Octavianworld

Clunkalytics

This afternoon I listened to an NPR segment on the government's "Cash for Clunkers" program.  It sounds like quite the  goat rodeo.  

A senior researcher at JD Power & Associates in Detroit interviewed for the segment noted that although the program provided incentives sufficient to fund sales of 250,000 cars ($1Bn in incentives at ~$4k/car traded in / retired), his firm's estimates are that only 40,000 sales will be incremental (over and above) what would have otherwise have been sold anyway.  Hmm.  If they're right, a billion dollars to lift sales by 40k cars.  That's $25k for each new, fuel-efficient car sold!  (In fairness, that's actually a lot less porky than a lot of things we hear about.)

Would the government have done better to simply buy 40,000 cars, perhaps for a little less than $25k apiece?  Then it could have run a contest where Americans could enter their most egregious gas guzzlers (via online video, natch) in the hope of winning a replacement, which would have been more fun, and bought the government lots more -- and more positive -- coverage of the program (perhaps giving a whole new meaning to "cap and trade").  

Of course this ignores the benefit of getting the other ~200k gas guzzlers off the road.  But treated as an independent objective, surely there would have been a better mechanism for encouraging drivers who were going to buy anyway to buy north of 20 MPG?

Cynically, one might say that the real beneficiaries of this program aren't auto workers, but the dealers whose glutted lots get cleared (especially since the program can be used to buy "foreign" as well as "domestic" cars -- ironically the folks interviewed on NPR sounded a common refrain: "Trading in my old GMC / Ford for a new Toyota pickup!").  It's hard to believe that under current conditions the dealers will order replacement inventories from the plants sufficient to replace what they sold.  

It's easy to understand why this program was so popular in Congress, since there are dealers in every state.  But if you wanted to make the most of a billion dollar stimulus for the present and the future of the nation, would putting it into the pockets of auto salesmen nationwide have been the best way to go? (It's a serious question, since dealers are often at the center of their communities and do spread a lot of money around, so maybe the multiplier is significant.)

Notwithstanding, I'm not coming at this from an ideological position.  I get the need for a stimulus to ameliorate the recession.  I'm thinking about this in the context of other retail promotion programs we see, many of which have the same inefficient dynamics -- subsidizing sales that would have happened anyway, motivating sales of the wrong products, and making the channel happy for a little while rather than encouraging more lasting customer loyalty.  And since "you manage what you measure", I'm also thinking about how I might have set up an analytic framework to execute the program more effectively.

There is a web site for this program (FWIW, it's using Google Analytics).  To measure how well the program attracts possible customers, perhaps the government could have channeled prospective users of the program through it, to gather information (e.g., pre-existing purchase intent, perhaps in combination with data from a BT network) in exchange for the "coupon".  To measure engagement and conversion, surely -- I can imagine a number of options -- consumers could have been tracked through to dealers.

Then, providing open access to the data and crowd-sourcing suggestions for improving the program would have been cool, and good practice for aspiring web analytics professionals (free job training in a growth category!).  Sadly, but more likely, we'd be filing FOIA requests.  Oh well.

(Re-)Thinking Marketing Silos

I've been wondering lately about the social marketing boom, the timing of its inevitable commoditization (via Adverblog, parodied here, warning -- possibly NSFW) and where its useful boundaries are -- at what point does it stop making sense to talk about a social media campaign per se, and to start thinking about social media elements in integrated campaigns.  (For example, how do you classify a social "forward to a friend" capability in an email campaign?)  The issue is broader of course.  Integrating the "customer experience" is widely acknowledged as a good thing these days across many channels, not just with respect to social media.  

Silos in marketing organizations are widely acknowledged as a principal barrier to realizing this objective.  So, three questions are worth asking.  Why do they exist?  What organizational model would be a better choice?  And, practically speaking, how do we get from A to B?

At an operational level, silos today are most commonly defined by channel.  That is, for example, offline channels vs. online channels (in retail, the folks who run the stores vs. the folks who run the website; in media, the folks who run the print magazines vs. the folks who run "interactive").  Or, within "online", email vs. web site vs. social media.  

