efficient: create one profile, upload photos and videos to one place, enter one friend list, etc. More important from the business perspective, the brand gains tremendous insight into each network member, information that can then be used to target advertising or in other monetization schemes.

In the Facebook scenario there are only a few winners and many losers—similar to how EBay is on top with online auctions, Google wins web search, and Amazon corners the market for online book sales.

At the same time, though, there’s an alternative trend with many winners. These are the sites that are picking and choosing social networking features to enhance businesses across the spectrum of online services: media, e-commerce, financial services, games, informational sites, and all the rest. They aren’t Facebook rivals; they just want to harvest some of the engagement, loyalty, content creation, cost savings, insight into user preferences, and other benefits that various social strategies have to offer.

Sites that use these features well will enhance their businesses. Also, there are significant opportunities for third parties to provide software-as-a-service functionality to customers who lack the technical proficiency to develop applications themselves. While the universe of possible interactions online expands, the user experience paradigms converge. Business opportunities multiply. Sometimes the sum of the parts exceeds the whole.

Trendwatch: What Can Web 2.0 Do for [Your Business Here]

In the past few weeks I’ve heard from several companies that are interested in using Web 2.0 techniques and technologies to enrich their online businesses. The interesting twist is that they aren’t media companies; they’re leading brands in fields such as e-commerce, financial services, and hardware. The Web 2.0 phenomenon has become such a vital element of the online user experience that audiences are demanding it on all the sites they frequent. It’s changed the way people see their own role in terms of interacting with businesses and information.

Web 2.0 started as a media tool that enriched content, generated more pageviews to monetize through advertising, offered a low-cost alternative to content creation, and opened additional channels for distributing content. Using strategies such as AJAX, it provided a richer and more information-dense environment with less visual clutter. It gave the audience a seat at the table rather than a glass pane to press their noses against. The response was highly favorable: sites that adopted a Web 2.0 approach noticed they had more visitors who returned more often, spent more time on the site, and created lots of content. Web 2.0, it turned out, leads to the prized results of deeper brand engagement and loyalty.

If you need a refresher course in Web 2.0, Tim O’Reilly defined it in detail in a well known article he wrote in 2005 (now available in your choice of eight languages). As a quick primer, he contrasts the 1.0 and 2.0 web experiences like this:

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

The time that’s passed since the Web 2.0 concept was defined is like eons in “internet time,” yet surprisingly many major sites still haven’t gotten the message, and some Web 1.0 sites are still attracting investment and launching, seemingly oblivious to progress in the last five years. Against that backdrop it’s exciting to see online businesses beyond the media industry starting big initiatives to tap into Web 2.0’s power to engage customers, expose them to more products, solve problems, and spend more time on the site. Tools such as community, platforms for user-generated content (discussion groups, blogs, wikis), ratings, RSS feeds, AJAX, multimedia, tagging, and facilitating peer-to-peer interaction vs. a linear business-to-customer approach, are quickly becoming the norm for a spectrum of online activities, not only defining the user experience in the media niche.

In the next waves to break, Web 2.0 is expanding to mobile (the “phonetop”) and ideas about Web 3.0 are starting to coalesce. These days, whatever your online business, envisioning the future in 1.0 terms is like trying to get a clearer picture by adjusting the rabbit ears on a black-and-white TV.

Social Networking the Next Generation: Kids' Sites

I've been checking out social networking sites for kids. Although the idea seems like a natural it's a more challenging market than for adults because of extra concerns about safety, privacy, and marketing. From the business perspective these add cost and complexity that can slow the growth rate and concern investors.

I haven't covered the full spectrum of options yet, but so far it seems like this is one area of the web where the US is in second place. From what I've seen the Japanese site Sanriotown--populated with the wildly popular Sanrio characters such as Hello Kitty--is the leader, with the most full-featured, fun, and not overly commercial features that include the requisite games as well as blogging, polls, discussion groups, videos, and more.

