What is the problem? What are the issues?

The rise of Web 2.0 what should the responses be of traditional community organisers (publishers, professional bodies etc) to the social networking phenomenon? Web 2.0 usage is prevalent across all age
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The rise of Web 2.0 what should the responses be of traditional community organisers (publishers, professional bodies etc) to the social networking phenomenon? Web 2.0 usage is prevalent across all age groups and both sexes (41% of the UK population already use Web 2.0 sites.web 2.0 has already reached critical mass companies must now adopt to the new paradigm Ian Eckert, Internet Director, TSL (Times Supplements Ltd) 35% of online communities studied have less than 100 members ; less than 25% have more than 1,000 members despite the fact that close to 60% of those businesses have spent over $1m on their social community projects Wall Street Journal on Deloitte study of Social Networking phenomenon, July 2008 What is the problem? No category of professional business leader can afford to ignore the social networking phenomenon the concept of online environments where content is partly or even predominantly user generated and the dynamics of community interaction and exchange are the principle drivers of their existence. Publishers are assailed by seminar invitations, conference events and professional media comment on the impact of Web 2.0 on their business models. Most have dipped their toes in the water (in the form of blogs, enhanced readership contributions, rating of products etc) and put the investment down to R&D, or patted themselves on the back for their creativity, whilst privately wondering where and when the ROI will come. Associations, later to the fray and less fleet of foot, are now also being subjected to the same story how a wave of community self-led interaction will undermine their traditional role as mediators and leaders of their community and further erode the value felt by (already declined) memberships. Government also has embraced the e-democratisation explicit in the concept of social communities through it s the Power of Information driven agenda and is encouraging and investing in the building of several communities, and has even issued new guidelines to civil servants to enable (nay to encourage) them to participate freely in blogs and discussions on the web. This short Thought Piece focuses on the complications faced by CEOS and Directors of enterprises over social networking strategies and our governing thoughts on practical responses. What are the issues? The community itself Which community? All communities are different. What are the special characteristics of the community? Does it really correspond in identity and behaviour to your organisation s traditional assumptions? Will it (whatever it might be) embrace your own claim to be its facilitator and enabler? How should you approach engaging with such issues? Why are you doing it? Business models Will an investment in social networking services or enhancements to present services grow my revenues? Or will it deepen the engagement of my membership so that the will perceive we are delivering greater value; or will it enhance the participation of citizens and through its empowerment reduce the burden on the public service? What is our objective? How real is the threat to your business of Web 2.0 alternative services? If it s not yet taking revenue away, is it taking mind and activity share which can subsequently translate into revenue and profit loss? Measurement What on earth constitutes success, unless it is purely monetary? - and few social networking experiments, properly accounted for and outside of the famous few (Amazon, ebay, Facebook, MySpace, LinkedIn etc) can be successfully measured thus. Is it audience measurement, or quality of audience, or nature of the interaction? Are measurements in place and do your sponsoring stakeholders have a clear and mutually agreed idea of what these are? Costs of Ownership Declining costs of technical platform and tolls are a feature both of the huge growth in social networking activity and the nature of the software industry itself. The Deloitte Report referenced above blames overpriced, shiny features as one of the great mistakes in Web 2.0 ventures. But what are the true costs of ownership? Governing thoughts on Practical Implementation The community itself All communities niche and segment online they are able to niche and segment to a far greater degree than in print. Anglers have become trout, salmon and carp fisherman in print; online they are Severn barbel fisherman, West Country trout fisherman, etc. Doctors are already catered for by print specialism (oncologists, paediatricians, GPs etc); online they can be Scottish GPs dealing with rural communities, commissioners in England struggling to implement Government policies, etc. The Web 2.0 myth (?) postulates that natural communities will express themselves if you create an environment which allows them to do so and stimulate them along the way. Such is the quintessence of Web 2.0. But will your stakeholders buy the argument of Build it and they will come or, lately, Build it and we ll see how they react? How might we properly analyse experience to date, to shorten our learning curve, to reduce our risks and enhance our chances of success? Custom research into prospective target groups online behaviour, focus groups and detailed analysis of both their professional and social workflow/thinkflow behaviour can vastly cut down the risks. Cultural factors will differ e.g. lawyers do not easily share their intellectual capital; doctors have a pro bono impulse to do so. So although communities will shape themselves to a certain extent, there is experience to build upon, if not firmly established paradigms to be followed. Forrester have a Social Technographics classification which enables easier classification of online user behaviour; other consultancies including our own have adapted the best of these methodologies to hasten the understanding and the realisation of community publishing benefits. Why are you doing it? Business models The most tortured and vexed question with a new and untested by time publishing and communications paradigm. Why are you doing it? There are likely to be five models of approach: (a) there is a business opportunity here which will create more revenues ; (b)the threat - if we don t these new community organisers will take our lunch ; (c) we will embrace this Web 2.0 stuff as it has the potential to transform our