Archive for the ‘First Take’ Category


First Take: Google+ Gets Features Right –But Offers No Reason to Leave Facebook

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Finally, after many mis-starts and social media product debacles, Google gets their social networking offering down right. The downside is, there’s no reason to call this a “Plus”, it’s just catchup.

Google has learned from failed attempts
Historically, Google has been complacent when it goes to social networking, not having realized how quickly Facebook was going to grow many years ago, innovation in this category was lackluster. Amid several attempts most have failed (see the chronology of failed Google attempts), there is hope with yesterday’s announcement. In previous launches, their efforts were mere copies of Facebook’s (+1 vs Like) or struggled with too much complexity (Wave) and privacy woes (see my additional analysis on Google vs Facebook vs Twitter).

Yet strikes the right balance with Google+
Although I’ve only spent a few hours cruising throughout Google’s latest endeavor, “Google +1″ I found myself strangely comfortable with the feature set. Groups (now called “Circles”), A wall with a cascading microfeed, Chat tools, commenting tools. In particular, great care was taken to craft the “Share” feature which makes it crystal clear on which circle or even in public you’ll share information. In the past, both Google and Facebook have miffed on how information will be shared. Being a late adopter has given Google the advantage here, they’ve had a few mistries, seen where Facebook has fallen, and have put the right features together.

But offers no reason to migrate From Facebook…yet
Yet, despite the familiar balance of features and site structure layout, this looks like a bare bones version of Facebook (minus the excessive ads, applications, yesterday tabs, and confusing user interface). As a result, I don’t see how this differentiates from Facebook. There is one saving grace that could make this tool unique, “Google Sparks” which is a conversation starter around different topics, that could leverage the Google search and media features.While only on the first week, I’ll reserve final judgement, but there isn’t a compelling reason why someone would switch to Google+ after setting up their social connections on Facebook.

The Bottom Line:
When it comes to features, Google is at parity with Facebook, but isn’t compelling for a mass immigration of social behavior. They must quickly integrate Google’s unique products like YouTube, Gmail, Apps, and others to slowly attract users over.

Below is some screenshots, and here’s a link to my public Google+ profile.

Google+ Welcome Page

Screenshot of "Hangout" in Google+ with Joseph Tame @tamegoeswild

FirstTake: Dachis Group Clinches Powered, Threatening Incumbent Consulting Firms

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Acquisition of ‘Powered’ Grows Social Software and Services Footprint in Enterprise Companies. Austin based Dachis Group, who has a war chest from Austin Ventures, has been on a buying spree and has pre-briefed me in their acquisition of Powered, a social and marketing platform with strong social media services, who they recently acquired, including Crayon, Stepchange and Drill Team (read my analysis). To date, Dachis Group has acquired seven firms such as Xplane digital management and change management orginization, the adoption council 2.0, a user community, and many of my former team mates from Forrester’s social computing research group.

Dachis, An Enterprise Contender, Threatens Incumbent Consulting Firms
In this mornings post (coincidentally timed) I released data how social media boutiques, like Dachis, are winning deals against incumbent traditional agencies. Jeff Dachis, former agency maven, has clinched a sizable acquisition investment, and has experience growing digital agencies, such as Razorfish in the first wave. Expect Dachis to compete strongly with incumbent consulting firms. I asked Peter Kim, (former Forrester Colleague) about their vision and he replied their vision is “Holistic point of view stemming from social business design, and how to formulate a strategy, activating them, understanding collaboration and company culture”. The last time we heard this type of chanage management vision was 10-15 years ago with ERP deployments.

