Social Web/Corporations

Corporations and Marketing

If you expect to read about how companies can make lots of money using the social web here, you have come to the wrong place. There is tons of good books on that subject, so no need for another one. Instead we learn a little about new ways to raise and save money, and a few facts about marketing in the social web.

== Amazon and eBay ==

To get started, let us take a look at two giants: Amazon and eBay. Although, they are not really social web companies (rather Web 2.0 companies), despite their size, they also rely in one critical feature on the social web:

• A core feature of Amazon is their customer reviews created by customers. Many users read those to get a feeling for the quality of the product.
• Can you trust a seller (or buyer) on eBay? The eBay reputation system usually gives the answer. Again, this system relies on users giving evaluations.

Both of these features are an important part of the continued success of these companies.

Aside: How do you evaluate a company (startup)? Well, Google took $13 per user per year and multiplied it by the number of users. Hence, for Flickr’s 2 million users that made about 26 million dollars and that’s what they got paid by Yahoo (almost).

Activity:

Can you think of another example, similar to the customer review or reputation system above?

Crowdfunding

Crowdfunding is a way of raising money for financing a certain project, usually initiated on the world wide web. These projects, as certain instances reveal, can be of any type but they always appeal to an artistic motivation.

The variety of those projects span music- and film-making but also game- and app development. Especially the latter one, game-development gained most recently the most attention due to the invocation for a new Point and Click Adventure Game by famous Game Designer Tim Schaefer and his company Double Fine Productions, who got four times as much than he originally asked for.

Background

Crowd-funding is a term that hasn't been used a few years ago but started gaining popularity by 2006 and kept growing after that. Back in 2000 Brian Camelio, a music producer created ArtistShare.com that was trying to invoke the music industry to prosecute against piracy and have against it laws digitally managed. Six years later the first real crowd-funding platform was created, called SellaBand.com and encouraged fans of independent music to support new upcoming artists. One of them was Nemesea who found enough supporters to record their debut album "In Control" and many more bands followed.

Although Crowdfunding was supposed to help newcomers to make a first step in the business, many already established artists and performers apply to their fans to get direct support.

For instance the famous Hip Hop Act "Public Enemy" tried to raise some money over SellaBand.com to produce their new record. Unfortunately the platform announced 2010 bankruptcy and the band had to correct their target sum.

An other more fortunate example of crowd-funding was famous Stand Up Comedian Louis C.K.'s attempt to sell one of his latest stage shows on DVD directly to his fans, not having any publisher involved. He completely produced and recorded his stage performance himself and eventually offered a DVD copy of it for only 5 $ via twitter, facebook and paypal to his fans. This way he made much more money with this direct and "non-professional" disposal than he would have made if he assigned a publisher. A publisher would have charged the consumer five times as much money and the actual performer only would have gotten a small percentage of the whole business volume.

Kickstarter

Asking people or fans for money over social Networks or blogs is one kind of crowd-funding but there are also special platforms, only designed to raise money over the web. SellaBand was one of them but only limited to musicians. Right now kickstarter.com, which was created in 2008 is the most popular crowd-funding platform that can be used to invoke any kind of artistic project. The most popular instance was Tim Schaefer, famous Game Designer who worked on several Adventure Games by Lucas Arts, Psychonauts and Brütal Legend, who couldn't find any publisher to finance his ideas for a new Graphic Adventure Game and that way appealed to the fans to finance the production of the game. Originally he asked for $400.000 and eventually earned outstanding 3.3 million dollars.

As a special feature the amount of money is categorized: the more you donate the more extras on the end-product you get. Starting by getting a free download link to the final game over autograms and documentation material up to being credited in the game.

How Kickstarter works

Kickstarter.com is not an altruistic platform which means, that successfully reached amounts of money are not fully going to the original fundraiser but 5 % of the sum goes to kickstarter while another 3-5% flows to amazon payments that is responsible for the actual money collecting. Also not every project is approved but can be declined if it doesn't meet certain requirements in terms of reliability or national laws. Therefore fundraisers are supposed to describe their ideas for their project in order to get approved but more importantly to convince the potential donors. Also a certain amount of money has to be defined that must be earned within a given deadline.

Only if the target sum is reached in time, money is eventually being charged by Amazon Payments which means that the donors don't advance money on loan until the deadline is over. It's kind of like a promise saying "This is how much I'm willing to spend". This way no money has to be transfered again if the whole funding call wasn't successful.

