Casey Cheshire

This is a first post in a new series about tuangou and the development of collective bargaining on the web.

Tuángòu (pronounced “twangoo”), which roughly translates as “group buying” in Chinese, is a shopping strategy and internet phenomenon.

The idea is simple in nature.  Multiple customers approach a store and arrange for a lower price based on the increased sale quantities involved.  If a store knows that all of it’s stock of shovels (for instance) will be purchased- it can afford to lower the price for those shovels.  Make less on more rather than charge more for less.  Adjusting the mark-up, a store would essentially make the same if not a little more by selling more items- think Walmart.  In the case of making slightly less, the store has gained more customers with the potential of future sales.

While the concept has been around for years and had been toyed with during the early part of this century, Tuangou didn’t survive the “Dot Com Bust.”  The social media infrastructure we currently enjoy, a critical factor in tuangou success, wasn’t as prominent or rapid during this first series of attempts.

It’s clear that the timing is now right for collective individual buying as exhibited by superstar internet site Groupon which was recently hailed by Forbes as the “fastest growing company, ever.”

Groupon’s mega success story is only the tip of the iceberg.  Group buying empower is the next step in empowering the customer through social media.  It started with social media providing platforms for immediate customer support and feedback.  The mystery of obtaining ROI on these efforts has been the challenge of the past few years.  Tuangou will enable social media to drive bottom line dollars, revolutionizing the value of two-way digital dialogue.

The offer-of-the-day sites are popping up everywhere, but this is not the furthest extent of where it can go.  The next step for collective or group buying is to increase transparency and ensure they’re sustainable through all-way success.

Have you noticed the addition of Google Voice to your Gmail?

Google has been clever and subtle about connecting Google Voice, it’s free phone call service, with the widely popular free email, Google Mail or Gmail for short.  Google Voice is a Skype competitor with bigger plans of replacing traditional telecom.  Could they actually pull it off?  I wouldn’t rule it out at this point.

The above graphic shows “Call Phone” slipped into the Chat/Friend window.  If you click on the entry, you get the below graphic:

One click away from being a new Google Voice user!

FourSquare 1.0 is doomed, but it’s not because of Facebook Locations.

For the better part of 2010 I owned Nashua, NH- well at least on FourSquare.  I was not just an early adopter, but an advocate for the location based social ‘game.’  The concept of becoming the ‘Mayor’ of a business or location by ‘Checking-In’ the most appealed to me.  It was a challenge I could win at my most frequented restaurants, shops, and even at work.

As a FourSquare advocate I explained the purpose and benefits of telling your friends where you were:

“If you’re in a coffee shop and check in, a friend of yours might be in the area, see that you checked in and join you.”

Huzzah! It’s about time your online social network joined you in real life!  Or is it? (dramatic pause)  A friend of mine, Shea Sylvia, wrote a cautionary tale on her blog about a creepy guy who saw she had checked-in to a restaurant on FourSquare.  Mr Creep actually called the restaurant asking for her- (music from TV show Lost would fit nicely here) “Ahhh!”

Okay, so FourSquare only allows your friends to see where you check-in.  Before we scold Shea for simply ‘friending’ to many creepy dudes on FourSquare, it’s important to note that you can also see who checks into locations without being their friend.

The other big controversy, this one with equal parts satire, was Rob Me Please.  The site is currently down, but their point was that people tend to ‘over-share.’  A robber could see that you’ve gone on vacation and steal your flat screen.  Technically this robber would have to know where you lived and all, but it’s not too hard to see how that could be found out.

Being a big tough guy with a relatively small flat screen, I wasn’t too concerned with the nay-sayers.  It was fun to be the Mayor of multiple locations in NH and even some highly competitive ones in Boston.

Some locations would even give you free drinks or discounts if you were the mayor.  That was the plan anyways.  Nashua certainly didn’t buy into this tech very quickly. Save for the local Starbucks (which was locked down by @KevinMic anyways), none of the 20+ locations I was the mayor of actually ever hooked me up.

Right about the same time the “Early Majority” group (from book Crossing the Chasm by Moore) of adopters started checking in around my home town, I began checking in less.  It was a slow process that had a flipping point when I stopped checking in where I work at EF Tours (@EFTours) in Cambridge.  The hotly contested building of over 850 people had about 5 regular FourSquare participants.  Maintaining your position as #1 requires consistent check-ins and frankly, is tedious.

One day I just stopped.  “Let someone else be the mayor today.”

I kept thinking about a criticism my friend and tech thought-leader, Aaron White (@AaronWhite), had made about social start-up Aadvark.  The site allows  you to ask & answer questions utilizing your social network.  Aaron’s main point of contention was that there had to be a ‘reward’ for answering questions to keep the system going.  Whether it was money, points, business referrals, or ICEEs from 7-11 some motivation was critical.  Aadvark, to their credit, replied to Aaron’s keen observation and must have added the ‘reward factor’ to their equation because they’re being acquired by Google.

It’s this same criticism that I now have of FourSquare, GoWalla, and now Facebook Places.  Why check-in? How is this going to benefit me?  Where’s the ‘reward factor?’

Good ol’ Kevin, yes the guy who is the mayor of just about every Starbucks in NH, actually swung by a PetSmart when I checked in there during a puppy training class.  He got to meet my starter-son Charlie, a wheaten terrier.  That was it though.