Industry Impacts: What You Should Expect
Here’s my industry analyst perspective on what these changes mean:

  • Raises questions about being a platform provider –beyond just services. Dachis purchased Powered, which offers a marketing platform with social business software features and poses. This will pose questions from customers who don’t want to be funneled into a platform owned by a partner, especially if they have their own platforms in place.
  • Strain existing ecosystem partnerships. Likely puts strain on Dachis’s partnership with Jive who offers social business software, and a variety of other software players they’ve aligned with. I’ve not spoken to Jive, so this is my own perspective.  Expect Dachis to claim an agnostic approach, but expect them over time to launch and reform software to spread into enterprises giving them account lock in and then recurring revenues.
  • Threaten incumbent consulting firms. Although outnumbered, Dachis has over 220 employees now globally, and can work with large multi-national firms threatening IBM Global Services (see recent announcement), Deloitte, KPMG, Accenture, and even Forrester’s consulting group.>
  • Scrutinized as a hodge podge of acquisitions without a common vision. Dachis Group had formerly released a confusing framework of social business design, but has since started to crystalize their messaging around social business design.  Yet expect buyers and competitors to point out how Dachis’s acquisitions of seven firms in a short period of time really is only an assorted mixture of companies.

My Take: Strong Move For Dachis Group, Furthering Credibility as a Social Business Firm
Dachis Group made a good move, this gives them them software infrastructure to lay out into brands and then have sticky deals with recurring revenues.  Furthermore, their growing staff gives them ability to take on larger deals where incumbent firms already play. I asked Peter Kim about the terms of the deal, what will happen to the Powered team and software, but he was unable to comment.  To overcome challenges, Dachis Group must prove to the market they are one consolidated offering (not just a mixup of acquisitions), and clearly articulate how they’ll work with other software and service providers in the industry.

Update: Aaron Strout, Powered’s CMO gives his take.

First Take Analysis: Jive Fills Warchest, Ready to Battle Enterprise Software Giants, IPO

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By Industry Analysts, R “Ray” Wang @rwang0 (Enterprise Strategy) and Jeremiah Owyang, @jowyang (Customer Strategy) both founding partners at Altimeter Group

Community Platforms Evolve to Social Business Category
Having tracked the social business category for some years now, and have been watching the category grow, and expand into other niches.  At first, the community platform space (like Jive) was insular, focused on only on enterprise communities, but has now grown into Social CRM, Application Platforms, Social Media Management Systems, Brand Monitoring, corporate email systems and eventually to deliver a customer experience that’s native to the customer. It may be social, it may be mobile, it may take even radical forms in including in store displays.

The Situation – C Round Funding
Jive, who recently raised a $15mm in 2007 has capped off their war chest with a hefty $30mm ‘C round’ for a total of $57.5 million in total.  Why this large amount?  ‘D rounds’ are virtually non-existent out of Sand Hill road, and if they need investment they’ll have to get from a partner corporation.

Altimeter Group SWOT Analysis

Strengths:
Jive has been hailed as a leader in the social software class, (Forrester Wave, and three Gartner Quadrants), and continues to show growth with large clients, claiming sales in the range of “$75,000-$150,000 per customer, closed ten $1 million deals, four of which closed in the last two quarters. While Jive is not yet cash-flow positive, he company has 3,000 customers, 15 million users, and will end the year on a $100 million run-rate” (source).  Their recent acquisition of brand monitoring company FiltrBox demonstrates the pre-cursor of SCRM systems, and have made a variety of strategic partnership including with early-to-market social business consultants Dachis Group.  They’ve recently hired a new CEO, Tony Zingale who is a seasoned leader of Mercury Interactive, where he clinched $1B revenues and lead a $5B acquisition to HP.  Lastly, they’ve shifted HQ from Portland to tech (and VC) centric Palo Alto.

Weaknesses:
They’re undergoing a cultural shift from a hip Portland startup, to becoming a tried and true enterprise player.  With a new CEO (Tony Zingale), and with a new CMO (Kiker has moved on) to take the helm soon, they’ll have to undergo both an internal mindset change as they shift to battle enterprise players.   Also, as Jive takes on larger clients, they risk alienating their small and medium size clients who can’t afford, or can’t scale with Jive’s new value proposition.

Opportunities:
Expect this war chest to be used to bolster the sales and marketing team.  C-rounds often focus on getting the company ready for a “material” event.  Jive will most likely use this time to build out significant partner channels and business development with enterprise clients.  Platform investments should support new partner models that support value added service growth.  Altimeter expects Jive to focus on bookings and immediate recurring revenue in order to maximize value for a “material” event.

