I said in my earlier post (@kathhhhhhh:080119) that I will be addressing the three main questions some of you have about Dayre 2.0. And today, I would like to talk about subscription model versus ads model.
I want to start off this post by talking about advertising.
Specifically, digital ads.
How do brands decide where to place their ads online?
Well, the starting point for most brands boils down to one factor: reach.
Reach is the number of people that would possibly be exposed to the ad.
Why is reach important?
Because all brands have a finite advertising budget. Even the biggest brands you can think of have a fixed media budget to work within.
And this means that unless you’re one of the biggest brands in the world (the likes of Nike or Samsung or Apple or P&G or Unilever) which can afford to put your eggs in many baskets, most brands with limited media money are extremely selective about the channels that they go with.
After all, they want to make sure that they get as many eyeballs as possible on their ads. It’s all about wanting the biggest bang for their marketing buck.
So if any platform wants to compete for advertisers’ money, it would need to show that it has a greater reach than (or at least a reach that is comparable to that of) the two biggest media giants: Facebook (who also owns Instagram and WhatsApp) and Google (who also owns YouTube).
It’s a fact that the digital advertising industry is a duopoly: Of the $88 billion spent on digital ads in 2017, more than 90% went to Facebook and Google, leaving a remaining market worth amounting to just $9 billion for what I would call “everyone else”, which includes content sites like Buzzfeed, creative agencies, PR agencies, media agencies, and media owners all around the world.
And this is really of no surprise because Facebook and Google command critical mass.
How is critical mass defined? How many users would a new platform need to have before it can even remotely try to compete with Facebook and Google?
Let’s look at the number of active users these platforms boast:
Facebook: 2.27 billion monthly active users
Instagram: 800 million monthly active users
WhatsApp: 1.5 billion monthly active users
Google (Display Network): 2 million websites, which reaches 90% of internet users (last checked, number of internet users stand at 3.9 billion)
YouTube: 1.9 billion monthly active users
Now, let’s talk about Dayre. Where does Dayre stand then?
At its peak, Dayre had 500,000 registered users (note: these are total registered users, not active users. Meaning this number includes users who have signed up for an account, but may not have logged in ever since).
In other words, even at Dayre’s peak, most brands would hardly consider Dayre when it comes to placement of ads. They have no practical reason to. Because Facebook, Instagram, and Google can help them reach more people for the same amount of money.
So logically, one would then ask: what’s stopping Dayre from reaching critical mass?
There are several reasons, and today, I will touch on a few.
Most platforms have a tipping point which propel them to global fame. To achieve critical mass, platforms need some sort of virality and the key push will come from word-of-mouth. You need everyone who’s using it to be recommending the platform to everyone who they know, thereby enabling a chain reaction.
Facebook, Instagram... or even Snapchat or LinkedIn’s business models allowed for this chain reaction because of how these platforms started and evolved. These platforms are only fun if friends, family, or colleagues are on it. So you would actively involve them.
Herein lies a conundrum for Dayre, a challenge which the previous owners faced as well: Most of you would hesitate to share about Dayre because you want to be able to continue talking about things which are personal to you, without fear of judgement or worrying about who’s reading.
Dayre’s growth has also organically come from largely Singapore and Malaysia – the platform has yet to find international success, which also makes it challenging to hit critical mass because of the nature of the content.
It’s a unique business problem, but we see this as a good problem to have though because - I have said it before and I will say it again – you have created a community that’s unlike any other. One where people can share openly about anything and everything.
Which is why in all that we do, we want to ensure that we can continue to provide you with this sense of freedom and authenticity - introducing an ad model would potentially ruin all the things that are great and unique about Dayre, and we want to be careful and responsible with the business decisions that we take.
But for the sake of discussion, let’s put all these factors aside and say we consider the possibility of running ads.
What would need to happen for Dayre in order to have a successful ad model in place?
The key words are sustainability and longevity.
We need committed brands who wouldn’t just buy one ad with us once in a year. A masthead ad or a single banner ad is not sufficient to support the operations of any platform, not just Dayre.
