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Someone Has To Pay For Free

January 28, 2010 By 1 Comment

I have been writing this post in my head for a while after I was catching up on the drama that unfolded with Jason Calacanis and the people at Comscore.  If you have no idea what I might be talking about, you can read all about that flap on Jason’s Posterous blog, and certainly the echochamber that ensued following as compiled by Techmeme and listed out by Jason.

In the tech world online and in social media circles we have been trained that we can do a whole lot of things for very little, and in most cases, everything we want to do has a “Free” application associated with it.  Things like YouTube, Blogs, Twitter, Facebook, Flickr, and a plethora of other things we “sell” to clients and companies that come in our toolkit we obtained for free or for very little investment.  Our investment at this point has been the time it takes to understand and implement the use of such tools.  This has been a very lucrative part of being a social media consultant and I suppose why you cannot swing a dead cat in a room and not hit one or two of the “experts” in our business.  Free is always easy to sell.

I have talked before about “The Problems of Free“, and I also talked about how companies are using free as a business model. I want to turn back to the discussion or debate related to Comscore.  We have begun to expect companies to provide services online for free or for very little cost, and as I see it that proposes a problem somewhere in the chain.  Comscore cannot compete with Free.  Someone has to pay for free.

If you are providing a service online, or if you have the latest cool application and you offer it to your users for free, how do you make money?  I often ask many of the startups that come to me what their revenue model is and how they plan to make money.  This is usually followed of course with “How are you going to pay me?”  I am not yet providing “Free” for my own services.  Many companies have long drawn out plans with “ad revenue”, affiliate marketing”, or worse yet I get a blank stare of “we have not yet come to that part of the business plan.”

In the end, you have to pay for the service you provide, be it your time, servers, salaries, and long lunches at In-N-Out.  Comscore is having the problem explaining that they have to pay their bills.  We have to give our stockholders a piece of the pie and we have to pay our salaries and everything associated with the costs of giving you what you want.  They are not able to barter it all and they certainly cannot ask their employees to do it out of the goodness of their hearts, so they have to charge.  I am not sure whether Jason or anyone else has really come up with an alternative to charging for Comscore’s services, other than perhaps the aforementioned ad revenue or the like.  Someone has to pay for the free in the chain of the exchange.  The problem that I see is that Comscore is asking the customer to pay when others are offering it for “free”, but even in that instance, someone is paying for the free.

Photo via Photos8.com

Filed Under: Advertising, Blog Metrics, Blog Revenue, Media, Services, Social Media Tagged With: , , , , , , , , , , , , , , , ,

Sponsored Status? Not Facebook

August 11, 2009 By Leave a Comment

I have been a follower of the sponsored conversations and sponsored tweets and the sponsored anything for a while now and I intend to keep on top of it because it does have somewhat of a effect on my business model although indirect. TechCrunch talks about banning sponsored status updates from their application.  This will take on quite a white hat look in many of the purists’ eyes, but in my eyes if seems to be a horse of a different color.  As a social media consultant I always talk about the metrics and ROI of using some of these tools, and the business model given today’s idea of return does not have much spark as it relates to sponsored status updates on Facebook. 

For the most part, sponsored conversations or updates or tweets or whatever the case is mostly about reach.  Part of that reach and probably what is most important to advertisers and brands is the amount of eyeballs.  Let’s face it, they are not banging my door down to put up banner ads here as I am not getting the reach they require, and that is exactly why Facebook’s idea of banning the practice of sponsored updates is sort of a moot point.

With the limits they have on "friends" there will never be the huge amount of eyeballs that brands and media buyers are looking for in a property.  My Facebook page will only ever have 5000 friends at the most.  That is not what they want.  They are looking for the biggest bang for their buck.  I do understand and argue that its not about the number of followers it is about the number of conversions, or how or who you influence, but that thinking has not reached the heads of the people that are signing the checks.  I think if I were to ask Ted Murphy the best way to sell the sponsored conversations it would be about your number of page views over the number of cool people you know. 

I think this has to do with a preemptive strike and more about what they have for plans down the road.  I do think however that with the addition of FriendFeed now in their crown jewels, it may also be a tell of what they have in store for a plan to for future looks of their new acquired service. As the FTC becomes involved and we see more and more of a crackdown these types of maneuvers will be quickly reversed or adopted but I applaud Facebook for taking a stand in this part of the controversy.

