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Groupon: four reasons why it might actually be the “next big thing”

We have been waiting for a “next big thing” since Twitter went mainstream some years back.  Could it be that Groupon is going to be it?  I am coming round to thinking it might be because it has a number of characteristics I find attractive.

1. It is relevant and real time

Groupon is about stuff that is happening right now in your area.  It is very specific, relevant and useful – all the hallmarks of what the world of social media (i.e. the world where information is not married to expensive distribution technologies) is all about.  No-one is going to ask the question “why should I bother with Groupon” in the same way people still ask “why should I bother with “Twitter?”.  When you see what it does, it is obvious how you use it.

2. It runs with the community tide

I have always believed that the “next big thing” in social media would be a new behaviour rather than a new tool and I have also believed that this form of behaviour would be linked to the formation of communities.  In particular that people would get together within communities to manage their interactions with institutions, in preference to allowing themselves to be managed within communities controlled by institutions.  While Groupon is a tool it sort of fits the bill in that a large part of what it does is based around the creation of communities – communities of purchase.  And also that it effectively provides a medium within which individual consumers can manage their interaction with brands.

3. It uses editorial narrative

The unique feature of Groupon is that it has an editorial department of 400 people to effectively “write the ads”.  This recognises that the one-size-fits-all approach to creative that characterises traditional advertising just doesn’t work in social media, which is a medium much more adapted to stories and storytelling.

4. It makes money

For the outset, Groupon has a real business model for making money that is rooted in what it does as a business.  It doesn’t rely on the Facebook / LinkedIn approach which is all about building a user base first and then trying to impose a revenue model on top.  In this respect, it is akin to Demand Media – another company I like – in that its business model is 100 per cent adapted to work in the social space and aligned against how its customers use the service.  This is unlike Facebook or LinkedIn who try and raise revenue on being a media platform or information channel to their users when their users actually use the service as a communications infrastructure.

Certainly – if I had money to invest I would far rather invest it in Groupon than in some personal data storage facility like LinkedIn.

Social Media Influence 2011

Final bookings are being taken for SMI 2011 which takes place of June 14 in London.  This is always a good event, especially for those taking on the responsibility for developing social media within an organisation.  It is not an agency-fest and I note the list of speakers this year is heavy on actual social media managers from UK based companies (Sony UK, Tesco, O2) who will be talking about their experience, rather than ‘gurus’ or people with products to sell.  Definitely worth attending if you have (or would like to have) responsibility for social media within your organisation.

Twitter makes You stupid (but Us clever)

Here is a very thought provoking post (sorry, article) by Bill Keller, executive editor of the NY Times.  I especially like the historical perspective and connection to Gutenberg – something which is not debated or understood enough.  We cannot really understand social media unless we also understand history, which is why I always begin my “What is social media?” presentations by looking back 600 years so that we can understand the extent to which our world has been shaped by the enforced marriage between information and expensive distribution technologies – a marriage which social media is ending (because media – the ability to distribute information – is no longer expensive and information is now liberated).

In much the same way as Keller highlights the cognitive trade-offs that have occurred as technology has developed (books effectively reducing our capacity to remember for example) it would seem logical that there will be some form of trade-off associated with social media.  And it may well be that the trade-off is that collectively we become more intelligent and powerful, but individually we become more stupid.  Perhaps it may be that stupid is not the word – rather we will become become more dependant – not just on the technology itself but the forms of community it is bringing into being.   We become a bit of number of brains rather that a brain in itself.  This may be a good thing, or it may not – but it important that we are aware that it is happening and adapt to its implications.

The right to legal priviledge versus the right to sensationalise

Lets be clear about something.  This whole institutional dust-up is not about privacy and human rights.  It is about the tabloid media’s presumed right to sensationalise (and the worrying ability of social media to deflate its ability to titillate) and the legal establishment’s presumed right to exist.  Basically it is all about the erosion of institutionalised privileges.

