When to Adopt Social Media for Your Business?

by Eric Tsai

What happens when hype is no longer hype but a real trend? Can you afford to miss benefiting from social technologies?

These are questions I get about using social media as part of the brand strategy conversations. This is when I introduce the theory of Technology Adoption Lifecycle (aka Rogers’ bell curve) to illustrate product adoption to better understand how new ideas and technologies spread especially in today’s digital culture.

roger's-bell

Fundamentally Innovators seek new ways of doing complex tasks and are willing to take the risk hoping to gain competitive advantage over time.

The Early Adopters want speed and cost savings to drive other innovations that’s mostly perceived advantage.

I see the rest of the adopter groups (early majority, late majority and laggards) as Mass Market. This group relies heavily on the concept of social proof and wants proven process from credible source that demonstrates significant cost savings over the existing way of doing things.

Now let’s apply this concept to social media.

Adopting at the Right Time

The idea of adopting new technology is to improve productivity and fuel growth, not to chase the hype or follow the trend for the sake of doing it.

You need to ask yourself this: How much risk are you willing to take investing (time, resources, money) in social media? Does your organization have the resources to execute the adoption of this new platform?

Regardless of how mature social media is, it has to fit within your brand strategy.

Don’t get me wrong, the timing of adoption is important and it could bring unexpected opportunities, but not if you’re unable to optimize the value from it.

You need to have the right adoption strategy at the precise time that gives you the longest lifetime value at an acceptable level of risk.

You can see some examples of mergers and acquisitions by companies attempting to harness innovation in the adoption lifecycle. Recently eBay sold Skype for $1.9 billion and acknowledged “that it had overpaid for Skype by about $1 billion — the purchase price was $2.6 billion but the Times has reported the total cost reached $3.1 billion after bonus payouts to founders.

Being a happy Skype user myself, I know the value of Skype today but eBay’s timing of the acquisition was simply off not to mention it didn’t fit with their business model.

A better approach would be to find something that aligns with their line of business in auction listings, classifies and ecommerce. EBay does own paypal, which is a great buy because it actually enhances their online auction business and helps to extend their brand to reach more customers. Looking from the hind side, a company like Craigslist (they do own 25% of it) would probably make more sense to go after.

One factor to keep in mind is sustainability of social technologies. This can be seen by the rapid adoption of the earliest social technology: email.

As a technology spreads widely, the economy of scale expands but its value will start to shrink.

Email is supposed to improve our communication and productivity but as we’re at the end of adoption lifecycle spam has exploded, “now accounts for 90.4% of all e-mail,” costing us more time, resource and money to manage email.

When a technology starts to get commoditized, it’s time to innovate.

This is why companies like Google is re-inventing the email landscape with Gmail going heads on against Microsoft’s Exchange email.

For social media one could argue that we’re still in the Early Majority section of the Mass Market and we’ve yet to see the explosion from the Late Majority section.

Regardless, the adoption of social media will continue to grow according to Forrester Research. I like their consumer social technology profiling tool that allows you to check the profile of your customers.

Take away: Adopt social media for your brand when you’re ready, even just to experiment, you still need time and resources. Focus on aligning your brand strategy to help you achieve your business goals. If you need social media strategy, you can start with this.

Are you an Innovator or an Early Adopter?

The Emerging Trend of Hybrid Marketing Model

by Eric Tsai

A day after my last post on how traditional media is deteriorating, Microsoft’s CEO, Steve Ballmer speaking at the Cannes Lions International Advertising Festival, argued that traditional media will not bounce back, all content consumed will be digital, we can debate if that may be in one, two, five or ten years.

In some respect the context of Ballmer’s statement is indicative of the fact that advertising revenues continue to shift to where the interaction is taking place – online.

There is definitely a shift in consumer behavior as the online experience, through social media, becomes more acceptable, accessible and affordable.

Keep in mind that social media in nature has low barrier to entry with the lack of gatekeeping process.

This is a double edge sword providing that content can be generated rapidly but the quality is dramatically reduced.

The message of social media is totally radical, pervasive, and decentralized while the content of social media focuses on the concept of crowdsourcing defined via Wikipedia as “the trend of leveraging the mass collaboration enabled by Web 2.0 technologies to achieve business goals.”

That’s what’s carrying out the new social media revolution because it’s basically an extension of our sense of voice with instant speed for community-based design.

During Jeff Pulver’s 140 Characters Conference, Chris Weingarten of Rolling Stone made a great point: Crowdsourcing kills art because crowds have terrible taste! If you let people decide then nothing truly adventurous ever gets out.

I couldn’t put it better myself.

People stop asking why information gets delivered and the quality of them.

Typically authorities have a quality assurance process in sequence and in concatenation to produce high quality, relevant content.

What we must do on the receiving side is to continue to question the legitimacy and integrity of the source.

