Platform Economy – What does it mean for regional companies?

Platform Economy

AOL is back. We are already in. Nobody forced us to join this closed system, but we did it ourselves and we had good reasons for doing so. In this locked Internet, life is better. The Internet websites are faster, purchases are easier, it is all wonderfully convenient to use on mobile devices.

What qualifies as a nightmare for many defenders of the free Internet has long since become reality once again. And the new description is not closed Internet – the whole thing is referred to as the Internet of Platforms. We have become used to reverting to the same services time and again for certain Internet activities. It is simply easier to order from Amazon Prime, to select a pizza from the usual menu on Delivery Hero and to not only discover articles on Facebook, but also to read them directly in the App. The companies exploit these habits of ours. Our desire for ease and comfort has resulted in renewed growth of the closed Internet in recent years. This process is strengthened by the fact that many of the success stories of recent years have either established their own platform, like the German Delivery Hero, for example, or they have achieved their success through these platforms. Two of the most successful news pages recently, BuzzFeed and Business Insider, see themselves less as portal offers or so-called destination sites, they are satisfied that their content is spread out over a diverse range of platforms.

It has turned into a race for those who want to become successful on the platforms and to establish platforms by themselves. If you want to see it negatively, the leeway within the independent Internet is getting smaller all the time. Some experts expect that as early as 2020, 80 percent of the advertising revenue will be controlled by Google and Facebook. Amazon could perhaps also stand a chance. But all of the others will simply have to integrate themselves into the system. This could have problematic consequences for small providers who don’t play the game according to the rules of these platforms. If you prefer to look at it positively, many little stars, for example YouTube stars, have profited tremendously from these platforms. It is often easier to get famous and distribute yourself on a social level here, thereby generating success. We have all heard stories about YouTube stars, and also some about YouTube millionaires, whom the youth of today strives to imitate.

Personally, I am an optimist. I don’t believe that this innovation is going to come to an end. Microsoft no longer has the same status as it enjoyed previously and it was not toppled by lawsuits from the European Government – it simply missed the boat in terms of the mobile Internet. The result is that the new generation of platforms also has to overcome new challenges time and again. What I see as a problem is the fact that almost all of these platforms come from one law-enforcement area, the USA, so that we, as Europeans, have very little influence over it. This has nothing to do with trusting or mistrusting the Americans. It is simply a crucial fact that a large portion of the world Internet infrastructure is concentrated in one place. The main roads of the Internet all begin and end in Silicon Valley and I don’t even want to think about what would happen if Mr. Trump tried to enforce some of his ideas via legislation. The political response to this should not be regulation so much as massive advancement of our own Internet economy and a change of European culture – away from rapid exits – selling of companies in order to maximise personal profit – and a swing towards entrepreneurship that would strengthen Germany and the European Unions sustainably. Where is the next SAP?

What does all of this have to do with local marketing? Which conclusions should small entrepreneurs draw, or perhaps not so small entrepreneurs as well, who aim their advertising at regional markets? My first piece of advice is simple: Do not back away from platforms. As entrepreneurs and business owners, we shouldn’t pull back in the face doubts, due to abstract data security issues. Our users usually don’t have any doubts, or they throw them to the wind if a function is particularly good and offers added value (e.g. Google Maps). Above all, we must do three things.

1. Identify the right platforms.
It’s not only Google and Facebook. According to the niche, it is the special directories that characterise the most important platforms. Perhaps a special health portal for physicians or yellow pages for legal assistance or artisans. But perhaps it is also the opinion portal that always comes up when the customers ask certain questions.

2. Sell on the Internet mall.
Whoever is involved in E-Commerce is welcome to run his own shop, but just like in real life, the trick is to position the products in the malls, the main streets of the Internet. E-Commerce doesn’t end with building your own shop. It is much more important to be present in the right places. Many of the successful online companies sell a large portion of their products on Amazon or eBay – besides the hard conditions on these platforms and the exhausting comparability. The user preference is enormous, therefore there is not really a way past these platforms.

3. Analyse platforms and learn the rules of the game.
Different platforms have completely different game rules that need to be adhered to. In the case of Amazon-E-Commerce, it is mostly the reviews that are decisive – and incidentally, something similar applies to hotel platforms, one of the most important local positioning system –, and on other platforms, completely different kinds of games and use scenarios are a reality. In the Facebook Newsfeed, we react to videos, animated GIFs, brief content. Those who want to inspire their fans here, have to offer them what they consume. You can’t shy away from creativity, because it is the salt in the soup of success on platforms.

How will it develop in 2016? The platform boom will continue, but the platforms will continue to verticalise in 2016. It will no longer simply be about how one presents oneself on Facebook, but rather which groups one is present in, with which users. Verticalisation means penetrating deep into one’s own target groups, getting very close to them. This is where your opportunities on the Internet lie, and the trick is to make use of them. I wish you lots of success in your activities this year. It’s going to remain exciting, stimulating and of course, very dynamic.

A German Version of this article first appeared on Gelbe Seiten Local Marketing:

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