The Missing Link

Anyone with even a cursory interest in the stock market has already heard of the remarkable first-day IPO performance of LinkedIn -- up a startling 109%. Not surprisingly, some pundits and analysts are suggesting this to be a wild over-valuation of the company, with others talking about a new tech bubble forming.

Is LinkedIn over-valued? I'm not going to opine on what its stock price should be, but I will say that I've been a LinkedIn fan since 2004 when Reid Hoffman, LinkedIn's co-founder, spoke at our DataContent Conference. What fascinates me most about LinkedIn is that it has found over $240 million in annual revenues just from the most obvious ways to monetize its data content: contextual advertising, recruiter and executive database subscriptions and a next generation job board.

The less obvious opportunity? Think master data. Do you know anyone who's not listed in LinkedIn? And if someone is not listed, do you find yourself thinking it to be somewhere between odd and suspicious? Further, have you noticed that most people seem to find value in keeping their LinkedIn listings reasonably current, and that a LinkedIn profile with lots of connections is very difficult to fake? Exactly! All the elements for a trusted, central database of business professionals. Think about it. Why circulate your resume if you can send a link to your centrally located resume that tells a lot more about you because it shows the level and extent of your connections? Why keep contact records in salesforce.com that you are forced to maintain, when you can link to a LinkedIn record instead, and the person you are linking to will promptly let you know of promotions, employment changes and more? The list goes on.

LinkedIn is routinely classified as a social media company, but to me (and everyone I talk to), that is actually its weak spot. The big opportunity for LinkedIn is data, pure and simple, leveraged by its huge scale and enough user engagement to keep its database current. In my view, LinkedIn should change its name to LinkedTo, because the biggest opportunity is to get everyone to link to it and rely on it as a shared, central resource.

A contrarian view? Perhaps. And I admit I have been bullish on Open Table for the exact same reason: a latent data play underlying a business most view very differently. My bottom line: for both companies, the best is yet to come.

 [Full disclosure: I currently own no shares in LinkedIn, though not from lack of trying.]

Local/Social/Photo

I've written numerous times over the years about Google's ongoing fascination with the local business space, and its various and sometimes ham-handed attempts to build a rich database of retail businesses.

I suspect Google's initial interest in the local market came from seeing the huge advertising dollars being generated from these small local businesses by yellow pages publishers. On top of that, Google certainly recognized that while it was the leader in coverage of the online world, it knows relatively little about thephysical world -- brick and mortar businesses in particular.

Google first went at this problem they way it typically does -- with a fleet of programmers. But even their world-class talent couldn't create data out of thin air, which was in fact the problem because so many small businesses and retailers had no web presence. This led to Google's rather humorous and ultimately futile campaign to have freelancers build a database of business listings. From there (and I am sure I am missing a few twists and turns along the way), Google moved to Google Places, which relies on user-generated content to build its business database. Over four million businesses to date have reportedly claimed and enhanced their listings.

To add more depth to these listings, Google has added reviews (both aggregated and organic), tied the listings to interactive maps, brought visualization to those maps (Google StreetView) and added deals (Google Offers).

Now the newest layer Google is playing with is business photos -- not photos of storefronts, but photos taken inside stores. Through a new offering called Google Business Photos, businesses can arrange to have Google send a photographer out to professionally photograph their establishments.

So, some simple photographs to let you get the sense of a business? Oh, no. This is Google. According to some press reports, Google is taking its StreetView approach indoor, snapping photos of every aisle, every few feet, presumably so you can conduct a virtual tour of the business. Utility? Pretty limited. Wow factor? Pretty high, at least for a while.

The bottom line is that in fits and starts, and with copious expenditures of cash, Google is building out what could be an extremely detailed, next generation yellow pages that will help users to discover and discern among small local businesses. Google provides the location, along with directions. It supplies significant business details, such as hours and credit cards accepted, provided the business has claimed its listing. It offers exterior and interior images (though the business must request the internal photography). It offers reviews and ratings. It offers daily deals from participating businesses. What's left? All I can think of is inventory and prices, and if Google can pull that off, it will really have revolutionized local shopping.

Implications? Well, if there was any lingering doubt, the company on which so much of us depends has moved into data content in a big way and seems to be getting its act together. This isn't great news for yellow pages publishers, but I still think it will be a long time before Google gets serious about B2B data -- if ever. But it remains one more reason for all of us to continue to innovate furiously, because competition these days can -- and does -- come from anywhere.

User Interface or User Interference?

I use an anti-virus software program called Avast. Anti-virus software is a tough product in terms of demonstrating its value to users. It runs silently in the background, only occasionally detecting an infected file. In short, it's easy to forget about. And without visibility, it is hard to build a deep sense of value.