These definitions get started because even though what folks share in common may be really important -- knowledge about a customer segment's habits for example -- the specialized expertise  required to mechanically execute campaigns in the medium is very different.  Even when these roles are combined, individuals or small groups may still think "channel first" because of the concentration required to think and execute mechanically.

The channel-defined definitions persist in part because the vendors who supply the tools for those channels have an interest in continuing to fight commoditization with new, complex features rather than with simplicity, which though virtuous, sadly accelerates commoditization rather than staving it off.  (The exception -- Apple -- proves this rule.)  Also, vendors have historically made integration hard, though this is changing.  Further, there is a vendor-sponsored event ecosystem that pulls-channel-defined specialists together more often (and in nicer places, with better schwag) than, say, audience-segment-centric conferences might.  And finally, just as cucumbers rarely survive their encounters with barrels of brine, folks steeped in particular media begin to think differently in ways that shape their abilities to think across channels.  Someone with a lifetime as an auteur of 30-second TV spots may find it harder to think about "conversations".

What alternatives might be better, and when?  If different target customer segments had radically different media usage patterns, you might cut things that way.  Or, if the media used to  attract, engage, and convert customers were similarly distinct, you might slice efforts by stage of purchase funnel.  But things have begun to blend: old folks are using Facebook and Twitter as much as young folks (who increasingly think these media are uncool as a result), and what do you call a retail checkout experience that stays on an affiliate's site?

So, the answer may be ad hoc task force overlays to today's channel-defined silos.  These can be reinforced by experience-wide metrics, analytics, and perhaps even evaluation and compensation frameworks for the members of these task forces.  But perhaps the most important first steps are awareness of what customers experience, a firm's business strategy  for choosing and serving (what products, priced how?) the ones they want, and mutual communication and education about how different folks approach and do their jobs in their respective channels.

To what degree do silos constrain you today? How are you adapting to overcome their challenges, and improve target customers' experiences?

Microsoft-Yahoo Search Deal: And Then There Were Two And A Half

Microsoft and Yahoo! announced today that the former's new Bing search engine would now run the latter's search capability.  And, Yahoo! will sell paid search campaigns for the combined capability.  At least for starters, this means Google owns two thirds + of pro forma search volume (per Comscore), and MSFT+YHOO own the other third.  

Yahoo! had no choice but to accept colonization by Microsoft, as its own search technology was going nowhere.  Similarly, Microsoft had to do this deal with Yahoo because in today's tough market (even paid search is seeing only low single digit growth), it couldn't afford to divide its sales force to fight Yahoo in the face of their shared, colossal foe.

It will be interesting to see how much search volume sticks with / moves to each.  I'm guessing there is a curiosity factor that has Bing volume temporarily high, but that Google will hold serve, since Bing's advantages seem concentrated in some commerce-oriented niches.  (Here's a wacky idea though:  Microsoft could reverse one important structural disadvantage with a pre-emptive bid to embed Bing by default in Firefox, when Mozilla's current deal with Google expires in 2011.  Maybe not so wacky if, following long-term trends, IE's browser share drops close to 50% by then, and Google chooses to focus on Chrome.)

The other reason for this deal is for each side to achieve a critical mass of search volume to usefully inform display ad targeting.  Display ad networks have been a surprisingly profitable business, even in tough times (see also for example NET income for VLCK in Q1 of this year).  And the tip of the spear in the trend toward multi-channel optimization of marketing spend has been attribution analysis between search and display channels ("To what degree is a search triggered by display ad exposure, and how can we better target display ads to behaviorally-defined user segments across a network based on their search history?").  So, this deal would seem to be as much about shoring up each side's profit centers as it would be about huddling for warmth in the paid search world.

Given the complexities of having Yahoo! take over Bing sales and operations (through AdCenter), folks at Google should make hay in the short term, since their opponents will be distracted and the transition will create work for customers that arguably doesn't add much value either.  Hopefully, much of this complexity can be absorbed for advertisers by their search agencies, and hopefully they can get paid for some of that.

