How Google And Groupon REALLY Make Their Millions
It’s so interesting that most entrepreneurs use basic online products in their lives every single day, but fail to realize what hooked them into using those products. Even more ironic is the fact that how disconnected we have become in recognizing the commonalities these mega successful products have that make them a “mega success”.
Ok, let me be more specific.
I am talking about successes such as:
- Google vs Yahoo
- Seth Godin’s Blog vs 890 bajillion blogs
- “The Random Show” (By Tim Ferriss and Kevin Rose, Founder of Digg)
- Google Apps vs Open Office
I will show you how they did it and how we can replicate their methodologies in our businesses.
But, here is the problem, I can keep giving you examples after examples to convey the point, but still fail because you might define success or “mega success” differently than I do. To eliminate any differences here – when I say “mega success”, I am referring to a business/entity that is successfully generating revenue where others have failed or attracting more audience and fans unlike any other business or entity.
This blog is specifically about how the Big Guys monetize the heck out of their products/services easily while the frustrated entrepreneur struggles to even sell ONE HOLY copy/subscription of their product. There are reasons why this happens, and it’s not luck.
The number one reason why Google is Google, Seth Godin is Seth Godin, Digg is Digg, Groupon is… well you get the point, is because these entities are not run by marketers, they are run by strategists. You and I both have been exposed to our fair share of scammy online marketing offers, which has conditioned us to suspend our thinking and blindly believe that marketing is the solution to solving world hunger. Don’t get me wrong, I am a marketing whiz and I continue to use marketing to grow businesses, but let’s face it – marketing is a piece of the pie called business, and not the pie itself.
In reality, Strategy is a far more powerful lever to create “mega success” than marketing.
I know you want to talk about monetization, so do I, but I had to set the stage by explaining to you the importance of strategy to make the following examples much more digestible.
Alright, so let’s dive right into it.
What do we do when we first start compiling a list of things our “state-of-the-art” website is going to have? We start off by putting an ABOUT US page, CONTACT US page, COMPANY HISTORY, and 107 other ideas to be implemented that no one else in the world cares about.
Now what did Google do? They ditched Google Weather, Google News, Google company history, owner profile and the 987354 other things that no one cares about and put laser focus on their most powerful asset - the Google Search.
What is your most powerful asset in terms of service delivery/product feature that needs this kind of highlighting?
I hope you have faced the fact that the only thing the users care about is the core product/service, which is user-friendly, risk-free, hassle-free, and convenient – PERIOD.
Are you providing that?
So the first rule is to give something of massive value to your users in a straightforward and simple fashion.
But wait… Google Search does not even sell their service, they make money on ads. Now if you have been in any sort of advertising, you know that sales people just want to create a blunt and shameless advertising spot in their available media and sell it to the advertisers. I am sure a typical ad sales person would recommend Google to sell ads on their home page. I am sure Google is going to make a heck load of money this way, but not for very long.
I hope this is making sense. Your business must be designed to give massive value to your users. If you are selling ad space on your website, realize that your users want value from them as well. Those ads must be relevant to their interest. The point is simple, date with your users and not with your advertisers. Monetization follows automatically when you get the core right.
Many might not know that Groupon became Groupon after many experiments and tweaks were done to its original concept at a website called thepoint.com(http://www.groupon.com/about). ThePoint was the original concept that let users create their own campaign, which could be anything from “Raise Money For Charity”, “Ban Ebay for X days”, to“Get Publishers to Publish magazines without photoshopping the models,” and these campaigns would be promoted to encourage group action.
Do you see the point? You can create any campaign your heart desires and create an incentive that is monetary or non-monetary. Hmm! The website encouraged group action, but in a very open, unfocused and confusing way. Great concept, butlack of focus.
So one day the founders decided to break-off the Group-buying-discounts part of ThePoint and make it as its own entity now known as Groupon. This is where the magic happened and now we know Groupon as the fastest grown billion dollar company in history.
I have given you two examples so far – Google and Groupon. Did they use marketing as their lever to success or strategy?
I hope I am giving you a higher perspective here, but I am not done yet.
Previously you read me say that “focus on the product and the monetization will follow”, but I wish I could say that it is always that simple. If it were, Open Officewould be the most used software the world knew.
Oh, so you do not know what Open Office is??? Good, that conveys my point more profoundly.
Open Office is an application suite that has all the softwares one would need to do word processing, spreadsheets, presentations, graphics, databases and more. In simple words you can do everything Microsoft Office suite can do in Open Office, the only difference is that Open Office is free.
Before MS Office 2007, Open Office was literally a copy of MS Office – same functionality, user experience and no compatibility issues.
Open Office was a failure due to the lack of strategy. MS Office kept on charging for their product, marketing to huge audiences, while Open Office was not able to giveaway their software for free to a small fraction of the market.
There are many reasons for that, but let’s talk about this:
How to do it right! – the Google way
Google introduced its edition of MS Office called Google Docs. Google Docs has a fraction of the functionality MS Office or Open Office has, but they have a really cool (in demand and problem solving) spin to it. A user can share and access his document from anywhere in the world with an Internet connection and a web browser.
But hold on! Where is the monetization part? Google is not selling ads here.
Remember! I told you that if you get the product part right, the monetization will follow (with some creative thinking). Google introduced a premium edition of their Docs and mail service for businesses, who desperately want central data storage and smart sharing capability. Many corporations have trouble moving and maintaining email servers and hence Google Apps was born. I use Google Apps, the solution is simple to use and hassle free.
Once again – Strategy
Google Search, Groupon and Google Apps filled the gap they saw in the market, but it is really important to notice that they all communicated their message clearly and focused on their core.
For Google Search the core was the Search Functionality; for Groupon, it wasGroup Discounts; and for Google Apps, it was Office Productivity in the Cloud.
There are many differences between the big guys and the small guys. One key difference is that the big guys are confident and bluntly say ‘no’ to the mediocre. They both have the same mental capacity but the big guys choose to use that capacity differently. I mean, I am sure Google could introduce 87 different features on top of the core functionality MS Office had, but they didn’t. They introduced basic features and introduced Cloud technology to the Office suite – pretty sweet. Remember, marketing follows strategy and not the other way round.
Start hating conventional wisdom and question ideas constantly.