What Avast does to overcome this, brilliantly in my opinion, is to alert me twice a day with a pop-up bubble and a voice announcement, that my "virus database has been updated." The message comes and goes in seconds. I am reassured to know my anti-virus software is working fine and is even updating itself for me. Perhaps most importantly, every time I see and hear this message, I am getting positive brand reinforcement.

Contrast this to some of the other software experiences I have as a user. Every morning, always in the middle of me typing something, I get a cryptic pop-up asking me if it is okay to run a program called "jucheck.exe" Turns out I am being invited to let the Java update program go out and check if new updates to Java are available. Every morning? How often does Java release updates? And why the need to ask permission for something this banal, when programs such as Avast don't? I am left with a less than positive impression of Java.

I had (note use of past tense) a program called SmartDraw that used to pop up messages on my screen advising of new versions of the program I could purchase, an abuse in my view of the privileged access to my system I had provided them.

Then of course there is Microsoft. Just the other day, I had finished tweaking a client presentation, realized I was running late, shut down my machine and saw the dreaded message "do not turn off your machine - applying update 1 of 14." Conversely, when you start up your machine in the morning, you settle in to work and updates having applied themselves, you spend the rest of the morning fighting pop-ups imploring you to re-boot your machine.

This all goes to show that how you interact with your users is important, because it sets a tone about you and your product. At one extreme, you can be invisible to your users, which is bad. But at the other extreme, you can be actively annoying to your users, which is bad. Even such simple things as updates can leave a bad taste if not carefully thought through from the user perspective. As data products increasingly integrate with software, it's important to remember that the user experience sets the tone for the larger customer relationship. So make sure that integration does not produce interference.

Serving Markets with Marketing Services

The latest rage among trade magazine publishers is marketing services, a broadly-defined concept that essentially aims to evolve publishers into something more akin to advertising agencies. That's not to say publishers will stop selling ad space; rather they are looking for new high-value services to sell to their advertisers.

This is not a new concept in the publishing world. Yellow pages publishers have been dabbling with this concept since the early 1990s, and many B2B buying guide publishers have been long playing in this area as well.

Advertising-based publishers realized a long time ago that because their clients were largely small businesses and medium-sized but boring industrial companies, most marketing services companies and advertising agencies never even tried to sell their services to them. Moreover, some of these businesses were so small that the only advertising representative who ever stopped by was their friendly directory salesperson. This was obviously a ripe environment, and many directory sales representatives regularly reported that their advertisers were relying on them for general marketing advice. Most publishers responded in ways that leveraged their existing products: creation of product catalogs that were distributed to the publishers' audience, but that the advertiser could also re-print for use elsewhere; ad design and production; partnership selling of non-competitive media and more. Recently, these services have expanded to providing SEO, managing paid keyword campaigns, building websites and managing online reputations.

The directory experience to date relative to marketing services has been a good one, and I don't think we are anywhere near tapping out this important growth area. Marketing services become a tougher game as your advertisers increase in size, but publishers are uniquely able -- if they organize themselves correctly -- to offer both market insight and market access bundled with creative and marketing services, and that's a powerful combination. While the goal is clearly to leverage your audiences and market expertise, it all starts at a more fundamental level: leveraging your advertiser relationships.

Information Meets Commerce

A quick note this week on two recent developments at the intersection of information and commerce, our sweet spot...

First, a fascinating post at Screenwerk, details the huge strides being made by companies trying to capture, aggregate and in some cases syndicate, retail inventory data. I've previously discussed the most established player in this field, Milo, but another company that hadn't previously hit my radar, called Retailigence, is now claiming that it is collecting data on 5.3 million products representing a stunning 25% of all US retail sales volume. Oh, the back-end data possibilities! To its credit, Retailigence is all over this opportunity, and is offering predictive intelligence on consumer sales behavior, along with sophisticated consumer profiles. As usual, B2C is leading the way, but retail/distributor inventory data opportunities abound on the B2B side.

Second, while you have doubtless heard about the loud battles being fought by companies such as NetFlix and Hulu in the online movie distribution wars, there was a somewhat quieter entry into this marketplace recently: Amazon's IMDB subsidiary. Yes, the Internet Movie Database, an impressive database of movies with incredibly rich detail, is being used as Amazon's platform to stream online movie trailers and sell movie tickets via mobile devices. And if the movie whose trailer you are viewing happens to be available through Amazon's Instant Video, there's a convenient link for cross-selling purposes.

What interest me with IMDB is that is represents that fascinating point where databases and catalogs blur, and where data content companies move from describing products to selling them. There should probably also be an award for IMDB for its creativity in developing, advertising, subscription and now transactional revenue elegantly and simultaneously. Expect that award from someone other than us, since we have already recognized IMDB with our Model of Excellence award way back in 2004.

Infocommerce gets sweeter every day.