Threats:
Key threats come from larger vendors who may suddenly gain a “social” religion, they’re moving from dominating the small pond of community platforms to big and must bolster for a new type of battle in the enterprise application market.  Should an Oracle or SAP decide to enter the market, it may make overtures for an acquisition.  Salesforce.com and RightNow are the biggest CRM threats as they have integrated with key social business constituents and Chatter offers competitive features on an existing footprint of customers. Mainstay social business platform Microsoft Sharepoint can continue to win favor through having a large direct and channel sales force, and new vendors like Broadvision who stem from a traditional eBusiness heritage.  Although they’ve been compared with Lithium in the past, we don’t see them as a direct competitor as both these vendors will develop friction directly with the larger enterprise software players.   Jive’s CEO Tony Zingale has been quoted as diminsihing the incumbents as having Social media “bolt on” features and Jive bloggers are already throwing bombs at CRM vendors.  Yet, expect these incumbents to use their existing enterprise footprints, CIO relationships, and direct and channel sales teams to their advantage.

Altimeter Group’s Take

  • Jive has hit a milestone moment, as this 30mm dowry prepares them to move into a new category, this is an accelerant.  This money will be used for rapid expansion as organic growth will not be enough to achieve velocity that existing enterprise incumbents may already be able to leverage.
  • Jive must partner with more system integrators, enterprise class software vendors, and integration providers to gain a solid foothold with enterprise buyers.  The money is clearly in the enterprise buyer market where existing ERP, CRM budgets can be gleaned.
  • Expect Jive to bolster recurring revenues, and stabilize growth, and prepare for an IPO in 2011 –an achievement we haven’t heard much about here in Silicon Valley for nearly 10 years.

The Bottom Line For Competitors – Don’t Be Last To Play Catchup
Market and solution footprint consolidation will continue around the key components of social business.  Expect market laggards and legacy competitors to work out their build/buy decisions over the next 8 to 12 months.  Most legacy software vendors lack not only the R&D prowess, but also the DNA to successfully launch a social product.  Early consolidators will gain the best deals.  Laggards will be odd man out during the rapid consolidation in the next 18 to 24 months

The Bottom Line For Buyers – Invest In Jive But Keep Them Vested In Your Success
Jive will emerge as one of the winners in providing social business solutions.  The company has the potential to IPO and succeed as an independent provider.   Other competitors will emerge and play catchup over the next 24 months.  However, should an IPO event succeed, the funding will provide Jive with the war chest to go after adjacent competitors and build out its base.  During the journey towards an IPO, customers and prospects must keep the management team focused on investing in successful deployments and outcomes, ensuring they get rapid service and support despite focused on top line growth.


The Altimeter Group is a Research Advisory firm focused on disruptive technologies, located in San Mateo.  We believe in openness, and disclose our clients with their permission, as a result, we hope you’ll trust us more.

First Take Analysis: Facebook’s Crusade of Colonization

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Today marks yet another important era in Facebook’s saga, they are expected to make a big push to extend the Facebook experience to every webpage.

Today, I attended the f8 developer conference hosted by Facebook, they’ve made some key announcements on what they want their developers to do.  While there’s a lot of news sources and bloggers rehashing what was announced, I’d like to go a step deeper and talk about the ecosystem impacts, opportunities and threats, and provide some insights.  Here’s my take:

Matrix: Facebook’s Crusade of Colonization
I just finished watching the keynote, while there’s a lot of folks rehashing news, my goal is to tell you what it means, and the impacts it has.

