Business Quests in the Information Age

Tighter legislation of online and interactive marketing

In yet another sign of a maturing market for new generation marketing and communications services, stricter legislations and rules are being enforced in Europe. The clipmark is about the UK market where legislation has been tightened considerably over the past few years. For example, the legislators have taken steps to make it impossible to target children with dedicated web sites and online activities. Now techniques of influence marketing are being regulated in a stricter manner to limit if not eliminate manipulation of consumers. The interesting question of course is whether legislators will apply the same kind of logic to politicians and their spin doctors...

clipped from www.visinsights.com Buzz Marketing techniques to become illegal in UK? Effective on the 26 of May 2008 certain activities will become a criminal offense when the Consumer Protection from Unfair Trading Regulations becomes effective. Seeding positive messages about a brand in a blog without making it clear that the message has been created by, or on behalf of, the brand will be an offense. Using “buzz marketing” specialists to communicate with potential customers in social situations without disclosing that they are acting as brand ambassadors will be an offense.

Blog Ad Network by Six Apart helps monetization of smaller blogs

Six Apart is one of the few companies of the so called web 2.0 wave whose focus on sustainable business models is a major strength. Using their position as a blogging platform to structure and manage an ad network is really a no-brainer from a business standpoint, while it is also in keeping with Six Apart's consistent policy of offering easy-to-use solutions to its customers. They are uniquely positioned to generate substantial business value from this initiative. I am very curious about their pricing mechanism and about the degree of visibility they will allow into their profit margins from this activity. And perhaps even more than those aspects of the scheme, I will be interested to understand their targeting philosophy (serving the relevant ads to each micro-audience) because that's one of the big battles of tomorrow's advertising.

clipped from www.marketingpilgrim.com Six Apart Launches Blog Ad Network, Blog Services clipped from www.marketingpilgrim.com Blog software company Six Apart acquired creative agency Apperceptive, a company that built blogs for sites such as The Washington Post, The Huffington Post, BoingBoing, and iVillage. Now they’re launching an advertising network for blogs. They are also venturing into design, programming, and blog marketing services. As an ad network, Six Apart is competing with Federated Media Publishing, Glam, Blogads, and others. Here’s how it will work - they will get advertisers, bloggers put the ads up, and the two share revenue (not sure what the payouts are like, but I believe it’s typical to get 20-30%). Six Apart is working with Adify to provide back end support so bloggers can see their payouts and manage their account. they are targeting their services to the little guy The ad network is currently in invitation-only beta and it’s just for bloggers who use Six Apart’s Vox, TypePad, or LiveJournal.

Inspiration from The Last Lecture

Today's inspiration from me. Dr Pausch's presentation contains a message for those of my customers who complain when I tell them what they need to know instead of what they'd like to hear: "your critics are the ones telling you they love you and care... when you're doing a bad job and nobody points it out to you, that's when they've given up on you". Enjoy.

The full lecture given at Carnegie Mellon University is below. Be sure to take the hour and a quarter needed to watch it because it's worth it. Every slice of it.

Fret no more about Google

The decrease in paid clicks on Google's online advertising network has been one of the worrying news of the first quarter for modern day advertisers. The Economist has done a good little piece of analysis showing why the decrease may only be the result of Google's own aspiration for more relevance and better performance of ads. And I think it shows pretty well why Google is here to stay and very far from being already "over the hill" as some put it. It is perhaps the most telling testimony of the company's ambition to build a sustainable position in the elusive field of online advertising and beyond that narrow perspective an indication of the stringent demands the company has on itself.

