What is Tapjoy?

tapjoy1
Tapjoy is a mobile application that focuses on boosting free apps revenue streams and application user base.  To date, Tapjoy boasts a userbase of over 77 million active users and over 700,000 daily micro transactions (Tapjoy.com, 2013).  It has a global monthly reach of over 339 million users.  In addition, Tapjoy is not restricted to just one mobile platform, they serve iOS (Apple), Android (Google), and WMP (Windows) making it easier for developers to generate user base when they only have apps developed for one of all three platforms (Tapjoy.com, 2013).
How does Tapjoy work?

Tapjoy has four main components that help developers build their revenue stream which I wrote in brief detail below:

Ad Marketplace

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The Ad Marketplace presents a list of targeted marketing actions that users can complete in exchange for virtual rewards or premium content within your app (Tapjoy.com, 2013).  These adds can consist of competing quick surveys or signing up for special offers on websites.  The Tapjoy team has one main vision with the ad marketplace: “Let your users earn virtual rewards or premium content that enables them to engage deeper within your app without being forced to pay” (Tapjoy, 2013).

Featured Ad Unit

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The Tapjoy Featured Ad Unit is a full-screen interstitial advertisement that highlights a single offer from a featured advertiser (Tapjoy.com, 2013). The idea of the featured ad unit is to increase the amount of conversions app developers get by hosting free apps.  It is a practicable way of generating revenue during load times and times where a user is waiting.

Banner Ads

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Tapjoy’s banner ads are the best performing banner ads on mobile, period (Tapjoy, 2013).  Even though it may be the best performing it is by far the most annoying and invasive.  There is nothing worse than trying to watch a video or play a game when 20% of your screen is being covered by an advertisement you have to close.

Tapjoy Videos

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Tapjoy Videos offers hundreds of clips your users can watch from big brand advertisers and popular media companies (Tapjoy, 2013). The one thing about Tapjoy videos compared to the competition is the fact that they are available on every mobile platform and that makes it more lucrative for advertisers as well.

What does the tech industry think of Tapjoy?

Tapjoy is not very well received by most web/technology bloggers and I have to agree with them.  While I believe as a business they are well structured and have a variety of revenue streams, the companies that Tapjoy partners with are questionable to say the least.  Michael Arrington from TechCrunch had this to say about Tapjoy “I can’t wait to see what Tapjoy does next in this ever-escalating arms race. One thing’s for sure – it’ll be very profitable. And very shady,” (Arrington, 2012).  Ryan Tate from Wired went as far as saying “Tapjoy, which was stung by Apple’s prior ban, has apparently just relocated the virtual bribes it was offering users to install apps” (Tate, 2012).  I felt the exact same as Tate regarding the form of bribery, a user downloads an app for free and faces significant disadvantages in terms of progressing within the game unless they sign up for some of Tapjoy’s questionable offers.

One of the reasons why Tapjoy is able to expand and grow like a virus can also be credited to Apple by allowing their apps to be released on the App Store by taking advantage of loopholes. “Apple approves hundreds of apps that integrate and leverage Tapjoy” (Tate, 2012).  Even if Apple bans “incentive-based” installation of apps they must take into consideration that these companies that continue getting approved via workarounds.  Below is an example of how Tapjoy once again avoids Apple’s policies and continues generating revenue:

“Instead of getting developers to integrate its SDK into their games – the act Apple banned – Tapjoy’s just launched a web app that iOS consumers sign up for once on device, and which gives them an offer wall of apps and games they can download if they want to earn virtual currency, just as before” (Jordan, ND).

Final thoughts on Tapjoy

My personal experience with Tapjoy has not been very positive, if the company wants to be successful they need to start reading what bloggers and users have to say.  One example of my interaction with Tapjoy would have to be playing a paid iPhone game and being offered an added bonus if I signed up for an adult dating site.  Why on earth would this be a good idea?  The game is rated for all audiences, so what would have happened if a younger child were presented with the same offer?  Huge conflict of interest and overall a bad impression with me, I wonder how many other users feel the same.  Step it up and clean up your business if you want to succeed Tapjoy, because right now you’re a business that I do not recommend working with.

That’s all for now folks.  Let me know what you think about Tapjoy in the comments below.

