Tag Archives: data

Alibaba & Big Data Services: Alimama

After doing financial services, insurance, now Alibaba decided to invest in big data services: Alimama is an Alibaba marketing platform. The firm held a meeting to discuss big data’s influence on marketing transformation.

library_logos_alimama_large

Alimama wants to build a technology-driven big data marketing ecosystem, making more people to use and share data therefore achieving media advertising value and brand marketing effect.

The marketing system centered on DMP (Data Management Platform) will improve enterprises’ data usability more effectively. Precision marketing brought by big data would optimize media advertising value continuously.

In 2014, Alimama will focus on developing video and wireless resources, wireless marketing will be integrated into game, weather, food and drink and photo apps without interfering consumers. Alimama becomes a crucial link in Alibaba’s O2O wireless marketing plan.

Sources:

http://www.alimama.com/

Facebook is Getting Users but also New Data

With the deal, Facebook enlarge its user base in countries in many countries and particularly in Brazil and India where Whatsapp is very strong. Owning the messaging service will give Facebook access to additional data.

Facebook Users & New Users from Emerging Markets

Facebook will get more information & data on users in emerging markets thanks to the acquisition: Whatsapp is more popular than Facebook in Brazil, India & Mexico.

With the acquisition, Facebook aims for better engagement with users, in particular in emerging markets. If Facebook succeeds in maintaining and building high user engagement with WhatsApp, it could drive those users to Facebook where they will see ads, potentially targeted with data enriched by WhatsApp use.

Whatsapp Privacy Protection & No Advertising Policy

In a June 2012 blog post, Jan Koum explained why the messaging service doesn’t sell ads. “Your data isn’t even in the picture. We are simply not interested in any of it,” & “Remember, when advertising is involved you the user are the product.”

The privacy policy says the app doesn’t gather names, addresses, emails or location data, and the only contact information obtained from users’ mobile contact lists are contact numbers. The service also purges message content. “The contents of messages that have been delivered by the WhatsApp Service are not copied, kept or archived by WhatsApp in the normal course of business,” states the policy.

For now, WhatsApp promises the service will remain free of advertising. In a February 2014 blog post, the firm reaffirmed its policy: “And you can still count on absolutely no ads interrupting your communication”.

However, WhatsApp’s terms of service in the Android ecosystem requires users to approve access to lots of other types of information including geographic location, contacts stored on the phone, personal profile data from contact information, and device ID. Apple iOS users are asked to approve collection of contacts and allow push notifications such as alerts.

Data in general was not really WhatsApp’s focus but this could change…

Sharing data with Facebook

Facebook’s revenue streams, in part, depends on the massive storehouse of data it harvests on its users around the globe. Therefore, Facebook could decide to alter Whatsapp privacy policy or establish data collection permissions to facilitate sharing of user data with Facebook.

The main piece of data WhatsApp needs to enable its service is a mobile phone number. Facebook can use this piece of data for its services like Facebook and Facebook Messenger. Facebook may be interested in determining degrees of closeness among people. Many people have submitted their mobile phone numbers to Facebook and the firm could connect that information to data from WhatsApp to learn more about which users interact more often with one another based on how frequently they are in contact on WhatsApp.

Conclusion

The price of acquisition of Whatsapp is justified by the will of Facebook to keep the lead in global social network. For sure, Whatsapp has to improve the service to make it more social because the competition is strong. WeChat & Line are successful in Asia. Telegram has been strongly downloaded even more since the purchase of Whatsapp by Facebook. Whatsapp could decide to do money transferring and electronic payment and the app would be competing succesfully with WeChat (微信 in Chinese)

telegram

The coming months should be very interesting.

Internet Strategy: Google and Facebook Collecting Interests

In the same time, Google communicates on its new music service and Facebook communicates on organized rating going further than just liking what friends are sharing.

Facebook doing a step toward e-commerce

facbook-rating-movies

Google covering all the area of worldwide information

Google-Music

The Value is not on accumulating data but in qualifying data

We already explained several times that value creation for an Internet company is in data. In the open world of today, data is money but qualified data is gold.