Notwithstanding interesting riffs on top of the established platforms, and newcomers that are useful in niches, this consolidation is further proof of the diminishing returns to innovation in search as we know it, that is, indexing and ranking unstructured content.  The next big wave of disruption in this category won't happen until we have radical change in the nature of the stuff being searched -- specifically, the advent of "Semantic Web" standards that will structure the underlying data in useful ways.  

It will be interesting to see how The Big Two And A Half left in search react to the propagation of open standards that could level the search playing field.  If the DOJ wants to fight the Search Trusts, perhaps its money is better spent on seeding and supporting those efforts than undoing what nature hath already wrought.

MITX "What's Next": Mid-Year Digital Marketing Zeitgest Check (#MITXDT)

This morning I went to MITX's "The Current Digital Market and the Outlook for What's Next" event at Microsoft in Cambridge. The event was well-attended.  Before the  panel discussion, I enjoyed talking with Allen & Gerritsen CEO Andrew Graff, who helped us at ArsDigita, and iProspect CEO (and ex-Bain colleague) Rob Murray.  Andrew reported that business was surprisingly strong, and Rob validated trends toward multi-channel attribution analysis and optimization.  I also had the chance to meet Forrester's Shar van Boskirk briefly; the 5-year interactive marketing forecast of spend across display, search, email, mobile, and social she / they released yesterday, projecting digital to grow to 20% of an otherwise flat market, with social growing by a factor of five, sparked a spirited conversation on Josh Bernoff's Ad Age article about it yesterday.

Shar moderated a panel that included Dace Venture's Jon Chait, Fidelity Labs' (and Razorfish alum) Hadley Stern, and Razorfish Client Partner Kristin Marlow.  Jon's got a $75M debut fund focused on consumer marketing solutions; Hadley's job is to develop things for Fidelity customers that will be ready for prime-time in 12-18 months, and Kristin runs the Razorfish relationship with T. Rowe Price.

Shar's summary / synthesis of the panelists' themes:

• the marketing organization's function has been transformed into one of "conversation stewardship"; marketers need to take their efforts to plant and nurture conversations to where audiences are (e.g., syndicate, Hadley's main point), and be prepared to have it be a real 2-way communication (Jon's primary point). (FWIW, maybe "2-way" should be "n-way").
• There's a tight focus on performance right now; investments in data management / integration are taking precedence over investments in new media

Panelist comments I noted:

• Kristin: Interactive marketing budgets are on the sideline, waiting for performance to come back; what is getting spent is very close to conversion, and is very closely watched and analyzed
• Kristin: Quantcast is hot, people like the idea of being able to buy cookies  
• Kristin: Attribution analysis for display v search spending optimization is a growth area 
• Kristin: There's also lots of attention to the "on-domain experience" 
• Kristin: Lots of focus on social, because people think it will be largely free, but it's not
• Hadley: "97% of Fidelity's business is done online" [stunning stat, I'd be very interested to better understand how that's bounded / qualified] 
• Hadley: Given that, his big theme is syndication -- "Fidelity Everywhere" -- building applications for the desktop, iGoogle, iPhones, etc. that allow Fidelity customers to do what they need in the places they are most comfortable, which doesn't always mean coming to the website 
• Hadley: Fluid times -- "Feels like every six months we're trying to make big decisions without much information."
• Jon: Trend is toward 2-way marketing , most cost effective ways to maximize engagement with the right people. Seeing 5-14% CTR on display ads in these media
• Jon: The trend is real -- his portfolio companies serving these needs have had their strongets revenue growth ever since Q4 of last year 
• Jon and Kristin: establishing credible social presence takes commitment -- can't dabble.  
• Jon -- entry price for credible social media effort = $250k-350k/year, sustained effort will be seven figures / year
• Kristin: There's a tradeoff between engagement and scale [Note: my presentation at IBM Research on Monday was partly about how you reconcile the two]
• Shar: there isn't and won't be any fully integrated platform for marketing analytics and execution -- the key is to work with vendors who play nice with each other, through adherence to "open data"  

Questions I wished I'd asked:

• How much of decision-making by clients right now is based on modelling versus testing?
• Given the decline in unit prices for media, as well as lower creative costs, the cost of analytics and tracking for any given campaign are getting bigger -- to what degree are marketers factoring these into campaign ROI? [I'm not seeing that yet, but I suspect it will begin to become an issue in the next 12-24 months.  If in the past the medium was the message, the measure may well be the message in the future -- meaning what each target consumer experiences will be personalized based on complex algorithms drawing conclusions about him or her.]  

