Spiral Marketing: The More You Know, The More You Can Know

February 10, 2010

Google Buzz or Google Fizzle?

Ah, Google – you evil bastard! You slipped in another Facebook / Twitter / (insert social network of your choosing) Killer into our gmail accounts while we slept, blissfully unaware of your latest misguided attempt at social network domination. At least the Wave and the Buzz make me think that, hey, I need a vacation; Google Docs? Not so much. But at the end of the day, as much as you’d like to, you will be hard-pressed to transplant the Facebooks and Twitters of the world. You have more money than most to spend on technology – but technology has little to do with the problem you are trying to solve.

Here’s the thing: Facebook, Twitter, and other social networks are marginally interesting technology, but I venture to guess that I could pay some very clever college students all the pizza and Meisterbrau they can consume, and they’ll come up with a pretty good approximation of the Facebook, Twitter or ______________ technology in a matter of weeks. Facebook technology has as much value as Twitter or Google Buzz technology: next to nothing.

Yeah, I said it. All this social media technology by itself is worth about as much as, well, Google Wave. Because the value of Facebook is that some enormous number of people use it every day, and they use it a lot. Same with Twitter. It isn’t the technology of the network that matters: it is the network itself that counts. Facebook could easily go away – it happened to MySpace, and it could also happen to Twitter. But MySpace wasn’t killed by technology or Rupert Murdoch’s continued misunderstanding of all thing interwebz (although it hastened its decline).  MySpace is dying because people aren’t using it the way they used to.

The value of a network is generally (and very loosely) based on the number of people that use it (Metcalfe’s Law). The value of a network is more precisely based on the number of possible subgroups within the network (Reed’s Law). On this count alone, your chances of transplanting a Facebook or Twitter go from “No way in Hell” to “Geez, if I drink enough, I could see it happening.”  Why?  Because you brilliantly gave away a veritable plethora of free email accounts (I think I have, like, 87 of them). This gives you a network with an enormous number of users – a necessary precondition to taking over the social networking world.

But this isn’t a network problem alone – it is a value problem. And while having a huge network (through registered gmail users) is a necessary factor in your dastardly global dominance scheme, it is not sufficient.  And this is where you will fall short again.  Because email is more ubiquitous than the largest social network – everyone’s got an account – but the economic value of a network is based upon the aggregate value of the interactions on the network. And people don’t value email interactions. If they did, email would be synonymous with “printing money.”  Which I suspect is what you are trying to do, at the end of the day. But I don’t want to interact socially through my email – I would rather not do ANYTHING through my email, just as I never write letters anymore. There is already enough garbage in email to negate any value it ever might have had – and hey, don’t get me wrong, I use email; I just use it when I have no other possible means of communicating what I need to communicate. But until you can tell me what in the hell “fwd:fwd:fwd:re:fwd:fwd:re:fwd:re:puppies” means without me having to open the damn email, I’ll pass.

The two necessary and sufficient preconditions for achieving social media world dominance and the economic and intellectual imprisonment of the world are 1) a very large and active community; that 2) delivers high perceived value  in the interactions of the community (and “noise” does not equal “value”).   With Google Wave you took a fair (although off target) shot at delivering more valuable interactions, but you couldn’t drive the numbers. With Google Buzz, you are using your huge gmail user base to capture numbers, but without improving the quality of the interactions in that network.

The good news? You’ve got the problem surrounded. The bad news? I think the Buzz you’re hearing is really the sound of a fizzle.

January 24, 2009

Is email losing it’s effectiveness? Uh . . . Yeah?

Posted in response to the question on LinkedIn:

I don’t know how you define “effective,” but email marketing, in my opinion, is definitely losing its effectiveness.   I think any discussion of effectiveness is relative to other media – that doesn’t mean email is more effective; it rather means email is losing traction less quickly than alternative techniques.  For instance, DMNews, in a recent article (http://preview.tinyurl.com/4qleog), tried to rationalize the promise of email for the future (consider the source . . .) with the statistic that the main reason people acces the internet is to use email.  This, side by side with the statistic that the younger demographic are more likely to use social networks, rather than email, seems a bit “optimistic.”

Also, the justification itself is a false analog – DKNews discusses this statistic – that the internet is primarily used for email – as though, QED, that validates email as a marketing technique, when in fact, the more relevant statistic is that people are finding alternative means of communicating, devoid of all the commercial email “noise.”   Across the board prices are down for email lists, response rates are down, etc. etc.   They just aren’t down as far as other means of mass marketing – that becomes a real conundrum, because if all we are faced with is a set of bad choices, of which we can only choose to select the least bad, then we are in trouble.

Someone also made the point that the party is being ruined for “legitimate” marketers by spammers – I think it is tough to have anything but a subjective discussion on that point, relevant to whether you are talking about your email blasts, or someone else’s.   The real issue is that marketers as a group tend to spoil their own parties before they start – they do so honestly – they are trying to do the right thing for their companies.  With a lack of viable mass marketing options, though, marketers create so much noise in aggregate that they dilute the effect of their own messages, as well as everyone else’s.   I suspect the same will rapidly occur for SMS-based campaigns, or any other emerging mass-marketing, “push” technique.

That becomes a tough row to hoe – you have to meet your goals with your marketing campaigns, but the ground has moved beneath everyone’s feet, and I am not sure anyone has a real handle on what “mass marketing” means in this new terrain.

I also believe that email service poviders do not help their case when they make claims devoid of any rational basis; one individual claimed the ROI for email is $57 for every dollar spent, vs $22 for non-email online marketing dollars; in other words he was suggesting the ROI for email marketing is 5,700%, compared to an ROI for non-email online marketing of 2,200%.  Put another way, this statistic suggests a payback period for your entire annual marketing budget – assuming a 24/7 business – using email is a little over 6 days! I certainly think that meets my hurdle rate requirements; I’d be interested in this individuals source for these figures, and how “ROI” is being calculated in this case.  The broader issue, however, is that – to me, at least – such claims propagate because of a sense that in this brave new world, nothing works the way it used to, and marketers are looking for answers in the heart of a maelstrom.  Through a combination of hope and factoids  based in psuedo-science, I sense that mass market service providers seek to create an arbitrage opportunity for themselves.

Unfortunately, in this “brave new world” (thanks, Aldous), I suspect the real answers are going to be quite a few orders of magnitude more difficult than we would like . . .

More on this later.  In the meantime, hold on to your hats – it’s going to be a hell of a ride!

K

Create a free website or blog at WordPress.com.