We explained a year ago that the monetization of Facebook would be by expanding and using the data the firm collects pressing interests and preferences.

Loyalty Management in China – Internet & Luxury Industries

In a crowded marketplace where firms compete for the same customers, it’s become hard to stand out. Consumer definitions of value and loyalty are different according to the location and period. Strategists ask marketers to develop loyalty management building profitable relationships with all customers and a higher attention towards best customers.

Loyalty Management in China is not a mature market contrary to the United States and Europe.

China, the country in the middle of the world, is a potentially lucrative and so far largely untapped resource of consumer data, one of the most valuable commodities in the marketing world.

The market is not very developed but it’s evolving rapidly. First, consumers are testing products and services. Next, a firm should be active to retain the new clients. Loyalty is going to be something that will rapidly become very visible.

Loyalty Management in China – Internet Industry

The strategy of the Internet industry is to take advantage of a high-growth area with a potential huge user base.

Once it has access to a base of consumer data, a company like Tencent, Baidu, Amazon China can use it anonymously to sell analytics about purchasing behaviour to other businesses.

Loyalty Management in China – Luxury Industry

The strategy of the Luxury industry is to establish a footprint before competitors. After developing very quickly in Tiers 1, and Tier 2 cities, luxury brands are running to smaller cities.

In the luxury industry, brand customers who use social networks like WeChat can be targeted for private sales – events that are made for them based on purchasing behaviour. If a customer receives an offer from Hermès for example, and then uses the invitation, that Hermès store pays a commission on sales to Tencent (WeChat owner)  and also covers the special arrangements on the offer, for the privilege of getting that consumer into its store. For this kind of customer, offer another luxury experience like a free glass of Champagne or testing other luxury products are a must.

Conclusion

Data is the new oil. As the Chinese market develops, the data accumulation and analytical insights that you collect can be very useful for your strategy of loyalty management and value creation in the long term.

WeChat: New Version 4.5 Offering Live Chat, Search, & Backup Features!

The new version of WeChat offers improvements on the usage of chat.

1/ 2/ Live Chat & Invite to Group Chat via QR Code.
3/ Search through chat history.
4/ Backup of data: this is now possible and makes easier the transfer of data to a new smartphone.

screenshot-wechat-version-4-5

screenshot-part-2-wechat-version-4-5

American Infrastructure Ready to Compete with China

Today American firms don’t have to compete with China. They are already well implemented all over the world. Even in China, Google Search is used and online retail store, Amazon, is quite successful.

However, in case the American companies should compete with Chinese companies, they are more than ready.  Huge database of users, History of interests, and heavy infrastructure are strong advantages to keep doing well and monetize. We explained how knowledge of interests is a way for Facebook to monetize.

fb-ready

Another competitive advantage of American firms in the near future is the management of carbon emissions. Facebook and Google have energy efficient data centers. Both companies are managing Scope 1, Scope 2, and Scope 3 emissions. It is not the case of Alibaba, Tencent, and Baidu.

Value Creation and Monetization at Facebook

Combined business models, micro-transactions, mobile & tablet commerce and the use of data based on personal interests

Value creation and monetization at Facebook: to succeed, other revenue streams than advertising and app revenue share should be developed now.
For many people, like Google, Facebook became a stop in any Internet session. The firm has developed an engaging experience for users that make them dependent from the social network: almost all their “friends” are there and this volume of contacts is not available elsewhere.

Facebook should look at the successful business models developed in China.

Current data are available for free

Facebook offers its service in exchange for the right to capture and collect a huge volume  of demographic and preference data from its users. That data is extremely valuable to brands. Marketers and advertisers can use the data efficiently because it is detailed and personal.

The social graph is a core asset of Facebook representing people and the connections they have to everything they care about. Today, the social graph, or profile information database, is not used for business with third parties outside the Facebook website: Facebook has restricted its business partners to using the data it provides to approach users exclusively within Facebook website. From the social graph, it is free to find and score similarities in the social data of different groups of people. It is possible to produce a graph of preferences and identify people who share a common brand affinity.

