Big Tech companies including Google, Facebook, and Amazon, hold sway over important industries. Journalism, digital marketing, retail, and more are at their mercy. But new developments are breaking open opportunities for other players. In this article, I’ll examine how the Tech Giants affect old industries, as well as alternative outlets for digital marketing.
History shows us that breaking monopolies is good not just for competitors, but the former top dog as well. In his book The Four, Scott Galloway discusses the antitrust breakup of Microsoft around the turn of the century, and remarks that Microsoft is bigger than ever now. The book is primarily about the Big 4 tech giants Apple, Amazon, Google, and Facebook. Galloway argues at the end that these corporations must be broken up as well, since they control not only major sectors of the economy, but our politics.
CNN Business reports that 47 State Attorneys General have joined an antitrust case against Facebook. It was begun in September by Letitia James, the Attorney General of New York. The case obviously has bipartisan support. The officials are investigating Facebook’s anti-competition practices, data and privacy breaches, its acquisition of other startups, and whether Facebook’s market share of digital advertising has raised its cost.
But Facebook isn’t their only target; the article says, “The meeting shows how law enforcement officials are increasingly probing specific business behaviors that they believe could support an antitrust case, rather than discussing tech giants purely in the context of their size.”
The Federal Department Of Justice opened an antitrust investigation against Google this year. It’s not connected to the one against Facebook, but it follows similar lines of inquiry. There are conversations of Google, whether intentionally or not, swinging the outcomes of elections. The YouTuber Tim Pool carefully dissected this topic in August; watch his video and decide for yourself if this is a legitimate concern.
For years, Google and Facebook have enjoyed a duopoly in online advertising, but Amazon is breaking into the space as well. This report from Geekwire.com details how Amazon is building its ad business:
“Amazon has quietly built a multi-billion dollar advertising arm that generates revenue by charging companies to promote their products on Amazon properties.
“Advertising drives a majority of revenue for Google and Facebook, which charge advertisers to have their marketing content appear on search results or news feeds.
“Amazon employs a similar strategy, but instead with its online marketplace and other platforms, giving vendors, authors, and others a way to reach potential customers. One of its main competitive advantages is the data it has on purchasing habits. It’s also replacing Google as the de-facto destination for product searches.”
More recently, the Google/Facebook/Amazon nexus has raised the costs of digital advertising. This means other apps and sites can charge lower rates and carve their own space in the market. The Motley Fool just suggested Pinterest can do this; they write that Pinterest can offer better returns on ad spend in the realm of search advertising. The article says it helps to think of Pinterest as a search engine rather than as a social network, one that lets users curate information about all manner of products and creative pursuits.
“The two digital advertising tech giants are big enough that they don’t have to worry about Pinterest stealing business, but it could have an impact on how high average ad prices climb on those platforms as marketers seek better returns on their investments. For Pinterest, it doesn’t really need to steal much from the industry leaders in order to grow revenue. Management expects to generate just $1.1 billion this year, which is just a fraction of what marketers spend on Google and Amazon.”
Advertising is the primary revenue source of news media. Much has been said about the collapse of mainstream journalism in the Digital Age, but a big factor is the chase for web traffic and t.v. ratings. With cable and broadcast television in decline, the networks are driving up sensationalism.
With Facebook and Google (and Twitter to a lesser extent) dominating web content, news websites have been dependent on them for traffic. A few years ago, they found they could get clicks and shares through stories inspiring anger. Both mainstream news sites and “content mills” followed this strategy. “Fake news” is both a genuine concern and a pretense for disregarding articles one doesn’t agree with politically. Today, most Americans actively distrust the media, or at least tune it out.
Perhaps journalism isn’t in decline so much as it’s changing. The Establishment Media (print, broadcast television, corporate news companies) are giving way to individual citizen journalists with blogs, podcasts, and YouTube channels. The big media companies aren’t the gatekeepers of information anymore, although Google and Facebook definitely are. Thus, the government is investigating them.
Where can a blogger go for news leads? This brings us to another news development, the acquisition of Cision by the investment firm Platinum Equity. What is Cision? It’s the parent company of PRNewswire and Help A Reporter Out (HARO). These are two resources for news journalists and bloggers to get tips, interviews, and press releases. Platinum Equity’s investment has boosted Cision’s stock according to Motley Fool.