Cheers,

Prabh

References:

http://developers.tapjoy.com/boost-your-revenue/#

http://techcrunch.com/2012/11/11/apple-stomps-on-tapjoys-app-download-circle-jerk-again/

http://www.wired.com/business/2012/11/app-bribe-fight/

http://www.pocketgamer.biz/r/PG.Biz/Tapjoy+news/news.asp?c=34747

 

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Hey everyone, new week which means new blog post! Before I get into this week’s blog I wanted to talk about my blog and the future of it.  I have begun to see a trend of my topics and noticed that I mostly focus on mobile marketing and I decided why not continue the trend?  After all, mobile marketing is paired with digital marketing in many ways and it is becoming more and more relevant as firms continue to try and invade the mobile ‘space’.

I had a really great experience happen to me over the weekend.  For those of you that read my blog you may have seen my previous entry about mobile advertising company, Vungle.  Well I decided to try e-mailing the Vungle team my blog link and see if I would get a response.  Not only did I get a response from the Vungle team, I got a response from one of the co-founders, Zain Jaffer.  He told me that he liked my post and stated that I write very well, that ladies and gentlemen, pushed my motivation to blog to another level.  Here I am a lonely blogger that does almost no advertising yet still get a response from an individual in such a high ranking position?  Well that just makes it all worth it.

One thing that I have to add is that content generation is really tough.  I have wanted to start a blog for a long time and I have been trying to think about a topic to blog about and then finally it came to me writing blogs for my digital marketing class.  I really enjoy learning about new companies and letting my friends know about them whether they want to hear about them or not (sorry friends).  Never get discouraged if you don’t have a following, mine is starting to grow slowly but the point is it is growing.  I get a lot of enjoyment out of learning that I have a new follower or that I had X amount of views on my blog in a day.

I hope that my number of followers continues to grow and I will continue to try and deliver content that is informative and interesting.  I apologize if the frequency is not as strict as it should be, but I will do my best to post at least once a week.  My next post should be up by the end of the day and enjoy your day until then.  If you do find my blog interesting, please feel free to share it with your friends or re-tweet my posts as I would appreciate it.

That’s all for now folks

Cheers,

Prabh

Hey everyone,

I hope my fellow KPU students are enjoying their ‘reading days’, I do not have class on Thursday or Friday so it made no difference to me unfortunately.  Anyways, taking MRKT 3311 has made me very interested in advertising and how firms are trying to reach their users.  The other day I was playing a game on my iPhone and because I had the trial version, I was forced to watch 15-second advertisements in order to continue or get more tries.  I thought this was a brilliant marketing tool for both the game developers but also advertising firms.

Imagine a mobile phone user that loves the ability to download and use a variety of apps (especially games like myself) but does not like the idea of purchasing them because even though the prices are usually a $1 each they add up quite fast.  Instead of charging users for the game, they can now offer it for free and advertisers can pay the developers to advertise in-game.  Even if the revenues are minimal (say $0.02 per view) within 50 views they break even without having to charge the user anything at all!

Alright that’s a long enough introduction, let’s look into the company I want to talk about more today, Vungle.

What is Vungle?

Vungle helps mobile application developers promote and monetize their apps through in-app video trailers. (About Us|Vungle.com, 2013). In addition to helping firms get their advertisements into their mobile advertise distribution they also help them create the mobile videos as well (About Us|Vungle.com).  Some of the popular clients of Vungle I have seen so far through my experiences with games that use their advertising platform are: Hotels.com and a variety of mobile games.

How did Vungle go from 0 to hero?

Screen Shot 2013-02-15 at 2.04.22 PMScreen Shot 2013-02-15 at 2.04.38 PM

Vungle was started by co-founders Jack Smith and Zain Jaffer in a small office in London about the size of a closet.  Being located in London their proximity to Silicon Valley posed as a problem in terms of finding principle investors and transforming the idea into a viable business.  That’s when they heard about a business that was founded by an ex-Google employee, AngelPad (Geron, 2012).  They pitched a 15-second video about AngelPad to the founder and he loved it and brought both co-founders on board as employees at the company (Geron, 2012).  Not to make this a history lesson, but they have re-defined the elevator pitch, what individuals normally did in 30 seconds, Smith & Jaffer did in half the time, and that became a big deal when it came to raising funds.

