Virtual goods. Real revenue.

My newest startup adventure has seriously cut in to my blogging time lately… which means the 14 MILLION(!!!!!) people who faithfully hang on The Genius’ every word have been left cold, alone, and without even a teeny tiny Genius Snack upon which to nibble. [sigh]

Spanking for you, @viximo!

No, wait—scratch that. There will be no spankings for Viximo. They’d like that too much.

Instead, I will intentionally NOT talk them up to my legions of followers.

I wont mention the fact that they embody the Next Big Business Model or that they’re building the most kick-ass community of Rock Star design talent in the history of the world.

I wont glorify the notion that Viximo’s platform will enable online communities, gaming sites, virtual worlds, and others to generate hundreds of millions of dollars in revenue in the next 12 months alone.

I absolutely will NOT point out that Viximo is enabling major brands and ad agencies to connect with young consumers in an experiential, immersive way that builds brand loyalty, cranks the word-of-mouth engine, and *bonus!* even opens a new revenue stream.

And dammit I will NOT describe the opportunity that Viximo presents to online publishers, retailers, ad agencies, and interactive designers alike as a chance to drink from the udder of The Virtual Goods Cash Cow.

No f**king way.

For those of you scratching your heads, wondering what the f**k a virtual good is, well… I’m sorry, but I refuse to help. It’s not my place to explain that technically, virtual goods are nothing more than a series of 1s and 0s on your computer screen… or that those 1s and 0s collectively represent a $1.5 Billion market—that’s expected to exceed $7 Billion in less than 18 months.

I wont explain that virtual goods provide functional, expressive, and social value—or that they increase social interactions, and hence user engagement and time spent online.

I definitely wont point you to this article which projects that Facebook is expected to rake in $100 Million over the next 12 months—entirely through the sale of virtual gifts and myriad other virtual items (including my personal fav, food and gifts for my Fluff friend, Mar-Mar). Or this one, which celebrates Gaia and IMVU’s success generating $1M/month through the sale of virtual goods “ranging from puppy dogs to lightning bolts”.

I wouldn’t even consider bringing your attention to Second Life’s success with virtual goods ($80M annually), let alone that of our Asian friends like Nexon, which sells more Mini Coopers (virtual ones, of course) than BMW; or Habbo Hotel, which sells more furniture (virtual!) than IKEA.

Last but not least, I won’t bother regaling the efforts of retailers like Kohls, JCPenney, K-Swiss, and Sears, all of whom have celebrated notable success selling branded virtual goods on sites like Zwinky.com, Stardoll.com and others. I mean, really, who would be impressed by numbers like these:

•    2.2 million visits
•    1.8 million items sold
•    97,000 click-throughs to Kohls.com
•    ALL WITHIN THE FIRST 16 days!!!!

Clearly someone’s been drinking the Kool Aide.

But I digress… the reality is, I’m simply waaaaay too busy to spend precious time discussing any of this, and the fact is, it’s Viximo’s fault.

I’m sure they’ll regret this unfortunate [and awfully selfish] little faux pas. But in the meantime, I’m standing by my punishment.

Yes, rather than divulge even a hint of how HUGE Viximo is poised to become, I’ll say only this—they HAVE done ONE thing right: They were smart enough to hire a Bonafide Marketing Genius.

Even if they have been a little bit grabby during these first seven days.

If you’re not showing Mac users some love, you’re an idiot

I’m sorry, but I cannot understand why the vast majority of “Web 2.0 technology” is launched in PC-only format. This is a question I have posed at least a dozen times in the past month as I’ve done the tech-startup “interview circuit” (that’s right—Yours Truly is looking for a job; one worthy of Her Royal Geniusness)… and the answer I get, time after time, is along these lines:

“With PC-users comprising ~80% of the market, we just couldn’t justify the development costs around supporting Macs blah blah blah blah blah blah….”

My follow-up question to this response usually probes about target audience: who are they trying to reach with their slick new technology?

99.9% of the time, the answer I get is: “early adopters” (or some colorful variation on the theme).

This is the moment when my head starts to spin Exorcist-style at the sheer stupidity of this logic.

See if you can follow the logic with me. You (savvy, Web 2.0 tech start-up) wish to reach the following audience:

  • early adopters
  • tech-savvy
  • heavy internet and media/gaming users
  • passionate about gadgets and new technology
  • ahead of the curve in “Web 2.0”
  • influencers; have the potential to become a WOM marketing vehicle for your product
  • not paranoid about online security; willing to download a new app, be a beta-tester, etc.

But… instead of targeting the loyal Mac user (who by the way, fits the above profile smack-on!), you focus your precious dollars & resources on the Bill Gates Black Hole. Instead of herding Purple Cows, you herd… sheep. S-H-E-E-P!!!!!!