As an avid YouTube consumer, I watch a lot of news content by individuals commenting on mainstream news articles. If Cision and other tip clearinghouses can boost their online profiles, citizen journalists can more easily get their leads directly from the source.
If the government successfully breaks up the Big Tech monopolies, audiences will need to diversify their news sources. In a way, we can make progress by going back. I advocate joining forums, message boards, and RSS feeds. These were very popular before Facebook took over the world, and are still chugging away in their corners of the web. You can search for individual forums based on your interests, as well as join Reddit, which is a network of forums. You can sign up for Feedly.com and get article feeds from participating websites. If you have a blog, consider submitting it to Feedly for traffic.
The changes in media and antitrust cases against Big Tech have implications for other industries, mainly in how they market and advertise. With the decentralization of media into millions of blogs, a business can really drill down its targeted advertising across the web. Blogs are monetized in other ways, too, such as sponsored content and affiliate marketing. If you want to sell products online, you would do well to make your own online store and enable affiliate marketing. Let bloggers pitch your goods, and let them earn commissions so you only spend money on successful sales!
We shouldn’t want to do away with Google, Facebook, and Amazon. They do plenty of good and make modern life easier. But when an organization is capable of great good, it’s equally capable of great harm. We should appeal to their better angels.
In the interests of disclosure, I’m very entrenched in a couple of these companies. I run Google Adsense on my site, and Facebook is major part of my website’s traffic. Facebook and Google’s subsidiary YouTube are my main sources of entertainment, ever since I cut the cord and don’t watch television anymore. When I critique them, I’m not biting the hand that feeds- I’m encouraging them to be better so society can enjoy more freedom and prosperity.
When starting a new business, it helps to focus on just one product or service. There are numerous examples of famous brands using this business strategy. They honed their operations by making one or a few offerings, then expanding later.
Entrepreneur.com interviewed the successful dropshipping merchant Scott Hilse about how to provide good customer service in one’s online store. The article notes criticisms of the dropshipping business model in which a website owner simply mediates sales between customers and manufacturers. But dropshipping can still work, and be a great industry, says Hilse. The key is to focus on a single product or service, which is easier to track than a full store.
According to Hilse, dropshipping is very much alive and thriving, but what is gold is not always glittering: With so many competitors and such low barriers to getting started, the drop-shipping market has become heavily saturated. Even e-commerce platforms like Shopify have their drop-shipping plugins, making it merely a matter of clicks to get started. But that’s where Hilse saw an opportunity. Following Ken Segel’s book, Insanely Simple, Hilse focused on the purest version of the dropshipping model: one product, an iPhone case and one straightforward website. For most, the drop-shipping model is attractive because a single store can have access to an almost infinite supply of goods — from bicycles to beanbags. And while most dropshipping stores are thronged with long catalogs, Hilse started his with a single item. While his competitor stores stocked hundreds, if not thousands, of similar cases, he could refine his entire business around the customer experience of selling that one single iPhone case.
While it’s nothing necessarily new in digital marketing, breaking down the dropshipping model to the bare-minimum has shown that it is still very much alive. By maintaining customer experience as the number-one priority, while still holding to the dropshipping fulfillment model, Hilse has been able to show that there is still a wealth of opportunity for budding drop-shippers out there. Unlike sites with thousands of products, entrepreneurs can build entire businesses out of a single product, with hyper-personalized marketing funnels, websites and advertisements, that no e-commerce super-store can ever compete against. “Focusing On A Single Product May Be The Key To Dropshipping”
It’s well known that Ralph Lauren began his clothing company making only neckties, and Amazon began as a seller of only books. This business model allows you to perfect your marketing and delivery method. Once you have success with one product, then you can scale and offer more.
I would temper this strategy by working in 2 different businesses. Selling merchandise is an emerging way for news media and bloggers to earn money. This enables them to perform their main job of reporting. (If you’re so inclined, visit my Resources page. I recommend the Udemy course on building WordPress websites! Shop Resources). It’s not well known, but McDonald’s actually makes as much money investing in real estate as selling fast food. But according to the film The Founder, McDonald’s first found success by cutting back its menu to just its top selling items.