One day Smith was on an elevator at AngelPad and happened to share it with the founder of 500 startups, Dave McClure.  Smith was able to use his 15-second pitch ability to convince McClure to have a sit down meeting with him about him and his partners dream, about making Vungle a reality (Geron, 2012).  Long story short the meeting was set and with the help of their strong promotion skills and passion for the business they were able to receive $2 million in seed money from the following big investors: Google Ventures, AOL Ventures, Crosslink Capital, SV Angel, 500 Startups, SoftTech VC, and angels Maynard Webb, Scott McNealy and Tim Draper (Geron, 2012).  This is just the beginning for Vungle as Smith says “We’re living on Red Bull at the moment, moving at a lightning pace.” (Geron, 2012).

Why is Vungle better than traditional in-app advertisements?

One of the reasons why Vungle is so much better than using the current mobile advertising platforms is because of content delivery.  They are not simply putting up a banner ad that users may or may not read and look at, they are combining content and creativity into one clean cut package.  “App developers are spending all this money on banner advertisements, but obviously it’s quite hard to convey what the app is really about,” (Cheredar, 2012).  They’re also not just displaying ads frame after frame, they refer to their advertisements as ’15-second trailers’ because each advertisement introduces the business/game and then highlights the unique selling points and end with a way to either download the mobile app/game or give details of the website they can view.  In addition, Vungle is expanding their revenue streams by releasing an SDK that will allow any developers to integrate the ad network into their own apps. Basically, this means that any app developer can now make money by showing video trailers for apps during natural pauses within the user experience (Cheredar, 2012).

Is Vungle going to be a hit?

I do not want to sound like a broken record by stating that every business I blog about will be a hit, but when you can easily see Vungle’s competitive advantage vs their competitors it is hard to think they will fail.  I think Vungle is going to set the stage for mobile advertising and that they will be bought out by a larger company within due time.  After all, Google bought Afterburner, Double Click, and AdMob, who is to say they may not purchase this company as well and expand their advertising reach? (Shontell, 2012). Google has also managed to buy at least 25 start ups in 2012 alone and that does not consider the sub companies owned by start ups (Shontell, 2012). In addition, their Google Venture arm also invested in Vungle before launching, time will tell.

I would like to know what my readers think though, do you think Vungle will be a boom or bust, why or why not?

That’s all for this week everyone, I would just like to say thanks to my followers and fellow readers, you are my motivation to continue blogging and I will do my best to bring you original content and teach you about new start ups in the Web 2.0 environment.  Enjoy your weekend!

Cheers,

Prabh

References:

http://www.forbes.com/sites/tomiogeron/2012/06/25/dont-try-this-at-home-how-vungle-broke-in-to-silicon-valley/

http://venturebeat.com/2012/06/19/vungle-sdk/

http://vungle.com/about.html

http://www.businessinsider.com/googles-acquisition-rampage-it-bought-a-new-startup-every-two-weeks-last-year-2012-9

Hey Everyone,

I hope you had a great Super Bowl weekend and I hope you enjoying the new upcoming holiday this Monday, Family day!

I decided to write my blog post this week about a site that my friend passed onto me a few weeks ago, thefancy.com

What is The Fancy?

