In reading many articles about Facebook's upcoming IPO, I get more convinced of this. It's hard to solve problems for multiple users. Even if there is one problem, depending on what role user plays the problem will be completely different. In spite of this difficulty many internet start-ups are faced with this exact challenge. Provide a value to one set of users and generate revenues from another set of users.
Facebook is a classic example. It started out as a dorm-room project. Without clear model of how to make the business work, Facebook went after building a big user base. Thinking goes that once you have big user base and people spending time on your site, there are many ways to monetize the traffic. Freemium to premium, selling advertisements, charging partners to connect with your site, and sharing the revenue with third party developers who build applications on top of your platform, these are ways that Facebook was exploring as it grew bigger.
But with a few exceptions most of these require solving a different problem for yet another set of users. For example, let's look at providing ads to freemium users.
Users are on Facebook to connect with friends and family. Facebook has been working hard to provide an easy way for users to share information with very little friction. It has been rolling out fixes and enhancements like there won't be any tomorrow, and it has been very successful in creating new ways to consume contents (news feed, subscription, threaded messages, and so on).
When it comes to serving ads, however, it is solving a different user's problem. It is a marketer's problem, not user's problem. Marketers are used to one set of system. They are used to Google Adwords and e-mail marketing system. They like measuring effectiveness of ad campaign. They need to see lots of charts and graphs justifying their cost to higher-ups. Serving ads to users sound like a simple add-on, but in fact it is a completely different product.
In order to get it right, one has to look at target audience that you are going after (persona), and drill down on how the product is going to solve the problem that the target audience has. Having 900 million potential reach is awesome, but that does not automatically make it the killer platform to run ads for marketers. They are looking for all the bells and whistles that they come to expect from other marketing products.
It's a difficult problem to solve. That is why there are so many Facebook ad platforms cropped up a last few years. It's because Facebook is not solving the problem for marketers. But in reality that's how Facebook will make its numbers to maintain its +$100 billion market cap.
Solving a problem for one set of users is hard. Doing it right for two is harder. But that's what most of start-ups have to deal with in today's environment. Think about how your business will make money, and spend a little time thinking about how you are going to prepare for it.
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| Last Feb, Facebook started to cater more to marketers; Facebook has not cracked marketing code yet, however. |
But with a few exceptions most of these require solving a different problem for yet another set of users. For example, let's look at providing ads to freemium users.
Users are on Facebook to connect with friends and family. Facebook has been working hard to provide an easy way for users to share information with very little friction. It has been rolling out fixes and enhancements like there won't be any tomorrow, and it has been very successful in creating new ways to consume contents (news feed, subscription, threaded messages, and so on).
When it comes to serving ads, however, it is solving a different user's problem. It is a marketer's problem, not user's problem. Marketers are used to one set of system. They are used to Google Adwords and e-mail marketing system. They like measuring effectiveness of ad campaign. They need to see lots of charts and graphs justifying their cost to higher-ups. Serving ads to users sound like a simple add-on, but in fact it is a completely different product.
In order to get it right, one has to look at target audience that you are going after (persona), and drill down on how the product is going to solve the problem that the target audience has. Having 900 million potential reach is awesome, but that does not automatically make it the killer platform to run ads for marketers. They are looking for all the bells and whistles that they come to expect from other marketing products.
It's a difficult problem to solve. That is why there are so many Facebook ad platforms cropped up a last few years. It's because Facebook is not solving the problem for marketers. But in reality that's how Facebook will make its numbers to maintain its +$100 billion market cap.
Solving a problem for one set of users is hard. Doing it right for two is harder. But that's what most of start-ups have to deal with in today's environment. Think about how your business will make money, and spend a little time thinking about how you are going to prepare for it.
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