Small Business Trends reports on their website that email marketing is coming back in popularity, and has the best return on investment among digital marketing methods. The article refers to a new study titled “2019 State of Conversational Marketing,” which also discusses the use of chatbots. Chatbots are apps that automatically converse with website visitors, similar to virtual assistants like Alexa. Chatbots aren’t mainstream yet, since there’s a learning curve to programming them. Read: “1/3 Of Businesses Used Email More Frequently Last Year – Because It Works.”
It’s my opinion that email is seeing a resurgence thanks to the drop in Facebook users. Facebook has clamped down on free social media marketing strategies, making it so businesses must pay for advertising. The current political climate isn’t good for Facebook, either. Businesses are treating social media as just another traffic source to their own websites and landing pages.
One advantage of social media over email is its quickness in letting businesses react to unhappy customers. Yesterday I reported on the importance of online reviews, and how responding to negative ones is in a company’s best interest (“Online Reviews Can Make Or Break Your Business”). This is where chatbots come in. It may also help to include a customer service phone number, as well as a forum to a business website. Earlier I suggested forums as a community building strategy for growing brand awareness. (“Brand Awareness: Build It, Use It.”)
You can read the complete study here: 2019 State of Conversational Marketing
On July 23, the digital marketing and CRM software company Womply published a study revealing the importance of having online reviews on the major platforms, Google, Facebook, Yelp, and TripAdvisor. The big takeaway is that negative reviews on Google hurt a business’ bottom line more than on the other platforms. Source: venturebeat.com, “Womply Study Suggests Bad Google Reviews Costlier to Small Businesses Than Yelp or Facebook.”
The article on Venturebeat.com summarizes the findings. According to Venutrebeat, “…Womply’s data science team conducted an in-depth analysis of transaction and online review data for more than 200,000 U.S. small businesses in every state and across dozens of industries, including restaurants, retailers, lodging places, salons, auto shops, and medical offices.”
Womply’s CEO is quoted as saying that small businesses typically don’t have access to data about their online reputation and how that affects their revenue. It appears Womply’s goal is to make it easily available through their software as a service.
According to Venturebeat, here are some additional findings:
It pays to have an open dialogue:Businesses that reply to at least 25% of their reviews average 35% more revenue than the average business.
Recent reviews have more value: Businesses with more than nine “fresh” reviews (reviews posted in the past 90 days) earn 52% more revenue than the average business. Additionally, businesses with 25 or more fresh reviews earn 108% more than average.
5-star ratings aren’t all they’re cracked up to be: The star-rating sweet spot for revenue is between 3.5 and 4.5 stars. In fact, 5-star businesses actually earn less on average than 1-star businesses.
It’s okay to have a handful of detractors: Businesses that average 35-50% negative reviews earn nearly the same as the average business.
Response rate matters: 75% of small businesses don’t respond to any reviews, which is a problem, since businesses that reply to more than 20% of their reviews earn 42% more revenue than businesses that don’t respond at all. Consequently, businesses that reply to at least half of their reviews earn $166,000 more in annual revenue than businesses that don’t reply to any reviews.
More is better: Businesses with more than the average number of reviews (83) earn 82% more annual revenue than businesses with review counts below the average. In addition, businesses with 200+ reviews earn twice as much in revenue compared to the average business.
More profiles claimed equals more revenue: Businesses that claim their free listings on at least three of the major review sites (e.g. Google, Yelp, Facebook, and TripAdvisor) average $107,000 more annual revenue than a typical business, and $179,000 more than businesses that don’t claim their listings on any review sites, a 60% swing in revenue.
Consumers are kinder than you think: Nationally, 81% of online reviews for a typical business are positive.
All this goes to show the importance of customer service and building relationships with your customers. This report is also a sign of Google’s power on the Internet, since its review platform is so easy to use and search engines have largely replaced the old phone book yellow pages. This should be a sign that every small local business needs a Google My Business profile.
You can read the Womply study here: “How Online Reviews Impact Small Business Revenue.”