relationship with our customers/members; (d) we have to do something; let s just make sure we don t spend too much money on it (a quote from the Chairman of a major publisher); (e) the enabling approach The business opportunity most social networks which generate revenues (if not profits) derive them from the members paying for services or from transactions. Yes, the mega high volume Facebooks will generate scale advertising revenues, but member pays will be the surest sign of value and stickiness. So it s important to segment the activity and figure out at some point where those value points are. Transactions (auctions, purchase, the trading of very high value and unique content) are a given. Membership participation and other services need to be crafted and thought through. LinkedIn s model already the study of a Harvard Business Review article comes from a careful segmentation of its users and it generated revenues only from 5% of its user base (the Focussed searchers e.g. headhunting firms) rather than the 95% of users who pay nothing. Genes Reunited subscription value is derived from a globally shared but private family tree which is unavailable the moment you unsubscribe. Sermo s $10m of revenue is underpinned by a heavy and sophisticated investment tin a technology platform which rationalises the buzz of doctorly exchange into analysable databases of real value to financial and pharmaceutical analysts. It s back to the three C s making money from Web 2.0 as standalone product comes from Commerce, Content (very premium and need to have) and precise Community benefit. Analysing that niche driver, for which members will pay, is the key. The threat how real are the threats to existing business as opposed to imagined? One recent Web 2.0 study quoted the case of shrunken US company RR Bowker, the once monopolistic bibliographic provider, which licenced its data to Amazon who then got its users to add their comments, reviews and ratings. But Amazon built its business on e-commerce and fantastic service values, with its Web 2.0 components deepening rather than explaining its success and appeal. derives its share (from which it leverages its c 6m of revenues) from the fact that it innovatively first distributed free doctors e mail addresses and services. But has it threatened the trade union role of the BMA or the publishing pre-eminence of the BMJ? Well, probably partially yes to the first and probably no to the second. Though it is early days in Web 2.0. Scores of other examples can be cited in truth it is probably the spectre of new revenue sources going untapped, rather than the threat to existing revenue sources, which feeds the sense of threat. The relationship with customers this must surely be the most sustainable and logical application of Web 2.0 to all organisations. It reflects what the internet and technology has enabled people to do. To find huge amounts of (often quality) information for free, to connect with potentially anyone else on the planet, to deliver their own views, to participate in debate or even just to listen in. Companies which continue haughtily to develop their known product, which through lack of will or investment ignore the potential of the new technologies (and specifically Web 2.0 related tools), or to respond to and learn about their different communities of interest will fail to grow and compete. The profound ripple effects of a company truly embracing customer learning and participation has the potential to transform product development cycles and the very nature of the organisation itself. Perhaps another reason why Web 2.0 is so challenging as all organisations, whether they are publishers or associations, is that they are fundamentally built upon control. We have to do something not necessarily a bad response, in the absence of any other response. Particularly if costs are controlled, no unrealistic revenue expectations are made, and the fruits of the learning are widely shared and embraced by the organisation. Where this approach is taken, we prefer to see it sponsored by the Marketing function, rather than a product silo, as it is in the marketing and customer relationship that the beneficial effects are most likely to be felt. Enabling for Government certainly, perhaps for many non-profit making bodies, this may become a route (though Publishers: look away now!)recognising that Web 2.0 and user/citizen empowerment is likely to grow, the Government has declared that it wishes to close a third of its estimated 2,800 websites. It wishes to automate and simplify its licencing and embed within its output sufficient semantic web and RDF framework to enable its information to be used and mashed up in a variety of private sector and citizen initiated websites. Ultimately surrender of the controlling impulse and push mentality which has driven traditional publishing. Measuring benefits Measurement of benefits and progress will depend on objectives if one has fuzzy sense of expectation, then it is inherently difficult to measure. But stakeholders and operators require some sort of metrics to judge progress, to provide encouragement and incentives. Revenues where they are expected are the traditional metrics; web traffic becoming so for visits and analyses of visits. But qualitative factors also need to be measured and what we will see is the application of more and more sophisticated buzz monitoring techniques to measure the quality of interaction and comment. Nor should the simple but effective ROI equivalence test be neglected X number of questions answered on the community website potentially saved us Y customer enquiry calls, X numbers of new customer leads generated are worth Y to us on a cost per lead basis, the PR value of X number of stories generated via the blogs was Y, etc. Costs of ownership Equally too it is important to be honest about costs. No enterprise ought to be technology-led in its thinking and basic community platforms may be built quite quickly and cheaply. But total costs of ownership are rarely small. A champion on the Board, a manager, community stimulator organisers, platform support, vertical search investment, engagement from colleagues to re-engineer attitudes of mind and processes none of these cumulatively are insubstantial. One community model we know of pays over 500 freelancers to stimulate conversation and interactions. Another professional publisher has one hundred whom it contracts to make three timed postings per day. Not all Web 2.0 activity is the unstimulated stirrings of the community volk!
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