When bigger does not mean better

Many online companies now target niche markets where competition is significantly lower than what is at the other end of the tail. This in turn allows them to start off with smaller companies that allow them to upscale with demand when their market increases. Think about the number of web sites that are popping up everywhere to cater for anything from fashion advice to blogging, these businesses did not aim to follow the old trend “get big fast”; but now follows the “small is the new big” trend. This allows organisations to be run cheaply, with little advertisement & staff expenses. Lightweight models and cost effective scalability is a web 2.0 pattern many online businesses have adapted to, such as Facebook, Google Adsense, Wikipedia, Flickr and even Digg.

Digg is a “place for people to discover and share content from anywhere on the web” (Digg.2011) where they share news stories for other Digg users to read. “The more popular the story, the more the story spreads” (Digg.2011).  Digg’s model is very user driven, where “they provide the system but the users provide the content” (McMillen, 2010). Digg also doesn’t seem to advertise very much, so they seem to rely mainly on word of mouth. Considering Digg first “started off as an experiment in 2004” (Wikipedia.2011) it has increasing popularity and up scaled into a web service similar to Facebook (although, it is considerably less popular then Facebook). Digg also re-uses many other services such as “Google Adsense” (Wikipedia. 2011), and copies social networking sites such as Facebook to provide a social network element to the service. Digg also created a “voting system called digging and burying, which then was copied by other social networking sites with story submission and voting systems” (Wikipedia.2011). Due to the users creating the content, Digg is very lightweight and therefore very scalable with its “77 employees” (Wikipedia.2011) and optional registration.

A common issue with this web 2.0 pattern is that exponential growth can catch business off guard. Digg has a large amount of “traffic at the moment, and may be beginning to be weighed down by all the resources being shared on their site”(McMillen.2010) however if managed well, it could just be a case of adding more servers.  Business survival is also another issue, with many start-ups beginning on tiny budgets or as a personal side project. If the business has a legitimate business model then they have a strong chance.

Lightweight models and cost effective scalability is a major pattern of web 2.0 due to the number of businesses targeting niche markets and providing particular services or products. By starting off small, businesses are able to make changes where needed without being easily detected. When their business becomes more popular, they then can upscale. Look at websites like Facebook and Wikipedia – they both started off very small and grew with their popularity.

References:

Digg. 2011. What is Digg? Accessed 12 May 2011.

McMillen, J. 10 May 2010. Digg, Lightweight models and cost effective scalability. Accessed 12 May 2011.

Wikipedia. 8 May 2011. Digg. Accessed 12 May 2011.

Niche Market equals greater chance of success?

With the increasing reliance and use of the internet it is not surprising to see companies using the web to advertise and sell their products and services to internet users. Many companies such as Amazon target the ‘head’ of the market with generic and popular products and services however; the majority of online stores and services target a niche market which is the ‘long tail’ of the internet. This is referred to as the web 2.0 pattern Leveraging the Long Tail which Tim O’Reilly states “small sites make up the bulk of the internet’s content; and narrow niches make up the bulk of the internet’s possible applications” (2005). With web 2.0 an online company is more likely to be successful if they target a niche market (or tail) rather than the popular market (or head) due to “lower costs in advertising due to lack of competitors and higher conversion rates due to the target audience looking for a service similar to what you offer” (Van Dyk. 2010). As explained by Van Dyk (2010) “The more specific the keywords, the more specific the audience. If you had a resort you could describe yourself as a hotel or perhaps the location of the hotel. This would be a very generic term and really the head. If you were specific and used keywords such as ‘backpacker’, ‘pets allowed’, ‘wheelchair access’ the results in a Google search would be fairly narrow.” This suggests that by targeting a specific audience reduces the competition and therefore your product or service will more than likely be seen by consumers. There are many online services that follow this web 2.0 pattern, and CarSpace is one of them.

CarSpace is a web service that is a MySpace for car lovers, which targets the niche market of car enthusiasts who want to share car information and stories. The website states, “Edmunds Inc publishes the website to empower, engage and educate automotive consumers, enthusiasts and insiders” (Edmunds Inc. 2011). Carspace also incorporates many other car selling sites like drive.com.au by providing car reviews and buying and selling car pages for its users. Although there are many similar sites to CarSpace, the competition does not exactly incorporate pages for users to share their experiences and have discussions about cars. CarSpace is a part of the long tail of the internet by providing a very specific service to a specific target. Tingom (2006) states, “The key is to really find a space that is vacant or needs some love and attention. There can only be a few MySpace web sites before that market is entirely full. Facebook decided to focus on colleges first – and then corporate after some success”. CarSpace definitely fills a vacant space in web services for car enthusiasts.

Like many other companies targeting niche markets, there are issues with this web 2.0 pattern. One common issue is that some markets benefit more from this pattern, whereas some markets not so much. In reality, it depends on the popularity of a service and the demand it’s in. CarSpace is not exactly a mainstream web service, however there is not many services that offer the same thing as CarSpace so there is less competition. Leveraging the Long tail is a crucial pattern of web 2.0 that can be seen all over the web with very specific services being offered to very specific target audiences.

References:

Edmunds Inc. 2011. About Us. Accessed 5 May 2011.

O’Reilly, T. 2005. What is Web 2.0: Design patterns and business models for the next generation of software. Accessed 5 May 2011.

Tingom, C. 26 July 2006. Web 2.0 is about Niche Markets. Accessed 5 May 2011.

Van Dyk, J. 2 May 2010. Leveraging the Long Tail using Web 2.0. Accessed 5 May 2011.