While flying to NYC today I read an interesting article talking about “the three-screen universe” (TV, PC, and cell phone/gaming gizmo/iPod). The basic premise was that we have so much information available to us that it is potentially causing a social breakdown by contributing to ADHD type behavior and actually isolating us from interacting with one another. The more I thought about this I began to apply the meaning of the article to myself. How many times a day do I check my smart phone? 10, 20, 30 times a day??? Knowing me it is probably more like 50-100 times a day. Then I think about all the time I spend gaming (granted the kiddos are asleep) but that time could be spent interacting (No co-oping with your buddy does not count) or sleeping and of course the weekly TV (LOST) and during football season the weekly Oklahoma Sooner game. Then I started thinking about potential disruptive behavior in meetings, laptop open and working during meetings, checking the smart phone 15 times during the meeting, etc… you know you do it or have done it at one point in time. The whole point is to just say every once in a while before you go to pick up that controller or smart phone/ipod/blackberry think about doing a little something for society and interact (positively) with your environment and don’t feed the e-mail monster. It will still be hungry in the morning.
Changes have been in the works over the past few years, dramatic changes and challenges are beginning to have an effect on traditional business. You look at software as a service (SaaS), service oriented architecture, and especially Web 2.0 and how organizations are trying to define new strategies. From my perspective, I focus a lot of time around discussing Web 2.0 and the value to traditional business.
Some of the common questions that are raised are: how do I calculate ROI around community? What are the contributing factors? How do I know that it is truly beneficial for me to have a community vs. not having one? The most common mistake when calculating ROI around community is to focus solely on the activity of the community. Things like unique visitors, page views, session time, community click throughs, read-to-post ratios, are all very useful in defining the health of a community, but they alone do not translate into a tangible business value that you can hang your hat on. When reviewing ROI you have to look at economic indicators such as the incremental value of the community and conversion rates.
Incremental Value is the difference between the value created by a business with an online community and the estimated value that the business would generate in the absence of community. There are a few guidelines that serve as baseline factors when calculating ROI. Research shows that Community members make up only 5% of the overall customer base, but this group accounts for 30% of the purchases and average transaction size is twice as large for community members as for non-community members. One of the biggest factors in calculating Incremental value is the referral factor. Community members are twice as likely to refer others to the site and the retention rates are 50% longer for community members than for non-community members.
With that in mind I began the process of creating a formula that took into consideration variables such as Advertising Dollars, Potential Market, Current Market Over Time and Direct and Indirect Growth to both Community and Non-community Members as well as accounting for retention and Word of Mouth. The end result is the following:
(A+(Nt/M) (b)) (M-Nt) = Community Member
(A’+(Nt‘/M’) (b’)) (M’-Nt‘) = Non-Community Member
Here are the variables
A= Advertising Dollars
Nt=Current Market over time
b= Direct Growth + Indirect Growth (CMs)
b’= Direct Growth + Indirect Growth (NCM)
r = Retention = 10% or .1
w= Word of Mouth Referral = 5% or .05
c= Content = 5% or .05
b = referral + 2(.005) = r + 0.0115
b’ = referral + (.005) = r + 0.01/2
So with this in mind you can look at this practical example:
10,000/1,000,000 (b) (1,000,000 – 10,000)
b=.1 + 2(.05) + .05 = .25 b= r + 2w + c
b’= .1/2 + .05 = .1 b’ = r/2 + w
CM (10K, 1,000K) = (.25)(99,000) + 10,000 = 34,750
NCM (10K, 1,000K) = .1(99,000) + 10,000 = 19,900
Thus based on the criteria referenced above, having a community will yield a 74% increase over time as compared to not having a community based on the sample size.
In future posts I will look at another example of ROI calculation based on the average value of a Non-Community Member compared to the value of a Community Member. This will focus on monetizing the community and assumes a product based community. This requires an understanding of the average transaction per customer, total customers (projected or actual), potential market and the current conversion rates of the product. I will also review how Subject Matter Experts and Word of Mouth is calculated to come up with the 5% referenced above.
Viral Marketing is now one of the most powerful ways to market online. The key to viral success comes down to interruption vs. invitation. Traditional media such as television has the potential to reach hundreds of millions but the message may not resonate or be clearly discerned by the prospective target audience due to the “noise” and passive positioning associated with this type of delivery. The beauty of viral messaging is that it has a much better chance to get the users attention as the message is either coming from a trusted source, a recommendation, or meets the search criteria defined by the user. Also, this type of message is available on-demand which gives the user ultimate control over when and where consumption occurs.