Social media allows us to connect horizontally across each other with relative ease, but just as Jeremiah Owyang recently pointed out that human don’t scale which questions the authenticity of top social media bloggers and news blogs.

This is very true in a sense that because we don’t scale, we’re only able to consume limited amount of information combine with short attention span, it’s a race to absorb as much as possible in a short period of time.

This propelled the publishers to publish rapidly; furthermore the increasing competition has put a sense of urgency pressure to compete for the same audience.

Ultimately the brand that can scale and remains relatively authentic perception-wise will be the ones to profit the most.

Hypercomptition To Hybrid Marketing

Hybrid Marketing

There is no sustained competitive advantage anymore according to Richard D’Aveni, professor of business strategy at the Amos Tuck School at Dartmouth College. He argues that advantage is continually created, eroded, destroyed and recreated through strategic maneuvering.

I found this particularly interesting because that’s what’s going on with the traditional media landscape.

Traditional media rules and orders can’t be applied perfectly under the new regime of communication (social media) and thus formations of authorities are under attack from these new forms of expression.

Simply put, it’s not a technological argument but the outcome from social and cultural conditions.

Think how content is produced, reproduced, distributed and consumed – more people are adjusting to the “new way of doing things” abandoning the old ones which leads to the permanent shift in behavior.

However, marketer should not disregard traditional media altogether, but combine traditional media with social media to form an integrated strategy or the “hybrid marketing” model.

In the hybrid marketing model, it’s about drawing a business model that works within the ecosystem of your brand.

The key is to have a fluid approach in creating a meaningful dialog with your market. Instead of focusing on what marketing tactics to use strategize on aligning your brand strategy with your business goals and view social media as one of the arsenal to choose from.

I believe this is a more practical approach and allows for integrated efforts for companies with branding 1.0 infrastructure to transition into branding 1.5 strategies because there is no point in applying branding 2.0 strategies if the infrastructure is not ready for it.

The idea is that the marketing strategy will streamline with the resources creating the desire outcomes that are measurable. Brands must consider the costs associate with deployment, control, and management to sustain such strategy.

There is a place for the shrinking traditional media. It will continue to evolve based on how we act and react to technology.

However, it won’t be technology that drives the outcome of the new media, but the cultural value of intellectual property and how it gets produced and consumed.

What’s your marketing strategy?

Perhaps you’re already utilizing hybrid marketing in your business model, share your thoughts here.

Why Business Models Evolve and How to Stay On Top

by Eric Tsai

A business model is the framework of how a business generates revenue and profits. While most proven business models can be profitable for a long time, it is just as important to realize that they evolve.  And when they do things could fall apart quickly.

If you’ve been keeping up with my Twitter tweets lately, you know I’ve been linking some statistics about how newspaper is going away and landline telephones are dying. Both are  examples of an older business model getting obsolete in favor of newer models.

Business models evolve for 3 reasons:

  1. Technology Disruptions – Technology changes consumer behaviors and the perception of value.  It is also the main driving force behind creating new technology.
  2. Commoditization – When a product or service lacks tangible value, it becomes a commodity that simply competes on price alone.  When a business model is commoditized, it will be forced to sell on quantity to scale the business.
  3. Competition – While competitiveness is good for most industries, excessive competition or lack of competition can result in a changing business model.

The perfect example for technology disruptions is the impact of internet on print media.  Instead of reading the newspaper, there is now a better way to get the same information faster, easier, and freely  You get the information you want on-demand and can share it with anyone while reducing paper usage.

The commoditization of cell phones is the end of landline telephones.  Today everyone I know carries a cell phone–even the elementary school kids.  I turned down an offer for a year free landline telephone service by my Internet provider Cox Cable simply because I see no value in having it unless they pay me.

Competition is the most obvious element of why business models evolve but it’s also a contributing factor to the first two elements.  Similar to the “the tortoise and the hare” story, the lack of competition can kill innovation if the market leader starts to relax and falls asleep on the competition.

A good example is the rapid adoption of Google Apps over Microsoft Office. For a long time Microsoft was at the top, in control and profitable…then came Google with its “freemium” business model, earning consumer trust and gaining user base faster than ever.  Once thought of as just a search engine company, Google is disrupting the space that Microsoft created, forcing it to lower its price, commoditizing its own product.

 

So How Do Businesses Stay on Top?

If your business doesn’t create the technology and you don’t have unlimited resources and capital, the best way is to focus on creating value for your business.

Here are some business drivers to consider:

  1. Focus on customer retention and satisfaction
  2. Build a recurring revenue stream
  3. Expand your offering and create value-added product or services
  4. Strengthen your brand and build equity in your business
  5. Build barriers to insulate competition and commoditization
  6. Execute on broader vision and take calculated risks
  7. Don’t rely on technology – become a platform company
  8. Network with strategic partners and empower your management

It takes a combination of all the above to stay near the top in a highly competitive landscape.  I will discuss them in details on later blog entries.

What are you doing to stay on top in this recession?