UPDATE:  I forgot to mention something I thought I should get into this post.  With the banning of sponsored conversations this also make it difficult to cross pollinate all of your networks with a sponsored post which in turn keeps the walled garden feel to Facebook which I think also helps their business plan.  Keeping third party applications from sending out a mass tweet/update/status message to all of your "friends" at once makes it also difficult.

Tags: , , Sponsored Status, , , , ,

Filed Under: Advertising, Blog Metrics, Blog Revenue, Bloggers For Hire, BTW, Marketing, Social Media

Old Media A Job and New Media A Hobby: The Problems of Free

July 28, 2009 By 2 Comments

I was reading through an article on Spiegel Online International and an interview of Chris Anderson, Editor of Wired magazine.  The article goes into detail as to the thoughts of Anderson and how he perceives the idea of new media.  I wanted to pull out some of the quotes from that article and comment on them.  The first of the comments that jumped out and smacked me across the face and it should others in the print media world was his take on the San Francisco Chronicle:

SPIEGEL: Your local newspaper, the San Francisco Chronicle, is fighting for survival. If it was to disappear tomorrow …

Anderson: … I wouldn’t notice. I don’t even know what I’d be missing.

In a word, OUCH.  Up to this point I was forming an argument in my head that the print media was another form of consumable information we all rely on for another take of a news story, but to say that a newspaper’s disappearance has not bearing on your world is a mind-numbing thought.  I wondered what Anderson would think if a statement about Wired would make him have talk differently if it were to shut down tomorrow?  I think he goes into the real reason why that wouldn’t happen, and a take similar to what I inferred with the remaking of BusinessWeek. His take on the cost of old media:

Anderson: The math of profit is pretty easy, revenues minus cost. You do your best on the revenue side and if you are not making money you lower your costs. The problem is not that there isn’t money to be made online, it’s just that our costs are too high.

This seems like a no brainer but for some it seems that this is the mountain they cannot climb.  The problem is that there are people out there giving away the cow for free which is of course the book Anderson released.  He goes into the economy issue:

Anderson: Attention and reputation are two non-monetary economies. The vast majority of people online write for free. We’ve tried paying some of our bloggers and they thought it was insulting. They’re not doing it for the money, they’re doing it for attention and reputation, or just for fun. For example, two years ago, I started this Web site called geekdad.com. It’s about being a dad and being a computer geek. We’re writing about how to do things that are fun for kids and fun for dads. It’s a community project, everyone contributes for free but we now have an audience bigger than many newspapers. And there are an infinite number of sites like this out there.

Not only are there an infinite number of sites out there that are doing just as he states, but they are doing it on budgets that most expense accounts could not cover in the traditional industry.  They are providing the news and they are doing it with close to nothing, which is completely game changing in this economy. 

I do like the end of the interview when Anderson is asked about charging for his book and they talk about "time is money."  This is somewhat of a dichotomy since nothing seems to be actually free.  This could be part of the reason we are in this situation to begin with, someone did it for free.

[photo via LA Times]

Tags: Spiegel Online International, Chris Anderson, , , , , ,

Filed Under: Advertising, Blog Metrics, Blog Revenue, Marketing, Media, Social Media

Living in a Facebook World?

June 24, 2009 By 1 Comment

For a long time I have been touting that we all live in a Google world.  We cannot seem to leave our house without first checking directions on Google, or order Chinese food without getting the local menu and number from Google, etc.  Many companies have come to us and asked, "How do we get on page one of Google’s search results?"  That has been the mainstay of my presentations about why companies need to get into blogging and other forms of social media.  I have yet to figure into the mix, Facebook.

Reading the article today that Wired put out about the "Great Wall of Facebook: The Social Network’s Plan to Dominate the Internet — and Keep Google Out", I began to think of living in a Facebook world.  I never really considered these to be rivals in the big scheme of things as Facebook is a social network and Google a search engine, but I see now that there are many players all jockeying for position in world of the Internet. 

I also think there is another small player that might be making things interesting and that of course is the social media darling of the bunch, Twitter.  They can help perform the function of both search and of the social network.  All of it actually has to do with data.  As we begin to see the emergence of what I call 2009 The Year of Listening, more and more companies are concentrating on brand monitoring and reputation monitoring and how they can get into community and infiltrate them with their brand, their message and their mission.  Yes, it is all about the business after all and that is the company that will win.  Which one will provide the best of all worlds?  Right now we are still living in the Google world, but there are some other players in the Internet solar system. 