What did I miss? 

Caption Contest

Online Surveys & Market Research

Facebook at 250 (Million): What's Next? And What Will Your Share Be?

Facebook announced last week that it had passed 250 million members.  Since no social network grows to the sky (as MySpace experienced before it), it's useful to reflect on the enablers and constraints to that growth, and on the challenges and opportunities those constraints present to other major media franchises (old and new) that are groping for a way ahead.

"Structured Collaboration" principles say social media empires survive and thrive based on how well they support value, affinity, and simplicity.  That is,

• how useful (rationally and emotionally) are the exchanges of information they support?
• how well do they support group structures that maximize trust and lower information vetting costs for members? 
• how easy do they make it for users to contribute and consume information? 

(There are of course additional, necessary "means to these ends" factors, like "liquidity" -- the seed content and membership necessary to prime the pump -- and "extensibility" -- the degree to which members can adapt the service to their needs -- but that's for another post.)

My own experience with Facebook as a user, as well as my professional experience with it in client marketing efforts, has been:

• Facebook focuses on broad, mostly generic emotional exchanges -- pictures, birthday reminders, pokes.  I get the first two, and I admire the economy of meaning in the third.  The service leaves it to you to figure out what else to share or swap.  As a result, it is (for me anyway) <linkbait> only sometimes  relevant as an element in a B2C campaign, and rarely relevant in a B2B campaign </linkbait>
• Facebook roared past MySpace because it got affinity right -- initially.  That is, Facebook's structure was originally constrained -- you had to have an email address from the school whose Facebook group you sought to join.  Essentially, there had to be some pre-existing basis for affinity, and Facebook just helped (re-)build this connective tissue.  Then, Facebook allowed anyone to join, and made identifying the nature of relationships established or reinforced there optional.  Since most of us including me are some combination of busy and lazy, we haven't used this feature consistently to describe the origins and nature  of these relationships.  And, it's cumbersome and awkward to have to go back and re-categorize "friends". (An expedient hack on this might be to allow you to organize your friends into groups, and then ask you which groups you want to publish items to, as you go.)
• Facebook is a mixed bag as a UI.  On one hand, by allowing folks to syndicate blogs and tweets into Facebook, they've made our life easier.  On the other, the popular unstructured communications vehicles -- like the "Wall" -- have created real problems for some marketers.  Structured forms of interaction that would have created less risky choices for marketers, like polls, have come later than they should have and are still problematic ( for example, you can't add polls to groups yet, which would be killer).  And, interacting with Facebook through my email client -- on my PC and on my smartphone -- is still painful.  To their credit, Facebook opened up a great API to enable others to build specialized forms of structured interaction on its social graph. But in doing so it's ceded an opportunity to own the data associated with potentially promising ones.  (Like prediction markets; Inkling Markets, for example, lets you syndicate notices of your trades to Facebook, but the cupboard's pretty bare still for pm apps running against Facebook directly.)

The big picture: Facebook's optimizing size of the pie versus share of the pie.  It can't be all things to all people, so it's let others extend it and share in the revenue and create streams of their own.  Estimates of the revenues to be earned this year by the ecosystem of third party app developers running on Facebook and MySpace run to $300-500 million, growing at 35% annually.  

Them's not "digital dimes", especially in the context of steep declines in September ad page trends in, say, revenues of leading magazine franchises, as well as stalled television network upfronts. But, folks might argue, "Do I want to live in thrall to the fickle Facebook API, and rent their social graph at a premium?"  The answer isn't binary -- how much of an app's functionality lives in Facebook, versus living on a publisher's own server, is a choice.  Plus, there's ways to keep Facebook honest, like getting behind projects like OpenSocial, as other social networks have done. (OpenSocial is trying to become to Facebook's social graph as Linux is to Windows.  Engineer friends, I know -- only sort of.)  And, for Old Media types who don't feel they are up to the engineering tasks necessary, there are modern-day Levi Strausses out there selling jeans to the miners -- like Ning, which just today raised more money at a high valuation.  Still too risky? Old Media could farm out app development to their own third party developer networks, improving viral prospects by branding and promoting (to their suscriber lists) the ones they like in exchange for a cut of any revenues.  In this scenario, content gets added as an ingredient, not the whole main course.  