Announcement What It Is Opportunities Threats What No One Tells You
Graph API An open protocol that’s designed to aggregate all social activities from your friend back to Facebook This makes Facebook a social inbox, regardless of the service: Pandora, Yelp, your corporate site Email providers like Gmail/Buzz, Microsoft Windows Live, Yahoo, and AOL all want to be those destinations, now competing with 500mm users in FB Facebook wants to be the starting point for your world –the new email inbox. If they turn on advanced search tools, this can threaten google.com
Social Plugins: “Like” button Allows website managers to quickly embed ‘like’ feature on website, like other social features. This will aggregate on FB, and is a form of social bookmarks As users go to websites (Like CNN) they can see which one of their real friends like which article. Now your friends are the editors, threatening traditional editorial process. Threat to social bookmarking tools like Delicious All this social aggregated content will yield a powerful database of what you and your friends like, the precursor to customized web experiences and social advertising.
Social Plugins: “Social Bar” A floating bar at the bottom of a webpage embedded by simple code allows for EVERY page to be quickly social. Everywhere you go online your friends can be with you, forever connected Google Side Wiki,Meebo, and Liveworld’s Livebar (unless they both integrate Facebook FB API). Disclosure: Liveworld is a client Now as every page can be social, there is no reason for consumers to make buying mistakes –their friends opinions are always there, diminishing power of marketers.
Docs.com A partnership with Microsoft that allows Microsoft office docs to now be social with your Facebook friend This can extend collaboration with your friends to the office environment Unsure if this use case makes sense, are your friends those you want to collaborate with? This is a direct threat to Google Docs Facebook and Microsoft are in bed, to team up against Google. Expect advertising based on social context to appear soon.
“Presence” Location based data Facebook handed out in every attendees page an RFID tag that allows you to swipe it at kiosks to indicate your locations, see mine. Although experimental expect this to extend to location base applications, eventually tying into credit cards, and mobile devices Location based social networks like Yelp, Gowalla, MyTown, Foursquare and Twitter already allow people to do this –the difference?  Add these chips to physical objects Expect this technology to extend to mobile phones, credit cards, and future consumer products –allowing for unique social interactions.

War Horn Sounded For Developers To Spread Facebook Experience:

  • A Precursor to Social CRM. All of the social data that is now being aggregated to Facebook is the foundation for Social CRM.  As Facebook captures each  ’object’ whether it be a song, restaurant, person, or ‘like’ they are now assigning a Facebook ID (primary key).  This unique identifier will allow every person, object, and piece of media to be trackable and have associated metadata.  In the future, expect these objects to be used by developers to quickly assemble experience in context, right on the fly.
  • Corporate websites can now be social –yet beware the tradeoffs. Corporate websites are plagued with inflexible archaic content management systems. Rather than wait for IT to develop a social roadmap for the corporate website, brands can now embed Facebook social features on corporate sites, serving up interaction and allowing users to find content their friends also like.  Yet beware, by allowing Facebook to be the primary login, this reduces the traditional way of capturing leads and populating your database.  Secondly, by doing this once, you’re setting the promise that Facebook will always be part of our corporate experience.
  • Facebook goes more public, and threatens Google –but users may revolt. Facebook’s roaring growth is a threat to Google and other web portals, and as more developers deploy these hooks, they spread their colonies all over the internet.  Yet Facebook’s core conundrum is they’ve made the promise to their users to keep the experience private and closed. Expect continued scrutiny over privacy as Facebook struggles to go open to compete with Google, dragging along users to be more public every step of the way.   Facebook’s battles are both external as well as internal.


Above: I spoke with WSJ Digits Video Show, you’ll find me just after 6 minutes in, and also shared quotes in LATimes, NYT, SF Chronicle, San Jose Mercury, Computerworld, BBC, MacWorld, Mediapost and others

First Take Analysis: What Twitter’s “Promoted Tweets” Means To The Ecosystem

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The Altimeter Group was pre-briefed by Twitter COO Dick Costolo last week about this upcoming launch, we’ve had some time to think over what it means to the industry.  Help your boss fight through the clutter, send them this post.

Summary: Twitter has launched Promoted Tweets, combining paid and organic media. Brands can now advertise promoted tweets on search pages, however the community has power over which tweets will appear measured by Twitter’s new metric called “resonance” which factors in behaviors like the retweet, at, hash, avatar clicks. Brands can now purchase CPM based ads to promote these popular tweets at the top of a Twitter search term –even in categories they aren’t well known in, influencing awareness.  Marketers beware: unlike traditional advertising or social marketing this is both a combination of earned media and paid media.  For Twitter this experimental move makes sense as it taps into deep pockets of online advertisers without jeapordizing sanctity of the community as users will self select which tweets will resonate and thereby become promoted ads.

