Bad News for Digg – Valuation drops from $160m to $500k

It’s a sad day for Digg, the once super cool social bookmark site has dropped from a valuation of more than $160 million to the bargain basement price of $500,000. The buyer is New York technology development firm Betaworks, which is attempting to revive the news-sharing site that was outmaneuvered by Facebook and Twitter.

I’m not entirely surprised by this drop in value for the site. Back in 2006, Digg was the place to get news before anyone else; it was the first site I looked at in the mornings to see what happened while I was sleeping. And, I wasn’t the only one. Enough of us went there daily to help land Digg founder Kevin Rose  on the cover of BusinessWeek in 2006 with a $60 million valuation.

But, now I hardly ever go to the site anymore and yesterday, Digg confirmed it sold its brand, website and technology to Betaworks. The price is a pittance for a company that once raised $45 million from prominent investors including Facebook investor Greylock Partners, LinkedIn founder Reid Hoffman, and venture capitalist Marc Andreessen in just one week.
According to insiders, Digg received higher offers from bidders that included technology and publishing companies and start-ups but ultimately decided Betaworks had the best plan for reviving its brand.

Founded in 2004, Digg was once one of the most promising start-ups in Silicon Valley. Digg users would post links on the site’s home page, then others would vote on their choices, determining the prominence of the stories they posted.

“They were one of the first social media sites,” says Kristina Lerman, an assistant research professor at the University of Southern California who has studied Digg and other social-news sharing sites. “They introduced social components like having friends and followers.”

The site quickly rose to prominence, in part due to founder Kevin Rose, a former cable television talk show host, whose charm helped sell the concept to Internet tastemakers. In the fall of 2008, Digg raised nearly $29 million in venture capital from Greylock Partners, Highland Capital Partners and other financiers in an investment valuing the company at around $164 million, according to Dow Jones VentureSource.

Over the years, the company was rumored to be in negotiations to sell itself several times, including to Google in 2008 for a reported $200 million. The deal was never completed.

But the audience started to drift away in early 2010 when services such as Facebook and Twitter exploded in popularity, as users preferred getting article recommendations from their friends or people they followed. I know I stopped going to the site for news around 2009, pretty much the same time Twitter established itself as the source for instant news having given us the very first reports of Captain Sully’s brave water landing and Michael Jackson’s death.

A series of redesigns not well-received by users also hurt the company. A site relaunch in the summer of 2010 triggered a backlash, with most users saying they preferred the old Digg. By the end of 2010, Digg’s audience had fallen by more than half, according to ComScore.

Newer social-news website Reddit. also stole some of Digg’s thunder. Last December, Reddit drew more visitors than Digg for the first time, according to comScore, and since then it has maintained that lead.

In March of last year, Rose resigned from the company. He is now a venture capitalist with Google Ventures.

Betaworks intends to fold Digg into News.me Inc., a digital media start-up that Betaworks launched in April 2011. News.me sends users links to news articles that their connections on Twitter and Facebook are reading and talking about. News.me, which uses an iPad and iPhone app and daily email newsletter, has about 10 employees.

None of Digg’s remaining employees will join Betaworks as part of the acquisition. Chief Executive Matt Williams will join venture capital firm Andreessen Horowitz as an entrepreneur-in-residence. Betaworks CEO John Borthwick will become Digg’s new chief.

Sad day for a once super cool site. But, it will be interesting to see what Betaworks has in mind for Digg. I will keep y’all posted.

Hyundai’s Bid for Fuel Efficiency Month is Clever PR

We PR pros, often take advantage of National [Something] Days/Months/Weeks to help make our clients’ news relevant and, let’s fact it, there usually is a day/week or month set aside for almost everything.

Well, the other day, I saw the carmaker Hyundai is taking it to a new level by enlisting consumers to help make August “National Fuel Efficiency Month.”

The brilliance here is in the simplicity.

The campaign is driven by a Facebook petition, which will most assuredly deliver more fans for Hyundai.