What is true in the new environment is that reach-based ad network plays surfing on aggregated content won't pay any more.  Rather we have to think about services that would generate more revenue from narrower audiences.  The third-party games created by Facebook app developers referenced above demonstrate how those revenues might stem from value through entertainment.  As we speak, Apple and its developers are earning non-trivial sums from apps.  Phonetag has its hands in folks' pockets (mine included) for $10/month for its superuseful -- albeit non-social -- transcription service.  Filtering for relevant content is a big challenge and opportunity.  Might someone aggregate audiences with similar interests and offer a retail version sourced at wholesale from filtering service firms like Crimson Hexagon?  Looks like Porter Novelli may already be thinking down these lines...

Let's push the math: a winner service by anyone's measure would earn, say, $50M a year. Four bucks a month from each person is roughly $50/ year.  You'd then need a million folks, 1/250th of Facebook's user base to sign up.  Reasonability check -- consider the US circulation of some major magazine titles. 

If your application service is especially useful, maybe you can get $2/month directly from each person.  Maybe you can make the rest up in ecommerce affiliate commissions (a 10% commission on $125 in annual purchases by each person gets you ~$1/month) and ad revenue (the $12 million/year nut would require one dollar per member per month; a $10 CPM would mean getting each of your million users to account for one impression on your service a couple of times per week, more or less, to cover that nut.)

We also have to be prepared to live in a world where the premiums such services earn are as evanescent as mayflies, especially if we build them on open social graphs.  But that's ok -- just as Old Media winners built empires on excellent, timely editorial taste in content, New Media winners will build their franchises on "editorial noses" for function-du-jour, and function-based insights relevant to their advertisers.  And last time I checked, function and elegance were not mutually exclusive.

So, even as we salute the Facebook juggernaut as it steams past Media Beach, it's time to light some design workshop campfires, and think application services that have "Value, Affinity, Simplicity."

Structured Collaboration in Social Media: Design For Analytics (IBM Research Talk Recap)

At Kate Ehrlich's invitation, I gave a one-hour talk yesterday at IBM Research and the Center for Social Software titled "Structured Collaboration in Social Media: Design for Analytics".

The presentation made three main points:

• Social marketing today is limited by the (un-)structure of social media. (And, most marketers accept the constraints of these media as they exist today, and "reasonably" adapt themselves to them.)
• Applying "Structured Collaboration" principles to social media design ("unreasonably" adapting the medium) can expand and improve user engagement.
• These same principles can inform the design of "engagement" for marketing analytics, to make segmentation and targeting easier and more effective.

The presentation included a survey and evaluation of the social marketing landscape today, and described two important shortcomings that limit what marketers can do with it:

• "Off-the-rack" collaboration structures that don't align -- and often work against -- what marketers are trying to accomplish 
• Sample bias given the "1-10-90" nature of participation 

The presentation then described and illustrated "Structured Collaboration" principles, and talked about how marketers like Nike are realizing significant results through initiatives that reflect them.  Then, we discussed how the design of these initiatives can reveal segmentation and targeting insights much more readily than the typical application of marketing analytics to conventional social media.

Finally, the talk offered some existing examples for how to exploit these principles cheaply, as well as some ideas for how several firms could apply them to realize their own versions of what Nike, and more recently others like Fiat, have done.

Thanks once again to Kate, Ethan, and Irene, and to all their colleagues for participating!

Testing Across Your Web Presence: A Conversation With SiteSpect's Eric Hansen

A recurring theme in our work with clients is to cast the analytic net across their web presences, not just their web sites.  For example, let's say you're a retailer and you run a "discounted shipping" promotion, with different levels.  The campaign for this should be evaluated not just in terms of conversion on your web site, but in terms of how different levels and creative versions performed in terms of attracting, engaging, and converting customers in all the places you published them -- display ads, SEM units, emails, your site itself, affiliates' sites, etc.