For those of you who still feel the Mac World is a low-volume, high-risk path to traverse, allow me to share a few relevant Mac Facts (provided generously by a great example of Mac-loyalty):

  • IT’S ACTUALLY NOT MORE EXPENSIVE TO DEVELOP FOR MACS: On average, the cost to develop and support Windows applications is 50% higher per dollar of revenue than the cost to develop for Macintosh.
    (Software and Information Industry Association)
  • THEY’RE UH, DOING REALLY WELL: $24 Billion dollars in revenue in FY07, having shipped more than 2 million Macs, 10 million iPods, and 1 million iPhones. After the last earning’s announcement, Apple’s stock price climbed to >$184 per share.
  • THERE’S PLENTY O’ OPPORTUNITY: Macintosh software comprises over 18% of all software sold. Macintosh users actually use more applications than Windows users, citing ease of installation of Mac applications as one of the reasons.
    (Software and Information Industry Association)

  • HEY, HERE’S A NOVELTY: IT’S PROFITABLE!: Software developers make higher profits with Mac software than Windows software. Average revenues per unit remain higher overall for Macintosh software than for Windows applications.
    (Reports from PC Data and SIIA)

But perhaps the best illustration of why developing your Killer Ap for Macs instead of PCs first is the recent iPhone phenomenon. People stood in line for HOURS to purchase a $500 first-generation product, simply so they could have bragging rights (and access to a wickedly cool piece of technology, if I do say so myself)… Don’t you wish YOUR product could engender THAT kind of passion?

And that’s just a glimpse of the potential that focusing on the Mac market holds. They may be only 20% of the market, but they’re also the ones most likely to drive 80% of your sales.

So here’s my advice:
Forget developing for the PC. (For now.) Buck convention—develop your Killer App for the Mac first; show them the love and the loyalty. Arm them with a distinction that 99% of your competitors glibly dismiss: the MAC-ONLY edge. Tap into the rich, passionate community of Mac lovers in all of the places they play, online and off.

Screw Bill Gates.

Sure, you might miss the big Sheep Convention. But who wants to hang around sheep anyway?

Search vs. Social Media

First, an apology for yesterday’s rant. I’m not one for apologizing, given that I’m a bonafide genius and all, but… well, I may have been a bit harsh on those poor, inexperienced CEOs who are blindly burning through their investors’ foolish generosity with a cockamamie “all things to all people” marketing strategy.

What was I saying?…

Oh right—I’m very, very sorry I was so hard on you. Fuck Walk it off.

Now, on to one of my favorite heated debates of late: Search vs. Social Media. It seems that every marketer worth her or his salt has placed their eggs in one of these two baskets. Interestingly enough, the split often follows the left brain/right brain phenomenon which divides marketers into the “creative” and the “analytical” categories. But I digress…

Let’s talk data:

According to IDG, traffic coming from organic search has dropped 7% as a percentage of total traffic in the past year (actually April 2006 – April 2007), while direct visits (from bookmarks and type-ins) increased 4%. Even more meaningful is this bit of data: according to IDG’s research, 70% of traffic to web sites does NOT come directly from organic search.

Meanwhile, social networks are driving more traffic than ever to targeted shopping and classified sites (data on this point ranges from 45-85%, depending on the source). Add in the greater sophistication of Web 2.0 tools and a markedly more experienced, savvy pool of users… and you’ve got yourself a juicy opportunity for creating a deeper, more direct relationship with customers—assuming, of course, that you deliver a satisfying (ie personalized, user-friendly, don’t-make-me-think-just-give-me-what-i-want) online experience.

My point? We’re seeing the first marked shift away from search (since Google reinvented the idea of it) and toward the slightly creepy [but certainly more convenient] future of personalized, interconnectedness that social media and Web 3.0 (that’s not a typo) promise. And I’m betting it’s just the beginning.

Should companies stop investing in search? That depends… on the type of business, industry, and audience, as well as on budget, access to search expertise, and competitive environment. A solid organic search program aimed at landing your company page 1 ranking on Google or other major search engines [for those of you who still believe there are any] could take 6-9 months; perhaps 3-6 if you’ve got the talent and expertise in-house. And by the way, page 1 organic search ranking only matters if your product or service correlates to common and [if you’re lucky] inexpensive search terms (meaning people actually KNOW what they’re looking for). Meanwhile, a solid social media campaign can yield measurable results in a matter of days/weeks and typically costs a whole lot less.

Aside from the advantages of speed and savings, there’s a lot more value to social media programs than simply the number of clicks generated or transactions completed online. It’s about connection, loyalty, transparency… big words that tend to scare big brands… yet those who embrace them will undoubtedly trounce their competitors. Denying what’s right in front of you isn’t what I call “strategy”. I’ll quote CK, one of my new favorite marketing bloggers to drive this point home:

“One must modernize (or face irrelevance). In using the British monarchy as a metaphor for social media…find out why it’s important to modernize, and why it’s critical to reach out to your constituents (if you want them to like you) right here.”

It doesn’t take a genius to see the benefits of hedging your SEO/SEM bets with low-cost social media as just one of the many tricks in the bag. Do it right and you’ll build your brand, strengthen direct-navigation traffic, and possibly even put an end to the Search Engine Monopoly once and for all.

Sorry, Google. (Although if you’re hiring… I’ll gladly reconsider this post 🙂