Monetization and social media

by Christopher S. Penn Awaken Your Superhero January 19, 2009

Excerpts: If you are a social media practitioner interested in earning money for your skills, you have to deeply understand money first.

First, money is a medium of exchange for other goods and services. Money doesn’t solve the value equation - that is, what you do must have value to someone. Money only makes trading value easier. If what you do is of no value to anyone, then like the farmer facing no demand for chicken, no matter how skilled you are, no one will trade with you. As a social media practitioner, your work has to have value.

The most successful social media practitioners recognize that social media in and of itself is of relatively little value. It’s a communications channel. What is of value is what you deliver to your audience. I deliver, for example, financial aid information on my Financial Aid Podcast. The fact that it’s a podcast has no inherent value; what has value is the quality of the information.

If you’re considering offering up your services to someone else as a social media practitioner, make sure that they have something of value to offer their customers, or both you and your client will fail to generate any business. Your own track record must demonstrate that you understand underlying value and how to present it in a social media context.

Second, money as a store of value is vitally important to social media practitioners. Like all industries, social media, new media, online media, etc. all have trends. There’s a new shiny object every day, and that presents new opportunities for you to demonstrate your skills and earn some money in doing so. You have to not only capitalize on trends, but sock those earnings away. You have to be able to store the value of a trend so that when it cools - and it always does - you have a strong base of capital to operate with.

Equally important is your ability to recognize value and trends ahead of time so that as a platform matures - as blogging has - you’re ahead of the curve and in new spaces. This is the often referenced blue ocean strategy, where there’s virtually no competition in any vertical in a new area. Blue ocean was podcasting in 2005, blogging in 1997, Twitter in 2006, Facebook in 2004 and so forth. As a social media practitioner looking to earn a living at your craft, you need to be able to spot new blue oceans and move in long before others do, while recognizing that it will be some time before that space is highly desired by a large population.

For companies looking at social media, recognize that the store of value means you need operating capital and strong revenue streams today from your social media efforts, but you need to be investing for the future as well. Your internal financial health will dictate how you prioritize investing for the future vs. banking on what’s hot today.

My Take

It strikes me as strange that attempts to monetize Web 2.0 have used Web 1.0 tactics. Web 2.0 supports actual, personal relationships. These relationships have natural, tangible, financial value.

Example - there are relationships that either save you money or make you money every day. Whether you are looking to buy something or sell something - your network enables you to do this more efficiently by filtering out bad choices through communal experience.

First, we need to understand the economic value of personal relationships. Communites have always been built around the value that these relationships produce. It is why we people band together.

In this sense, social media communities are no different than physical villages, towns and cities. Then we can replicate the process and create true value that can be converted to cash.

"My Take" on Web 3.0

Facebook | My take on web 3.0
A thought I'd shared on Facebook's "Web 3.0" Group:

James,

I think of it similarly. 'My Take' on the evolution of the Web - Web 1.0 and 2.0 were a "place" I go to:

Web 1.0:
1. see something
2. learn something
3. buy something / sell something

Web 2.0
1. connect with real world events or places
2. connect with someone or a group to forge a real relationship that can lead to or facilitate my real world relationships

I envision Web 3.0 to be where/when the Web comes to me and integrates with my real world and my real relationships and my real, local events to facilitate the things I normally do and the interactions that I normally have with the people in my real life.

Saturday October 6, 2007 - 06:07pm (EDT)

Adotas » Brand Ads Steer Clear Of Social Sites

Adotas Brand Ads Steer Clear Of Social Sites

Written on September 4th 2007 Author by Editor |

In a report put out by IDC called, “Social Networking Services in the US - Popular, Yes, But How to Monetize Them?”, the firm projected that social networking ad revenues in the US would hit $1 billion in 2007, an increase of over 50% from 2006’s $400 million.

Only advertising seems to make social networks attractive to major media firms and portals; whereas e-commerce and subscriptions did not substantially contribute to the revenue accumulated by social networks according to emarketer.

IDC program director Karsten Weide was quoted in a statement to say, “Social networks cannot guarantee a brand-safe environment. Advertisers don’t want to see their ads displayed alongside illicit content, for example. The dilemma for social networks is if they start to control what content users can post, they will lose popularity, which is what attracted advertisers in the first place.”

The reported summarized that for as popular as social networks may be, there is the potential that they may not see big scale brand advertising because of these issues.

My Take

It will definitely take some creative thinking to monetize social networks...

Any ideas????

Tuesday September 4, 2007 - 03:13pm (EDT)

Recovering Journalist: Backfence: Lessons Learned

Recovering Journalist: Backfence: Lessons Learned


Lessons from the failure of a user-generated hyperlocal network, thanks to its founder, Mark Potts. His advice:

• "Engage the community. This may be the single most critical element. It's not about technology ... it's not about whizbang Web 2.0 features. It's about bringing community members together to share what they know..."

• A top-down, "if you build it, they will come" strategy absolutely does not work, and that's not what Backfence did... Backfence employed a group of talented journalists and community representatives who sought out and interacted constantly with members of each of our communities to encourage them to participate. Over time, in our more mature communities, this really bore fruit. You have to get a critical mass of community participation and eyeballs coming to the site. You have to get the community involved. There’s no substitute for that.
• Hyperlocal content is really mundane. We heard this criticism all the time. You bet it is—if you're an outsider looking in. To members of the community who actually live with these local issues, it's vitally important. It's precisely that mundane content, and the conversations around it, that brings life to hyperlocal sites.
• Trust the audience. We were asked all the time...how we avoided having Backfence become a nasty free-for-all. There were many answers... But most of all, we trusted the audience to do the right thing—and invariably it did. All of that is why we can boast that we very, very rarely had to police Backfence by deleting content. ... The audience took responsibility for what went on at each local Backfence site ...
• Leverage social networking. The rise of MySpace, Flickr, YouTube and the commercial version of Facebook—virtually all of which have happened since Backfence launched more than two years ago—demonstrates the power of social media. Local communities are social beehives anyway. Why not take advantage of existing local connections and the virality and marketing reach of social tools such as member profiles, "friending" tools, widgets and the ability of members to exchange messages with each other? This was an element we unfortunately were unable to get off the drawing board at Backfence, because of business issues and other priorities.
• There is most certainly a robust hyperlocal advertising business. Indeed, local advertisers are eager for new online advertising vehicles. I've seen it suggested repeatedly that Backfence failed because it couldn't sell advertising to local merchants. Not true. In fact, we sold ads to more than 400 advertisers, more than any other similarly sized hyperlocal effort that I'm aware of. It was clear that we had staked out an affordable and lucrative corner of the local ad market. Ads in local newspapers—even community weeklies—are too expensive for many small local businesses. Alternatives like the Yellow Pages, Val-Pak-style coupon flyers and local radio are similarly pricey. And most small businesses don't know from AdSense. That presents a ripe target for a talented, hard-working ad sales team concentrating on offering low-cost ads to local businesses who want to reach members of their communities through hyperlocal sites. It's a rich, untapped marketplace.
• If there's anything I've learned from Backfence, it's that the power and potential of local communities still is waiting to be tapped.

Thanks, Mark!

Thursday August 2, 2007 - 01:25pm (EDT)