Also kickstarter.com only registers crowd-funders with an American bank account which means foreign people would have to meet certain additional rules of action in terms of international laws.

Criticism

The most notable thing about kickstarter is that it's either well known funders or popular brands (at least for special fan circles) that tend to come out quite successful on kickstarter while unknown private people with completely new ideas are badly off trying to get their projects funded.

People like Tim Schafer are known and respected by many fans for their work in the past and use their names to advertise their new ideas. On the other hand popular brands like video game franchises that have been quite successful back in old days but haven't experienced any new sequels for a long time and are strongly desired by the fans are usually good arguments to get money raised. But if you're neither a famous developer nor you have an old established brand to revitalize it's hard to convince people or more importantly to reach them with your message. That's why there are also lots of "epic fails" on kickstarter with funding projects that came out with embarrassing low numbers, even a "0".

Apart from this dilemma many main publishers criticize those crowd-funding platforms for thinking they are completely better off without them. While using crowd-funded money developers are completely free to unfold artistically without meeting any compromises in terms of design and content. Publishers criticize those people for thinking leading producers would only corrupt the developers' efforts.

Collaboration to Save Money

Another interesting aspect of the social web, is that people use it to save money. It kind of started with eBay, where you could get rid of your junk for money. But it turns out you can’t sell all you junk on eBay. But how about trading your junk for other people’s junk? Well, that’s the idea behind Online Bartering.

What is Online Bartering?

Bartering is a very simple and today more and more popular swap business. Everybody knows this situation: kids in school swap their lunches. They swap cookies for chocolate or the vegetable for an apple with another kid.

Trading own things or services without needing money is called bartering. You can barter used objects, like second-hand-clothes or toys from your children, you can barter self-made work, like designed art or you can also barter services, like cleaning a room or painting a car. The principle behind barter, is that somebody offers a thing, he don`t need and somebody else, who is interested in this thing, can offers you something that you want. This is a good alternative to all the money-based systems like ebay, amazon or any other webshops.

The idea of bartering becomes generally known by a guy named Kyle MacDonald. He arranged the craziest internet-barter deal. "MacDonald bartered a single red paperclip to a whole house in a series of 14 online trades over the course of a year."

An important part of this trading is the value of the products or the services. How much the trade-object is of value is relative and depends on somebodies personal relationship to this object and his preferences.

Advantages

Bartering is not only good for the Users. Also, it's good for the government and the general population. Because of the no-money-deal, there is no fluctuation in the value of money.

For example, while an apple cost 50 cents five years ago, it may cost one euro this year. These means disaffection and diversity for the economy. This is why people should do bartering: You don`t deal with money, you only deal f.e. with your services.

These services are the second big advantage. Poor people, families, students etc. have little money to pay for professional job performance, like installing the computer or repair the washing machine. But somebody else is very good in this job. And this one for example need someone, who repairs his car or bakes a birthday cake. So you don't have to pay money, you only pay with services you are good at.

The problem in finding a proper deal-partner is much more easier in the Internet. Because there is no geographical limit and you can deal with international people. The transport in another country is no problem, today. So you have a brighter audience as for example on a garage sale.

So, a bartering network is a service to find someone who is interested in what you have and at the same time finding someone who has what you want. And this with international people, but without geographical barriers. So this is very helpful for you.

Disadvantages

One disadvantage is, that you need a lot of time and work to make a good deal. So you have to find a good product or service to deal and then you have to find the perfect partner for this barter-trade. You need someone, who search exactly this product and is up to make a deal with you. And the third part is, that he also has to offer you a thing, that you need and you're interested in.

Another disadvantage is the problem with unfair deals. It's very difficult to find a deal-partner, who has a barter-object with the same value as your object. So the risk is, that you have to change your 50€ picture with a 25€ bag, because you don't find anything else you like in this 50€-price-league. This means, you have to be a little flexible and you should accept, targeting a more prized product with a less prized one, but usually for you important product.

But this is the principle behind the no-money-system. It's not about an exactly 1-to-1-deal, it's more about the idea: “I have something you need and you have something I need, so let us deal!”

Examples

There are many examples of popular branding-sites in the Internet. Here's a little abstract:

• Craigslist (http://www.craigslist.org/about/sites): You can choose a city nearest you and then look, what other people offers there. You can find things like jobs, holidays or antique furniture. But attention: There also deals, with a fix price, so you have to pay sometimes.