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Filed Under: Blog Consulting, Blog Metrics, Blog Revenue, Marketing, Media, Search Engine Optimization, Services, Social Media

New Media Marketing? Is it taking a backseat?

April 9, 2009 By 1 Comment

Just reading over at Profy and Svetlana Gladkova asking the question, "Twitter is a Popular Marketing Tool?".  The analysis is interesting on Svetlana’s piece and I think you should read it.  The thing that caught my eye was less about the written words and more about the graphic she had in the post.

 online-business-tools1

The thing that made me note this graph was the far right three forms of online tools being used, blogs, podcasts and Twitter.  I preach of course that these are the "new media" and that companies should be embracing them, but it is nowhere near the use of direct mail.  I was amazed at the lopsided view of this. Twitter is the new media darling and blogs are making somewhat of a comeback since breaking on the scene at the beginning of the century.  I am curious how the study was conducted and as I understand it it was conducted by WebTrends.  The study appears to address only the European companies but I think that the results can be indicative of what is happening here as well.  As the economy keeps dipping and we go back to the "what works" idea of marketing, I see the testing of social media to be take a backseat to the more measurable results of the past.

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Filed Under: Advertising, Blog Metrics, Blog Mining, Blog Platforms, Blog Revenue, Bloggers and Blogs, Blogonomics, Business Blogging, Marketing, Media, Search Engine Optimization, Services, Social Media

Blogging Networks Feeling The Economic Pain

January 31, 2009 By 1 Comment

headache.jpgI have been following the story of Pajamas Media and the closing of their ad network operations as of April 1. This is not earth shattering news as we see the boom days of blog earnings begin to buckle under the economy and crash on the rocks caused by the storm. We have seen other networks close and cut back and have similar problems. As companies cut back on their ad spends it stands to reason that these forms of revenue will dry up or become scarce. i think this is not going to end any time soon.

One of the reasons ad networks were so powerful before was because they could leverage large page views and could funnel the eyeballs into one place better than companies looking to buy up ad space on single blogs. That trend has changed now as properties that have large followings have figured out how to leverage and negotiate their own advertising deals cutting out the middle man. The smaller single manned blogs are also more flexible and don’t need quite the investment to turn a profit. We are seeing a definite shift in the blogosphere and that shift will continue to transmogrify into a new model that is hopefully better.

I intend to discuss this further on my radio show on Tuesday. I want to have a few or the blogging experts weigh in on this as well as discuss my ideas further. Join me on Tuesday at 5 p.m. PST as I discuss ad revenue and blog networks further.

[Headache photo via pvera]

Filed Under: Advertising, Blog Revenue, Blogonomics, Mediasphere Radio Tagged With: , ,

Budgeting Social Media Management

December 4, 2008 By 1 Comment

Reading Marketing Profs Paul Dunay’s post regarding the company budget for social media I found it interesting specifically about the idea behind content creation. Paul states:

Ok but the real cost (again unlike the traditional media stuff) is in Content Creation to fill up those social media / new media channels – here is where the cost can get large. I happen to think I am very fortunate since I work at a consulting firm where many people are thought leaders – so we have no shortage of opinions ;-)

He does not get into the costs specifically as he does with pricing the actual tools of social media. The tools he itemizes are:

A Blog;

A Podcast;

A Video;

A Wiki; and

A Community.

I refer to these things as tools as I also believe that applications can be used in a social media planned budget as well. The applications are mostly free to very inexpensive. I did notice he did not budget for the activities surrounding the likes of Twitter or other which enhance the above tools. Basically, they are free. He is correct however when he states:

So unlike traditional media – Print, TV and Radio – which can cost big money. Social media’s upfront costs very little…

You have to read through his original post regarding the overall budgets to get an idea of the numbers, but I wanted to wrap my mind around the budget ideas first and foremost. The low cost of social media is right now making it a hot and much sought after way of accomplishing a company’s advertising, marketing and public relations strategy.

The real cost is the people that can manage this strategy, someone that can understand the uses of each tool and application and how to make it work for its intended use. This is where the budget has to be difficult to nail down. The person that is responsible for this doesn’t even have a job title or description these days. Is it the marketing person, the advertising person or the public relations person that handles this? What department do we charge for the implementation of this new way of handling our media? These are some difficult questions to answer. I am personally seeing many more job openings on job boards, and seeing recruiters provide the answers to the question of who to place in the position. The real question I have for Paul is the budget for the wage for this person. How much does your company expert in the leadership of social media get paid? Do you have a budget line item for a social media manager?

