Last month MySpace grew its user base by 1 million. That is quite a turnaround since March 2011 when it was widely reported that it had lost 10 million users in that month alone. There is still a long way to go in terms of recovery and there are company issues that need to be ironed out since its sale by Rupert Murdoch to Specific Media last year (at a considerable loss from the $580 million he originally bought it for). Justin Timberlake is also a new investor, which has helped with advocacy.

So what have they done?

Since redesigning, simplifying and cleaning up their interface they have focussed on one of their previous core successes - music. To my mind MySpace has always been the best place for bands and artists to profile themselves, share their music and news and most importantly, be discovered by a wider audience. As such they have built up a massive library of free music through licensing deals with record labels and uploads from a raft of unsigned artists.

Two months ago they launched a brand new music player with features similar to Pandora and Spotify that is heavily integrated into Facebook and twitter. This effectively concedes victory to those platforms in terms of trying to dominate the friends and followers space. However that helps to redefine them in a new way and shed the reputation as the sickly child of social networking.

This was further enhanced by a recent announcement with Panasonic to offer MySpace TV that will allow users to comment and socially share music videos and television shows.

Music on MySpace is free and it has almost three times the amount in its catalogue than Spotify. If you want to discover new music this really is the platform of choice now.

What should we take from this as digital marketers?

The easiest lesson here is that by leveraging the audiences of larger and more active social platforms, allowing content to spread on them and not directly competing for market share they have opened up to potentially much larger numbers than they previously had. But we all pretty much know that’s the way to go now don’t we?

What is more interesting for me is this. All too often when digital platforms don’t get the uptake as quoted in the business plan or if numbers start to slide there is a propensity to panic and blame lack of certain features for poor results. Surely by introducing more functionality and content you can appeal to a wider audience? On the face of it there is some logic to this but personally I have never seen it work out. In fact the approach often reminds me of those hideous MySpace profile pages of old.

If you exclude the giants of the industry, who can afford to diversify, the digital services that really succeed usually have two things in common. They focus on a very specific target audience that they understand well and solve one common problem in an effective manner. It's brave, you will turn off some potential fringe users, but you are in the most likely position to succeed.

We should continue to iterate and innovate around giving that core audience what they really want rather than diluting our offering and trying to appeal to the masses.

You have probably heard about the recent social media explosion surrounding Quora. There have been some pretty grandiose claims about how it could be "bigger than Twitter" and "the future of blogging" so I thought I would give you a closer look to see what all the fuss was about.

What is Quora?

"Quora is a continually improving collection of questions and answers created, edited, and organised by everyone who uses it." - their definition

• You ask a question and the community answers it. You can also subscribe to topics, answers or people that interest you.
• It utilises your existing connections via close ties with Twitter and facebook so you are more likely to start getting answers from people you're already engaged with.
• The best answers get voted up Digg style, the dross is pushed down so you iterate towards quality.
• Relevant content is collated into a facebook-like feed enabling new content to be brought to your attention (via notifications).
• It has a strong, intelligent search engine for easily finding topics and answers surrounding the question you might have.

So it's like a discussion forum then... wow!

Indeed! Plus Q&A sites are not exactly unique either so why has it carved out its space on the web and been so highly praised by the big players of Silicon Valley? The answer lies in building personal reputation. Aside from the pleasure of writing, bloggers generally publish in order to share their opinions, experiences and expertise so they can build an audience and ultimately become influential. However this can be at quite a considerable cost in terms of their time creating and marketing that content (ask me how I know!) and is rarely successful.

By engaging with Quora on topics that you have sound knowledge and opinion on you can build audience and influence much faster than before. A well constructed and timely answer will get voted up towards the top and therefore will be read (alongside links to your profile) by everyone following the topic. Invariably, you will pick up more followers and be inclined to write better quality answers to help increase your votes. It's this game mechanic that has really set Quora apart.

Ok, I'm liking this anything else cool?

Funny you should ask. The SEO benefits are actually astounding. Q&A sites are doing particularly well in natural search at the moment (as are video and real time social media content) as the space race for relevancy and fresh content continues between the major search engines. It is completely feasible that your post on Quora could top the search term for the topic whereas your own blog post would normally nestle somewhere on page 5. Now that is powerful, and it's already started happening.

