The Power of Interest Graphs and Strategies for Building a Successful Subscription Business

The Power of Interest Graphs and Strategies for Building a Successful Subscription Business

Introduction:

In the ever-evolving world of social media and digital platforms, understanding the value of interest graphs and implementing effective strategies for building a successful consumer subscription business are crucial. This article explores the significance of interest graphs, as exemplified by Instagram, and provides actionable advice for entrepreneurs looking to thrive in the subscription space.

Instagram's Unique Value Proposition:

According to Facebook's CEO, Mark Zuckerberg, the interest graph holds greater value than the social graph. Instagram's success lies in its ability to leverage the interest graph effectively. Unlike the open web, Instagram's closed ecosystem allows for higher-efficacy signals about user interests, thanks to first-party data and quality control. By focusing on the interest graph, Instagram generates valuable user engagement and first-party data, making it a powerful platform for advertisers.

Challenges in Building the Interest Graph:

While the interest graph holds immense potential, building it has proven to be a challenge. Unlike the social graph, which derives signal from user interactions, the interest graph heavily relies on approximation. Instagram faces technical hurdles in translating visual content into user interests, and its algorithmic curation in the "Explore" tab is still a work-in-progress. Additionally, users have the ability to game the system through comments and hashtags, making it difficult to accurately capture interests.

Instagram's Entertainment Niche:

To maintain the sanctity of its platform, Instagram can further focus on its entertainment niche. By delving deeper into consumer and entertainment information, Instagram can inhibit the propagation of undesirable information. Clickable links, which serve no purpose in the entertainment context, can be eliminated to maintain a singular focus on entertaining users. This approach aligns with the intent of Instagram users, who primarily seek entertainment rather than information.

Separating Users and Brands:

Learning from Facebook's experience, Instagram should separate user-generated content from organic brand interactions. Zuckerberg's decision to create Pages on Facebook allowed businesses to interact with users for free and determine what users wanted from businesses on the platform. Similarly, Instagram should predominantly aim to entertain users rather than inform them. By segregating users and brands, Instagram can provide a seamless user experience and strengthen its position as the first killer app for the interest graph.

Strategies for Building a Successful Consumer Subscription Business:

• 1. Embrace Network Effects: For single-product solutions, maintaining long-term retention without network effects can be challenging. If network effects are not applicable to your product, consider launching new products that better monetize existing customers and open up new customer segments. This approach can alleviate the burden of customer acquisition, increase monetization rates, and improve retention.

• 2. Expand Product Offerings: Selling a product solution for a daily necessity, such as sleep, can have a broader market appeal than focusing on a niche habit like meditation. By launching new products that cater to different needs, businesses can tap into larger customer segments and increase their market reach.

• 3. B2B Expansion: Exploring business-to-business (B2B) offerings can be a game-changer for consumer-rooted subscription businesses. By targeting new customer businesses and acquiring hundreds to thousands of users simultaneously, companies can unlock tremendous growth potential. Headspace and Calm have successfully expanded into the B2B model, showcasing the immense value of this approach.

Conclusion:

Understanding the power of interest graphs and implementing effective strategies for building a successful consumer subscription business are essential in today's digital landscape. Instagram's focus on the interest graph exemplifies its value, while the challenges it faces highlight the complexities of building and curating an accurate interest graph. By embracing unique niches, separating users and brands, and expanding product offerings, entrepreneurs can unlock the full potential of the subscription business model and achieve significant growth.