But, that’s just the icing on the cake. It doesn’t matter if Hyundai gets new Facebook fans. It doesn’t even matter if enough people sign the petition to claim the month, although if they do get enough signatures just imagine what Hyundai can do with that! They would “own” August! What PR pro doesn’t want that opportunity to play with?!

Still, what really matters is that Hyundai has cleverly aligned their brand with fuel efficiency through a campaign that puts the carmaker’s own fuel efficiency record front and center. 

Nearly every blogger and reporter who has covered this campaign has repeated this message: The company was deemed by the EPA as the most fuel-efficient automaker in the U.S. for model year 2010, the most recent that was officially tracked by the agency. And through May, Hyundai’s new car fleet averaged more than 37 miles per gallon, about 50 percent higher than the U.S. average.

And, those who aren’t using that message tend to reference the carmaker’s position as having the highest average fuel economy and lowest C02 of any manufacturer in the U.S.

It’s always hard to rise above all the news noise out there and this is a super clever way for Hyundai to “own” fuel efficiency. So, well done guys! Here’s hoping you get August, if only so I can see how you use it!

Social Media Explained Through Bacon

It’s Hip to Be Gay – Brands That Support LGBT Find Fiercely Loyal Customers

I’m sure by now you’ve all heard the announcement that surprised no one. No, I don’t mean that Tom and Katie split, although, that was no shocker either. I’m referring to the news that CNN host and silver fox himself, Anderson Cooper came out as gay.

On his previous silence, AC said, “It’s become clear to me that by remaining silent on certain aspects of my personal life for so long, I have given some the mistaken impression that I am trying to hide something – something that makes me uncomfortable, ashamed or even afraid. This is distressing because it is simply not true. I’ve also been reminded recently that while as a society we are moving toward greater inclusion and equality for all people, the tide of history only advances when people make themselves fully visible.”

Interestingly, this comes on the heels of several brands embracing the LGBT community and finding a fiercely loyal and often highly monied customer base.

This month alone, we’ve had the Oreo Cookie Gay Pride image they posted to their Facebook page. No, it is not a real cookie, although many have asked Kraft and Oreo to release the rainbow cookie in stores. The image was created and posted to Oreo’s official Facebook page in celebration of Gay Pride month.

The picture of rainbow deliciousness quickly went viral and generated more than 231,000 likes, and nearly 40,000 comments.

Of course, there was some backlash, but Kraft and Oreo stood their ground and earned some very loyal fans.

“Kraft Foods has a proud history of celebrating diversity and inclusiveness. We feel the OREO ad is a fun reflection of our values. There has been a lot of buzz about the image, and it shows how relevant OREO is to people even after 100 years,” said Basil Maglaris, associate director of corporate affairs for Kraft.

And, today Facebook announced, the site is adding marriage icons that depict same-sex couples. This follows last year’s addition of ”In a Civil Union” and “In a Domestic Partnership” options to user profiles.

The social networking site has also taken significant steps towards preventing anti-LGBT bullying, creating the Network of Support with GLAAD and other LGBT organizations in 2010.

And, they aren’t alone.

Earlier this year, Starbucks released a memo supporting gay marriage. There were protests, of course, but Starbucks didn’t back down and has seen no losses thus far. Also, this year, The Home Depot was boycotted by some for providing employee benefits to same sex couples. The American Family Association web site proclaimed, “AFA is promoting a boycott of Home Depot until it agrees to remain neutral in the homosexual culture war.” The pledge condemns The Home Depot for giving “financial and corporate support to open displays of homosexual activism,” because this helps expose “small children to lascivious displays of sexual conduct by homosexuals and cross-dressers.”  In response to the pledge, which was delivered at Home Depot’s annual shareholder meeting, Chairman Blake responded, “We are, and will remain, committed to a culture that fosters an inclusive environment for our associates, our customers and communities in which we exist.”

A smart decision because the simple fact is, your own political or religious preferences aside, supporting the LGBT community is good for business.