The quality of the current conversations is really high, primarily because of the extremely engaged early adopter community who buys into the concept and is committed to producing good content. Additionally there is the chance of commencing discussions with the top people in each topic field. Thought leaders and CEOs such as AOL's former chairman Steve Case are talking openly with regular users on a level playing field (not from a lofty conference stage). This is your time to be seen and heard by the right people.

It is not to everyone's taste though!

It wouldn't be right if I didn't list a few faults would it?

• The site does spew out a lot of notification emails which can be a little annoying, especially during this massive growth period. Although do you remember how many invites you got to join facebook initially? However, it was enough to prompt one developer to create this spoof site.
• You are building your reputation on someone else's platform. No different to doing the same on Twitter, facebook, LinkedIn, MySpace etc. but Quora is still in its infancy and anything could happen. Maybe best not to shut down that blog just yet and possibly repost what you write on Quora there as well?
• As the platform expands into the mainstream there is a danger that it will dilute and get spammed causing the big guns that are currently engaged to get bored by mediocrity from the wider community of fools. Some people feel Twitter is moving this way and it certainly is the reason Yahoo! Answers is widely derided. In this case we could see questions outstripping answers. The community must continue to police Quora for quality but will they stay engaged?
• You can edit another person's question. This is a marmite feature and does feel reminiscent of the warring editors of Wikipedia battling for supremacy. Where reputation matters, big ego also lurks.

Do you use it Mark?

I must admit I did sign up pretty early (last summer) and just clicked about, followed a few of the geek guys I take note of on Twitter and pretty much left it there until the explosion around Christmas. I am following a few topics like "Getting your startup featured on TechCrunch" and "What's the best CMS to build a corporate website?" and the quality of answers are really high! It's undoubtedly a useful resource.

However I'm not addicted to riding on the sweet high of Quora as yet. That may be because I am not really trying to build my personal brand as much as I am for our agency. Quora is currently positioned around the individual although inevitably in the future it will open up for companies in much the same way facebook did. Brands are being mentioned right now so if you represent one I would start searching straight away and getting in on the conversations early.

You can follow me here if you like and please do tell me what you think of Quora in the comments below.

Ever heard of Groupon?

If you haven’t you soon will. Groupon offers one discount coupon deal per day in cities around the world. The trick is that the deal only kicks in if enough people buy it. The site heavily utilises major social networks to help and incentivise bargain hunters to share the good news with their friends in the hope that the deal is triggered - "collective buying power".

Since launching in late 2008 it has taken off in the US and has inspired a large number of lookalike companies and campaigns in the space as well as creating a market for unredeemed coupon trades. Speculation has recently been mounting that a big number takeover bid from Yahoo, Google, Amazon or eBay is imminent.

The business is also growing internationally through acquisition and natural growth and recently ran its first nationwide campaign for Gap across America.

But was it successful or not?

The $11 million Gap day was timed to coincide with the back-to-school rush. 445,000 shoppers bought a $25 voucher for $50 worth of Gap clothing, a move that sparked a huge amount of buzz online (well, before they decided to muck about with their logo).

This buzz would have boosted Groupon’s subscriber base enormously as well as make them a decent amount of money, Groupon normally take 50% of the coupon price. However marketers are divided over the value of the campaign.

"All in favour say I"

The average purchase of a Gap customer once in the store is likely to be a lot higher than $50, especially around the back-to-school period when the majority of stock is at full-price.

The offer expires after 3 months. After that, Groupon buyers can exchange their voucher for a $25 gift card instead of the $50 credit. Those that do not redeem at all are simply lining the pockets of Groupon and Gap.

Gap may have negotiated a better split than the normal 50% due to the value they bring to Groupon in terms of new subscribers. Gap running on Groupon also enhances their image considerably and the word of mouth spread was highly effective. There is also a brand building element as users that don’t buy are still hearing about the business and its latest messaging.

Marketers have compared this multi-million dollar marketing spend to the effectiveness of a magazine or TV ad which instills less reason for the customer to come in through the door. A Groupon customer has already spent the money, valuable cash in the bank until the customer redeems it, and a far greater incentive to follow up.

