Creating Sustainable Online Revenue and Profit Growth

5 Nov

With apologies to Charles Dickens, our current economic “worst of times and best of times” provide an inkling of an uneven future across the global economic landscape. Just ask someone trying to sell a home in southern Florida these days, or looking for work in the developed world. Times are difficult indeed.

But when it comes to global consumers benefiting from advances in technology, media and telecom (my professional “workshop”) I find it hard to be anything other than optimistic.

Here’s why: We are at the beginning of another major wave of innovation, which promises to accelerate changes that will enhance the business and personal lives of producers and consumers alike. And in terms of “manufacturing growth online” or “accelerating” such growth, I am focusing on companies, products and services that leverage three dramatically innovative technologies that are forever going to change the we use and interact with content, people, locations and commerce.

That’s my conclusion from my involvement with several emerging internet, online-video, telecom and consumer-technology businesses in Silicon Valley and San Francisco, (and after four years in the southeastern U.S. focused on internet, media and telecommunications issues in the U.S. and globally).

To start at the beginning: In recent posts, I have discussed the importance of saving users’ time, money and delighting customers when it comes to designing winning products.

These are the most important building blocks of great online products. And at the start of the consumer internet, there was an “architectural” reason why the most successful brands (for instance, Yahoo!, EBay, and Amazon, to name just three) became so: They used the basic “building blocks” of the medium — hypertext markup language (HTML) – to usefully link related text documents in a manner that delighted, and saved time, and saved money for their millions of customers.

(To be sure, they also took advantage of the power of the distributed architecture of the internet-protocol (IP) network to ensure point-to-point communications, regardless of the route the digital packets take to reach their destination. But that’s another story, for another time. This post is already “geeky” enough ;-).)

Today, dramatically new ways are emerging to usefully link information and thereby create the building blocks of sustainably successful online businesses.

In my view, the three that are most profoundly meaningful are the social graph, the location graph (a “graph” for places), and the video graph: more about each of them below. Amid evidence that “silos” are emerging that threaten to render these three radically new approaches less effective than they otherwise might be, there is emerging great business opportunity in “mashing up” and merging technologies that take the best of each and drive value from all — or a synthesis of several — of them.

That’s where I am focusing my investment attention and board leadership. Each of the four companies on whose boards I sit (WHERE, Coincident TV, Success Television and MotiveCast) are playing innovative roles in meshing these various silos of user engagement and attention. And they are generating meaningful revenue, engagement and customer growth as a result.

The first of the new methodologies is the “social graph,” or social ecosystem, which is linking many of us through our “friends” and expanded contact lists. Both Facebook and LinkedIn are two companies exploiting the social ecosystem very effectively and with great success. OK, perhaps now it is not so “new,” but it’s worth keeping in mind that 500 million-member Facebook is still less than a decade old, and we are only beginning to see its impact on the social graph.

In the social-graph organizational construct, I know you, and you know me – with the appropriate nod to privacy settings, and familiarity, we share a web of interests, web objects and social “relationships,” and we can benefit from each other’s networks. The net result from a business-process improvement perspective is — among other benefits — dramatically lower customer acquisition and retention costs, as well as dramatically higher-value relationships with your customers (largely because businesses have the potential to know so much more and have such closer relationships with those customers).

There are similar business-acceleration benefits when it comes to the “location graph.” A number of companies are using location awareness to drive customer gratification and revenue generation. Location-based Service (LBS) leaders such as WHERE, Foursquare, Groupon and Gowalla are using location as the key-building block of a new “location-centric” web. Their applications – helping users find valuable local businesses and offers – is providing another organizational theme for distributed information.

At MotiveCast, the team has built a powerful platform for branded advertising in a location-centric, social gaming environment. They recently were selected by PepsiCo as one of the 10 most innovative online companies as a result.

Finally, there is video. Although online video is now a mass phenomenon (and Success TV and before that MyPrimeTime were true pioneers in that), online video in my view remains stuck in a very “1.0” experience.

That’s starting to change. Coincident TV has created a new programming language, along with a software editor and API set, that allows owners of online video to link that video in context to another other distributed objected on the internet.

In just six months after shipping its first product, Coincident TV has developed dramatic performance enhancements for its customers (including MTV,Fox’s GLEE franchise and Audi) in terms of generating more clicks, more Facebook “like”-button adoption and more search.

I’m betting that applications and software that leverage these new ways of “navigating’ across the social, location and video grid (as well as text of course) will deliver tremendous new growth for those companies smart and innovative enough to deploy them in ways that save user’s time, money or delight them in some way.

We are already seeing it at WHERE, CoincidentTV, MotiveCast and Success Television. And my view is we have only just begun.

(Note: This is an expanded version of some remarks I delivered at Landmark Ventures recent conference on Media and Technology in Los Angeles. I want to thank the Landmark folks for giving me an opportunity to assemble these thoughts. Some coverage photos of the event are here.)

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2 Responses to “Creating Sustainable Online Revenue and Profit Growth”

  1. Ivan November 8, 2010 at 2:34 pm #

    Great post Craig. I think a new graph should be considered for inclusion to ypur list, the graph which I think is going to be extremely important next year and has high overlap with the three graphs you mentioned (and may even be a basis to construct those graphs). Taste graph… For example, taste graph can help you understand what places and video people like so you can use it to derive higher level graphs like location and video graphs. The taste graph data is available now, e.g. Facebook has it and is getting it more whenever you click Like button. Other apps can use that data by connecting to Facebook (considering privacy, of course) and now it is finally possible to process large amounts of personal taste data – Big Data processing is as cheap today as it has ever been. Understanding taste graph can lead to more purchases, no wonder Groupon is all about personalization lately… Lets keep an eye on taste graph in 2011 🙂

    • craigforman November 8, 2010 at 4:42 pm #

      Fascinating, Ivan. What I am very interested in right now is the “acceleration” metric that comes from meshing several graphs. You are absolutely right about “tastes,” and it will be very interesting to see if — as you release the next versions of WHERE for instance — engagement momentum builds exponentially as you link such “connective tissue” as taste between the social and location graph. Next year is going to be VERY interesting! Thanks for the note!

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