US sites are more specialized. Imbee is an independent site with a strong content creation platform, including blogs, audio, video, photos, and trading cards. Disney's Club Penguin (purchased from the founders last year for $350 million) focuses on games and chat and touts the fact that it's ad-free...but there's a prominent shopping link. Disney also maintains the Virtual Magic Kingdom (VMK) site, which offers gaming and a tie-in to the theme parks. Webkinz has an unabashed tie-in to the stuffed animals sold by its parent, Ganz. They offer games and chat. Nickelodeon's Nicktropolis is connected to the parent TV network, offering lots of Nickelodeon video plus games. Mattel's Barbiegirls also has games and chat, plus a "design fashions" feature. Most of the sites with gaming also offer the opportunity to create and decorate a personal space, or "room."

Interestingly, the kids' social networking sites are adopting more gaming-derived virtual world technologies than their adult counterparts. This seems to validate the vision that some day (perhaps when these kids grow up!) many web interactions that now occur in static media such as text will migrate to a 3-D virtual reality format along the lines of the Second Life platform.

Just as with social networking for adults, the kids version is attractive for its powerful engagement and loyalty attributes, as well as highly scalable model of user-generated content.

Because of the somewhat higher barrier to entry there's currently less competition among kids social networks than in the comparable adult space. As clear winners emerge on the adult side, expect competition to pick up significantly in the kids arena. Looking at the products currently on the market, there's lots of room for innovation and better quality before this niche is mature.

Hello Kitty Online: virtual (sur)reality integrated into online social networking:

Social Networking: Connections and Reconnections

A current trend in social networking is empowering real-time connections--think Twitter's up-to-the-minute mobile tweet-streams. A startup I'm working with, iPling, helps you connect to others nearby who share your needs and interests at the moment. But there's another side of social networking, reconnecting with people you may have lost touch with. Venerable sites such as Classmates.com have offered that service for years. Now it's getting more sophisticated.
Last weekend I tried out the reconnection angle by creating a group on LinkedIn for colleagues at a former company, GoTo.com. An Idealab spinoff during the dotcom boom, GoTo--based in Pasadena, California--was founded in 1997, went live with a product in 1998, and morphed into Overture Services in October 2001. In 2003 the company was acquired by Yahoo; the name changed again, to Yahoo Search Marketing (YSM), and operations moved to Burbank. GoTo was notable for originating the world's first successful pay-for-performance bidded marketplace for search advertising--the product concept Google improved upon when it created AdWords.

The company also gained a bit of notoriety as the object of one-time celebrity stock analyst Henry Blodget's hypocrisy, when he publicly touted it, pumping up the price, while privately disparaging it--an action that eventually attracted securities fraud charges from the SEC.
My first day on the job at GoTo was Monday, March 13, 2000...a date memorable as the first business day after NASDAQ hit its all-time high of 5132.52 on Friday, March 10. In other words, my first day in the internet sector coincided--hopefully in a random rather than correlated way--with the beginning of the bubble bursting. For a few weeks I worked in the helium-headed environment of the bubble days--a time when GoTo still aspired to be a consumer portal rivaling the likes of Yahoo. As 2000 wore on and we began to accept post-bubble realities a new, less costly business model was needed. The biz dev team began talking to large portals about a back-end service to monetize their search traffic. In the fall of 2000 we went live with a partnership with AOL and GoTo v2.0 was born. The new strategy was so successful that we were one of the few dotcom winners in the difficult 2000-2001 period.

As is often the case, competition eventually eroded our success. Google launched its competing cost-per-click version of AdWords in 2002, luring away AOL. Because we were completely dependent on partners for distribution, and therefore for all-important scale, our stock price became quite volatile, shooting up and down as big partners signed or departed. Also, as the partners recognized their critical role, they bargained harder and our margins shrank. Ultimately, acquisition by a large portal that could guarantee a steady traffic stream made good business sense.

In any case, I left GoTo--by then Overture--in February 2002 for a job at Yahoo. When I arrived at GoTo two years earlier, it was in the midst of ramping up after an IPO the previous summer. There were about 250 employees when I joined and close to 1,000 when I left. It was a pretty tight-knit group that had been through highs and lows together and bonded accordingly. When Yahoo bought Overture in 2003 it was a reunion with old colleagues, many of whom I continued to work with until I left Yahoo in 2005.

