Summary of Our Series
Chapter 1- The Social Media Business Model every Community Owner Must Understand
If you dont pay for something online, chances are YOU are the product
There’s a famous Internet adage that goes “if you don’t pay for a service, then you are not the user, you are THE THING THAT IS FOR SALE”. Nowhere is this more true than on Facebook groups, LinkedIn communities, and dozens of other notionally free sites, that mask their true advertising intentions behind thinly veiled services. Most people accept the trade off in their personal capacity to keep in touch with family/friends/colleagues/recruiters. But there are inherent risks in doing this if you own a community.
Facebook itself has an uncanny ability that is nearly supernatural to post an Ad to you based on a conversation you and your partner just had that morning. The Internet is filled with stories that swear that you just mentioned something, and voila- you got an ad later that on that …week->day->afternoon->hour…. Whether or not you believe Facebook saying it doesn’t listen to your microphone or other feed, there is no doubt that they are a data company. They specialise in getting you to provide data to them as quickly, easily, and innocently as possible, in order to increase the targeted nature of profile driven advertising. This advertising is how they make their money, and the only reason they can is because they own the data that you have given them to make their money, its in the terms and conditions. They are quite enlightening if you read them fully.
Social Media and Communities
At first it was easy to just onboard simple users, and hang on to stratospheric growth. Back in the early 2000’s growth would come from just opening new accounts for simple core target scenarios. The key to this model was a long term play of free to use, free to connect, and free to some large perceived value. This made it super attractive for a user to just get onto Facebook, Twitter, LinkedIn, or any other social community. Social media investors invested billions to allow social networks to form. They needed hard drives, servers, cloud capacity, people, and eventually moderators, security and lawyers, and other big company stuff. They invested in the original model of free, knowing that advertising would pay them back 100-1000 times over as people uploaded so much data to the networks it would be impractical to switch, and lock in would take hold. People have up to 15 years of memories on Facebook now, its unlikely they will switch now, as the average user has too much data vested in the platform. Back then it was revolutionary that they could tell you someone was married for three years, and their anniversary was coming up, and they were originally from Texas. The wife of a Facebook person, would get an Ad for “Don’t Mess with Texas” mugs and t-shirts three weeks ahead of her husband’s birthday. A hotel Ad for where they got married would appear a month ahead of their anniversary, that was magical in technology of advertising, and was approaching the value of special interest magazines, in advertising mix, and overtaking them. This continues beautifully as long as you keep feeding the platforms data.
Over time people who wanted Facebook, got Facebook, and their new user curves levelled off somewhat, and other platforms (many of which they bought) arrived on the scene catering to different communities or different demographics (Instagram, TicTock, and the like). The battle shifted from just a simple core user with relatively simple (“about me” wall demographics) to ever more highly specific community and group driven profiles which were much more data rich. To compete and evolve ahead of the relevancy curve the social networks needed ever more targeted data. They don’t want a simple 30-50 white male profile to sell Health Cereal to. They want far more targeted data, as the more specific a data point is the greater its value, and the higher the conversion rates and click through rates of ads are. Social Media companies charge for users clicking on ads, not for displaying them. So the way to increase the click through rate, is to get better data and interest targeting. Groups, Communities, and special interests are the best way to get that data.
The Magic of Big Data Advertising
If you want to reach out to a male, 52 year old, with multiple children, who is affluent, who owns a cottage, and a boat, flies ten times a year or more, and sell them a new boat you now can. How will you find this buyer ? Facebook will tell you, and offer to bring you 20 of them who live in a 14.7Mile range of your boat dealership in Minneapolis. Its that accurate. They will even tell you its $1.34 for every click they bring to you, allowing you to cost your acquisition as a seller. Who told them all of that data ? Their users did, with every post, every about page listing, every like on a boat post, every boat group membership join, and every connection. That’s the utopian social network business model- data given for free by the user, was converted to revenue by advertising, based on targetted information the user gave up in return for an experience, a connection, or a service. The more information, the higher the click through rate and the more money they make directly.