I’ve realized that the only thing I’ve been doing while checking in on FourSquare is missing out on the experience of real life.  It seems too, that I’m not alone.

Last week I tweeted that I was bored with FourSquare.  The responses came rolling in:

• mizkerri Yup. RT @CaseyChesh: I’m getting bored with @FourSquare – Anyone else?
• MeganLeap @CaseyChesh No, but isn’t that was Facebook Places is for?
• Private – @CaseyChesh yes. But it seems much more popular here in the west coast (I’m vacationing)
• denimroad @CaseyChesh yea its a split.. I use it because of the social networking qualities but the rest of is not fun anymore
• NathanSpencer @CaseyChesh I feel bad. I only use 4sq to let ppl know where I am and even then not much anymore.
• jennifer_el I killed my account. RT @mizkerri: Yup. RT @CaseyChesh: I’m getting bored with @FourSquare – Anyone else?
• jennifer_el @CaseyChesh Not really. I mean, I kept forgetting to check in cause I was actually busy enjoying myself, so what was the point?
• MeganLeap @CaseyChesh Maybe! However, I’m going to stick to Foursquare. I don’t need to update ALL my Facebook friends with my whereabouts.
• Private – @mizkerri @CaseyChesh Yes and no. It’s still useful and kinda fun but the novelty has worn off.
• Drantis82 @CaseyChesh yeah, I quit a few weeks ago.
• YoavShapira @CaseyChesh I quit months ago

The prosecution rests. FourSquare and it’s friends GoWalla, Facebook Places, as they’re currently offered, are doomed.  They need a reward factor for check-ins.

Will they find it? Maybe, but I see a much more interesting future for geolocation.  Checking into a location is the start, much like floppy disks were so much cooler than using index cards with holes punched on them.

We’re seeing only the tip of the location-based innovation iceberg.  Saving money more than social fun will be the driving force that helps this new tech bridge the gap from fad to phone.

Wednesday, all over the world, online marketers experienced drastic changes in their Facebook advertising performance.  Most advertisers saw large drops in both impressions and clicks.  The bigger the ad spend, the larger the drop, some as high as 60%.

There are many factors that go into advertising performance, and some immediately checks come up negative:

• Has the volume suddenly dried up? Are they all on vacation? This is not the case as these drops cross industries, markets, and demographics.
• Has the competition gone up, increasing the minimum bid? No sir, bid recommendations remain the same.
• Did your intern pause all of your Campaigns? No, interns are kept locked in the conference room.

All signs point to Facebook changing the way they serve ads.  Data collected since Wednesday shows no signs of return, leading most to assume these changes are here to stay.

While you may think it a bit odd for Facebook to suddenly change the way they do business, keep in mind they continually change their interface- much to the (dis)like of the majority of their users.  Those changes, however, typically allow people to revert back to the old style for a few days.

If you think it’s confusing, you’re not alone.  Reps at Facebook have been scrambling to come up with answers as large checkbook advertisers flood their phone lines.  I can almost imagine the hoards of online marketers yelling: “This wouldn’t happen on Google!”

I applaud Facebook for continuing to grow and mature it’s ad serving platform. They’ve got plenty of targeting power and are slowly learning how to enable everyone to use it.  My problem is with their implementation and lack of communication. If you’re the biggest, badest, fastest growing social platform- the future of the web, ACT like it.  Get a campus like Google, hire a beebop flute player, and seek measurable perfection in all that you do.

Potentially related, Facebook has publicly discussed their work on optimization the News Feed with a system called EdgeRank.  A great News Feed will make for better user experience, but the ad platform is what keeps the iguana fed at Facebook.  They need to devote more attention to the business side of the house.

Triage – What can you do? Test results haven’t come back yet.  In the mean time, here are a few potential band-aids:

• Ensure your bids are within the suggested range & test upping your bids.
• Create new ads with the same & new copy.
• Compare performance across multiple accounts & campaigns.

The way I see it, Facebook will either revert and reevaluate or adjust and inform.  My guess is that they’ll tweak what they’ve done- though there is a sense of urgency.  You’re spending less, and they’re making less so it’s going to be a working weekend at Facebook.

I also recommend adjusting your Facebook advertising strategy.  The system is changing and soon the new levers that affect performance will become clear.  Gear yourself up for a Facebook Quality Score, complete with it’s own set of algorithmic quirks and voodoo rules.  The positive side is that they’re moving toward Quality, which should benefit us all in the future.

If you’ve had any performance changes recently, please post them below:

I was checking in to Lingo, my local lunchery, on geolocation-social service FourSquare when lo and behold a trending location caught my eye: Heatpocalypse Boston.  Wiping away the sweat from my brow, I immediately checked-in.

Yes, 106 of us are currently baking in the Heatpocalypse Boston.  This new venue has had over 200+ unique check-ins and is a remarkably accurate description of the insanely hot weather we’ve been having in Boston lately.

This event is a funny reminder of how a common struggle- like weather, can unite us all.  If not for FourSquare, I might not have had proof that I wasn’t the only one sweltering out there.

There is a serious side too of course.  Dehydration can be dangerous so get yourself some water & drink up Boston!