Because my latest professional article talks about digital economics, I thought it was relevant to post it on my personal website. Continue reading
Category Archives: Web 2.0
Why Social Media is super cool and not
Facebook, Twitter and (probably) soon FourSquare are so incredibly popular these days, it’s IMPOSSIBLE not to have heard about them. Where there’s hype, there’s smoke. ‘You have to jump on the wagon’ they say, ‘if you don’t have a fan page, you’re out’. Even if you don’t have a Facebook fan page, you’ll still be able to survive. Trust me. If you do want one, catching up will be easy as 1 2 3.
Some of my thoughts on social media. I’ve split personal and professional point of views because I think it should be this way. Continue reading
Social networking ROI
Social media, social applications, search media…I’m not a Web 2.0 specialist nor a big fan of those technologies (even though I have my own blog!), but anyone who’s been around the net knows at least a little bit about them. While they are fun and sometimes very useful, I fear there are simply too many for our own good. Developing such applications can be costly (most of the time higher than 500 000$) and not very profitable. Most of the developers rely on advertising in hopes of having a positive ROI.
So sign up with Adsense or any other known ad network and things should be all right! Right? Too bad things aren’t that simple.
Ask any web 2.0 developer how important the popularity of his application is. Chances are, he’ll say it’s the most important thing. I agree; network effects have never been so important in a business than ever before. Facebook, the most common example, makes nearly 35 million dollars a year selling virtual gifts (link here). Amazing? Funny? Disgusting? When people buy these gifts, they are not just buying a couple of pixels, they are buying social status. This means they are willing to pay, or sacrifice the 1$ to get noticed. The more friends you’ve got, the better (unless you send it as a private item). I think of it as buying a beer of a drink to someone in a bar; you are not just paying 5$ for nothing, you are sacrificing 5$ to please someone you like (or payback the guy on whom you just spilled your drink…then you are willing to pay the 5$ to keep yourself safe). In economic words:
value of gift < or = value of social benefit
Naturally, this wouldn’t work in a place where there aren’t a lot of people. Imagine a Facebook with only 4 users; sending a gift wouldn’t be as fun. Facebook can easily pay a good portion of its employees through network effects; over 100 million users is a lot of people!
Let’s make one thing clear: VALUE comes from SCARCITY. The scarcer, the more valuable something is. Facebook is scarce in the sense its one of the biggest, most popular social networks. There are hundreds of other social networks on the web, but aren’t as valuable because of their inferior popularity. If you want to make lots of money with a social networking, make it super popular.
How do you get there? Hire really good Web 2.0 marketers.
M-A