Will Digital Space ever be Profitable?
This may sound a little pompous but the fact is that Internet is the most revolutionary medium developed since television in the late 1940s and 50s. So far, Digital Marketers have been struggling to project this channel as an effective channel, but the fact is that its multidimensional adaptability supersedes that of any other medium. I took the plunge into digital marketing believing that Internet will soon gobal up the big fish and replace analogue media sooner than later. But guess little I realized that this business is still in the valuation mode, every second digital product you come across is only vying to acquire more and more users. Without much worrying about, the immediate impact on the business.
Globally you could count the companies in this space who are actually making money! Is the flaw in the business modeling or actually creating offerings which are attractive enough? Are enough marketers trying to understand the gaps and developing this space or the randomness is reining its control?
Technology’s Marketing Flaw!
At this juncture I feel obliged to mention a dicey disconnect between technology and marketing. There is a huge gulf between developing a new marvelous technology and finding a market for the technology. And this is not a new phenomenon, this has existed for years. I read somewhere that when the revolutionary ball point pens where introduced after World War II, one company promoted this product as being able to write underwater. The early pens coasted 10times much as fountain pens, so it was necessary to stress the USP. There was however no research identifying how many people would be really dying to write underwater! And obviously this was long before they discovered Scuba Diving!
The oxymoron was that while ballpoints could write underwater, what early versions lacked was writing under pressurized cabin of the plane. And the day a marketer realized that, ballpoint pens became most ubiquitous products in the universe. This is not one isolated incidence of technologies lack of marketing purposes.
Here is a recent example in 2000; a company by name Digital Convergence introduced a device called the CueCat. This was a small scanner shaped like cat (as opposed to mouse) that was to be connected to PCs. Many publishers like Forbes, obliged printing bar codes on their covers, in order to let the CueCat users to scan bar code and reach the web page on the internet. Digital Convergence and these benevolent publishers distributed over 10million CueCats. Device caught all kind of awareness parameters but met little enthusiasm with its consumers. It was clear that people just didn’t want to read magazines on the web! The business fell within 12 months of its birth, catalyzed by the technology bubble burst in 2000.
Digital Convergence still maintains a web page and urges consumers to hold on to their devices and use them, because one day technology will come back.
I guess proliferation of millions of channels within the Internet space is driving away the sanctity of the medium, though with current economic melt down funding have taken a back space but not for very long. I guess it’s become important for technologist to become technopologists, they not just understand the technology marvel but the interactive behavior of consumers with technology. At the core of every invention/innovation should be an inherent basic consumer need. That’s when a true model for this space will come alive. Time to go for presence in the space needs to be more sanctative.
On a lighter note last evening I met representative of one of the largest General Entertainment Channel (GEC) in India raring to enter the Digital Space. They would be aggregating our very own daily soaps from their channel and stream them on their portal. In hope that there will be millions who will throng this portal and watch summarized soap in the duration of 1-4mins!
Isn’t it time when the Digital fraternity stop inventing and innovating for the sake of valuation? Could we clearly identify the consumer needs and answer them well.
When Indian Railways can identify a clear need gap and make IRCTC offerings a grand success, why not others?
Loading ...
bang on.
The only way to success (online at least) is in being “consumer centric”. Very few current online ventures are trying to identifying & address the gaps. Most beileve in valuation/brand building – wonder how much successful online businesses like “google” etc spent on initial brand building.
I guess the real issue is that very few understand this medium – Till then the hyperbole continues.
Leaves a lot of gaps. I think the writer is jumping to conclusion far too quickly. Superfluous at best.
Hi Mohit,
While I agree to the macroscopic view of very few digital giants making money, but this is no way takes away anything from the internet economy.
It is rare to find investors lining up (even in recession) to give away hundreds of millions of dollars to the likes of Twitter and Hulu despite the fact that both of them have not even started monetizing (and will not monetize for some time to come).
This confidence stems from a belief in the medium to perform in medium to long term. We haven’t seen such confidence of investors in any industry including telecom or broadcasting yet.
I am also appreciative of the intelligence of investors to understand that the fruits are not here in short term, but in long term.
The fact that it’s very easy to start a dotcom business allows a lot of trial and error and below average businesses to get started. To my mind this ease itself is the manure for growth. Small ideas (like Twitter, Google or Facebook) cannot come from board-rooms of giant organisations and consulting companies, rather these get started by enthusiasts who look at a simple idea and start off in a untraditional way.
