This article is a collaboration between myself and Nathan Bush (A.K.A. Another Advertising Wanker, A.K.A. AnotherAdWanker). We’re both strategists at Brisbane advertising agency De Pasquale and had our ire raised a notch when we found out The Starlight Foundation had spent $14 million on its own social network. The fact that we’d been working on a similar project for The Children’s Hospital Foundations had a little to do with it, but mostly, we just couldn’t figure out how they could drop that much dough.

You may have heard about the new social networking site for sick children produced by the Starlight Foundation called Livewire. It is similar to a Facebook or MySpace application but only available for children in hospitals or with serious illness. As Daniel Oyston points out in the Marketing Today podcast, it is an incredibly valuable service for the kids and will no doubt help them feel connected, positive and strong in their recovery process.

However (and I think you knew that was coming), if we put to the back of our minds that this is a children’s charity, there are a few questions that have to be answered in regards to the cost of the project and the allocation of tax payers money. Cameron Reilly addresses this in his podcast with the Livewire creators here.

The crux of the issue is that the cost to develop the social media project over 18 months was $14.7m. The Government supplied $7.2m through Senator Stephen Conroy’s Clever Networks program. The remaining 30% was supplied by Starlight and 20% from other suppliers (keep-in mind that this is not necessarily all cash and includes some in-kind donations).

Nevertheless, $14.4m is a lot of money for a social media project so we will list all of the elements we could find which are included in this budget:

Online platform including social networking tools, chat, mobile platform

Let’s presume you’ve downloaded Ning, analysed it, and then made your own version of it. Let’s say you then get a team of one designer, one project manager and two programmers working exclusively on this for two months. That’s four people times $150 an hour times two months. If you played a lot of ping pong in between meetings, and got your agency’s agency to mark it up a few times you could probably get to $250,000.

Competition Engine

Let’s call it $25,000. That’s one junior programmer working for six months. If you can’t do that for $25,000 you’re doing something very terribly wrong.

Hosting

WebCentral are about the most expensive hosting provider in Australia. Two of their dedicated servers will cost you about $20,000 a month. That’s $160,000 over a year.

Content Management

You could use a free open source CMS like MODx, but your agency won’t make any money out of that, so they’ll convince you to spend $60,000 on some proprietary piece of shit that does the same thing.

Content

Hire a pretty blonde with a PR degree and she can punch out content for 12 months for $60,000.

Customised manual sign-up to increase data security

Call it $5000.

90 computers and tables in hospitals for children to access from bedside

Dell will sell you 90 computers for $108,000. Presuming the kids are happy with IKEA and don’t need rich mahogany, you should be able to get 90 tables for $9,000

Wireless networks and wiring in some hospitals

Five business plans and a few modems - call it $10,000

Parents and siblings site to come by the end of the year

Surely you’d build this in the initial stages as part of the whole thing?

Two therapeutic studies on the benefit of social networks to recovery

Two w@nkers telling you shit you already know like “kids who can interact with other kids have faster recoveries than those stuck in solitary confinement in a Romanian orphanage”. $100,000.

15 full time employees in total - chat room hosts, editorial, security and an outreach person in each state to work with partering organisations to demonstrate how to use the site

$60K a year each, so that’s $1 million, tops.

Training program for chat hosts with the Australian Federal Police

Let’s say they had two police officers training staff for two days. That couldn’t possibly come to more than $10K. Cops don’t earn that much.

TOTAL

$1.79 million

As you can see there is a lot more to this project than just being a social media site - especially in regards to security and support. However, we still can’t see how all of $14.4m will be completely spent by the end of this year. We can get to around the $1.4m mark with some generous estimates. This leaves $13m unaccounted for. This leaves us with some questions:

1. As Cameron Reilly points put, is there any reason to reinvent the wheel? Surely a free network creator such as Ning and embedded content would have significantly brought the cost down with no major impact on functionality?

2. Will the publicity around social media projects such as this and the budget being used scare other charities off playing in the social space? We know that charities can do sites such as this for next to nothing - but will they ever bother to explore now?

3. Livewire is aiming for 20,000 members by the end of the year. Given the funding of the program (which ends this year) - this equates to $735 per member. Is this a responsible allocation of funds when our hospitals have a long wish list of other resources required?

Don’t get us wrong, it is a great project and will do wonders for the kids. But surely we need more accountability here?

This entry was posted on Friday, March 6th, 2009 at 1:56 pm and is filed under Online Marketing Mistakes, Social Media. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.