Selling Shovels Instead of Gold
April 23rd, 2008
Posted by Danny Allen
When I lived in Alaska, the popular wisdom was that in the Gold Rush almost nobody got rich mining for gold, but that people did get rich selling shovels to the miners who were headed into the hills to go prospecting. Similarly, after the oil boom in the 1970â€™s, the richest man in the state didnâ€™t own oil wells, he ownedâ€¦ grocery stores.
What does any of this have to do with advertising? This week, Forrester Research released its â€œGlobal Enterprise Web 2.0 Market Forecast: 2007 to 2013.â€ The report concluded that over half of businesses surveyed by Forrester have Web 2.0 (social networking, mashups, and RSS) on the agenda for 2008.
BizReport concludes that this result means that â€œThe report adds weight to the frequent assertion that Web 2.0 isnâ€™t just a passing fad and is indeed a long term strategy that marketers need to consider.â€ A hundred entrepreneurs are going to conclude that it means that the world needs more social networks. Several more Hispanic social networking sites will spring up.
On closer examination, thatâ€™s not what it means at all. Chances are that the companies surveyed (including BEA Systems, IBM, and Microsoft) did not respond that they are going to set up widgets on Facebook and homepages on MySpace like s
ome Second Life pretender showing up two years late to the party. Itâ€™s a lot more likely that these businesses said that they will incorporate mashups and RSS feeds into their corporate collaboration tools, and possibly create an internal corporate social network among employees, vendors, and customers to facilitate interaction.
Those who are going to benefit from these trends are not the people who rush out and set up another new niche social network. Rather, itâ€™s going to be the people selling shovels to the people rushing into the hills to find the next Facebook gold. Marc Andreeson is a really, really smart guy. Heâ€™s sold two Internet companies for over a billion dollars each. His newest company is Ning, which provides the infrastructure for people who want to launch a social network. They have enabled the creation of 230,000 (thatâ€™s right) social networks and are adding over 1,000 a day.
The point is that although Web 2.0 tools are interesting and likely the future of the Internet, the Forrester report is not evidence that marketers need to rush into using Web 2.0. The Forrester report is evidence that there is a lot of money to be made in the Web 2.0 tools that will be used by all those online prospectors looking for gold.
Here at TM, we preach the gospel of new media almost every day. However, as marketers and advertisers, as we embrace new media we also need to be cautious of differentiating between whatâ€™s new and compelling and whatâ€™s hype. As press releases come out announcing new research reports, take a closer look at what they actually say, rather than what someone thought would make the best headline.