Filed Under: Blog Metrics, Blog Revenue, Blog Tools, Bloggers For Hire, Blogonomics, Corporate Blogs, Marketing, Media, Services, Social Media Tagged With: , , , , , ,

Twitter Keeps Flying But Magpie Makes The Money

November 25, 2008 By 9 Comments

magpie.jpgAs I was growing up in rural Colorado, we had plenty of opportunities to see magpies in their environment. They were usually standing over the latest roadkill. Basically they are scavengers. They get fed from nothing they have done on their own but finding the opportunity. I draw that picture to my own mind and drawing the metaphor of the name and bird over to thinking about the latest company and their attempt to monetize from the efforts of others. I am speaking from the recent launch of a advertising site that is asking people to use their Twitter stream for advertising purposes. I am speaking of Magpie. I had a chance to hear of this from my friend Lucretia Pruitt (@geekmommy) on Twitter itself.

I spoke about the idea of a third party monetizing Twitter earlier today. I think that Twitter needs to get on board with a private beta or an alpha or a something. I know they have been wrestling with this like most others on how they take something and make money at it. They throw ads on it and sit back and hope the sales guys can turn a profit. I’m not in the boardroom of Twitter and this is probably already a part of their behind the scenes workings. At least I hope so given their latest offer of $500 Million from Facebook. To turn down an amount like that you have to have your reasons. I know they say Facebook is overvalued but that is another blog post completely.

Frankly they may do well to have Magpie or another third party prove the ability to make it work and then just take some of the money they have and buy it up. I’m sure that they would not have a problem to make that happen unless of course the price tag of the company was too high and in that respect they merely block the company from the API and not allow them to use twitter for that purpose. The terms of service clearly allows for them to do what they feel is best for Twitter:

We reserve the right to alter these Terms of Use at any time.

Magpie spends the time the effort and energy to monetize the system, gets everyone used to the fact that Twitter now shows up with ads in the streams, or in the background and companies bring the ads and back the money truck up to the Twitter dock.
I have seen and read about the idea that the people on Twitter are calling the Magpie service the PayPerPost (Ted Murphy’s company that used bloggers and their blog content for advertising, now known as IZEA) of Twitter. People forget that PayPerPost was not real popular with the blogging elite or the purists, yet the investors and VC types have been writing checks to the group on a regular basis. I can foresee the same thing happening for the folks at Magpie. They are beginning to get some traction and according to TechCrunch people that use their service are bound to make some decent money.

[photo via Neil Phillips]

Filed Under: Advertising, Blog Platforms, Blog Revenue, Marketing, Social Media Tagged With: , , , , ,

Black Friday–Are We Seeing The Demise of Blogging Networks?

July 30, 2008 By 2 Comments

I have been watching the recent demise of one of my favorite blogging networks called Know More Media. A business blogging network with its focus on the business world. I have been reading Easton Ellsworth’s blog since it’s inception at Business Blog Wire. As I understand it they intend to discontinue paying their bloggers as of this Friday on August 1, 2008. An open letter from Jeremy Wright, CEO at b5Media to the leadership at Know More Media was my first alert to this happening. dead.jpg

I have also been following the rumors, innuendo and some of the people involved with the blogging network at Weblogs, Inc., a blog network company that was purchased by AOL, and the idea that they too may be stopping the payment to their bloggers for the content that they are providing. They are supposed to also learn their fate on August 1, 2008. I would say that this Friday could be referred to as Black Friday as it relates to the blog networking agencies.

What is the cause of this demise? I believe there are two components to this dilemma and it starts with the economy and the ad spends we are seeing in the online marketing realm. I too have felt the economic crunch with companies that were early adopters to enter into the social media arena. Experimental marketing such as the kind I provide, is usually the first to suffer the cuts of companies tightening their belts to prepare for the new downturn. Companies using blogs to market their products and services are still seeing the advertising as experimental not being able to yet show a return on their investment. Measurement of social media marketing is still in it’s infancy and companies are falling back on what they believed was working before they began to experiment and then experience tougher times. The economy has taken its toll. Advertisers are repositioning their budgets to go to something more stable and more quantifiable.

Another problem I see is the way blogging networks are managing their properties. Some of the companies that are in trouble with their networks are those companies that are not flexible and have the ability to move with the market. The leadership of these companies are beginning to see what happens when you rest upon your laurels and get too comfortable with a business plan that really must grow with its market and adapt to market changes. Leadership continues to take profit and not go back to those leaner times. In addition, since the sale of Weblogs, Inc., we have seen the emergence of social networking sites like Facebook and Myspace and the explosive emergence of microblogging sites such as Twitter and other applications. These blogging networks must also evolve to adapt these tools to make them a part of their own properties. They may have some components in place, but for the most part relying on their bloggers to keep them profitable is a tough chore for those bloggers and it will not last forever.

