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Metcalfe's Law

When technologist Bob Metcalfe discovered what is known as Metcalfe's Law he stumbled on something that applies to marketing, communications, franchising and business networks.

Metcalfe's law, which describes the relationships within simple computer networks, says that the usefulness of a network equals the square of the number of users. In plain English, the more connections (users) a network has, the more useful it is. A network with one user is not much use; one with two users is limited; but with each new user that joins, the number of connections and possibilities between them multiplies accordingly.

Network size makes a difference

Network Veka is a prime example of a successful network that has grown substantially (190 million sales to date in over 50,000 installations) in the six years since it was created. The hardest part was starting off - convincing enough people to join to make the network work effectively. Twenty people in a small room make a party, the same number rattling around in a big room doesn't. But, as Metcalfe's Law predicts, once the number of members reached critical mass and we achieved national coverage it took off.

The point when your marketing starts to work

Metcalfe's law also throws light on the mechanics of critical mass - the point at which an effect takes off. Critical mass is a key factor in marketing, because you need enough power and momentum to be noticed and get through to people - in today's world you have to compete for attention, and hold that attention long enough to get your message across.

Even with a limitless budget you can't be everywhere. You have to be selective to be effective. And when profit is thin the marketing budget is usually the first to be sacrificed - you cannot afford to do all you'd like to do. But when budgets are cut most of us just spread the money more thinly rather than make choices. We shrink the size of adverts, find a less expensive slot, or do less and hope somehow the brilliance and force of our communications will do what it did before. It rarely does, because it lacks critical mass.

People think that some advertising is better than no advertising. But - as Metcalfe's Law suggests - below a certain level of communication, your spend will be wasted. Above that level it will start to pay for itself and generate business. Marketing is not a precise science, but that does not mean it cannot be shown to work. To be successful you must choose where to concentrate your spend to reach your target audience.

It's not the size of your budget that matters it's what you do with it that counts.

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