Looking first at the media.  What is interesting about the whole affair is that the suspension of traditional media’s ability to report gives us the opportunity to analyse how social media in isolation is handling the story (i.e. the story about the footballer not the story about the institutional fight) and compare this with the way the mainstream media traditionally handles such events.  Within social media we have a simple tweet which states that x footballer had an affair with x semi-celebrity.  This prompts some discussion and debate within the relatively small digital communities that are interested in the individuals concerned.  This discussion goes along the lines of “So-and-so has had an affair.  All these footballers are the same.  Shame though – this bloke seemed to be one of the exceptions, but at least he has patched things up with his missus.  Ah well – lets talk about more important things like the big game coming up next weekend.” There are also some quite good jokes that are made – British pub and terrace humour at its best.

The way the tabloid media might choose to report this story would be to splash screaming great headlines of outrage across the front page, send legions of paparazzi to stalk the individuals concerned and their families, to tease-out (and frequently invent) as many lurid details as possible and do everything possible to convince us that this event is the single most important piece “of News the World” must be interested in.  What a difference – a difference which exposes the fact that the media don’t like the right to privacy because it impinges upon their right to sensationalise and they don’t like social media because it similarly deflates their ability to titillate.

The legal establishment is all in a flutter because it is slowly starting to realise that social media is creating a space within which it is powerless.  In fact, worse than powerless, totally irrelevant.  You simply cannot apply an institutionalised legal framework to the specifics of information within this space because the core assumptions you need for this model to work just don’t exist (and never will).  Social media exists outside of the law, not because it wishes to break the law, but because there is no law yet in this space.  Try as you might to drag bits of current legal process into it and all that happens is that you end up looking silly.  And when we do come around to creating some framework of control that works, we may well find that what works is not actually law as we currently know it (the thing that has lawyers, silly wigs and fees and all that stuff), but something based around the creation of social permission that it all together more, well, permissive.  Basically this will mean working out the codes of behaviour that are required to allow society as a whole, rather than editors or judges, to work out what importance to attach to information.  Critically this is not about determining what is right or wrong – something  that is fit for publication or not fit for publication.  Rather it will be based around ensuring the ability to generate a collective assessment of interest or relevance – something which social media actually already does rather well, quite unencumbered from formal regulation (as the general lack of interest in said footballer’s private life, as represented within social media, neatly demonstrates).

LinkedIn CashedUp CrashReady

LinkedIn has ended its first day of trading as a public company with valuation of $8.9 billion.  This is 36 times its 2010 revenue.  That’s right – 36 times revenue.  As this Mashable piece points out this compares with Google at 5.5 times 2010 revenue and Demand Media at 4.4 times revenue.

What is the difference between LinkedIn and Demand Media? Well,  Demand Media has a business model: a business model that is currently working and which is rooted in the fundamentals of its business.  LinkedIn has none of these things.  Perhaps that fact that Demand Media has a functioning business model means that analysts have some form of reality upon which to base their assessments, whereas for LinkedIn all we  have is a model that appears to be a cocktail of one part fantasy and one part ignorance.

Whatever model the ever-so-clever money men are using, it will probably be one that basically regards LinkedIn as a form of content platform or media.  However, LinkedIn, Facebook et al are not forms of media, they are actually infrastructures – that is certainly is the way people use them.  I don’t know how you value LinkedIn as an infrastructure, especially when it is an infrastructure that didn’t really cost anything to build, where the idea behind it easily replicatable and the content within it essentially remains the property of its users.  That sounds to me like a max three or four times revenue multiple proposition.

At some point in it is going to dawn on Wall Street that these properties are largely disposable infrastructures that simply host content on behalf of users – basically branded data storage facilities with some service add-ons.  And then we will get the crash.

How do you teach social media?

Last Friday I spend the day at the Plantijnhogeschool in  Antwerp, giving the keynote speech at a conference organised by the European Foundation for Commercial Communications Education (now to be known as Ed Com).  This is basically the place where the institutions who teach communications meet the agencies who employ the people they teach.

The main talking point revolved around the issue of how you teach social media linked to the continued relevance of “The Big Idea”.  There seemed a large constituency of support from both academics and industry, that we still need The Big Idea, in large part to have a conversational starting point, and that social media’s problem derived from the fact that there did not seem to be such an idea that was visible within most social media campaigns.  This was seen as a relevancy issue for social media, rather than a relevancy issue for Big Ideas.

