4. (2014)
PEOPLE CONNECTED TO INTERNET
2.97 billion
PEOPLE SHOPPING ONLINE (2013)
2.3 billion
ONLINE SALES ARE WORTH (2013)
£588 billion
growing by 19% every year
7. the Internet!
and digital technology!
have changed !
the (economy) rules
network effect
disruptive digital economy
transformed business models
new criteria for value
8. “When a network effect is present,
the value of a product or service
is dependent on the number of others using it.”
Shapiro & Varian (1999)
Information Rules
network effect
for example!
software distribution and use
social networks
telecommunication
online auctions
1
19. defend itself
“Last Thursday, we planned to use two different hashtags
during a promoted trend – #meetthefarmers and
#mcdstories. While #meetthefarmers was used for the
majority of the day and successful in raising awareness of
the Supplier Stories campaign, #mcdstories did not go as
planned. We quickly pulled #mcdstories and it was
promoted for less than two hours. Within an hour of pulling
#McDStories the number of conversations about it fell off
from a peak of 1600 to a few dozen. It is also important to
keep those numbers in perspective. There were 72,788
mentions of McDonald's overall that day so the traction
of #McDStories was a tiny percentage (2%) of that. With
all social media campaigns, we include contingency plans
should the conversation not go as planned. The ability to
change midstream helped this small blip from becoming
something larger”.*
*McD Comment to Business Insider
22. or employ new social
media manager…
“A British Gas advert for a social media
senior manager, a job that comes with a
salary of up to £60,000, also attracted
attention. The successful candidate, the
advert says, will have a detailed
understanding of Twitter and Facebook
and "implement social media best
practice and innovation”*.
*The Guardian (18/10/13)
23. we have to
rethink
how
messages
reach
consumers?
24. Two-step Communication Model
(adapted from Katz & Lazarfeld, 1955)
brand
marketing mix
elements
brand
messages
influential message
consumer
consumer
consumer
may not be relayed
if counter to norms and values
brand messages and
interpreted meanings
25. brand
marketing mix
elements
brand
messages
influential message
consumer
brand messages and
interpreted meanings
consumer
consumer
may not be relayed
if counter to norms and values
Network Coproduction Model
(adapted from Kozinets, 2010)
direct
influence
interaction
26. Amount sex.com was sold for,
the most expensive
domain name ever
$85 million
32. MONTHLY USERS GLOBALLY (2014)
1.23 billion
17.2% global population
MONTHLY USERS IN UK (2014)
24 million
37.5% UK population
BRAND VALUE (02/2014)
£6.1 billion
56.8% increase from 2013
FOUNDED
2004
REVENUE (BLN $)
(data: Facebook)
8
6
4
2
0
2009 2010 2011 2012 2013
33. FOUNDED
2004
REVENUE (BLN $)
(data: Facebook)
8
6
4
2
0
2009 2010 2011 2012 2013
Product (?)
social network
communication tool
content sharing tool
gaming space
Price (?)
free
advert-based profit
(but you give away your personal data)
Place (?)
virtual, the Internet, web
Promotion (?)
purely based on ‘network effect’
34. digital economy
disrupts !
traditional models
3
with example being!
physical vs digital media industry
“the Patent Wars”
new-wave of corporational acquisitions
long-tail marketplace
36. PHYSICAL vs DIGITAL
ALBUMS SALE IN US
REVENUE IN BILLION U.S. DOLLARS
(data: RIAA)
CD albums
Digital albums
$10b
$5b
$0b
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
37. digital !
era!
losers
games and video rental!
528 stores, 4190 employees!
went completely bust
music & entertainment!
238 stores, 4350 employees!
lost long legal battle against downloads
went bust and nobody wants to buy it now
physical media !
sale tactics
sell CD
sell DVD
rent CD
rent DVD
38. digital media sale tactics
freemium
premium
preview
trial
subscription
digital rental
embedded advertisement
pay-as-you-go
streaming-without-ownership
digital !
era!
winners
40. Number of patent claims
potentially at stake
in each smartphone
250,000
41.
42. Alternative to “the Patent Wars”?
Tesla Motors are opening their patent portfolio
to accelerate adoption of electric cars.*
*http://www.teslamotors.com/blog/all-our-patent-are-belong-you
49. Three forces of emerging !
long tail marketplaces
source: Anderson (2006), p. 57
Democratize production
Long Tail toolmakers/producers
Democratize distribution
Long Tail aggregators
Connect supply and demand
Long Tail filters
50. new criteria!
for value 4
user base first - money later (e.g. )
consumer friendly sales tactics
page views/attention
user demographics
beta versions
crowdsourcing (e.g. )
51. SPEND ON ADVERTISING (2013)
$652.1 mln
SPEND ON ADVERTISING (2013)
$2.5 bln
vs.
PROFIT IN 2013
$35 bln $37 bln
PROFIT IN 2013
52. quick adoption to landscape changes
loss of control (e.g. Twitter hijack)
privacy and data protection
intellectual property chaos
online piracy
challenges
53. (data: Times)
AVERAGE NUMBER OF USERS
PIRATING WORLDWIDE PER DAY
Game of Thrones
Breaking Bad
The Big Bang Theory
Orange is the New Black
True Detective
House of Cards
Masters of Sex
Modern Family
Fargo
Homeland
0 75000 150000 225000 300000
54.
55. One last thing…
Imagine you find a great resource for this course.
!
Write down the names of up to five people on the course
that you'd send it to.
!
Write your name (first and surname) followed by the names !
of these people on a sheet, and hand in please.