One viral aspect that is getting a lot of attention is online video. If you are reading this you have more than likely viewed a user created video on YouTube or some other site and you are not alone. Online video is beginning to garner more attention from average viewers with 4% of people over the age of 18 watching videos daily and another 14% watching at least once a week. Research shows more organizations will be shifting marketing dollars to producing and positioning online videos. The reason for the shift is that video ads show a propensity to generate higher ad interaction and longer ad viewing (2/3 of the way through on average) this in turn leads to higher click-through rates.
So as an organization you may be thinking about focusing on online video or maybe you are looking to tie into user generated content and incorporate your advertising. If so, you need to focus on a few key factors. As with any type of marketing activity consistency is the key. Ensure that you are intrinsically linked to your brand, your video should require online interactivity and it needs to have synergy with offline marketing material. The other key factor revolves around the concept of Social Media Optimization or SMO.
SMO is the process of optimizing your online media presence by becoming more visible through searches within online communities and community web sites. The concept of SMO is to increase the chances of your video being distributed more widely through community search engines. This is very important as this is the key driver for this type of viral strategy.
As you consider your viral strategy it may become clear that you need a solid community presence associated with your brand. This is where branded community offerings can be applicable. Integrated platform (Blogs, Forums, File, Photo Galleries, Video & Podcast support, RSS) that streamline the positioning of an online community. Let me know if we can assist you with your community or viral marketing needs. We would be more than happy to assist. Feel free to contact me with questions at email@example.com
It is official… Adrian Peterson is now a member of the Minnesota Vikings. Peterson was built for the NFL and should do very well, especially with the Minnesota O-line. I will be taking my son to the Minnesota vs. Cowboys game in October.
Draft time is one of my favorite times of year, I liken it to Christmas… I love the overcoverage of the event and the ebb and flow of the picks, especially when something happens that is unexpected… like a certain Notre Dame quarterback falling to the 22nd pick.
Speaking of the draft it was great to see the Madden08 commercials. It is a great feeling to know that you had a part in contributing to something that you are passionate about. Community Server powers the blogs of the Madden08 site as well as the forums for the Dallas Cowboys, Chicago Bears, Cincinnati Bengals, Houston Texans, and the NY Giants
I can’t wait for football to start!!!
It took 7 months but I finally broke through the 10,000 point barrier (Xbox 360 achievement points). Let the celebration begin, okay on to 20,000! In another update to the never ending hockey series, Rob and I once again dropped 2 to the Scott Dockendorf and Kevin Cunningham combo (yesterday). Back to the drawing board.
I am really looking forward to the NFL draft tomorrow! For those of you that don’t know I am a big OU Sooner fan. I can’t wait to see where Adrian Peterson ends up, I just hope that the Bills don’t trade up (Eric Smith’s team). As that would mean I would have to root for Eric’s team and that just can’t happen.
Also, Telligent will play a part in the NFL draft tomorrow. When EA announces the cover athlete to Madden08, the blog portion of the Madden08 site will be powered by Community Server via an iframe!!! Great stuff!!!
Alright, I have finally broken the 1000 pt barrier on a game. Thanks to EA’s Fight Night 3 (Great game btw) and 5 nights of gaming and a very understanding wife (love you babe). In the latest news Rob Howard had a big collision during a pick up game of hockey yesterday… don’t worry Rob, scars are cool :). In other updates the never ending series with Scott Dockendorf and Kevin Cunningham took a turn for the worse after directly calling them out in a previous post, we dropped the best of three series 2-1. We will see who is feeling it today.
