Since Mark Zuckerberg, and cofounders Dustin Moskovitz and Chris Hughes, launched Facebook from their Harvard dorm room in 2004, the social networking site has grown past their wildest dreams. Today, there are more than 70 million active users, 55,000 regional, work-related, collegiate and high school networks, and 20,000 applications, with 140 new applications added each day. These applications enable users to do everything, from sharing videos to sending virtual cupcakes. But it’s the Scrabulous application in particular that some people spelling out trouble.

Scrabulous, a Scrabble application developed by two brothers in India last year, has over three million users with 700,000 of them spelling out words daily. Scrabulous has reinvented Scrabble by introducing it to the social gaming demographic. It has transformed from the old version when players sat down for hours spelling out words with wooden tiles, to the new version where users can play multiple games against multiple opponents over the course of weeks, even months. Scrabulous is getting people excited about the board game in a way they haven’t been in years.

So what’s the problem?

Well, Hasbro and Mattel, who own the rights to the game, did not license its use. A trademark infringement lawsuit was filed against the two brothers earlier this year. The game was even shut down temporarily by Facebook due to pressure. Scrabulous users were up in arms over the lawsuit and “Save Scrabulous” petitions quickly appeared on Facebook groups.

While it’s understandable that Hasbro and Mattel reacted the way they did - after all Scrabble is their idea - their reaction also demonstrates a lack of knowledge on the trend facing not only them, but every business: online marketing. Scrabulous is an online marketing goldmine. It has an addicted fan base and a social network that is a machine for viral buzz. With Hasbro and Mattel’s deep pockets, they could have bought it up or at least struck an innovative marketing deal and made this a win-win situation for everyone involved.

Mattel has released its own online version of the game, but it’s only available outside North America. The game has 5,200 players a day who complain about its slow speed and dictionary issues. This move further demonstrates that Mattel and Hasbro just don’t get the online movement. It’s an image that’s only going to help them do one thing: lose the large online demographic.

So what does this have to do with your business?

While you may not be faced with online copyrighting issues, that doesn’t mean you can’t learn from the Hasbro and Mattel situation.

Lesson #1 - Be on top of industry trends
The actions of Hasbro and Mattel made it seem that Scrabulous was the first they heard of online gaming, let alone online marketing. You want your audience to see you as a cutting-edge business that knows what the next big thing is, not as a business that is scrambling to keep up. A business that is behind will be left behind.

Lesson #2 - Know your audience
You may never consider a certain demographic as part of your audience, but as Scrabulous has shown us, new audiences can appear out of nowhere. It’s important to know who these audiences are, what they like and where they are going so you can be present in their online lives. If they can’t get enough of Facebook, consider creating a “Page” where users can become “fans” of your business. If they’ve moved on to new social networking sites you should know what they are and how you can use them.

Lesson #3 – Decide which online opportunities benefit you
Online marketing offers a lot of opportunities, but they’re not for everyone. Online advertising on popular websites can cost upwards of $500,000 per day and blogs need constant updating to be effective. By knowing your audience and where the industry is going you’ll know which opportunities will benefit your business the most.