Party2.0

Ford 2.0 – Get Your Door Signs Now!

Posted on: March 9, 2009

 I wonder if Henry Ford would have changed his business model if he had launched his car company in the Web 2.0 world.

There seems to be a mindset in social media that if you build it, advertisers will come. We think that advertising is a funding source without limits, as long as you produce the necessary eye ball count.

Using this business model Henry would have provided a new car to everyone who came in and filled out a profile on themselves. He could justify giving the transportation tool away for free because when the cars really catch on, and the volume scales; there will be millions of unique eyeballs watching these things drive around. He would dip into the bottomless pit of advertising dollars for the magnetic door-sign opportunities presented by these rolling billboards. He would tell marketers that all of his users give him great demographic information and he could even geo-target the cars in various communities and by their commuter habits.

Sure it costs a few grand to build a car, but Henry would make that up in no time using advertising revenue– Remember; millions of eyeballs will be exposed to the door-signs!

I had a college professor suggest that “nothing happens until someone sells something”.

That is probably why Henry Ford chose the “build it and sell it” business model rather than ad monetizing. I don’t think Henry would have told the press, “We will get to a business model sometime in the future; right now we are focused on building a solid automobile delivery platform”.

This economic downturn has highlighted the problems associated with an advertiser based business model in social network. As the budgets constrict in corporate America, the marginal networks are fighting for the advertising crumbs. Andrew Chen wrote a great piece on the weak foundation of many social network business models.

Andrew expresses his concern that these models will have trouble attracting growth capital as the advertising revenues go south. He worries about all those that don’t have a true business model or are waiting for the model to present itself. This is especial challenging when there are so many social sites that rely on ads and early-adopters to fuel their engines. Henry would probably be fine until Misters Chrysler, Buick and Toyota joined the door sign monetization band-wagon. Then they would all be heading to Washington for a bail-out!

Lucky for Ford, it launched during the industrial revolution and not the social awakening.

Ari Rosenberg, a media sales consultant shared some insight on the challenges of online advertising; but his concern was the volume of advertising presented on each page.

His conclusions would point to a different problem that Henry Ford would have experienced with is Ford 2.0 business model – Door sign clutter. If Henry’s cars where popular then he might be tempted to plaster on dozens of advertisement, thereby reducing the effectiveness of the system. Ether way, relying on the ad machine to power all networks seems destined for a bad bend in the road.

It seems reasonable to find a way to monetize a network through ether a “Selling-Something” business model, an “Offer-Freemium” business model or a “Subscribe-to-This” business model.

Any of these models have sales-fuel that keeps the economic engines running. The door-sign monetizing plan will not sustain a world of social networks.

But a Selling-Something plan works most every time.

 

 

 

 

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