Digital Strategy 101
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NETWORK EFFECT<br />
DEFINITION USE<br />
The effect that one user of a good or<br />
service has on the value of that product to<br />
other people<br />
EXAMPLE<br />
If none of your friends were on Facebook, it wouldn’t be a very worthwhile space to<br />
waste your day. But with each friend that joins the service, it becomes that much<br />
more interesting. <strong>Digital</strong> businesses like Facebook are built entirely on the Network<br />
Effect.<br />
In marketing, we tend to focus our<br />
communications on the value of the<br />
product or service to a single user –<br />
which is smart, people most often<br />
choose things based on the immediate<br />
benefit to them. But as marketing<br />
becomes as focused on the service itself<br />
and not just how the service is<br />
communicated, brands and businesses<br />
will find that leveraging the Network<br />
Effect will bring a new competitive<br />
advantage in the marketplace. AMEX<br />
began focusing on how they could<br />
connect their small business customers<br />
together to aid one another and now<br />
small business is a true cornerstone of<br />
their business model.<br />
DIGITAL STRATEGY <strong>101</strong>, FIRST EDITION BY @BUD_CADDELL 51
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