Being an avid gamer, I have a tendency to focus on vertical markets that I enjoy personally, so we have made significant traction in the gaming industry. From our relationship with the Xbox team, Community Server powers the Xbox forums, Major Nelson‘s blog, Gamerscoreblog, and the new Forza Community. We are doing some very cool work with Electronic Arts that will become public very soon, but one of the sites rhymes with “aladdin” hmmm. Also, we just rolled out a great new site for Ensemble Studios. The new Age of Empire III forums which are powered by Community Server. The real reason we do it is for the free games :P
One of the great things about Telligent is that we work hard, but we also play hard. At any given time you will either see a heated game of ping pong, scooter races, WoW card games, (I call it adult pokemon others call it geek poker) numerous circular objects making there way towards someone’s head, nerf guns of various shapes and sizes or the all out competition of direct gaming, I am talking head to head, no holds barred Xbox 360 and PC gaming at it’s best. The game of choice for us Xbox guys is NHL 2K7, why? it is fast paced, takes about 15 mins for a game, and you can absolutely school your buddy when they go for the big hit. Scott D, you know who I am talking about :). At any given point in time you can catch me and Rob Howard taking on Scott Dockendorf and Kevin Cunningham in what seems to be a never ending series of games. There have been swings from one side to the other, but I do think that Rob and I hold the all time series lead in this one :). We will have to find out who has the hot hand tomorrow.
Outside of the office there are about 20 or so Telligenti, yes that is what we call ourselves, who are Xbox 360 gamers. We like to co-op or just try to see who can build up the most achievement points between us, FWIW, I am leading the way with 9000+ points.
We also have what is affectionately known as frag night the first Tuesday of every month, it is our time to order pizza, and get our gaming on. We do need to look into getting an air hockey table or one of the old school hockey games with the guys that spin around. That would be a great addition!
One of the more frequent questions I get is why Telligent? I joined the Telligent team about a year and half ago. Previously I was a co-founder of a Professional Services firm that focuses on custom application development and works extensively with Microsoft. I was the VP of Sales & Marketing, a member of the Board of Directors and had equity in the organization. So why leave for Telligent? Two words, Vision and Collaboration. When I met with Rob Howard, Jason Alexander, Scott Dockendorf and remotely with Scott Watermasysk one thing became very clear, this was a team that has the vision and domain knowledge to do something truly unique.
When you first meet Rob Howard one of the first things you will notice is the passion that he has for Telligent and Community Server. If you ever happen to catch him at a conference, or via webex demonstrating Community Server you will immediately recognize that Rob truly is a thought leader in terms of understanding the application of business intelligence, specifically around collaborative software and online community. More than that though, Rob understands the concept of the blue ocean. Mainly, don’t compete over minor scraps in the red ocean of over saturated products and competition, look for the blue ocean and ensure that the focus of the organization is to build something that provides value but may not be completely mainstream just yet. This is where the collaboration reference comes into play.
One of the big shifts over the past few years is the emergence of Web 2.0. Web 2.0 focuses on collaboration. From an organizational standpoint this trend is really gaining traction with traditional businesses. The move from traditional marketing to a more viral approach has accelerated the emergence of strategy aimed at bottom up marketing, whereas the end consumer either B2B or B2C has direct impact on the direction of marketing strategy for an organization. This was very key for me as it provided an opportunity to guide the marketing direction of a product that was still in the early adopter phase of the product lifecycle. The ability to ride the wave of collaboration combined with the vision and drive of the Telligent team were an easy sell for me. Over the past year we have made significant penetration into a number of great accounts, Disney, Conde Nast, MSNBC, Intel, Dell and Electronic Arts to name a few. What is really exciting is that enterprise level organizations are truly just scratching the surface of what is possible in terms of Web 2.0 marketing strategy and software solutions. This means that Telligent and Community Server will continue to be in very high demand.
This year has already started with a bang and with the release of Community Server 2007 which is the best Community Server release to date it just keeps getting better. The roadmap is defined and we are looking to do some very special things in upcoming releases. Look for the announcement of some very large initiatives that are in the works and will be launching later this year, one is just mind boggling and definitely affirm that Community Server can scale to meet the needs of almost any organization.
Hello and Welcome to the Black Fin Blog. I am Tom Edwards, VP, Sales & Marketing at Telligent Systems. The purpose of this blog is to provide additional insight into Telligent and Community Server as well as provide my perspective on sales & marketing. So why the Black Fin? It is a newly acquired nickname given to me by one my co-workers. He thought it would be funny to name my hair, so it stuck. Yes I choose to go with a more aerodynamic approach, but hey it can cut through water like nothing else. Anyway, I will try to keep it light and interesting moving forward.
I am an avid gamer (Xbox 360 is my platform of choice) gamertag – TheBlackFin. Look me up on either the http://www.360voice.com/ or anytime you are on Xbox live. I am always up to co-op on the latest game.