My view, not surprisingly, was slightly different.  In the first instance, social media does not “do” campaigns.  Social media is about sustained engagement, often with small numbers of people at any one time, but which happens over a long period of time – indefinitely in fact.  Secondly, in-so-far as social media conversations have to start somewhere, they don’t start with The Big Idea because that is not what people actually want to talk to brands about – it is what brands wished people would talk to each other about.

The Big Idea ‘du jour’ was T Mobile’s Life is for Sharing – prompted by the recent viral success of its Royal Wedding video as well as previous flash mob virals.  Now Life is for Sharing is, indeed, a Big Idea and it has been used as a creative platfrom very effectively by its ad agency Saatchi & Saatchi.  But here is the thing: you need Big Ideas to make ads but they don’t work in social media because T Mobile’s customers (even those that watched and ‘liked’ the YouTube clip) don’t actually want to talk about Life is for Sharing – or if they do, they don’t want to talk about that with T Mobile.  What they want to talk about with T Mobile is much more prosaic.  They want to know why their phone doesn’t work, or why, when the start “sharing their life” whilst roaming it costs them a small fortune.

But of course, these sorts of mundane customer service or product issues, were not seen as being relevant to brand image or marketing – the carts to which the old nag of Big Idea is currently harnessed.

And therefore, when it comes to teaching, the issue is not really how you teach social media so much as to whom you teach social media.  If you see yourself in the business of creating the creative directors of the future, there is about as much point in teaching them social media as there is teaching footballers to play cricket.  But if you decide that you are creating future communications practitioners, then social media is highly relevant – but not teaching social media as a form of media (which it is not) rather understanding it as a set of behaviours.  We therefore need to look to more towards psychology, or even history, to provide a way to do this than we do towards creativity.

How do you regulate social media? Do you regulate social media?

Last week I had an interesting experience, presenting at a workshop on regulating digital media.  (My presentation is here, for those interested).

The folks attending were, in large part, those to whom Government (in its various iterations) has decided it falls to Do Something about the regulation of social media.  However the real problem they have, as I saw it, is that the current model of regulation just doesn’t work in social media.  This is because the current model relies on the fact that information is always married to an institutionalised means of distribution and this means of distribution is both the dominant partner in this relationship and can be regulated.  However, social media is all about the liberation of information from a particular means of distribution and therefore the means of distribution (the media) has ceased to be a gatekeeper through which we can control information.

Here is an example, drawn from some of the case studies discussed.  A nightclub in Belgium was running a party called French Kiss.  Continue reading →

The future of advertising, media and Facebook (in Bulgaria)

A couple of weeks ago I was in Sofia, Bulgaria, to run a workshop and speak and the annual gathering of advertising and media folk, organised by the Bulgarian Assosication of Advertising Agencies.  I was doing this wearing my hat as a member of the faculty of the EACA School of Advertising and Communications.  Essentially I was there to explain, as politely as possible, that the business model of advertising is broken.  (Here is the presentation for those interested – it will make only vague sense since it is mostly just a collection of images Sofia 22 March 2011)

In the run-up to this I was also asked to answer some questions about the future of advertising, traditional media and Facebook for the online publication Human Capital.  Here are the answers – for those who speak Bulgarian, but I thought I would also publish them here in English, since it is relevant to advertising and media everywhere, not just in Bulgaria.

What are the major differences between traditional media and social media from advertisers’ perspective?

Continue reading →

Facebook: the new AOL

Continuing the Facebook / business model theme, here is an interesting observation I saw on Social Media Today from Jim Worth.  He says that Facebook today reminds him of AOL in the 1990s.  AOL became the gateway people used to get onto the internet in much the same way as Facebook is the gateway people use to do social media.  But once through the gate, people often move on.  That, in a nutshell, is the problem Facebook faces.  Failure has stalked all of those who try and hold onto the people they take through the gateway – from AOL to Yahoo.  Why should Facebook be any different?