Fancy is the place to discover, collect and buy from a crowd-curated catalog of amazing goods, wonderful places and great stores. Part store, magazine and wishlist, Fancy is the best place to buy great things (Fancy.com, 2013). In my opinion The Fancy is what I believe an elevated Pinterest page that allows users to purchase items they like or “fancy them” adding them to a wish list in which anyone that views their page can purchase the items for them.  Sarah Keller, from Mashable also believed it’s similiar to Pinterest and said “It’s not that Fancy is ever going to “take on Pinterest,” per se, but it does beg the question of whether there is indeed room for more than one significant social image-cataloging site (Keller, 2012).
One may be skeptical of this concept, but much to my surprise the fancy has a member base of over 2 million active users.  In order to gain some better perspective, Pinterest has over 25 million unique visitors each month and still has not created a viable revenue stream in order to make the business profitable (Jackson, 2012).  In addition to the services listed above they also offer a subscription service called Fancy Box in which goods selected by their style experts are sent directly to your door.
Here is what the vision that founder, Joe Einhorn had in mind when creating this incredible site “What we’re saying is, let’s find out about the coolest stuff in the world through people who have amazing taste, and then we’ll ‘fancy’ it, and, if merchants and brands are seeing demand forming around a place or product that they want to sell, they’ll come to us” (Elliot, 2012).  Although the site is boasting massive user growth, profitability still deems to be an issue.  However, Einhorn believes the new iPhone and mobile apps, along with the ability to do international transactions, are expanding the shopping mall and expanding the profits in doing so (Elliot, 2012).
What’s so cool about The Fancy and what makes it different?
At first one might think it is something similar to other e-commerce shopping sites that sell small gadgets and clothing like JackThreads or BeyondTheRack however those sites are restricted in two forms: they are invite only for new member sign up and sales are restricted to specified time frames.  The Fancy has their style experts pick items from vendors all around the world and showcase them on their site and allow anyone to sign up with no time-sensitive purchasing.  In addition, JackThreads & BeyondTheRack are specifically targeted to their narrow target markets while the The Fancy, although pricey, has some smaller goods priced modestly and have a large selection for their more wealthy clientele. 
I believe their competitive advantage lies in allowing users to make wish lists. For example, say I’m a student and I can’t afford a vintage $300 leather-strapped watch I love on the site so I ‘Fancy it’ and then my friends tell my parents I really want it for my birthday, they can then view the page purchase it and problem solved!
Now the most important part, let’s look at some cool stuff on The Fancy
After wasting countless hours (more than I would like to admit) navigating around this site, I have brought some items of interest to the blog to share with my readers.  Let me start it off with what I believe is one of the coolest bed head boards I have ever seen:
https://i0.wp.com/cf3.thingd.com/default/177389417038613597_bf2eaf5220be.jpg
Ladies and gentlemen allow me to present you with the coolest thing on The Fancy, the Aquarium Bed by Acrylic Tank Manufacturers!  Taking the description directly from The Fancy because I do not believe I could describe it any better myself “Forget about the race car or canopy bed you dreamed about as a child. This custom-made aquarium headboard makes your boring old Serta setup just about the most amazing place you can rest your head at night. And possibly the most distracting” (TheFancy.com, 2013).  Beautiful am I right?  Well it could be yours for the low, low, low introductory price of $65,000 USD!  Okay this might make the site seem like a gimmick and just a joke, but come on, there is some Sultan out there that can afford this and he would not have found it without The Fancy.  
Next let’s move to something slightly more affordable. 
I decided to pick a watch because it serves as a good border for luxury purchase for modest spenders and a modest purchase for luxury spenders.  Although the total cost is $450 it may seem a bit out of reach for the average consumer but the watch itself is a piece of beauty.  It goes above and beyond the standard watches one might see at this price range by not only including a date window but also a day window allowing the one who wears it to be on top of things.  The watch itself is sold from Amazon.com and already has over 13,000 individuals ‘fancy’ing it.  Another thing I like about the pricing here is it is one flat price, the ridiculous watch markups are not shown trying to trick the purchaser into thinking they are getting a deal, it’s one price, take it or leave it.
The final item we will look at is a modestly-priced gadget that can appeal to any customer from any market segment, that and it’s really cool of course.. (I may or may not have Fancy’d each item I am posting here, just saying)
Here we have a ridiculously cool robot lamp.  It’s only $18 and it comes with the Edison-style bulb included!  Although it may not give you the best lighting for late night studying it certainly doubles as a nice desk ornament.   As stated above highlighting this product is just more to give individuals a perspective of what they can see on the fancy and what makes it so great.
Note:  All images are hyperlinked to their respective Fancy pages if my readers would like to Fancy them on their own accounts!
Is The Fancy A HIt?
I just wanted to end the blog off with my opinion of The Fancy and my opinion of the site.  Personally I think it will be a huge hit as it gains wider interest with individuals.  It can not only be looked at as an elevated Pinterest but also an elevated Instagram, because why filter and share photos when these goods are cool enough on their own?  I can see this site continue to gain users and become one of the better e-commerce sites around.  I just hope they do not sell out to a larger company at risk of losing their integrity of being such a great website.   In closing, I definitely fancy The Fancy.  I’d love to hear what my readers think of the site as well as the blog, I will continue to try and deliver interesting content and eventually make this site a blog that people are talking about.  Until next time, that’s all folks!
Prabh
Sources:
http://www.thefancy.com/about
http://www.forbes.com/sites/hannahelliott/2012/06/06/fancy-turns-impulse-shopping-into-an-art/
http://mashable.com/2012/02/23/fancy/
http://www.forbes.com/sites/ericjackson/2012/10/25/why-facebook-needs-to-be-scared-of-pinterest/

Hey everyone,

I recently read an article about how RIM (now Blackberry) was going to make an ad for this year’s Superbowl and I found out they were paying about $3 million for a 30 second segment.  That’s right, $3 million for 30 seconds – $100,000/second!  Now I always knew Superbowl ads were outrageously expensive, but I had no idea they were that expensive.  One would think with the advancements of social media and declining traditional media viewership that advertisements might be getting cheaper.  Well at least I thought that way, but boy was I wrong, in fact CBS sold out of all their ad inventory with prices floating between $3.7 and $3.8 million each (Steinberg, 2013).