I guess the marketers of today need to un-learn a lot before they can venture into digital marketing
I am not just hopeful but extremely positive and buoyant about the Digital state of affairs in the world and some part of it gets reflected at my blog: http://www.atomthought.com
Yes,
Why not if 2-3 players can be profitable, the one with sound value proposition for consumer and biz model will definitely succeed.
Actually digital biz is victim of its own, where lot of sprouting and mushrooming of products gave way to selling at CPC, CPL because of tight sales cycles and quick monetization and VC pressure.
No one has actually looked at the fact what is his expenditure per user acquired and what should be selling rate per user. We are just in a rat race to beat the other with lower and lower CPC and CPL. Wonder who is doing this exercise before starting sales of his properties.
-Manav
Every medium is unique and needs to find its own revenue model. Problem is juxtaposing existing paramters and paradigms on a medium which has its own unique strengths…. your own ball-point example.
Seeing everything from a single lens can never be the way forward. interruption driven monies/value or rather advertising dependent solution may not be the solution one seeks. If millions congregate at a point does not mean they should be bombarded with unwanted advertising, there may be other ways to earn.
hi deepak
Bang on!! Actually this medium has been driven by hype more than pure business sense. and another aspect is that while some players are making money, what needs to be observed is what are their costs — it will be a surprise that most of them are deep in the Red.
the problem with multitudes of channels in internet is that all of them follow the same formula which has been beaten to dust by now…………………..
some of the smaller ones tha make money are catering to niches, and servicng the niches make the costs lesser. but cross-market offerings are still in red…………except only one prominent example – the big daddy – google.
Internet Startups need to keep iin-step with needs/wants of markets……..i loved the term “Techonopologists”
hi saurabh,
The Internet as a medium is good, and its for the long run……….thats for sure
And lots of ideas are indeed te manure for a few to succeed.
but on your comment on investors, i will rather reserve my comments on the investors. For example they have invested tons of money in an Indian Social-Networking company ….but whats the USP of that company….whats the new thing…why will consumers latch on to this site.
investors have at times to invest the funds they have raised, as the funds have a time-frame in which money needs to be invested
what deepak is pointing out is true also…..that most of the internet startups are “me too’s” and even if they are not, very very few of them have a consumer-need based model ……hence the need for good techno marketeers…………….and not the typical hyperbole’s that usually internet companies have become
in social networknig, as an example….there has always been a migration fron one fad to another. From early generation SNS to Friendster to Facebook / MySpace ……..and now you hear niche Social Netowkring which is donig better
Hi Prashant and Deepak,
I absolutely agree on the fact that many ‘Indian’ startups are merely replicas or me-too products. I am personally disappointed on this turf myself.
But I get solace when I see startups like Slideshare, who are doing so well and have Indian blood in them
Let me also point out that as Indians we have not done enough in terms of creating infrastructure (remember we have been harping about 50m internet users since the last 5 years, and even till today I am not sure if we have really reached that figure).
Secondly, if you look at content- we don’t have enough depth- we cannot count beyond 3 or 4 portals in most of the categories.
To my mind we have a massive opportunity and challenge to expand infrastructure and invest in content (both of these areas will not give you direct RoI, and one cannot calculate any RoI in short term tjrough these investments anyways)
So while I agree with you absolutely, I also feel the reason why investments are happening is due to an awesome opportunity in content and infrastructure
I have also echoed your thoughts in an article ‘Social Network Platforms’ Strategy in India’ at http://www.atomthought.com.
hi saurabh
atom thought does not have that article any longer
can you pls let me know how to read the full article
regards
Hi Prashant,
There are 2 articles that you may want to refer to:
1.) Stragetgy for Social Networking Platforms: http://www.desicreative.com/?cat=4
2.) Social Media Marketing and RoI: http://www.atomthought.com/dls/SOCIALMEDIAMARKETING.pdf
Please do let me know if there’s still trouble accessing, I will send the same via email attachment
thanks
Digital is in in fact the biggest medium for marketers to convert fence sitters into consumers, because this is where they can expect genuine feedback and suggestions, which is incomparable with any other medium.
What’s important to realize is the method of measuring the impact of digital. If one thinks, this is traditional marketing, wherein people are going to run after freebies and get a buy in… then one dealing in a very superficial world that is short term. The real world of buzz marketers i.e. social media is where people meet, discuss, decide and come back again and again to contemplate their own decisions.
Songita B Verma
Bloggers’ Mind
(www.bloggersmind.com.)