What do I see for the future of the likes of blogging Networks? I see smaller niche networks fracturing off to make single networks and written by perhaps multiple bloggers. We are seeing the emergence now of social sites such as in the food realm, the sports realm, and the automobile industry and other hobby type sites. The mommy blogs have embraced the idea of community and are some of the best in the business at making a social group made of many bloggers. The only problem we are seeing is the bloggers themselves are not making money from these groups. It’s an advertising property for the owners. Groups that are joining as a member/friend/follower of the group as a whole are becoming their own target market. They are generating content for the group and it all ends up in one place. They have built in forums for discussion, they have feeds that are brought in from each member of their own member blogs, and they have a Facebook look with each community member owning a certain part of the real estate. We see it now with FriendFeed Groups and other places.

Some of the players like b5 and others are still able to show profits because they have positioned themselves to give the best product. I believe even b5 has adjustments that they make on a regular basis to bring in new properties and cutting off the parts of the network that are bringing their number down. A type of survival of the fittest as it relates to their participating core. The problems we face have to do with metrics and what those with money see as the value. I have heard tell that those that have a target audience with the most impressions are the most valuable and are riding that wave. It seems Jeremy Wright is able to continue to surf that wave.

What do you think. What is the new thing to replace networks? Do you think networks are here to stay? As we all become our own citizen journalists, how can we monetize that content, or is their a different way of thinking for advertisers. These are questions I get and wrestle with on a regular basis. Any ideas?

[photo via Benny Bloomfield]

Filed Under: Advertising, Blog Metrics, Blog Revenue, Blogonomics, Marketing, Media, Professional Blogging, Services, Social Media Tagged With: , , , , , , , , ,

Technorati Changing The Way It Does Business

February 29, 2008 By 1 Comment

richardjalichandra Technorati has been an icon of the blogosphere since Dave Sifry began the company to track blogs and provide bloggers with statistics and search.  It was the first thing people downloaded to their blogs, and the first part of setting up a blog.  They seem to have lost that celebrity status.  There are so many companies that have been cracking away at that Technorati keystone that it appears they may crumble.  I have been waiting to hear some news from the Technorati camp and it appears that news is bubbling up as reported by TechCrunch.

When I talked with Richard Jalinchandra in Las Vegas at the Blog World Expo in November, he mentioned then that Technorati was in for some changes and that he wanted to lead the company back to its glory days.  He couldn’t talk then about what he was doing but it seems that the cool stuff I expected and the things the head of marketing, Aaron Krane,  talked about on my Social Mediapshere radio show would make them a shining star again.  I didnt expect them to enter the advertising arena.

Tris an I questioned them on why they were not indexing search results past six months and it looks like they may be rethinking that with adding an advertising component to their search.  Arrington states:

Technorati will certainly be competing head to head with FM, although sources say they’ll focus on the long tail of the market as well (FM only takes larger sites). The network will be a self-serve exchange for bloggers (and other publishers) as well as advertisers. Ad units will include both display and text ads, and will allow units to be charged on both a CPM and CPC basis. (emphasis added)

I was hoping that Technorati would be adding some features that would be more than just another way for bloggers to add a revenue component to their blogs.  I want to see them return to an application I would run to five times a day because they offered a way to see stats and a something that was cool to experience as I did back in the day.

This is part of the reason I have hooked my wagon to the folks at Lijit*.  I certainly see that they have ideas to make their “wijit” something that is a first add-on to a blog.  I am not sensing that Technorati has that coolness factor in mind.  I certainly understand that after raising $20M in funding you might want to start thinking of making money and perhaps they will change the way they run their business and we have only seen the beginning of their new glory days.  It appears Richard is doing his job of CEO and is running the company in the best interest of those investors, but I for one want to see them do some things they used to do, only better.  Don’t make it about the page views make it about the blogger and a company that every blogger loves to use.

[photo via Brian Solis]

*Lijit is a client and I do some evangelism for them.

Filed Under: Advertising, Blog Metrics, Blog Revenue, Blog Tools, Blogging News, Blogonomics, Business Blogging, Marketing, Mediasphere Radio, Social Media
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