The Graph API presents a simple, consistent view of the social graph uniformly representing objects (like people, photos, events, and pages) and the connections between them (friendships, likes, and tags) (Facebook Inc, 2012). The Graph API enables partners to read and write data to Facebook. Through “Facebook Connect”, the protocol allows businesses to have on their own websites all the features currently found on Facebook such as the “Like” feature, allowing user actions to show up on people’s profiles, publish that action across their friend’s newsfeeds. Facebook is now better implemented building a higher volume of data on how Facebook users interact with sites within and beyond the Facebook walls. The feature called “Facebook Connect” is a win-win situation: the firm gives to the brand access to Facebook users real name, email address, profile picture and list of friends. In exchange, the brand shares the activity of Facebook users on the site of the brand. Both Facebook and its partners can understand better users’ habits across the larger web. Knowing interests of an user is a key piece of information. 

The Open Graph Protocol allows third-parties to access most, if not all, of any Facebook user’s data as long as they are opted into the program through their security settings. We can note that all users were automatically opted into the Open Graph Protocol (Open Graph protocol, 2012).

The volume of participation is a critical component. With the right level of engagement and participation, a social circle may influence another social circle to participate with the external offering, whereas, previously, I mean without a “friend” connection, that level of comfort to engage with an external site may not have existed. Brands have the opportunity to track and offer incentives for people promoting their brand.

Facebook might be able to build a web ecosystem where a user’s needs can be anticipated, understood and personalized for them: it is called semantic web.

Facebook Inc. understood the opportunities of collecting user data on interests much more of what we can believe. Today, Facebook is mainly an advertising platform. The business model of Facebook will change from the advertising model to combined business models (advertising, payment, merchant, and infomediary).

Advertising Model

Facebook sells ad space on its site. Like other Internet firms, Facebook is offering personalization in online advertising with one-to-one advertising. Facebook helps its clients to aim their ads at specific groups of Facebook users, based on elements of its users’ profile data.

Facebook Ad

In the online-advertising ecosystem, the brand or individual is able to collect metrics and analytics. That‘s mean, the brand or individual knows the impact of its campaign. This demand of brands for user data is important for Internet players.

An issue with the advertising model is the impact of the world economy on the business. With the crisis, Google’ revenue was impacted with a light decrease of advertising revenue on the first semester of year 2009. However, the main challenge for Facebook is the behavior of users: advertising on smartphones seems less efficient than on computers. Advertising on tablets shows good results and the growth will come as well from this kind of other connected devices.

Payment model: applications and virtual goods

App Revenue

Facebook takes in a percentage of revenue generated by applications hosted on Facebook through revenue-sharing agreements with developers who created and own the application. Facebook hands over a few categories of public profile data (sex, age, location…) to the app makers, enabling them to personalize the experience of the app’s end users.

Zynga

In 2011, Facebook got 12% of revenue coming from Zynga thanks to a 30% revenue share to Facebook (SECURITIES AND EXCHANGE COMMISSION, 2012). To rely on a unique and main supplier is too dangerous and it is not a strategy.

Micro Transactions & Virtual Goods

The business of micro transactions for virtual goods is booming. When users purchase virtual goods using Facebook payment infrastructure, the firm receive fees that represent a portion of the transaction value. The opportunity for Facebook is not only in social games. Taking the example of Tencent, virtual goods can be used for many other purposes like avatars and other online benefits internally or through other business partners.

According to the report of Strategy Analytics called “Virtual Worlds Market Forecast 2009-2015” (Gilbert, 2009), the worldwide revenue generated from the sale of virtual goods is forecasted to increase to $17 billion by 2015.

Premium Access

Like SinaWeibo, Facebook could charge more for a better and extended experience. The user is able to pay to get additional features.

Facebook currently requires payments integration in games. The firm should seek to extend the use of payments to other types of applications and mobile tools in the near future. The App center will help. Facebook could encourage users to build their own virtual world through virtual goods. Multiplying the number of micro-transactions by giving user the choice to obtain a new and better experience is the right solution. The business model to follow is coming from China: Tencent.

The use of a virtual currency like Facebook credits makes easier micro transactions of real and virtual goods over the Internet. Those credits could be used both within Facebook and on partner websites. The decision to have credits in local currencies should accelerate the use of micro payments over the platform.

