Pinterest

With co-founders coming from former positions at Facebook and Google Adsense, it is no surprise that Pinterest combines the social networking aspects of one with the search options of the other.  What remains to be seen is how to make that a profitable combination.  In only its third year of operations, Pinterest has grown at an incredible rate and now boasts over 80 employees and nearly 50 million users, yet the company freely admits that it has not settled on a business model (yet).  Primarily operating on huge sums of [P]investment funding, it appears that many are confident that the company can find a way to generate substantial revenue.  I agree.

I think the “best” alternative depends on which direction the company decides to aim, but there are several options for Pinterest to begin generating revenue.  Obviously the company can sell on-site advertising, but I think this may not be the best option.  The site is already loaded down with business accounts promoting themselves.  If banner ads and sidebars become commonplace, this may be ad overload for users.   

Pinterest can also sell data at a premium price.  The interesting thing about Pinterest that separates it from Twitter, Facebook, Instagram, and other social networking sites, is that users are already segmenting and categorizing themselves.  The boards they create SCREAM the products/brand, even the lifestyle that they are interested in, and Pinterest can mine that data to update companies on what’s in, what’s trendy, and what direction users are moving in.  In addition, the company may generate some side revenue by charging a fee for business  accounts.  I think a lot of businesses would bite, for a small fee.  Whichever direction Pinterest decides to head, it will be interesting to see in the upcoming year how it plans to model its business to start generating revenue independent of investors.          

Participation Marketing

Today I listened to “Off Target” and read, “Promotion Within Your Community.”  What I found really interesting was in the “Promotion Within Your Community” discussion about Participation is Marketing.  I completely agree (as you have surely noticed from previous blog posts) that marketing has become all about creating relationships with prospective customers.  

The aspect of this that I had not considered before was participation in your community outside of the material that you put out.  So, instead of just being really [inter]active on your own social media pages, you also need to be participating on a variety of other pages related to your industry.  It makes perfect sense- you begin to identify yourself (or your company) as an expert and you put yourself (or your company) in front of a much wider audience than just those who currently follow your pages. 

 

For example, my firm is committed to strong community involvement in Bowling Green, KY where we are based.  One of the largest community organizations with thousands of Facebook Friends and tons of local volunteers/participants is the local Humane Society.  We try to work with the humane society so that not only our own followers see us, but all the thousands of followers of the humane society see our efforts as well. This strategy can work well across a wide range of platforms, opening companies up to audiences that they may never have tapped without a little outside help. 

Another great example of this is an effort by Home Depot to participate across all kinds of media.  The company has set up Home-Depot’s How-To Community connecting DIYers across the web to Home Depot.   PRSquared describes it here.  “And here’s the kicker: those HD Store Associates will not only answer “DIY” questions in the hosted forum, but, with the Customer Service Dept’s ability to monitor for response opportunities across the Web, the in-store professionals will also be empowered to respond to users — while they’re working in the stores! — in the online zones where the questions are being asked, even outside the HD site.”  I think this is an incredible opportunity to connect with consumers who may not have gone straight to Home Depot, and it is an idea that companies across the board can surely find a way to capitalize on.    

Social Media Advertising

               

Today I read “Why Advertising is Failing on the Internet” and “Advertisers Face Hurdles on Social Networking Sites.”  I see how advertisers can struggle online, but I think that social media opens up advertising opportunities that are nearly unheard of on other platforms.  To begin with, people join social media sites eager to connect and be engaged.  That’s WHY they go there.  It’s up to businesses and their ad departments to capitalize on that.  

I would think one of the more successful ventures has been the Facebook Offers (I say I would think that because I haven’t noticed offers popping up in my own feed recently, but I also can’t find any confirmation that they’re not out there anymore).  Facebook Offers provides a simple way to get product into the hands of potential customers (who doesn’t like free stuff? Or getting a great deal?).  Then they just have to rely on the quality of the product to draw in repeat consumers.  I have to say that I have become a repeat user of several brands that I first tried out through Facebook Offers.  (I have also “one and done” some things, but I still tried out something I wouldn’t have if it wasn’t free.)  

I also think “in-stream” advertisements are going to be a big thing, for a couple of reasons.  First, Facebook is good at targeting ads to particular audiences (it’s all those cookies and privacy invasions- but they work).  I recently have been searching for a work by a particular artist.  The day after I began my search, I had an in-stream mobile ad for a different artist who does similar style work.  I bit- and clicked through.  I also have a feeling the in-stream ads will work because it’s easy to misconstrue them as something a friend has posted, or liked, or had some connection to- which is an immediate endorsement of the brand.  If you don’t look too closely, the in-stream ads look just like any other post in a Facebook news feed, and consumers will naturally be drawn to content that they may already have a connection with through a friend.  

The graph to the left (from Business Insider) shows that ads in mobile news feeds have the highest click-through rate of any ads on Facebook (It’s also got some other interesting data and promising forecasts for the future of social media ads.  Take a look here.)  

In the end, social media users provide some of the most engaged web users out there.  They provide lots of opportunity for brands to promote themselves and create a (hopefully lasting) connection with potential consumers. 

Ad Sales Impact on Web Design

Today I read/watched all of the required material for this week.  I’m interested in how well advertising on the web works, mainly because I know how I personally respond to ads on the web- which is almost not at all.  I almost never click into ads on the internet unless it is something I’m already searching for, which is part of why Google’s ad sales strategy has been so successful.  They supply ads that meet searchers’ needs instead of distracting them from their original goal.

Another interesting aspect of web advertising is similar to print advertising: how ads affect website design.  

