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Beware of bandwagons
Thursday, 12th April 2012

By Tim Buckley Owen

Abstract:

Scepticism greeted Facebook's acquisition of Instagram but picture sharing services are apparently experiencing runaway success. With other information companies expanding, the bandwagon rolls on, but, looking at Groupon as an example, bandwagons can crash.

Article:

Bemusement and scepticism seems to have been the response of some commentators to the announcement that Facebook was to buy the mobile photo sharing network Instagram for a cool $1 billion. The Guardian reminded readers that Instagram was a profitless, two year old site, and the BBC pointed out that the deal cost Facebook $77 million for each of Instagram’s 13 employees.

But it’s not alone among picture sharing services at the moment in apparently experiencing runaway success. The media has also been reporting figures from the web analytics company Experian that Pinterest is now the third most popular social networking site, beating LinkedIn and Tumblr (see for example Daily Mail comment, plus earlier LiveWire coverage from Joanna Ptolomey and me).

Meanwhile the predictive analytics bandwagon also careers on. The venerable company information provider Dun & Bradstreet announced recently that it had added further analytic capabilities to its Portfolio Risk Manager, while cloud-based predictive analytics solutions pioneer InsightsOne has secured $4.3 million in venture funding to help it “meet the demands of its growing early adopter customer base”. And on the acquisitions front, the global financial information services company Markit has announced its acquisition of Data Explorers, whose analytics help clients identify investment opportunities and manage risk.

But is it all a bandwagon? InformationWeek’s Doug Henschen isn’t afraid to call it that, in a piece looking at how one company, SAP, is following in the footsteps of rivals by adopting the open-source R statistical programming language to develop its predictive analytics capabilities – a path apparently already followed by Information Builders, Oracle, Tibco Spotfire, SAS and the mighty IBM.

No sensible person would dispute the importance of observing trends such as these and forming judgements as a result. But bandwagons can crash, and there’s a classic example out there at the moment: Groupon.

Its initially meteoric rise has been replaced by an apparently never-ending tale of woe, widely reported in the media. In mid-March the Advertising Standards Authority found it in breach of United Kingdom rules when it advertised a deal involving the prescription-only medicine Botox; then it had to agree to better trader diligence after the UK’s Office of Fair Trading found widespread violations of consumer protection laws.

Since then it’s been forced to revise its fourth quarter results after failing to set enough money aside for customer refunds and is facing a Securities & Exchange Commission investigation as a result – plus a class action lawsuit mounted by disgruntled investor Fan Zhang.

LiveWire started reporting concerns about the robustness of Groupon’s business model a year ago and has done so several times since. Cheer the bandwagon on by all means – but think twice before jumping on.

By Tim Buckley Owen

Tim is an information skills trainer and writer on the information industry with over 40 years' experience in the profession. His career has encompassed information management, writing, editing, training, government policy advice and corporate media & marketing.

Besides writing for FreePint, Tim runs courses for training providers and private clients on enquiry handling, abstracting & summarising, information packaging & presentation and information management. The sixth edition of his classic handbook Successful Enquiry Answering Every Time is published by Facet Publishing. You can find details of Tim's training services at www.buckleyowen.com.

Tim can also be reached at tim.buckleyowen@freepint.com

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