2009-01-31

On my own score: Changing the world of Social Networking and e-Commerce OR Banner advertisement isn't working!

During the past years, I always wondered how Social Networks and other Web 2.0 bubbles could survive. In discussions, I was always seen as the black painter, the pessimist ... because I was telling these concerns and referring to the first new economy bubble.

Well, even though my predictions are not yet fulfilled and the Web 2.0 bubble still exists, and even though it looks like it is not breaking as bad as the new economy bubbles back in 2000/1, the signs are showing that several things will happen similiar like in the past. And - many of the Web 2.0 bubble companies are Social Networks of which many have done more for todays mankind than new economy bubble companies back than. Therefore from my opinion they need a second chance to make it through the upcoming issues.

The biggest issue with monetizing these networks is their audience. If I am saying many users are freeloaders, I don't mean that in any way insulting but, looking to the users behavior the moment they should pay for the service they use (the one or other way) you must recognize that this association isn't far away from being truth - as said, I am not wanting to insult someone here nor I am saying that this is in general the case!

During the past months, some friends of me and I made up our minds and after playing around with several ideas, and due to the fact that we are also acting in the VC scene in Germany and partially supporting global VCs in terms of doing due diligences etc. for them, we found that it is time to explore the other side: So we started a new business called SocialCom.

The marketing yadayada is:

Our understanding is that in a world where Web 2.0 is a smashing success regarding user involvement but a crushing disappointment when it comes to revenue generation, SocialCom goal is to rewrite the rules. SocialCom enriches social networks with tools that enable Social Commerce in a reliable, measurable and profitable way without being intrusive – no sensitive user data, no ad space, no banners needed. As a result, social networks can expect significant revenues without putting off their ad-weary audience, while the audience can expect exciting new content.

Consequently, we believe - and see - that Banner advertisement is not working!

In fact, the marketing yadayada is not that far away from the real world. In fact nearly all, non-business Social Networks are 'suffering' from their users and do have massive monetizing issues - even though they are (of course not) telling this to the broad audience.

We have been in many discussions and due diligences during the past 18 months and can tell you as one result: Social Networks are, from my personal standpoint, helpful and making the world smaller - and hopefully a better place. Fact is, however, users are not willing (and often even not able) to pay for this.

Coming back to our idea of SocialCom: Since the audience of Social Networks is quite weary if it comes to advertisements and usually very sensitive if it comes to personal data - even though I personally believe most users are still not sensitive enough! - the Social Networks are in the middle of a dilemma.

If they are placing more ads in today’s formats, users are leaving - aside the point that the sensitive ones realize that they are spammed with Cookies from their Social Network as well as from different ad-networks (this is going to be another blog entry I am writing about soon!).
If they are going to sell the user data they a) don't know if the data is correct and b) it will end up in going public in the worst case --> users are leaving or changing their data (as happened to some large Social Networks nearly instantly after they changed their policies ..) this or the other way, income is decreasing or stagnating.

So what does make our idea of SocialCom different:
a) SocialCom is not about trademarks
b) SocialCom is not about advertisement
c) SocialCom is about products - and products ONLY.

d) SocialCom does not need to know that the user is Chris Right or Lieschen Mueller
e) SocialCom does not need to 'hunt down' the user with cookies and therefore is not tracing him over all websites he has been and will be - as most ad- and affiliate-networks doing it!
f) SocialCom does indeed need some information like: Someone who is of age 33 (or between the age of 30 to 40, or...) and is a he (or neutral) is currently in (or coming from) Germany... is currently on our Social Network and we would like to show him some products that may interest him (and which he's hopefully buying ;) ). That is it.
About f) since we do still not know nor trace who you are in person, nor make any connection between you and your trails (behavior, interest, gender, …), we protect your personal information since we don't know it at all... but of course we put you into a pigeonhole to deliver you (and therefore the Social Network) some product ideas which are displayed in a non-intrusive way. And hopefully you are interested in them and buying this via the offered way to support your Social Network – and of course SocialCom, which consequently means me ;o) The information delivered by the Social Network to our systems is, by the way, immediately deleted the moment the conclusions are calculated and the products are chosen and delivered to the side to be shown to you!

The promise of SocialCom is
a) To the End-users - so usually you - We are not penetrating your privacy nor tracing you in any way!
b) to the Social Networks - We are not going to sell your users nor collecting data about any individual but deliver you tools and chances to monetize

I could, undoubtedly ;o), go on in writing a lot more – but I am asking you to discuss the idea explained here. I am looking forward on your feelings and questions about it. And of course I will, as long as it isn't compromising the current stage and IP of SocialCom, explain more here if you like me to.

1 comment:

ischilling said...

Well, it is some time I wrote this article.

Since I've been asked by many people what happened and why I am now doing something different (currently www.Yukoono.com).

The idea itself is still strong, the team was it more the less as well - only, the investment didn't work out.

As simple as this, that is why I left SocialCom.