Once a social network has your user- its unlikely they will ever want to hand them back to you. You have lost control of the relationship, and they will fight you tooth and nail for that user as its core to their business model. Don’t give them the user to begin with you’ll never get them back.
Thanks for bringing your boat owners community to Facebook, we appreciate you brought us better data on 200 users of your local community. To improve user experience, we will recommend to (y)our users other groups for “relevance”. Why just belong to boat owners in Lake Winnersh ? Why not join the following 10 bigger groups ? Mr User why don’t you join all Michigan owners, all Searay Boat Owners, all Boat Owners for Trump Groups (yes they know your affiliation), and Former Marine Corps Boat Owners group at the same time ? Before you know it, the community you built over the last 10 years of hard work, curation, and relationship is a 4000 person network with people who live in the Australian outback as members.
For community driven and neighbourhood groups this is absolutely fine in most cases. There is nothing wrong with adding more choice and content to your users. But you are now less in charge of a community, and more of a volunteer curator of content. You have lost your opportunity to monetise your relationships, and the tools that are needed for you to be more relevant to your group are now in the hands of the platform. If you need evidence of this, just ask yourself if you are allowed to handle any cash or join the money flow of any FaceBook group ? No – they will cut you into the experience, but never the revenue, or at least not yet.
But like we said above, its not all bad. You needed a quick way for users to collaborate, share content, participate, and provide messaging, bulletin boards, and to connect and engage. As a platform provider Facebook and LinkedIn did that for you brilliantly, they are giving you a service, and aren’t charging. Its a quid pro-quo exchange of value. Social platforms offer real value to you, they give you technology, data, storage, legitimacy, an oversight role (think of political groups and blocks/bans etc), and commonality of trust. In return you hand over your monetisation opportunity, because your passion for the community and its cause, outstripped your toolset, it was just easier to move to a FB group rather, than build a platform to cover your needs. Their recent feature set, adding more group moderation and features, basic video rooms, etc reflect their need to cover your scenarios more completely than in the first wave of adoption so you will continue to hand over your communities, and police them for free.
Another Way ?
Companies like ClubCloud, HiveBrite, Gluup – and Wild Apricot have started to provide platforms for communities that are special purpose built systems for Communities. Rather than simple take it or leave it social network platforms that are ad driven, most scenarios that club owners, alumni associations, community groups, private members clubs, sports, entertainment, and even adult clubs need are packaged nicely into uniform solutions putting their community owners in charge.
The Cloud membership software industry has removed the conflict of interest between the Club and the platform. The software is paid for as a subscription service rather, than have user ownership as the business model. This means the club will always control the relationship between its members and itself, never the platform.
Our job in the industry is to provide the toolset that Club owners need to maintain relevance, content exclusivity, social connection, and business model viability to our customers. We don’t compete with our customers, we don’t need their users to join our platform, they are on YOUR platform. Clubcloud focused on four things common to the industry:
- Social, Connection, and Interactivity – all of the features that you would expect in a social network, under the control of the club owner, with their rules, terms and conditions, and policies, not an outside set of rules.
- E-Commerce Platform and Marketplaces – Clubs need the ability to handle their own membership management, subscriptions and dues, as well as product sales, and community marketplaces all in one place. So we built an ecommerce platform into every ClubCloud so the control is with the Club, and self service is with the member.
- Video at the Center of everything. From clubhouses, groups, people, meeting spaces, virtual spaces and offices. Even up to advanced features like video assisted shopping, reception rooms, and make your own table events; Clubcloud has woven video and remote spaces at the centre of everything with state of the art self service video interactivity, built in for free.
- Integrate everything – Easy to use is the new normal, and every feature, club and use case has to be super simple for various levels of user sophistication. Making tech simple is the key to user loyalty and adoption, and lots of complicated elements need to work seamlessly so that club owners can focus on their communities and not their technologies.