So emails may be flying around showing how great a working environment Google is, but nobody should infer it's a corporate version of Club Med. And judging from their ambitious cooperation with SalesForce , these guys are going for a cut of every significant business transaction they facilitate. That is some business quest!

clipped from www.economist.com The case of the missing clicks What does it mean when people click on Google's ads less often? The scare started when comScore, a research firm, reported in late February that Google's “paid clicks” had decreased by 7% during January, and were flat compared with the same month a year earlier. the ratio of paid clicks to searches dropped even faster than the number of paid clicks: it was down by 16% in the month of January. eMarketer, another research firm, projects that online advertising in America will grow by 23% this year, economic troubles notwithstanding, because the measurability of the medium is too compelling for marketers to ignore. the likeliest explanation is instead that Google itself is to blame—by, paradoxically, increasing the quality of its ads this is what drove Google's revenue last year: it grew by 56% on the back of a 21% increase in revenue per paid click.

Thalys experiments: WiFi inside, idiot design?

Writing while in the train getting back to Brussels after a couple of days in Paris for Ad:Tech. Yes while in the train. That is really cool. What's less cool is the amount of over-engineering Thalys seems to have put in designing this service: resources like Gmail, Google documents, Network solutions webmail and Google Apps are simply not usable because some stupid piece of junkware that runs on the Thalys WiFi network considers those to be forbidden resources. Even the sites of Le Monde and CNN are not accessible. So what gives? Is Thalys developing a new concept of a hyperlocal web? Are they trying to revolutionize the web by severly limiting connectivity? Is this a censorship experiment for the Chinese government?
None of these exciting avenues I'm afraid. It only seems that somebody felt it important to implement an extremely stringent security policy, which, in the end, voids of most of its value the great promise of WiFi aboard high-speed trains. I'm sure they'll fix this someday, but what does it say about cost of opportunity in terms of revenue to the company? What untellable stories of wasted service design resources does this case convey? Is there anyone to doubt that product / service design will be a strategic competency for companies in the coming years?

In the end, it all boils down to common sense and a structured albeit flexible approach to product ownership. Something that does seem to be a common thread to methods like scrum, agile development, permanent beta, Toyota's continuous improvement through the kaizen approach or NLP... They all accept a degree of chaos that characterizes the real world. Realism, common sense, perseverance, patience, continuous and relentless improvement, continuous quest for evolution, no nonsense and a thirst for  feedback are some of the characteristics of approaches that work.

Now on the positive side of things the idiot design does not prevent Thalys travelers from accessing Wikipedia, Barack Obama's web site or the Business Quests blog :-) as you will see in the screen-shots.

P&G challenges in interactive and digital marketing

Currently attending a great presentation by P&G's Michel Lambert who is telling us about challenges and achievements in interactive and digital marketing. With an experience of 20 years in marketing 9 of which at pan-European level, a strong background in direct marketing, having gone through the great school called P&G and basically a combination of analytical capability and common sense, he's got a contribution to make.

In fact I was lucky to meet him yesterday and I was impressed with the stuff he told me about how P&G is clearly putting a great emphasis on interactive and digital factors throughout their organization, not only in the field of marketing. He clearly gets the transformative power of information technologies in the field of communication as well as in all the processes of any company that wants to be successful in the coming century. Michel does have a good and no-nonsense grasp of the ways in which organizations need to transforms their structure, practices, approaches, ways of assessing success versus failure, recruiting, building relationships... In fact it's quite impressive. While I prefer to respect a degree of confidentiality, I think the presentation of today reflects very well the state of play at P&G's end and this presentation certainly looked like a call to agencies to finally start offering stuff that make business sense rather than just surfing on the latest online fad and fashion.
Michel has a non nonsense approach: "is my brand prospect and brand customer online? Sure. But what do they actually do there? how can I understand them better?". His take is that the consumer, the person that is potentially a customer, the complex individual should be at the center of every single thought people  have about interactive and digital marketing. Platforms, tools, communities, practices, plugins, widgets... will proliferate and they are not really relevant if one does not understand the consumer.