• CareToTrade (http://www.caretotrade.com/): They advertise with the slogan “What you want for what you've got”. It's a free platform for service providers.

• Swap Market (http://market.swap.com/): This is a site, where people can turn what they have into things they need. This swapping is for free, you only have to pay for the postage, if you sent your package away. But you have also the opportunity to pick up the product at your dealing-partners home.

• HelpBuddy (http://www.hbuddy.com/): Help Buddy is a social bartering network specially for students. There's a blog, where you can post what you have and what you need. One positive thing about HelpBuddy is, that it is all private. For example you can give private lessons in math or help a new student to move in his apartment. So this is a big social effect and you can easy find friends on your campus.

Social Media Marketing

If you have a product or a service you want to market it. There are many channels, but social media have become very interesting in this respect. Traditional are ads placed in Google’s search or on Facebook. More subtle is what is called viral marketing.

Activity:

Social media also can easily turn against a company. So happened to Dell in 2004. More about the so called "Dell Hell" in the next paragraph about Social Media Monitoring..

Naturally, a company should be present in as many social media channels as possible, not only for advertisement, but also for communication with customers.

Hence, besides the traditional ways of Internet marketing (usually ads and SEO), the social web provides plenty of mostly inexpensive ways for additional marketing, like blogs, microblogs, podcasts and social networks.

Social Media Monitoring

Today only few people are left not having a Social Web Account e.g. at facebook, twitter and so on. But corporations also have to follow this trend to stay in business. And for these the Social Web carries a risk in form of the freedom of expression in the World Wide Web. Everybody can write about what went wrong with a special product or the customer service of a company in his blog, twitter about problems or even comment directly on the facebook page.

As Dell has learned the hard way, it is dangerous not to know what is going on in the social media world. In addition to the usual web monitoring, companies should also start a social media monitoring.

Social Media Monitoring means that companies watch an analyze social media entries in forums, weblogs, micro-blogs (e.g. twitter) and social communities like facebook or myspace. The monitoring is needed to get a fast overview of topics and opinions of the social web and it is done continuous.

Tools

Free tools available for just that are Google Alerts, Social Mentions and Icerocket. If you like to specialize for Twitter there is Twitscoop, for Facebook there is Open Facenook Search, and for forum search there is Boardreader and Omgili .

Among others, you can use monitoring tools

• to manage your reputation
• for customer relation management
• for market analysis
• and to watch the competition

Dell Hell

The case of Dell was a famous social media crisis and was afterwards called the "Dell Hell". In 2004 a journalist, professor and blogger, Jeff Jarvis, wrote about his frustration with the customer service and the products of Dell in his weblog. Dell ignored him. But many others shared the fate of Jeff Jarvis and were angry at Dell and called for justice. The case of Dell got viral and the story also reached the mass media. The social media disaster of Dell was perfect. Sales and share prices fell, the image was badly hit and in the consequence Michael Dell took over the management again.

The only positive aspect about Dell Hell is that Dell now uses social media for innovations (customers can suggest new functions for the products) and customer support. Dell also uses twitter now and made $2 million with it.

Assignments

Ex.1: Kickstarter

Look for a couple of projects on Kickstarter (http://www.kickstarter.com/). You should be able to find at least two or three. It is also fine to find projects from the past. Write about them in your blog.

Ex.2: Flattr

Start to look for the Flattr button. Especially many blogs have such a button. Think about adding one to your blog.

Ex.3: Flattr (optional)

Before you do this exercise, make sure you have experience with spending money on the Internet. For instance, only use a pre-paid credit card when making payments on the Internet.

Register with Flatr and send them a one-time payment of let’s say ten Euros. Then tell them that you want to spend two Euros per month. Now, flatter as many people (their websites, that is) as you like. You should also add a Flattr button to your blog, so people also can flatter you.

Ex.4: Dell Hell

Use your favorite search engine and look for "dell hell". How many search results does Google list? Read some of the articles, and write about what you found in your blog. Dell actually has learned and started something called IdeaStorm (http://www.ideastorm.com/) to get customer feedback and improve its products.

Ex.5: Google Alerts (optional)

Use Google Alerts to do social media monitoring. Write about what you learned in your blog.

References

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