  

 This webpage is a pretty good example of what not to do.  Ads seem like they're squeezed in wherever they fit, which makes the page confusing and the ads less effective.  If the page is so convoluted that viewers stop trafficking the site, advertisers will be much less willing to pay for that space.  More ads is not always better. Just as in a newspaper layout, ad placement is key to a website’s overall design.  Smashing Magazine highlights all these specific factors that go into web design in light of ad placement, but what I find the most interesting is buried about halfway through the article.  It notes that one key factor in web design that does not come into play in print design is when clicking on an ad takes the viewer away from the original webpage.  How do you design a website and ad space that is successful enough to make the viewer click into the ad but also come back and finish exploring the original site (perhaps even click into even more ads)?  That’s tricky.  Even if you make it so that ads open in a new window, is the original page interesting enough that the reader will come back to it and begin browsing again.  This aspect of online advertising means that web designers and content creators really have to step up their game.      

Crocker Law Firm Business Model Canvas

I work at Crocker Law Firm, a small(ish) personal injury law firm in Bowling Green, Kentucky.  As both the case manager and business manager, I have access to and knowledge of much of the information required for this Business Model Canvas assignment.

Crocker Law takes three primary types of cases: motor vehicle accidents (MVA), Workers' Compensation claims, and Social Security Disability (SSD) claims.  For the purposes of this assignment, I broke MVA into two different segments: claims that settle and claims that go through litigation.  The types of claims that settle are typically much lower value than the types of claims that end up in litigation.

In order to come up with the amount of potential clients, I read state reports about how many people were injured in car accidents each year, how many people qualify for SSD each year, and how many people were injured at work each year.  I reduced those amounts by 1/3 to compensate for the geographic territory my firm typically covers, and then I further reduced that amount (by gut estimation really) to compensate for injuries small enough and accident circumstances that would result in our firm not wanting the case.

In general, I can see how this tool would be useful for providing a realistic assessment of most business models, but I do think that with the business model of my firm, I need to take the analysis with a grain of salt.  There aren't set prices for any of our services, so I can't say that if we take in the "right" number cases that we'll be profitable. For the purposes of this assignment, I took averages of each case type and input that as the price, but in reality we never know how much any cases is worth until it is resolved.  A personal injury firm can sign up a case worth $1,000 and a case worth $1,000,000 in the same day, and there is no way to estimate when those cases will come in.

The business model canvas can help point out flaws in a basic business model, but what it points out to me is what I noticed more in setting up the model than evaluating the results: there is NOTHING certain- we can't even set our own prices to cover rising costs.  Our firm has to learn to be extra aware of being smart with cash flow when we're "in the money" because there is very little estimation far ahead of time of when the dry months will be. 

A Peek into Privacy

Yesterday I read “Advertisers Get a Trove of Clues in Smartphones,” Shopping and Social Media: The Retailers Guide to Big Data,” and the introduction to The Numerati .  It’s fascinating the vast amount of information that can be obtained just by observing people’s web surfing habits, but the practice of mining big data brings up a huge issue that we have often faced in the recent past: privacy concerns.

Detailed here are what could be the top five web privacy concerns of 2013.  Among the list are both “Walking a Fine Line Between Effective Marketing and Privacy Intrusion,” and “Social Media Websites Using Location-Based Services Need to Avoid Privacy Nightmares.”  This raises two major concerns among social media marketers.  

Time and again we’ve seen user backlash against Facebook for privacy leaks, unclear privacy standards, and overall a very opaque and ever-changing policy regarding user privacy.  One of the main complaints is that users never know where they stand on privacy controls.  The company changes policy without much notification to users, and Facebook Friends don’t know what kind of information about them is available to fellow users and potential advertisers.  Facebook’s latest offering, Home, stands to be the next in line to raise privacy concerns.  The app is downloaded onto the Android phone as the home screen and basically keeps FB up and running at all times while also providing the app access to information contained on the phone and web-surfing habits of the user.  It will be interesting to see how the company responds to privacy concerns   

One of the most important things companies can do in this age of big data is be transparent about how they use big data.  It’s a lot harder for a mobile app user to complain about selling his information to an advertiser if you made it very clear up front that that is a possibility (not to say that it won’t happen; people will always lash out if they feel their privacy has been invaded).   

#Hashtags

I read “Twitter Turns Seven” (and also coincidentally stumbled upon LinkedIn Turns Ten- who realized LinkedIn was older than Twitter?), and I have a hard time realizing that it’s been so long since Twitter began.  I can’t help but compare Twitter to Facebook and have looked at the evolution of the two biggest social media sites.  One thing I find interesting is that Facebook always seems to upset its users with massive overhauls and grand new updates to the site, while it appears that Twitter makes smaller, less major changes over time to ease users into a new interface. 

I think a major advantage that Twitter has over Facebook is the hashtag.  Hashtags are popping up everywhere, even on Facebook where they have no technical use and verbal conversation (though I think the second is by a younger generation who also thinks textspeech is typical for verbal conversation- OMG). Because Twitter enables users to see anyone else who is tweeting about the same topic, there is greater connectivity across groups of users who don’t already know each other.  I can see any person (whether I follow them or not) who tweets about #BostonMarathon, #Grammys2013, #Another4Years or whatever piece of information I might be interested in.  It’s a great way for marketers to promote campaigns and cluster those who are involved, and it’s a great way for users (TwitterErs? Tweeters? Twits?) to find what they’re looking for. 

Rumor has it Facebook may soon roll out hashtags on its own site.  We’re left to see if Facebook leaves it for the useful tool it is or tries to transform it in some way- and if they do, how users will feel about that transformation.