Digital communities… not just a pretty ‘face’

It is so easy to get caught up in the astronomic growth of online and offline communities – both social and business oriented. Of course I am referring to the Facebook’s, the Linked-In’s and the iPod communities of this digital world. There are a myriad of others of course, but they all have one thing in common – coverage and user volume. This is to say that these communities have proliferated our daily lives and while we as consumers may take them for granted these digital facades cover tremendous untapped value – data.

The key advantage to digitally based communities is measure-ability. If the ‘owners’ of these communities have in fact structured themselves in this manner, they are holders of a tremendous amount of knowledge – even if this knowledge is diluted in millions of pieces of data.Stay with me here… Lets take the iPod community as an example. By tracking the types of music that its customers download and mapping this data to basic geographic and demographic data which they have about their customers, Apple is able to provide amazing insights into music trends globally. This information can then be used to influence investment in various types of artists and marketing initiatives. In addition, Apple has an amazing ability to derive product requirements for their physical and digital products – such as the iPod and iTunes. As it finds that the average size of a users iTunes library grows to be 40 gigs, they can preempt this by developing a device that can easily support this amount of music and media.

More powerful yet are ‘open’ communities like Facebook where users have free reign to create their own content. By mining the behavior of users, Facebook ought to be able to provide authoritative data on a huge number of trends across the world – from the political inclinations of ‘tweens’ to travel habbits, music tastes, food tastes and clothing. Privacy concerns are raised with this type of data mining – but the pros and cons of this topic are better addressed in a separate blog. Companies ought to be able to make informed decisions on things like their marketing and advertising strategies, product strategies and even investment strategies globally.

Getting to a place where a company is effectively able to do this requires investment in both infrastructure and manpower – data warehousing does not come cheap. But I would wager that a ’smart’ investment in data analytics to uncover the behavioral patterns of your community will provide the company with a significant competitive advantage over its competitors both direct and indirect. While I have picked global names, I strongly believe this principle can be effectively implemented on a smaller scale. Knowledge is power!