Why is there so much hype over advertising during the Superbowl?

The Superbowl has been one of the biggest televised sporting events ever, if not the biggest for a long time.  Last year a record was broken and total viewership passed over 110 million viewers, a figure that in my opinion is absolutely mind blowing (Freeman, 2013).  To imagine that 110 million people watch the same program all over the globe is incredible, keeping in mind some people only watch the big game for the (usually) hilarious commercials.  Alan Middleton from York University in Toronto stated that, “It’s got a status and a presence way beyond just a football game. Advertisers like being associated with that, especially if they’re doing one of two things — either announcing a new product or starting off a major new ad campaign” (Freeman, 2013).

Evolution of Superbowl Advertisements

The Superbowl never started out as being the go-to event for firms to put their advertisements on.  Upon reading an article by The New York Times (NYT), it was actually Apple that is rumoured to have spurred the ad phenomenon. “Most experts trace the phenomenon to 1984, when Apple ran a commercial called “1984” to introduce the Macintosh. The spot, inspired by George Orwell’s “1984,” was a big-budget spectacular, and generated a lot of comment” (NYT, 2013).  Years later, Budweiser saw the success behind the buzz that Apple was able to generate based on their Superbowl commercial and developed their own.  In fact, “Anheuser-Busch paid to be the sole beer advertiser during the game and featured the Bud Bowl in displays in stores and bars and sales of the Budweiser brands rose 17 percent” (NYT, 2013).  Upon further doing research, Budweiser has almost exclusively been the Superbowl Sponsor since the late 1980s.

Who’s advertising this year?

I was originally going to post a list of all the firms advertising in this year’s event until I realized there are 37 different companies advertising.  Anheuser-Busch InBev (parent company of Budweiser) takes this year’s crown by not only sponsoring the Superbowl but also running six commercials over four and a half minutes(Steinberg, 2013).  Based on the figures RIM is paying, that means they are paying a grand total of $27,000,000 and that’s not including sponsorship costs.  Who can argue that traditional media is dead with these figures?  Well not to try and give any big spoilers but some of the big names you should end up seeing are: Samsung, M&M’s Audi, GoDaddy, and Axe.

Quick rundown on the numbers

For my reader that may think these advertisements are a waste of resources, I wanted to just break down the average cost per exposure.  If we continue to look at the price RIM paid for their advertisement ($3 million for 30 seconds) and the amount of estimated viewers (110 million) that means that they are reaching 110 million individuals at a price of about $0.03/exposure.  The cost may be high, but the value they receive from each exposure is unbeatable.  Superbowl provides larger firms the ability to launch a new ad campaign and instill that first impression with users and then motivate them to go onto YouTube and look up the advertisements again and again.  This is one marketing platform that advertisers will continue to use for years to come.

I’m also going to include a YouTube link below to Apple’s 1984 Superbowl advertisement.

That’s all for this week everyone, hope you enjoy reading my blog this week.  Please leave your impressions on the high cost of advertising during the Superbowl in the comments section below.

References:

http://adage.com/article/special-report-super-bowl/buying-super-bowl-2013/238489/

http://www.huffingtonpost.ca/2013/02/01/super-bowl-ads-canada_n_2595399.html

http://topics.nytimes.com/top/reference/timestopics/subjects/s/super_bowl/advertising/index.html

http://www.cbsnews.com/8301-505123_162-42744222/rise-in-super-bowl-ad-prices-threatens-raw-deal-for-advertisers/

http://mdia4015.edublogs.org/2010/08/18/advertising-rules-how-an-apple-ad-made-1984-nothing-like-1984/

http://www.ibtimes.com/super-bowl-2013-how-many-people-will-watch-san-francisco-49ers-vs-baltimore-ravens-1053964

Hey everyone, being the technology news junkie I am, I decided to write a post about the new app developed by extremely popular micro-blogging website, Twitter.  Vine was originally a small video-sharing app that never launched before being acquired by Twitter.  Details on the purchase price are difficult to find.