Infomediary Model: anonymous social marketing?

Facebook should start charging for access to its user data. User data is potentially highly valuable. Facebook collects a rich set of information from its user profiles. Each profile contains not only the user’s demographic data, but also data about the user interests. Every action adds an additional piece of information: adding a friend, liking a brand, looking at a page or a video…The tastes and buying habits of the users and connections (“friends”) are much better predictors of what the user is likely to buy, than is age, sex, and location data. As a consequence, selling anonymous user data is a good way to make money sharing knowledge of people interests, those people being potential buyers of products.

Application developers could have to share a higher percentage of revenue in order to benefit from user data.

Facebook could decouple its user data from its platform and license it to large web marketers or directly to large marketers like L’Oréal, but in an form with anonymity that contains no personally identifiable information. External marketers and advertisers might be interested by the use the data to target ads or other content to potential customers either online or offline. A marketer from firms such as Procter & Gamble or LVMH, could compare this combination of demographic and preference data, and determine similarities with people who have already bought their products.

The sale of user data is an easy way to quickly monetize assets.

Market insights are another value that could be created by Facebook. With its huge database, the firm can sell specific insights corresponding to the needs of their clients.

Merchant model with e-Commerce Transactions: Facebook can become a key tool in the purchase decision process

Merchant model with e-Commerce Transactions: Facebook can become a key tool in the purchase decision process

e-Commerce is appealing downstream opportunity to leverage the existing platform thanks to the following strengths: a massive logged-in user base; insights into users’ interests; and the network’s ability to enhance “word-of-mouth” effect by users. Facebook should build payment relationships with consumers; and promote the existing billing system.

With the amount of volume of activity and users the firm has, extending a business model with current customers is easier and faster (Zhenga Lindgardt, 2009).

The firm should develop new features in order to become a main source of commerce. An advanced and innovative search function with an option based on interests would be a powerful tool. The company should be able to charge a fee based on a percentage of revenue generated through the platform.

The knowledge of actual tastes and preferences of Facebook users makes the social network very attractive for discovery of products and services, and online purchases. If Facebook changes and improves its mobile strategy, mobile commerce could become beyond year 2020 the first source of revenue. The firm could charge for the store and asks a percentage of each transaction (1%-3% according to the product or service). We can expect Facebook being the link between a brand and a potential customer through her/his history of interests. Douban developed mobile applications based on interests. Facebook is able to do better.

For most users, Facebook is able to personalize better than any other firm the purchasing experience around the data the American firm owns. The process could take into consideration the world and interests of a unique user.

A the time of decision to purchase or not a product or a service, the social connection gives confidence in buying if the perceived value and benefits of the products are recommended by “friends”.

Nobody knows well the future of the firm, even the task is difficult and risky, below is a wise forecast:

Conclusion

To conclude, as explained, Facebook Inc. is likely to generate much more revenue from user data through mobile & tablet commerce, and infomediary in the years to come. Personal data on Interests are the key assets and should be used through mobile applications and search. The profitability of the firm could also increase under the condition the company follows the path of Tencent, one of the world leaders in the business of micro transactions. The business of virtual goods is growing and highly profitable: Facebook should take advantage of this kind of opportunities.

Bibliography

Facebook Inc. (2012, May). Core Concepts – Open Graph – Tutorial. Retrieved May 29, 2012, from Facebook Developers: http://developers.facebook.com/docs/opengraph/tutorial/

Gilbert, B. (2009, June 1). Virtual Worlds Market Forecast 2009-2015. Retrieved January 21, 2011, from Strategy Analytics: http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=4779

Open Graph protocol. (2012, March 22). Open Graph protocol. Retrieved April 12, 2012, from Open Graph protocol: http://ogp.me/

SECURITIES AND EXCHANGE COMMISSION. (2012, February 1). REGISTRATION STATEMENT ON FORM S-1. Retrieved May 27, 2012, from SEC: http://www.sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm

Zhenga Lindgardt, M. R. (2009, December). Business Model Innovation. Retrieved April 23, 2012, from BCG: http://www.bcg.com/documents/file36456.pdf

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