Here are some of the very interesting things Michel shared with the audience today:

1. understanding the on-line behaviour in fine detail: motivations, participation, influencers, self-expression, context rlevancy, how they search, what are their expectations from search, why are they searching, where are they searching...
2. take a more strategic view on things: define roles and make choices. Here key performance indicators are key of course since they eventually feed back into the formulation and execution of strategy
3. how do you actually build valuable and intense relationships with people: the magic of relationship marketing
4. generate content or leverage existing content?
   • we compete for an audience, for the attention of people. So our competitive set includes media and entertainment
   • calls for production of higher quality of conten
   • why don't I invest in mobile marketing? There is no usable content!"
5. Risk taking
   
   • culture of data and measurement. Gut feeling is not really the core strength of P&G: if an ad does not test well in pre-release it will not be aired. Online things are considerably more difficult and require more risk-taking
   • risk taking needs to be managed in new ways and in particular by doing more iterations and working on shorter cycles (one year is an eternity online)
     
6. Cost of reach is too high right now.
   1. There is no way in the world P&G will invest crazy amounts to go full steam ahead with a pan-European campaign without understanding the ROI and how the campaign fits into a broader five-year strategy
   2. clear directions, reach goals and glide path: it may be possible to achieve results in year one simply because there was nothing before, but results in future years come only at the price of having a disciplined approach, not by throwing good money after bad. Back to basics again.
7. the challenge of mass individuals
   • consumers are in control
   • consumers want proximity and a relationship with the brand
   • segmented advertising vs one-size-fits-all even though offering a relationship on an individual basis is not an option because it costs too much and drives ROI down the drain
   • agencies should support brands in achieving mass customization in the relationship with their consumers and prospective customers
8. the sweet spot of balance between tools and approaches
   • starts with the consumer and drive scale from them, not from tools: e.g. in search and keyword advertising if I don't understand my consumer I end up translating ad keywords on a global basis on various platforms!
9. growing importance of retailers as media
   • retailers are increasingly building relationships with consumers  in particular by exploiting their huge databases and by developing content
   • P&G could develop a relationship with retailers considering them as media, but they need to develop missing capabilities in particular to assess the financial value of each contact
   • out of 25 retailers surveyed only one had proper online capabilities to achieve that. Quite frankly this is a shell-shocking picture! That's some potential business quest for someone in the field and with access to the decision makers of top retailers.
10. the need for constant optimization
    • in traditional media: concept test, develop content, pretest, go on air, wait to get results, plan for next year. The cycle is therefore one year. In the digital world, the cycle is much shorter and analytical skills are in very short supply in-house
    • transform pre-test into post-optimization: a complete shift in the mindset and probably one of the biggest challenges P&G is facing
11. integration
    • how do we integrate different platforms and media? how does the mix work together?
    • understand the relative ROI because the budget will not increase; in fact, it might even decrease. If there are more ways to execute a marketing strategy, then the money must be shifted from somewhere. New media need to prove the case and a better collaboration between online and traditional, between search and influence, between interactive and non-interactive... That's a key challenge

Michel also mentioned education of people inside P&G as being a major area of focus today because marketers need to reassess many of the practices they used to consider as world-class. Furthermore the relative differences between markets makes it necessary to have a decentralized approach and in that respect the world is very far from being as flat as Friedman tends to suggest. The world has changed in a major way.

Neuromarketing: the future of marketing?

Currently attending a very interesting presentation about the way neurosciences are being exploited for marketing purposes. The presenter is Olivier Oullier, a Professor in neurophysiology in France and also an active partner at a company called neuroeco, that does seem to be very much in stealth mode since its web site redirects to the page of Prof. Oullier.