Recently, with the corporate turmoil at Yahoo, I noticed a number of connections from the GoTo days were reaching out to fellow GoTo "alumni" on LinkedIn. Since I have a special interest in social networking and media, I decided to take the small step of creating a GoTo group. LinkedIn makes it easy to set one up and invite a seed group of members. From there, virality takes over, as friends and friends-of-friends show up in one another's updates and display the group logo. Already, less than two days after inviting the seed group, there are more total group members than initial invitees.

My biggest gripe so far is that I have to hand-approve membership requests from people not on the invite list. I would prefer that people be allowed to join by default, then inappropriate individuals could be removed if needed. However, LinkedIn doesn't offer that feature. One thing's for sure: with hand approval required, LinkedIn gets a lot more pageviews.

By the way, if you worked at GoTo before it was Overture and want to reconnect with old friends, you can join the group here

A Misfire in the Dark: How Not to Do Online Media

There's been some hype lately for wowowow.com, a founder-funded web site for "accomplished women over 40" that launched last weekend (press release here). Last week it was featured by the New York Times, PaidContent.org, and Mashable, among others; it was on Good Morning America today. Notably, the founders are all women in media. But unfortunately for the many people who think wowowow is a promising concept and would like to see it succeed, the founders are all from traditional media, and the old-fashioned business assumptions they bring from that environment result in a "me-too" web site that misses many opportunities for thought leadership and innovation.

Wowowow is what happens when traditional media thinking intersects the online medium without much thought to the dramatically different business environments the two platforms present. And by the way, I don't mean to pick on wowowow specifically. It's typical of many middling web businesses these days, and for that reason presents a good object lesson in how not to build a media web site in 2008.

In traditional media, because of high unit costs for production and distribution, it makes sense to start with a narrowly targeted, high-value concept--such as serving the information needs of affluent older women. Your brand identity is tightly connected with a restrictive definition of audience. You don't want to waste resources creating products consumed by people your advertisers don't want to reach. With traditional media, the advertising opportunity is the starting point for the business concept.

Online is the opposite; it's all about scale. While the low barrier to entry online makes it easy to create niche sites such as wowowow, the greatest rewards are reserved for those who tap into the web's extraordinary scale opportunities. So online media is about inclusivity and the starting point is the audience. The key to delivering value is the ability to segment that audience for advertisers who want to reach niches--self-segmentation through content affinity, inferred segmentation through behavioral targeting, demographic segmentation based on profile data...whatever.

The economics of online favor scale and online technology facilitates segmentation. Therefore the web also favors diversity, a larger pool from which to segment. Demographically monotonous sites such as wowowow come up short.

Interactivity also differentiates the online medium from its traditional ancestor. People who prefer to receive content in a passive way gravitate toward the one-way, top-down mode of traditional presentation. Those who consume content online see themselves as co-creators of the site experience and expect a conversation. While wowowow allows comments on the articles it presents, it doesn't give the audience a full seat at the table when it comes to generating content and connecting with one another. Related, the web is about democracy. You create content, I create content; we share opinions and debate basically as equals. Instead of any of this wowowow has an old-school, nose-against-the-glass feel as the audience mainly observes the antics of the celebrity founders and their pals.

Traditional media is also segmented by medium: video is on TV, audio is on radio, print is in newspapers and magazines, and the various media rarely intersect. Wowowow honors this tradition by being text-centric, rather like a web site from the last century. But fast-forward to 2008 and you'll notice that the best sites are all polyphonic, telling their stories with a mix of audio, video, text, slides, interactive graphics, and more. Check out CNN's forward-thinking design, for example, where content on a variety of platforms, by both paid staff and citizen journalists, coexists on the home page. The goal is to tell the story through the medium the audience will find most appropriate and compelling for that message.