A national survey conducted last year found that nearly three-fourths (74 %) of LGBT adults are likely to consider brands that support their cause/community, an increase from January 2007 when 62 % reported they were likely to consider those brands. A significant portion of these adults, two-fifths (41 %) say they are extremely likely or very likely to consider these brands.

When it comes to workplace policies, nearly nine out of ten (87 %) LGBT adults say they are likely to consider a brand that is known to provide equal workplace benefits for all of their employees, including gay and lesbian employees. More significantly perhaps, nearly half (49%) of LGBT adults say that they are extremely or very likely to consider these brands.

Brand loyalty appears to be more important than price in certain situations for LGBT people. Seven out of ten (71 %) LGBT adults said they are likely to remain loyal to a brand they believe to be very friendly and supportive to the LGBT community “even when less friendly companies may offer lower prices or be more convenient.”

There also is a significant portion, (23 %) of LGBT adults, who say they have switched products or service providers because they found a competing company that supports causes that benefit the LGBT community.

But, it’s not just the LGBT community’s support in play here. For the firs-time ever, an overwhelming majority of all Americans support issues like gay marriage and they are increasingly voicing their opinions through the brands that align with the cause.

So, good for Facebook and Oreo and every brand that takes a positive stand on this issue. It’s not only good humanity, it’s good business.

How Social Is Being Used To Drive Business

How are social networking and social software impacting businesses now and in the future?

A new research report co-authored by MIT’s Sloan Management Review and Deloitte entitled Social Business: What Are Companies Really Doing?may have the answers.

The report surveyed nearly 3,500 managers from companies 115 countries in 24 industries, and conducted in-depth interviews with thought leaders and top business execs from major brands, including McDonald’s, IBM, SAP, Salesforce.com, and Yammer. Here’s a quick rundown of its key findings.

1. Social Business Matters Today- Will Matter Even More Tomorrow

    • 52% of survey respondents believe social business is important to their business now; 86% acknowledge it will be important or somewhat important in three years
    • The most important use of social software is for customer service, 2nd most important use is to innovate for competitive differentiation
    • Managers still see it as an external-facing activity

Bottom Line: Though not everyone sees it as important to their business now, nearly all managers agree that social software will become increasingly critical to their organization over the next few years.

2. Many Leaders are Enthusiastic, but Lack Metrics to Prove Value

    • Leadership and clear vision recognized as key to social software adoption
    • Biggest barrier to adoption: lack of management support. The most common answer to the question “How do you measure social software use?” was “do not measure”
    • CEOs, presidents and managing directors are 2x as likely as CIOs and CFOs to say social business is important to their organization

Bottom Line: Metrics may not be as important when companies are experimenting with social software, but as it becomes more widely used, metrics must be in place to assess progress and encourage successes. Social business depends on leadership; leaders can benefit from social business.

3. Different Perspectives Based on Size of Organization

    • Respondents from small (fewer than 1,000 EEs) and large (over 100,000 EEs) companies were twice as likely as managers of midsize companies to acknowledge the importance of social business
    • When asked the importance of social business three years from today, all groups answered similarly

Bottom Line: social tools allow small companies to look bigger than they are; large companies appear more human and approachable. Midsize companies see the advantage of social tools, but don’t see themselves exploiting them for three more years.

4. Social Business Getting Most Traction in Media and IT Sectors

    • Almost 75% of managers from Media companies say that social software is at least somewhat important to their organization today; nearly 66% of managers in the Tech industry say the same
    • Managers from the Energy and Utilities (7.1), Financial Services (10.4%), and Manufacturing (9%), industries are least likely to say that social software is important to their organizations. However, managers from all three segments acknowledge that it will be much more important in three years

Bottom Line: Certain industries are seeing more value in social tools than other industries. But even managers from industries that place a low premium on social software today agree that social tools will be much more valuable in the near future.

Ultimately, small businesses are using social to amplify their reach. Larger organizations are doing so to humanize their brand. It’s great to see that mass adoption of social for marketing is finally nearly here!

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