How it will work, a likely use case scenario:

  1. Twitter users will continue to interact with each other, and popular tweets will receive a high ‘resonance’ score from Twitter.  Some of these Tweets will be created by brands, and some by the users themselves.
  2. Tweets with heavy resonance can be purchased by advertisers in a CPM basis to appear as the first ‘sponsored’ Tweet on a search term. (Update: Just saw Dick’s recent video suggesting that promoted tweets will appear in other locations beyond search)  The sponsored tweets will be clearly labeled and have a different background color.
  3. These promoted tweets will only stay if users continue to resonate with them, those that don’t will disappear and a different tweet with resonation will appear.

Matrix: What Twitter’s Promoted Tweets Business Model Means to the Ecosystem
This has several implications to the ecosystem as a whole, we’ve broken down the impacts to the various players in this matrix:

Player Direct Impacts What They Will Do What No One Tells You
Twitter Finally gets a business model beyond search deal partnerships with potential to scale.  Taps into deep pockets of online advertisers. Experiment. Expect black and gray hat marketers to try to game this system, in order to obtain resonance. Twitter will constantly tune algorhythm like Google does. Expect this to cascade to their partners and grow into the ecosystem as Twitter aggregates resonation on other 3rd party sites
Twitter Users Have power over which promoted ads will stay visible Initially be shocked by changes, then learn they can help self select tweets that will be promoted.. In the real time resonace world users have a lot more power Power tweeters like celebs and digerati will be targeted by marketers to engage and resonate tweets. Twitter users that retweet tweets may be surprised to see their promoted tweets in search engine results ads.
Social Marketers The conversation is now being monetized, with changes to the outcomes of whats expected of the online conversation and engagement. Educate traditional marketers. These folks will try to increase resonance of tweets by interacting with community. Will build an inventory of top promotable tweets Don’t go overboard, make sure you think of this in the larger context of integrated marketing. Avoid shiny tool syndrome.  Must pay close attention to what terms are resonating with community to build inventory
Direct Marketers and Advertisers Finally traditional advertisers and direct marketers have skin in the social game in a way they know. Flail. Many will try to buy their way in and obtain resonation without asking why a tweet resonates.  Will fight over top searched terms in Twitter, expect a lot of contests to promote tweet engagement. Expect tension between this marketer and the social marketer if education is not completed.
Developers and Agencies A clear goal (resonation) has been put forth, with opportunity to get a cut of the incoming advertising dollars. Developers are waiting with baited breathe for Chirp developers conference this week to see how this will be tied in.  Twitter has indicated that promoted tweets will spread to clients, expect revenue sharing to be offered Don’t buy the first ‘resonation solution’ that comes around, expect half a dozen vendors and agencies to approach brands in the next quarter offering the ability to increase ‘resonance’ and case studies will show increase in resonance.
Competitors and Search Engines A new player being in town a new form of advertising is afoot changing the game. Expect nervous deals to come to the table on how search engine results can factor in Twitter’s resonance.  Expect players like MSFT and Yahoo to quickly launch their version of defining how the social web should be categorized. They will have the advantage of built in ad base of advertisers and millions more users.  Expect existing Twitter partners Google Search and Microsoft Bing will fold this in and reward resonance and combine with page rank, or will create their own metric to reward social engagement

For Resonation, Brands Must Pay Closer Attention To Users –This Isn’t Traditional Spray And Pray. Power continues to be in the hands of the users, however brands that pay attention to why tweets resonate will have a leg up.  here’s how you should approach this new space:

  • Change your mindset, as organic and paid merge: This is a combination of organic and paid ads, you’ll need skills from both worlds to be successful. Direct marketers should educate social marketers, and social marketers should explain how resonation occurs in the conversational web. Remember, this gives top tweets staying power beyond the constant stream of chatter.  In the end, remember that users have power over which advertising inventory will be created, chosen, and allowed to stay as a promoted tweet.
  • Remember Twitter users have power over which promoted Tweets will work: Remember that users they get to choose which tweets can be put into the advertising inventory as their interaction will self select which tweets can become promoted. Secondly, promoted tweets that don’t yield community engagement will also fall off the stream. is that in the real time resonance world users have a lot more power. Brands must analyze what works for users first before promoting tweets.
  • Then, carefully pick tweets to be promoted by analyzing the conversation: First, monitor which tweets are already resonating with your brand, take note of what is causing it to resonate and in what context. Secondly, recognize that these tweets should have long term impact, not a daily special as the tweet is promoted, users will interact with it, forcing it into a viral loop.  For best results, experiment with promoting tweets from your customers –not just those that you create.
  • Recognize that ‘Resonance’ is the page rank of microblogging: Advertising agencies and social marketing agencies will come out of woodwork with “resonance solutions”, yet most will do it wrong.  Instead, look for a sophisticated partner that knows the value of social conversational marketing to create an inventory and the long term experience of an advertising agency. Expect resonation to also cascade to other social networks like Facebook and even community platforms and content management systems to derive what content should surface.  Twitter has made nods to new dashboards to appear, expect your agency partners to align around resonation as the new ROI.

This post is the result of the collaborative efforts of the Altimeter team including Charlene Li (Leadership), Alan Webber (Web User Experience/Government), Michael Gartenberg (Mobile and Devices) and Christine Tran (Customer Strategy Research), learn more about the Altimeter Group. For more news, see Twitter blog, AdAge, we’ve cross posted on the Altimeter blog, and NYT for details.

FirstTake: Facebook PayPal Deal Spurs International Ad Sales

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Web Strategy Summary
Facebook to now offer Paypal as an additional way to buy advertisements and virtual currency for social games (press release).   This paves a way for Facebook to reach global advertisers who prefer PayPal vs traditional credit cards. Although this partnership is limited in parameters to those two specific use cases of ads and virtual currency, this is yet another testing ground for developing Facebook into an eCommerce platform with over 400 million global users.

Update: Facebook contacted me after this post went up, and made it clear, this is announcement is not intended towards eCommerce, and is really just limited to the two use cases. While I understand and agree with the scope of today’s announcement, as brands interject more money into Facebook via advertisements, and on the flip side, users are more comfortable purchasing goods (albeit virtual) this continues to be an opportunity for brands and their members to get comfortable with monetary exchanges. As such, I’ve removed from the title of this post “Testing ground for eCommerce”, although the rest of the post stands.

Background
Facebook has been testing the ability for users to purchase virtual Facebook credits for over a year, allowing users to send virtual goods to each other, as well as purchase additional features in third party social games. Over a dozen of these third party games already exist extending created by playfish, Zynga, CrowdStar, and others.

Industry Impacts:

  • Increased revenues for Facebook –and PayPal. For Facebook, and their new partner PayPal, this deal makes sense, as they can continue to grow scalable, low-touch revenues streams by cultivating international advertising dollars, where there is clear global growth. This spurs international brands to continue to deploy Facebook ads, likely in the SMB space as international companies that are enterprise class would delegate ad buying to their digital agency. Although Facebook touts their advertising program, no official case studies or data has been released by them or third party researchers to my knowledge.
  • Additional channels to monetize heavy game players. For the game heavy , perhaps the 43 year old middle age women with disposable incomes, this gives them new opportunities to play games with increased functionality.
  • More use cases for game creators to test virtual goods, with brand sponsors. Game creators should allow for virtual items to be introduced into their games, and be sure to have a business development opportunity for large brands to participate –and offer branded virtual items in context of a social game.

The big opportunity? Testing ground for ecommerce within Facebook.
Facebook should roll this out to the application developer community to allow ecommerce functionality to the platform, starting with an application from eBay, the owner of PayPal.  Brands should carefully watch how these early test by Facebook occur –and expect by end of year that Facebook will start to experiment with allowing ecommerce happen directly on Facebook Fan Pages. This is, of course, extremely exciting –but could be very terrifying to normal users.

Additional Industry Resources