Implementing a test strategy like this has been hard to date, because you may not control all of the different properties involved in the campaign; even if you do, each channel may have its own testing tool; and, even if you've consolidated things somewhat, the tagging job is still a bear.

So, I was really interested to see this recent announcement of SiteSpect's "URL Tunnel" capability, which allows users of this service to implement integrated tests across multiple properties in their digital ecosystem.  I met  SiteSpect CEO Eric Hansen and CMO Kim King a couple of weeks ago at Web Analytics Wednesday, and had a chance to talk with Eric last week by phone about how this works and about how their customers are getting valuable new insights from this capability.

Here's a simple example of how this works.  Let's say I'm a retailer and I have a gift finder on my site that enables parametric search across my catalog (search by gender, age, price range, etc.).  I build a widget version of this gift finder that can be embedded on affiliates' sites, or published as a display ad unit.  I set up "mywidgets.myretailsite.com" and respond to calls from the syndicated widget code from here.  Then I direct this traffic through SiteSpect's solution (either their "SiteSpect ASP" service or their "Enterprise" appliance running in my data center).  Now I can implement and track multivariate tests on widget variants through SiteSpect.

Eric described how a SiteSpect travel customer has used this.  Before, the travel portal acted as a catalog of destination packages, but booking happened on the private-labeled booking engine / travel shopping cart another travel industry partner provided to them.  From a user experience perspective, when a customer pressed "Book it!", he or she was taken off the travel site to the partner's site, e.g., "booking.partner.com", and the travel operator lost visibility to how different variants of those booking pages performed.  Now, the booking engine is still run by the partner, but it's embedded in pages served from a distinct "partner" subdomain off of the travel operator's site, and routed through a SiteSpect server where test variants are defined, applied, and tracked.  

How does the partner feel about this?  In principle, you might expect them to be concerned about the loss of control.  But in practice, since they weren't going to tweak the travel portal's marketing mix elements themselves, they are thrilled give the travel portal the opportunity for insights that will raise conversion rates, and therefore earn more booking fees for the travel partner.  Plus they may learn stuff that they can generalize for the benefit of other relationships.

From The "Stop Whining About Obscurity And Start Rethinking Content For Usability" Dept.: What's your iCalendar Strategy?

At  a number of events I've been to recently, one common refrain has been "Gee, how is it that no one knows about all the cool stuff that's going on in sector X around here?  We've been working hard to get the word out, but we're still flying under the radar."

Around the same time, I was fiddling with my Google Calendars, trying to integrate them and add additional calendars to them (like weather, holidays, etc.).  I was really surprised to see the scarcity of things already registered with Google that I could add.  There's an option for adding a URL for different organizations' iCalendar feeds, but no way readily apparent to me to search / discover such feeds, either on Google Calendar itself or via a logical search.  

I went to the web sites of some organizations with events series that I like to get to, to see if they offered iCalendar feeds that would place those events on my calendar, so I could have them there as reminders if by chance I could get to them.  So far, no joy.  Reassuringly, I'm not alone with this idea or my curiosity at the lack of feeds, or their discoverability, as this post by Jon Udell suggests.

If you are a publisher with a series of events you'd like people to come to, how can you publish an iCalendar feed?  Here are a number of options for tools to publish calendars on your site that also support publishing an associated iCalendar feed.

I also checked out services like Eventbrite  and Eventful, thinking that these intermediaries logically would publish iCalendar feeds for organizations that publicize and manage individual events through them.  Again, no luck -- maybe I'm missing something?

This idea is not new.

The broader point:  Democratization of publishing tools means content exposed as content will find it harder and harder to get its day in the warm sunlight of user attention.  Smart publishers will think about how they can expose their content in formats and applications that are more tightly tied to how users employ that information.  Many things can be turned into event series -- if you are a recipe site, how about a "meal-of-the-week" series?  If you are the US Government -- or Forbes.com -- where's my iCalendar feed for economics statistics announcements?  Other examples: interest rates integrated with interest rate calculators, apartment rental listings integrated with mapping applications that support getting directions...  what can you think of?