Do me a favor and think about your favorite products and/or services and ask yourself this simple question:

• How did you hear about them?

Does the answer to this question remain consistent or inconsistent throughout the years?  Do you find your preference for a particular product or service to be a reflection upon your upbringing? (i.e. our family has always bought Brand Y, so I continue to buy Brand Y)  Perhaps your friends’ habits play a major role in your consumer activity?  Or maybe you discover products and services through a wide variety of channels and outlets.  Obviously, there are a ton of ways to captivate consumers’ attention. What I’m wondering is:  Which is the most effective?

I raise this question in direct response to Microsoft, and their attempt to revive their search brand with Bing.com.  The fact that Microsoft is going head on against Google is eye-opening enough, but what really stood out for me was their marketing budget.  It is estimated that Microsoft will spend a whopping $80MM to $100MM in marketing efforts alone!  Believe it or not, this figure does not include the hundreds of millions they will likely spend in partnership deals with HP and Dell in making Bing.com their products’ default search portal.

Here’s an example of where some of that money did go [video below]:

Since Google is the unquestionable titan in this particular domain, I immediately thought back to my first encounter with the search giant about 10 years ago.  I was in the seventh or eighth grade when I noticed that my friend was using something besides Yahoo! or Altavista or Excite.  It was this insanely simplistic homepage with just a few words and lot of white space.  I was immediately intrigued and have used Google exclusively from that point forward.

The point is, there was no advertising campaign or multi-million dollar budget involved in grabbing my attention.  My conversion was a direct result of something 100% word of mouth.  Similarly, online services like Facebook, Twitter, and YouTube were introduced to me through similar viral efforts.

This brings me to the heart of the matter:  What efforts are most effective in captivating consumers?  Is it viral or is it commercial?

We’ve all witnessed how reaching an audience has become easier and more affordable through the constant advancements in technology.  Blogs, microblogs, and social networks are just some examples of the many consumer-driven publishing platforms that are revolutionizing the process of creating and distributing content to the masses.  We are experiencing the beginning of a much flatter and more democratic media surge, where an individual has the ability to reach an audience just as easily as Company X.  But just as the landscape is changing for the content providers, consumers have developed a new way of being captivated.

As a consumer, how do you prefer to learn about a brand, product, or service?  Does the answer depend upon the particular market segment?  (online vs. physical / free vs. paid / product vs. service )  Do you use different techniques for different scenarios?

Tell me what you think.

Web startups are anything but rare nowadays.  Technological advances continue to drive down startup costs to the point where nearly anyone can participate in the internet ecosystem.  As a result, online businesses are in a constant battle with one another, competing not necessarily for customers, but simply for eyeballs.  We are witnessing the battle for attention, and it has been met with massive criticism.

Many skeptics criticize a website that has millions of users and lacks a definitive business model.  What most of these skeptics fail to grasp is that web businesses, for the most part, are not the “conventional” business and should not be treated as so.  The web has simply created a different playing field where web services have to first prove themselves valuable and credible in order to retain a significant user base.  The revenue model comes second.

The Battle for Eyeballs

Startup web firms today face a TON of competition.  For the end user/customer, this is a great thing.  As users, we are able to utilize the most effective web tools at the lowest (most often free) cost possible.  For the companies themselves, this is really the start of the battle…the battle for eyeballs.

How do you separate yourself in a sea of competition?  How do you compete with the field for attention?  What do you offer that others don’t?  Why should anyone choose you?

Ultimately, it’s the web firms who effectively answer these critical questions that stand a good chance at winning the initial battle.  But again, this is just the beginning.  You have only gotten their attention.  The firms must now convert these eyeballs into regular users.

The Value of a User

With today’s maturing web, the business landscape has been altered in a big way.  A firm’s market is now global while the number of their competitors will continue to rise.  Effective marketing techniques have changed dramatically while customer satisfaction has become the fundamental ingredient for success.  To a large degree, this brand new internet ecosystem has democratized businesses, giving the consumer one powerful and influential voice.

Due to the shifting landscape, web firms are now forced to adopt a totally new set of values (as compared to traditional business at least).  Most importantly, firms must now understand and appreciate the power of a dedicated userbase.  Instead of focusing solely on monetization options, the internet ecosystem has taught businesses to focus first on maximizing user value.  Even if this results in operating at an initial loss!  We have seen this strategy employed by Facebook, Twitter, Google, and many others.

It’s very simple, the businesses who create the most value ultimately wins.  This has been true and will remain true in any business; past, present, or future.  What has changed, however, are the rules for achieving this result.

Businesses must never forget the value of a user.  Not only are they a statistic, they are your biggest asset and most powerful marketing tool.  It’s easy to get caught up in monetization, but without a proven community of users, why even bother?  Unless your an invested VC, web firms should be worrying about one thing, and one thing only: How can we maximize user value?