SEOmoz Whiteboard Friday – Ignore the Tail at Your Peril! from Scott Willoughby on Vimeo.

SEOmoz Whiteboard Friday – Ignore the Tail at Your Peril!

In this excellent blog post by 37 signals, “The bar set in our industry is too low“, talks about the idea of offering for free and then “hoping and praying” the company will make money later.  People in the Web industry have touted, “success based upon future results” is not sustainable unless there is a real business model behind it.  Too many times I’ve heard at industry events: We can build a huge audience now and we’ll figure out how to make money later.

The first wave of Facebook apps grew huge audiences but saw their online advertising rates erode due to the fact there wasn’t a lot of intent or enough relevance for advertisers built into the apps being built.  The group of savvy second wave of FB app builders borrowed the model of paid virtual goods, popular in Asia, and have built very solid business models.  In the meantime first generation FB app companies such as Slide and RockYou, who have seen sky high valuations, have seen their growth stall since it became impossible to reach the lofty expectations set.

Another example, FreeConferenceCall.com offers simply to host free conference calls.  We use this service in my line of business every day.  Their website’s FAQ states in response to the question, “What’s the catch?”:  “There is no catch! There are no advertisements to listen to, no quality issues, no hidden fees, no sales pitches, no contracts, no purchases required, no privacy problems, no limitations or restrictions, and no surprises.”  I realize they have the ability to upsell more advanced services such as larger packages or voicemail systems but surely the number of people partaking in the free conference calls dwarf any paying customers.  It seems to me their loss leader has more value than their “for pay” services.

Hope and pray is not a new business model solution.

I did a quick query on Quantcast to see which of these sites have the most amount of traffic:

RT Search Engine          Monthly Users
search.twitter.com               688.3K
friendfeed.com                   202.8K
tweetmeme.com                    202.1K
oneriot.com                       28.7K
scoopler.com            not enough data
topsy.com               not enough data
almost.at               not enough data
dailyrt.com             not enough data
twazzup.com             not enough data
collecta.com              just launched

Google’s Larry Page has stated publicly this is an area they are weak in currently, though I’ve been noticing more and more inclusion of real time search results lately.

“…substituting effort for ability turns out to be a winning formula for underdogs in all walks of life…”

Throw out the conventional.  If you are building a startup you have to be willing to go above and beyond what is conventional and disrupt your competition.

A great read.  Check it out here.

Online advertising is still in its infancy, where the amount of time spent on the Internet is roughly equal to the amount of time spent by the average American watching TV.  However, the amount of money being spent on the Internet is roughly a third of TV.

To bridge the gulf the online advertising spend, the challenge for marketers is to innovate and really bring out what is special and unique about this medium while making it scalable in its reach to touch millions of people who utilize the web.  The company that unlock this potential will be huge.

The industry is still young.  Lots of potential and much opportunity.

For the life of me I still don’t see how Mahalo will scale. Yahoo!’s original directory started off with a team of Surfers (editors) who created and organized and ontology. Yahoo! ended up decommissioning the directory because it didn’t scale. Yahoo! was overwhelmed by the number of submissions.

Fast forward to what eventually became Open Directory Project (aka DMOZ) which eventually amassed over 70,000 editors. The current DMOZ is rife with SPAM, dead links, neglect, and accusations of graft.

Other things such as Social Bookmarking (i.e. Del.icio.us, Reddit, etc) have shown problems as well due to the lack of depth.

Mahalo, to me, is more like Answers.com than a competitor to Google, Yahoo!, & Microsoft’s search engines.

The bottom line is the Internet, growing at an exponential rate, just can’t scale with linear approaches to organize the information. One must employ algorithmic techniques that can scale with the growth of information on the web and understand concepts from a fundamental relationship level.

More on this later…

1. Dell Ideastorm – No doubt part of the effort to revive the fortunes of Dell now that Michael Dell is back at the helm. Makes Dell more open and responsive to consumers. Much better than a canned survey from a market research firm since the suggestions are unedited and can be voted upon. I absolutely love the fact that it requires registration so Dell can continue a dialog with these consumers who obviously care.
2. Yahoo! Suggestions – The Yahoo! Suggestions board is being used to gather feedback for quite a few number Yahoo! properties (15 at launch) from Autos to Real Estate. A pretty good first start. The only wish I have is Yahoo! should really promote this a lot more. A lot of the suggestion boards don’t have a lot of traffic nor enough feedback to form a critical mass.

I know that there are a lot of folks in the blogosphere who decry these efforts as blatant rip-offs of Digg, but I think all of these folks miss the point. As a marketer, the hardest thing to do is to create a vibrant and constructive dialog with the consumer. These “Digg-like” Web 2.0 features merely make customer feedback much more accessible, cost effective, and with the added benefit of sifting out issues that are more important than other due to open voting. Remember, Digg didn’t invent voting nor did it invent ranking. Digg’s great breakthrough was they packaged it in such a way which was brilliantly easy. Besides, Drupal had this feature in their content management system since 2000.It would be great if brand marketers and product managers across different industries embrace harnessing the consumer voice to improve products and customer experience. Imagine if car enthusiasts had this capability to suggest new features and product wishes for their favorite vehicles (Detroit anyone?). Or how about struggling airlines use this capability to markedly improve flight service and give us options for better food on flights. It would be very easy for old line companies to begin offering these capabilities by leveraging open source solutions like Pligg (an open source version of Digg).

Remember, companies exists to fulfill and capitalize on a market demand or consumer desire, what better way than to get this feedback directly from your customer’s mouth?

Update: Peter Cashmore and TechCrunch has a pretty interesting post about this as well.