What is Vine?

Well taking an excerpt from the official Vine blog, Vine is “a new mobile service that lets you create and share beautiful, short looping videos. With Vine, capturing life in motion is fun and easy” (Hoffman, 2013). The looping videos are in the form of a graphics interchange format (GIF) and six seconds in length, which equals about 1/5 the amount of traditional Superbowl commercials. If six second clips are the way of the future, it may revolutionize the need to TiVo past them and just endure them, after all six seconds is about the time it would take to swap through a few television channels.

Superbowl aside

I just wanted to add an aside about Superbowl commercials because I read an article a few days ago that blew my mind.  As many of you know, RIM (maker of the Blackberry) has seen some massive economic downturns in recent years.  However, they are announcing immediate release of their new products in two days, and in order to help them gain exposure they have purchased an ad in the upcoming Superbowl.  I want you to think for a second, how much do you think it would cost for a 30-second Superbowl ad?  I understand the amount of viewers surpasses that of any other televised event, but could you imagine paying $3 million for a 30 second advertisement (Wasserman, 2013)?!  That breaks down to equalling $100,000 a SECOND!  If RIM were able to share a six second clip with the same amount of viewers as the Superbowl gets, would it really be worth advertising there?

Why is Vine important?

vine screenshots2 resized 600

Those of you have read my previous blog about Instagram (thank you!) would have read that Instagram sold for $1 billion to Facebook.  Naturally, Twitter had to react to this by creating the “next big thing” which might just be Vine.   Ryan Sommer from Econsultancy wrote a great article about why vine is so important, let’s review them below:

1. It encourages everyone to get back on Twitter

2. A new viable alternative to Instagram

3. The GIF pitch lets your personality come through (Sommer, 2013).

Twitter success can be attributed to intuitive ways of getting messages across to massive audiences by using an easy-to-use platform.  Vine can have similiar success due to Twitter integration and with both applications working together, the possibilities are endless.  I touched on Instagram above, but one has to wonder, why is it so popular?  I think this correlates directly with Sommer’s third point, Instagram allowed users to express themselves with photographs and Vine will do the same using six-second videos.

Doug Gross from CNN also posted his thoughts on how Vine may change how users interact especially with Twitter.  Below are his six reasons as to the impact Vine may have:

1. Spur creativity
2. Spam up your feed
3. Turn Twitter into Facebook’s video alternative
4. Invite more “Oops” moments
5. Continue the rebirth of “GIFs”
6. Press the competition
(Gross, 2013)

Although I may not agree with all of his points, I can relate on points 1, 3, and 6.  Vine isn’t an app Twitter released to bring back old trends, add more noise to to social networking, nor create whatever he believes “oops” moments are.  Vine was created to take on Instagram and videos by using the hitting two birds with one stone technique.  Many critics believed Twitter wouldn’t last and look at it now, and I believe that the same credits will be wrong with Vine.  Give it time and we’ll see great user content generation as well as the birth of six second advertisements.

Looking at the share potential of Vine

According to statistics website, Statistic Brain, Twitter now have over 500 million users (Twitter Statistics|Statistics Brain, 2012).  If even 10% of these users decide to try out Vine, that means 50 million users actively recording short video clips and sharing them within their networks.  Having deep Twitter integration can therefore help Vine skyrocket into a success story.  In addition, Vine is trying to make sure users can actively use their Facebook login information to use their services, however, it appears Facebook has now blocked access (GigaOM, 2013). If the doors open up to using Facebook logins, the number of active users on Vine can skyrocket exponentially.

Summing it up

Marketing companies that take advantage of this new service can see themselves as “first in” firms that capitalize on the rapid user growth.  If products can be highlighted within the six seconds we could also see larger firms pulling video advertisements out of YouTube and traditional advertisements out of television.  Time will tell, but in my opinion Vine is a hit, and it might be the trigger I need to pull to bring me back into the social media scene.  If any of my readers would like a further explanation about Vine and how it works, I’ve added a video interview below between the Wall Street Journal and AllThingsD detailing it further:

Vine Video Interview

Thanks for taking the time to read my blog, and that’s all for now folks.