Finally, the web is also about technology. This manifests itself in many ways, from the how the site functions to content about the tech-driven gadgets we all use. Wowowow seems almost devoid of technology; I looked in vain for a bit of AJAX and couldn't even find an RSS feed. Paradoxically, the founders seem to believe their online audience are stuck in the age of rotary phones, film cameras, 45 rpm records, and ViewMasters. You have to believe, if your audience is online, that they have some interest in technology and appreciate good web design. Show them some respect with a technically competent site that invokes the wow factor.

The web is all about innovation, and innovation is all about overcoming fear of failure and embracing risk. Sites like wowowow seem a bit timid to let go of business ideas that succeeded back in the day of traditional media. Concepts about demographic targeting or content subject matter alone aren't sufficient to drive online innovation. You have to insert these into a bigger picture vision of the medium and its future.

A Growing Role for Social Media

A recent blog post by Forrester analyst Jeremiah Owyang on his report “Online Community Best Practices” has generated an interesting comment thread that not only contains the sorts of tips teased in the title, but also highlights current thinking about communities as platforms for both media and marketing.

The post is primarily an ad for the full report, which is only available to Forrester clients (I haven’t read it). That document is based on interviews with 17 community leaders and aims to uncover commonalities in successful online communities. However, Owyang shares a few high-level tips for free. “Above all,” he advises, “remember that control is in the hands of the members, so put their needs first, build trust, and become an active part of the community.” The most successful communities were created by people who “acted more like a host, rather than a policeman,” Owyang observes.

Once they launch a community many companies face hurdles making it grow, he continues. Owyang recommends thinking of a community as a product in development. To build and grow it you need to define the objective, create a roadmap, assemble the right team, and be prepared to adjust plans as needed. To maximize the chances of success launch the community with backing from its most enthusiastic members and stay engaged as it grows, he advises.

The blog also shares a slide from the full report that correlates various stages in the community’s lifecycle to different growth rates. In the early strategy and research phases growth is slow. Member activity ramps up steeply beginning with launch and proceeding through kick-start, growth, and ongoing management—what Owyang calls the community’s “adolescence.” After a time, following the classic “S-curve” of product adoption, the community reaches “maturity,” when increases in activity are only incremental. At this point the sponsor’s role shifts to ongoing management and continual improvements, Owyang says.

As enlightening as Owyang’s brief summary of the report are some of the comments it generated. Among the highlights:

• Unrealistic expectations can doom a community project. It’s important to get everyone on board with achievable expectations early in the process
  
• Focus on engaging, useful content instead of pushing your brand objectives too hard
  
• Get management on board with a community by demonstrating ROI
  
• Communities are about people first; the underlying products or services aren’t really important
  
• Successful communities don’t succeed on their own, they require planning, management and marketing commitment
  
• Community growth may not always be a smooth curve; often there are big spikes that correlate with, for example, new product releases or marketing initiatives. It’s important to anticipate spikes and be prepared to deal with the issues they create, such as site performance, moderation and support needs, and spam.

Both Owyang and his readers also share insights into the future direction and value of the social media movement. Owyang foresees it becoming a core business function, almost like email. At some point, he says, “online social communities will just normalize, and everyone will say ‘duh’ this is no-brainer, improving communication with customers is a core function of every company.” A commenter agrees, “online communities are simply the next iteration of customer communications,” one that empowers members to interact directly to one another, in addition to dialogue with the community host. Another reader ventures that communities are “the future of marketing for many companies.”

Having both started and managed online communities I agree with these insights and am glad to see more high-level thought and discussion around community dynamics. Above all, anyone contemplating using a community for marketing or content generation needs to do so not reactively--because it’s a fad or because a competitor has one—but as a thoughtful and purposeful attempt to solve specific business problems, such as the cost or content or brand engagement. Communities both large and small are rapidly rising features in the online landscape; social networking is joining ecommerce and media as a true wealth-making “killer app” of the digital age. For those of us making it happen it’s exciting to join the discussion about the big picture and help frame the vision of how best to channel this powerful force for change.