We need a stable of brands to buy numerous placements with us on a regular basis (and these ideally need to be minimally weekly placements).
And in addition to reach, the big brands would also be looking at engagement. This is why Facebook, Instagram, and Google continuously come up with so many product verticals and ad formats. On Facebook alone, you have Image ads, Video ads, Canvas (or Instant Experience) ads, 360 Photo ads, and Carousel ads; on Instagram, they now have Stories and IGTV.
But introducing so many product verticals would mean an interrupted experience which doesn’t sit well with the nature of Dayre. Even on other platforms, how often do you find yourself thinking ‘hey, I really love that this FB/IG ad is on my feed”?
A highly disruptive experience aside - if you knew that brands are on this platform, leveraging on your information and data to run ads, would you still feel as comfortable sharing the same things you are used to sharing on Dayre?
I know some of you may still feel that it is possible for Dayre to adopt an ad model because you all have seen brands run sponsored campaigns on Dayre. But note that these brands go directly to Dayreans for ads – we don’t get commission from sponsored content because we’re not in the business of managing Dayreans/Influencers and we have no intent to do so.
Even if we do consider taking commissions, the truth is that the amount would not even be enough to maintain Dayre in its current form, let alone consider app improvements such as improving stability and adding in new features.
The minimum cost required to operate Dayre at its base level includes hosting and maintenance fees. This means no bug fixes, no app improvements, no new content, no new users and this already amounts to approximately 150K SGD per annum.
For Dayre, it’s an extremely delicate balance between the commercial aspects of the app and the nature of the community.
I’m currently operating on the leanest, most efficient team that I can have, that wouldn’t compromise on the performance and growth of the platform.
And even so, this is a team of 10 people with expertise spanning across operations, strategy, product management, User Experience/User Interface, Engineering (my biggest department which is made up of a team of 5 front-end and back-end developers, and operated offshore for cost effectiveness), Business Development, and Content. No, it’s not just the 3 of us (@i_yune @clarahow). It takes a village.
For some context, the current codes and platform which Dayre is originally built on, and that we inherited, are obsolete. This means that my engineering team needs to do a complete migration. After migration, we need to look into bug fixes which were neglected over the past couple of years.
Only when these are done, then we can look into implementing features which many of you have asked for, and also look into enhancements that can improve your experience on Dayre – such as making it easier for you to find great content or people that you may be interested in.
As some of you may know, I wear dual hats in my professional capacity – one as the founder of Create Collective, parent company of Dayre, and another as Head of Digital, at M&C Saatchi, an advertising agency.
When it came to Dayre, it was a conscious and measured decision to set up a separate unit for its operations. I would love to be able to run an ad model for Dayre because this would benefit my clients on the advertising side. But this wouldn’t be the right thing to do for Dayre.
TL:DR, let’s do a quick recap of the key points so far:
To become a preferred platform for brands to advertise on, you need reach.
Reach comes from the user base that the platform has.
Facebook and Google dominate in terms of number of users.
Dayre cannot compete on user base, given the dynamics of the community.
Therefore, Dayre will find it difficult to get enough share of the defined media budgets that these brands have to keep the platform sustainable.
And this is why we believe that a subscription model is what would ensure Dayre’s success in the long run.
There is also another very important reason why having a subscription model is very important to Dayre, which I’m touching on for the first time.
A gated community means that your content won’t be searchable on Google, unless you choose to opt-in (I will go in depth into this in my next post). Which means that on Dayre, you will be able to continue writing about anything you want freely and safely.
And we’re making this decision even though it comes at a business cost because we strongly believe that we don't want to be monetizing user-generated content. This is why we need a content team to create content which are searchable to bring in new users – I will elaborate on this in the next post as I understand that this is still a question some of you have.
There’s one thing that I’m still trying to figure out though – I’m aware that there will be people who would want to continue using Dayre but are unable to afford it because of financial difficulties.
I would like to know if there are ways that can enable me to identify these people who should be given free subscriptions. So, if you have some ideas, please let me know.
Wednesday, 16 Jan 2019
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