The Bankwatch

Tracking the consumer evolution of financial services

On VRM, Facebook, and being misunderstood for long periods of time

I simply love this post at RWW.  The post is about how FaceBook could turn on the power of their userbase to the benefit of consumer power.  I have long been a fan of VRM and at the same time at something of a loss to see how it could be initiated.  Then I read this post, and new lights went on.

The post is about FaceBook, but it is less about them, than it is about business models for dot.com companies with large userbases who insist on following tradigital advertising models. The whole ‘We have lots of eyeballs so lets monetise’ thing.

[disclaimer]  I have long believed that adwords, adsense, and any such interruptive advertising model has only a limited online lifespan, and represent a termproary interlude that keeps SEO types busy in these formative internet times, until we get to the next level whereby the consumer is truly in charge.  Only then will I accept a Web X.0 increment.

I look at myself and my online behaviours, and maybe I am in the minority, but maybe thats because the tools I use are not well understood.  My online experience sees almost no ads except when I choose to do so, and I do so choose.  I see them in emails I deliberately subscribe to, I see them when I seek them out, but my standard web experience is protected by pop up blockers and AdBlock Plus.  If in doubt how many have PVR’s at home, and skip tv ads?

Its not that I don’t want to lknow about products and services.  I just don’t want to know when I am reading, listening and watching things on the web.  This is the power and the promise of the internet medium;  it has the power to be better.  I listen to Sirius Radio for similar reasons; I want to hear music not ads.

Enter Vendor Relationship Marketing (VRM).  Terrible title, but in essence VRM says you will decide when a merchant (vendor) may contact you, ie advertise to you.  Until then stay away. Here is one of the more provocative catchphrases from “The ClueTrain Manifesto” which forsaw this problem and solution 10 years ago.

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The challenge is how to move from an interruptive model in radio, television, phone, mail, and now internet to VRM which would require a seismic and complete shift.

“be prepared to be misunderstood for long periods of time.” – Jeff Besos

Back to the RWW post.  Bernard does a nice job of pointing out that FaceBook is taking too long to develop a business model, and is taking longer than Google did.  He notes that it will take a radical shift in order to do that, and that shift will be misunderstood, but give it time.

I agree with Bernard.  The reason FaceBook and traditional advertising doesn’t work is because no-one wants to hear an ad in the middle of a conversation.  However FaceBook has the other benefit (some say weakness) of being a walled garden and Google cannot see inside.  He notes this is the perfect oportunity to turn that walled garden into a powerful tool on behalf of the consumer.  When they feel the need for a product, service or information on them, FB users could, through an RFP (Request for Purchase) process make it known to vendors, even to the point of naming their price or price range.  Vendors could respond.

This turns the ad model on its head.  The playing field is levelled between the merchant and the consumer.  If the merchant comes on stronger than the consumer wishes, or tries to return to old ways, the consumer can ignore them.

Relevance to Bankwatch:

Consider banking – every day thousands of RFI’s emanating from VRM services, and the banks can compete on them, all electronically.  Clearly this requires formats, standards, and defined processes but it makes an interesting future world view, and one that FaceBook could kick off.

Written by Colin Henderson

June 26, 2009 at 12:47

2 Responses

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  1. Colin,
    I have been an early follower and participant in the VRM workshop. Partially based on the idea and “internet” mindset, we (@ iChoosr) decided to build a “0.1” VRM application, just to test the waters … What we started with is a personal RFP application, but then for one single product. (so lots of the same PRFP’s combined). This then becomes “a group buy” application … 😉

    Anyway, we started (by coincidence) in the group buy initiative around “heating oil”, Colin, you can not imagine the push back we got from the industry … “.. but iChoosr, we own the customer, not you !!!” And so they started several lawsuits against us. So far, we won them all (obviously). This was end 2008. What happened just now? One of the larger producers of heating oil approached us with the question “When will you guys organize a new groupbuy … ?”

    Next in parallel, we started to organize a group buy initiative for energy contracts (also for consumers). Same reaction from the vendors “… but we own the customers … and iChoosr, who are you?”
    But then, when I show 2.000 intentions from people, you notice that the sales guys at those companies start to listen. Only the marketeers but their heels in the ground.
    The only players who are interested to join the auction are the smaller players, as they see this approach as a cheap lead generation effort. But do they understand/do they want to understand VRM ?? Absolutely not !!! It’s all short term thinking, based upon their “own” wallet …

    That is THE problem with the VRM approach. Online, I guess you can convince the blogosphere and early adaptors @ Twitter, but then you only covered 0.01% of the people.
    (in our heating oil example, we had 40% of the people subscribe to our initiative via a paper form …)

    So I see iChoosr as a front runner in the evangelization of an early VRM application, but we need a long time to get it between the ears of Vendors and Consumers.

    If you would like to have more feedback on our experience, do not hesitate to contact me.

    Cheers and enjoy the weekend.

    Bart Stevens
    http://www.twitter.com/ichoosr
    Bart

    Bart Stevens

    June 27, 2009 at 06:01

    • Bart … thats quite the story. It probably reflects the deep shift that VRM will require to take off.

      Colin Henderson

      June 29, 2009 at 11:48


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