"I just don’t buy it"

The economics don’t work for most businesses. It’s nearly impossible to make a profit when you are giving away 75% of the initial purchase (50% to the consumer and 25% to Groupon) unless your new customers return regularly. In effect the $11 million in revenue is also potentially $11 million in losses, not taking anyone else’s cut into account.

“Breakage” - the theory of a certain percentage of people forgetting to redeem is not a stable business model. Groupon also sends reminders to its users near the expiration date and remember the user has already purchased, they are likely to redeem!

It caters to the psychology of the bargain hunter who may have never had any intention of shopping at Gap except for this one offer. Arguably they are now only happy to shop at Gap at this value level and no higher. Assuming you need repeat purchases or large basket sizes for the campaign to make sense does this really target the right consumer mindset? Effectively this is a traffic buying exercise resulting in fickle new customers, loyal to deals, not the brand.

This is not the start of a beautiful relationship. Promotions are supposed to help you reach new audiences and develop rapport. In this case the giver of the discount is Groupon, not Gap. The loyalty is not really to the one suffering the margin shortfall.

You are at the mercy of the 50% off culture that has arisen on Groupon. Comparatively a 15% or 25% offer would look stingy but not every business has the same margins that they can afford to play with.

So should we do it?

I have put a stronger case for reasons not to commence a Social Coupon campaign because I think the reasons in favour are fairly obvious. A recent study from Rice University concluded that 66% of the 150 merchants interviewed found Groupon profitable, 32% making no money. In total 40% said they would not participate again.

So, like a proper History graduate I am going to say “Yes, Groupon is worth investigating, but…”
Here are a few tips:

• Do your numbers – there are a huge amount of financial factors to be considered when putting the case for Social Coupons forward. It’s not a straight forward algorithm and you need to be honest with yourself about the stickiness of your full price proposition.
• Quantity does not guarantee profit and in fact could even sink you! Be prepared with a bucket when Groupon turns the tap on - they don't cap the deal at x number of sales, build that into your equation.
• Make the execution of your offer watertight – this is going to cost you and the experience a new Groupon customer gets is crucial. Your entire client facing staff need to be up to speed on the deal and also well trained in upselling or ensuring repeat business.
• Make the terms of your Groupon deal totally clear to your customers - you want them coming back but not at a 50% loss to you each time.
• Beware that you can’t necessarily determine the day your Groupon runs. You need to be careful when negotiating it around a time of year that ideally suits your business. For example a gym would be targeting New Year when health and fitness is most on the mind.
• Groupon users are mostly young. 68% are aged 18 to 34 and they are particularly strong on certain demographic groups such as females. Make sure their audience overlaps with yours!

Some final thoughts on Social Shopping

Typically brands that gain the greatest purchase results through Social Media tend to go one of two ways - either through offering coupons or discounts, or by making noise during sales or special event periods. A survey by Morpace found that 37% of Facebook users joined fan pages for special offers.

eMarketer senior analyst Debra Aho Williamson says, "Coupons remain a leading driver of brand interactions in social networks. At the same time, they can be one of the trickiest social media tactics to pull off. The discount offer must print or download easily and must work as promised. And the retail store or distribution channel must be prepared for demand."

Is there a less scary way?

Maybe you should consider a location based promotion (like Starbucks and L’Oreal) or checkin discount instead? Gap did that as well! The penetration is not quite there yet but Facebook Places is going to change that. The quality of customer is higher and it oozes user evangelism, which is what you are ultimately after.

You can read more about it here. I’m off for some discount booze and food down my local pub.

Forget about the battle of Facebook and mySpace. The next battle is for your kids, and is going to be fought between Club Penguin & Moshi Monster.

Moshi Monster lets you create and adopt a monster, then nurture it, and then interact with other people's monsters, and even play games. Think of it as a cross between Second Life and Tamagotchi.

Club Penguin was bought by Disney for an obscene amount of money a while back, when the entertainment giant decided it needed to be in the social network arena. It works much like Habbo Hotel, with you personalising a penguin, which you can then talk through with other penguins!

Intersting times afoot.