Prabh

References:

http://www.vine.co/blog

http://mashable.com/2013/01/25/blackberry-super-bowl-ad/

http://www.statisticbrain.com/twitter-statistics/

http://allthingsd.com/20130124/vine-twitters-new-video-sharing-app-gets-tangled-up-on-launch-day/

http://www.cnn.com/2013/01/25/tech/social-media/twitter-vine/index.html

What is Instagram?

Instagram is a mobile photo sharing application that allows its users to add custom filters to edit and enhance their pictures.  It was founded by co-founders Kevin Systrom & Mike Krieger, both of which are Stanford University graduates.  The application itself was released first onto the Apple App Store October 6th, 2010 with the Android Play Store version being released April 3rd, 2012. (About Us|Instagram, ND).

Is it popular?

Instagram had a snowball effect in terms of user growth, within 2 years of being released, Instagram had over 100 million users.  That figure alone is incredible, I can’t imagine launching a free application and gaining a million users over 2 years, let alone 100 million (Kern, 2013).  Not to mention, Instagram is a free application that did not have a working revenue model, which begs us to wonder, how could the support their massive user base?

Well Instagram ended up raising capital from venture capitalist firms to the tune of $57.5 million throughout the 2 years (Inc.com, ND).

The big buyout

On April 12th, 2012 Instagram was acquired by Facebook for $1 billion in cash/stock options (Price, 2012).  The company only had 12 employees at the time of purchase.  I remember waking up that morning and going on my favourite news sites and reading the headline that Instagram sold for $1 billion and my jaw just dropped. A business that was only 18 months old pulled in that much money?  I couldn’t wrap my mind around how that was even possible.  I guess that really shows us the impact social media has on individuals.  If someone has a good idea and executes it well, then the possibilities are endless.  Looks like I need to go to Stanford and meet some Computer Science majors when I decide to do my MBA.

The debacle

After the big purchase by Facebook, Instagram updated it’s privacy policy that allows Instagram the right to sell user photos.  If users wished to decline the new policy they would have 1 month to delete their account.  This caused a public uproar in the form of a tidal wave, after users found out about the new policy, they took to Twitter and personal blogs to criticize the company and say it was unfair.

Celebrities such as Kim Kardashian swore to deleting her Instagram if the policy did not change, and she has the largest following of 4.7 million users (MThe amount of daily users also dropped by 3.5 million per day due to the new policy (AFP, 2012).  Right away if I was the founders I’d have an emergency meeting to try and brainstorm how we are going to gain these users back.  3.5 million user drop is not worth any amount of money.  I understand advertising revenues are important for a company but at the same time it’s never worth risking losing your user base.

What are they doing now?

Well in response to the backlash, Instagram founders went on record to say they have no intention of selling user photos.  in addition they rolled back their privacy policy to their original policy they had in effect in April 2010.  Co-founder Kevin Systrom also went on record to state “Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.” (Rusli, 2012).  I think it was well-handled and it had a lot stronger effect by Systrom addressing the users rather than the new owner, Mark Zuckerberg.  Systrom admitted that they made a mistake originally and corrected by saying any new policy updates will be crystal clear when explained to consumers.

What can we learn from this?

Even if you have a great idea that can spread like wildfire, the minute you want to change the model from free to revenue-generating, you have to take user feedback into account.  There is a reason why Facebook constantly changes their layout and advertising platforms, they are trying to find a perfect medium as to how to please advertisers while not angering their users.  For any of you fellow MRKT 3311 students that have the “next big idea” never forget about your users, without them your business can crumble.

Thanks for taking the time to read my blog.  Please leave some comments letting me know how you think Instagram handled the privacy policy situation.  Until next time folks, cheers.

Prabh

Sources:

http://tribune.com.pk/story/486159/proposed-privacy-policy-changes-see-instagram-shares-fall-user-exodus/

http://online.wsj.com/article/SB10001424127887323277504578193483190479030.html

http://news.cnet.com/8301-17852_3-57560432-71/kim-kardashian-instagrams-no-1-enemy/

http://mashable.com/2012/04/09/facebook-instagram-buy/

http://www.inc.com/inc-staff/infographic/brief-history-of-instagram-in-user-growth-and-funding.html

http://gigaom.com/2013/01/17/instagram-releases-monthly-active-user-data-says-active-users-are-growing/