Disruptive Technology and Small Business Valuation
Social Media is Fine But Social Commerce is Where The Money is

What’s the real value of social media to small business?  I’ve been enjoying using social networking for some time. It’s a lot of fun to be up to date with the next big thing.  If I list all the social media bits and pieces I’ve used during the year it totals thirty plus - and some would say I wasn’t even trying!

When I talk about value I know that during this last year some people have made a lot of money.   Twitter is apparently now worth $3.7Bn from $1Bn up from a year ago says the Daily Telegraph and Facebook’s value is up from $10Bn to $46.7Bn (Sharespost)  

Ah yes… I wouldn’t mind a piece of that little windfall.  Nice to be selling a share or two from that pie. 

And yet… writing from the viewpoint of small business valuation, and to lean on the comic words of Monty Python ‘What has Social Media ever done for us?’

I’ve found it hard to find practical examples of small business adding value through social media.  Yet this defies logic - I’m just not finding them.  I think I may have been looking in the wrong place. 

A year ago the phrase ‘Social Commerce’ began to appear more frequently in the media.  A good article here if you want a useful etymology.  Paul Marsden’s Social Commerce Today blog gives a hint of the rate of growth in the use of this phrase. Especially in recent weeks it seems.  When I started letting go of searching for social media value and moved to social commerce value I began to glimpse a few more helpful examples.  

Thinking about it a bit more I did a bit of field research.  Using publicly available information from a prominent coffee chain with 76 outlets in Central London I saw that about 65% of their outlets had a Foursquare checkin during 2010.  Foursquare is a well promoted and popular location based social media tool.   But what struck me given all the noise - was what I felt was a relatively small number of checkins over that period - about 4,500.   Granted, the chain does not have an active Foursquare or social media strategy but I found the slim volumes worrying.

By contrast I remember just before Christmas GrouponUK  (Social Commerce) had a promotion selling tickets on the Heathrow Express, over a few days, for a substantial discount.  Here the number of customers passed the total number of Foursquare checkins for the whole year.   I think what I like most about Groupon is that you can get a feel for the revenue effect of what they are doing.  

The other weekend a cheap hotel deal appeared to gross £76,000 - and a champagne drinks promotion £32,000.  Paying substantial commission to Groupon apparently. 

This is in no way rigorous research - I mean it might well be argued that I should total the number of Foursquare checkins over the same weekend - in fact it’s just a bit of amusement to try and sharpen my thoughts.  

But just doing this exercise helped me differentiate between social media and social commerce - and made me at least realize I’m far more excited by solid revenue results from transactions right now.  

Disaster Risk

During the  ‘Real Time’ Web segment at the recent DLD (Digital_Life_Design) Conference industry pundit Jeff Plover started talking about the speed at which things are changing that he illustrated with some words about the Haiti earthquake.  I revisited this video the other day on the anniversary. 

It was all mixed up with business stuff - but what gave his talk real power was a moving anecdote about his personal involvement in this disaster.  I found it to be four minutes and thirty four seconds of moving commentary about how he made a difference on that day from thousands of miles away. The day started with a tweet of frustration and ended with him on the phone to the Pentagon helping make a difference on the ground.   The story supported his conclusion that “we are living in this world where things are different”.  

Keeping with the ‘disaster theme’ he went on to say that one of the great takeaways from 9/11 was “we need to communicate better”, and of the now well known problems that all of the different responders on that day Fire, Police, FBI, the Civil Authorities – were all on different radio frequencies.  They all wanted to help but that was frustrated by the communications problem.  ”Now” he argued “everyone is on the same frequency” and in this circumstance “great change can happen”.

These are very serious themes:   More communication channels, social media and social commerce can really make a difference.