1. tools are too rational
2. lack of innovation in methods and tools  used to understand and anticipate human behavior
3. inference of future patterns from past statistics
4. media instability, like for example the radical transformation of a the TV experience with TiVo
5. excessive creativity in ads

Today's marketers project their own (mostly rational) thoughts as being the logical behavior of the consumer. However, the fatc is that they are not the consumer and the consumer is not only rational, which may be why the most successful marketers are those individuals who dare to use more than jusrt their rational capabilities. Intuition is important as Steve Jobs, the creators of Cirque du Soleil  or people at IDEO would most certainly agree.
Professor Oullier researches brain activity and bodily activity of humans as they are exposed to various stimuli. His quest is to establish models and correlations between activity inside the human brain and the (economic) behavior of a person. To do that they now use large magnetic resonance equipment, and I guess that their goal is to bring their methods to market. I only hope we don't end up with a world like Minority Report since theoretically attributes of people could be used to "predict" their behavior and the temptation will be there for people to try to prevent certain behaviors. The question being how much of those predictions will actually be self-fulfilling prophecies, something that is relevant not only in the field of tomorrow's marketing.
Interestingly all stimuli but smells go through the thalamus and that may actually explain why there is so muc work being done on olfactive marketing,a subset of sensory and environmental marketing. In neurosciences terms, the effect of an ad on someone paying attention is to trigger the production of dopamine in their brain, which makes them feel good and therefore create a positive association between the product and the consumer. At the end of the day, this elaborate scheme shows how Pavlovian animals we humans can be. Today consumer neuroscience is a topic of great interest in the greatest of universities.

Let's add an element. In certain circumstances and for certain stimuli (e.g. in a situation of immediate danger) the message in the brain will not go through the upper layer (neocortex), which is the part of the brain that manages those thought processes of which we are conscious. So I guess that the name of the game is to trigger stimuli that will generate an unconscious positive association with a commercial offering, such as to create strong unconscious motivation to buy a product or a service. Back to Minority Report or to Brave New World.

Lego Mindstorms at Ad:Tech

Just attended a splendid presentation of the way Lego has been actively seeking to and succeeding in involving passionate users in the life of the Mindstorms product line. Lego's people noticed that Mindstorms was generating a lot of passionate contributions and involvement by the community of users, many of whom were absolutely not kids but male adults. The product seems to have been outrageously successful in the Silicon Valley, where the local tech enthusiasts seem to be the typical customers. The product was being hacked and transformed in all sorts of ways... So Lego's people decided to really engage in a very intense interaction with their customers and to let them influence the life of the product to a very large degree. They set a few very simple rules to manage the community of carefully screened engaged users: respect, positive contribution and giving Lego a veto right on how the product would evolve... Today, it's one of the best known examples of how powerful a genuine engagement with customers can be to drive buzz, word of mouth and basically to make it possible for a lovemark to emerge. There's even the case of famous author Chris Anderson who went on to build a drone using a Mindstorms NXT control module...
Here's a nice little video about Mindstorms:

Wundelroop at Ad:Tech Paris

I met  Michel Kleindl and discovered Wunderloop at AlwaysOnMedia NYC in 2007. He was kind enough to spend some time with me and to give an interview to this blog. Since then, Wunderloop seems to have been very successful in making its case for behavioral targeting, womething that was not that obvious back when I first heard about them. Some of the trends were clear, but not everyone agreed that behavioral was the way to go or that it would be feasible and accepted by people online. That's a good example of a business quest that is pursued with succcess by someone who gladly calls himself an "fossil" and a "dinosaur" because he's been working in the field of online marketing wince 1994 (Gosh, that does sound like prehistoric times!).
Today, Michael is here to speak about what he calls six megatrends in the industry and his views should be worth listening to. Here are his trends:

1. Internet going very strong: Internet adoption has strong momentum, broadband fixed and mobile connexions are the norm and the average amount o time we all spend online is growing, which leads advertisers to allocate a larger share of their budgets online to reach more than 20% by 2010 according to the IAA. Young people are spending more time online than in front of traditional TV sets, while e-commerce is finally becoming big business. Online ad sepnd in Europe will be 15 billion euros this year and grow to 20 billion euros in 2009 and 25 billion by 2010 according to ZenithOptimedia. That's just huge and for anyone who is looking at figures, that's nothing new under the sun.
2. Eyeball aggregation: business models are moving to being consumer driven instead of property driven. Portals are dead because the audience is increasingly fragmented and autonomous. Ad networks will play a central role in securing necessary aggregation for advertisers to achieve reach in a world that will be essentially people centric and mass-customized. That's a great insight and it has huge implications for some of my customers.
3. Multiplatform business: no longer just web pages: online brochures and static sites are clearly not relevant in today's environment essentially because they provide no interactivity and therefore no feedback loops for brands to build a better understanding of their markets. Between February 2006 and February 2007 the reach of the top ten German portals dropped from 28% of the online population to a paltry 14%. The web in now really enabled for multimedia and therefore brands need to have an integrated and coordinated approach to the various platforms (blogs, social networks, video platforms, online on-demand TV programs as enabled by companies like like Move Networks, interactive TV schemes like Joost, mobile...) where their customers may be active.
4. Global / Pan-European scale of business: advertising budgets are becoming pan-European and pan-European budgets are growing much faster than the industry average (+89% between 2005 and 2006 and + 71% between a year later, with growth in 2008 likely to be even greater according to IAA). The implication of this trend is enormous in terms of minimal critical mass necessary for a business to grow and probably one of the strategic justification for various forms of consolidation from industry driven M&A to purely financial roll-up schemes.
5. Video advertising will be big with Jupiter Research expecting video advertising to exceed 1 billion US dollars by 2011 representing over 5% of total display advertising. That's big
6. Targeting: targeting is the crux according to Kleindl (well, to be fair I would not expect him to say ant less, but that's fair game and the logic is impeccable). Kleindl believes this is a paradigm shift where advertisers who were accustomed to buy space (context oriented) will have to learn to focus on people's behaviors ("it's about people, not pages"). Reflecting about the empowerment of an ever more fragmented consumer population AOL's Ron Grant says "we need a way for advertisers to take advantage of that fragmentation" and of course Kleindl adds "targeting simply works". More importantly he makes a powerful point in saying that "there is no reason why any campaign should not be targeted". Aside from Michael's vested interest in the point, I think it is extremely valid and you'd better bet on it. Now of course, the business and legal environment is likely to become more difficult especially in Europe as governments become increasingly interested in new marketing methods and tools chiefly because of their focus on privacy. A huge contradiction: people spend 5% of the time searching and 40% on content and yet advertisers spend 40% of their budgets on search versus 30% on sites with online content. There's an opportunity stemming from a major inefficiency of the market! According to figures from GroupM, in B2B if you buy untargeted bulk ads, CPM costs 1 to 2 euros, while CPM for very well targeted places the cost is 50 to 150 euros. This is also an inconsistency, because content does not necessarily mean much in terms of the individual visitor's attributes  and preferences as expressed through their behavior. Michael's conclusion of course is that Wunderloop has a very bright future, something I tend to believe. In 1995, 94% of ad euros web to only ten top destinations online and it's been dropping very significantly ever since, even though metrics are difficult in that field. That means big fragmentation and also a big opportunity to reach users on a variety of place, with, I suppose, big value being derived from a consolidated understanding of behavioral patterns, but I don't know whether Michael would go that far in the reasoning.

Again some very interesting insights by a great insider of the industry, who seems like a very agile dinosaur indeed IMHO.

Discovering Efficient Frontier at Ad:Tech

Got to Ad:Tech this morning. The usual suspects are around, but it's always interesting to keep tabs on how the market is evolving. One interesting surprise though: efficient frontier, an interesting SEM company. It's a company whose founder combined his experience with stock market systems (hence the name derived from modern financial theory) with his knowledge of how search engines work to create a platform helping advertisers optimize their marketing investments online. To them an AdWord is like a stock and the words an advertiser buys are very much like stocks in a portfolio. Thus provided one captures sufficient relevant information from search engines and can put them through an algorithmic process, it is conceivably possible to define the risk / return combination of each word and each possible combination of words, which in turn means that it is possible to define an optimal combination of words to be bought. Extremely interesting in my very humble opinion.