Tuesday, January 31, 2012

2012 Predictions: Part 3 - The promise of social media and the rise of the ecosystem

Third and final part in my three part “Predictions for 2012” post. Part 1 here, part 2 here.

Part 3 - The promise of social media

Good News: We know where to go to find people in social

The good news is that where to find people on social is known. There might be a 1,001 social media sites but as Om Malik confirms in this recent piece on some comScore data Facebook is dominant followed by well known names like Twitter, Linkedin, Google+ and Tumblr. [as an interesting side note, it looks like MySpace still has a decent amount of traffic (more than Googe+ though no activity or time on site to speak of) and the hot to trot pinterest is gaining followers fast.]

Marketing platforms are emerging for each of the leading sites. Meaning the marketing departments at travel companies (suppliers and intermediaries) have suites of tools to work with in attracting social audiences. There maybe a lot of debate around whether or not social is a fad or meaningful (underhyped, overhyped or somewhere in the middle) but the tools to take advantage are known. The easy prediction (and good news for the large social media companies) is that advertising dollars will flood into social media in 2012.

The more detailed good news, I predict that money can actually be made with smart advertising on social media. It was thought in 2011 that social media was just for brand building and customer engagement. In 2012 we will see the first hints of sales and direct marketing activity on social media. Get ready and prepared to see and buy ads on Facebook, Linkedin etc that look like ads on Google.

[side note – here is a link to my 5 tips for launching a social media strategy]

Bad news: four eco-systems, four business models

While the growth of social means more opportunities for brand building, customer engagement and (I predict) sales, it has also been part of fracturing of the web media and content worlds into a series of different ecosystems with different content and revenue models. Google, Facebook, Youtube, Apple and maybe even Amazon. In each ecosystem the means of gaining prominence and then generating revenue is very different – so different that it takes more than just an adjustment or tweak to do it properly. Instead it takes a full-scale effort.

In Google you get prominence from inbound links, quality of content, site structure, bidding capability and dollars spent. The reward is traffic that may or may not results in sales depending on how good you are at monetisation. The ecosystem is completely open. Content is created or published on web pages, open for the world to see and search.

On Facebook prominence comes from customer engagement. Getting customers to like you, use your app and then continue to read you and hopefully comment. To stay engaged for a very long time. The potential rewards are a long spectrum of possibilities from the warm and fuzzy (customers engaging with the brand) to direct response (clicks onto booking engines). But the big money inside the ecosystem is restricted to Facebook and some gaming companies. Everyone else is at the warm and fuzzy side of the spectrum. The ecosystem is closed. Consumers may screw up and put public content intended to be private but inside social media there are terabytes of content excluded from the Google and the general public.

For Apple prominence comes from developing an app. A good app is very very different to a good website (or a good Facebook page). Not only does an app need to work on a smaller screen, in a perfect world it should work offline and online. The best are purpose built and targeted to people in different states of mind. But the rewards can be more immediate. Customers are happy to pay money upfront for apps and content from Apple. Less so in travel than in pure entertainment and games worlds but there is money being spent on Apple for language guides, local transport planners, destination guides and more. The ecosystem is closed.

Finally inside Youtube prominence comes from video content. The production quality does not have to be expert but the content needs to be entertaining. Great videos can generate numbers that make TV executives want to cry. Viral hits can out-rate the best of Hollywood. But - there is no formula or rule book (yet if ever) for a YouTube hit. The rewards are…..not sure. There is some advertising and there maybe some brand improvements but the dollars are small and outside of a megahit the brand benefits low. For a travel company there is no answer yet to either “how to make money on YouTube?” or even “how to build a brand on YouTube?”. In short there is an ecosystem in YouTube with monstrous amounts of traffic but no one knows how to use it other than to post and hope for a viral hit.

The bad news here is that for now you need to pick. Need to pick which ecosystem you are in and hit it hard. You can flirt with others (ie hit Google hard and flirt with Facebook). But you need to pick the main one and double down efforts. I predict that a lot of money is going to be spent and wasted by companies trying to play in all four to the same level.

[for more on this see these articles. Interview with Phil Simon on the “Age of the Platform”, post by Jason Calacanis on “Founders defining reality” and Nigam Arora’s post on the recent Google earnings announcement for the stock consequences]

Thanks to jooyoung.kim from Flickr for the image

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