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Who wouldn’t want to be awesome? 09/29/2009

Posted by Paul Daigle in Uncategorized.
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NeoUmair Haque, Director of the Havas Media Lab, recently challenged the world’s markets with what he calls The Awesomeness Manifesto. In it he asks “What makes some stuff awesome and other stuff merely innovative?” His point? If innovation is the act of doing something a little bit differently, then are markets driven by innovation all that, well… awesome?  He goes even further in asking if the cost of innovation can exceed the benefits.

Innovation often isn’t. Innovation means, naively, what is commercially novel.

Yet, as the financial crisis proves, what is “innovative” is often value destructive and socially harmful. Financial “innovation” destroyed trillions in value.

A better concept, one built for a radically interdependent 21st century, is awesomeness. –Umair Haque

Though our culture is built on, driven by, and even a bit obsessed with innovation, is the enhanced value, meaning and quality of life produced always proportionate to the energies expended to realize those fruits? And, more importantly, can innovation be a double-edged sword?

He goes on to identify, what he calls, the four pillars of awesomeness. Each of which sound like an appeal to leave business for the sake of business behind to pursue the higher calling of true value creation.

Awesomeness happens when thick value is created by people who love what they do, added to insanely great stuff, and multiplied by communities who are delighted and inspired because they are authentically better off. That’s a better kind of innovation, built for 21st century economics.  -Umair Haque

Umair’s observations are quite similar to my own (see Gravity vs. Electricity).

He concludes by turning his manifesto into a collaborative exercise by inviting readers to contribute their ideas to the cause of awesomeness.

Here are my thoughts on awesomeness.

Capitalism, which is a reasonably good economic and social model, asks most of us to make a significant personal contribution in order to sustain our quality of life. We call this contribution “work.” Regardless of how much we like what we do, most of us see our careers as a means to an end.  We often keep professional and personal separate. We qualify our contributions through their financial rewards. We make our work, what is often our single greatest contribution to society, about making money and living well. Too few of us qualify our participation through our careers much further.

Does the disconnect between our day-to-day getting by and the net value of our output contribute to the kind of markets we see today? Markets where too many indistinguishable goods and services compete for our business. Where fierce competition for existing markets creates a cacophony of voices in the media working to distinguish themselves… creating secondary markets around consumer attention and mind share. If we consider the time, energy and resources that all this competitive activity expends, the environmental impact, the noise we have to filter through, and the time and energy we waste knee-deep in messaging, offers and hype… we have to ask: does this innovative marketplace, with all the heat and friction it generates, really produce net gains for society?

I’m not saying that Capitalism, free markets or innovation are the problem.  I believe that we are the problem. Do we recognize how our careers, our products and our companies affect the world we live in… really. Perhaps the pursuit of personal awesomeness can begin by reconnecting the value of our sweat to the net-value we produce in the market.

Innovation, the act of bringing incremental improvements to existing ideas, keeps us locked in an endless front-line battle for market share. Awesomeness transcends the value found in existing markets to create new markets. The pursuit of  awesomeness is the pursuit of game changing ideas, unrealized value, and truly original ways of thinking. Because we are so accustomed to imagining new ideas and value propositions within the context of existing markets, we have a difficult time trusting or embracing the promises unleashed by awesome thinking. This insecurity prevents awesome thinking from becoming an embraceable model.

Instead, we view awesomeness as a phenomenon produced by a few gifted geniuses. Steve Jobs, Howard Schultz and Oprah Winfrey have the magic touch for creating markets. A Pixar or Nintendo’s succession of successes are accidental or otherworldly. The rapid ascent of YouTube, Facebook and Twitter are too singular to teach us anything that we too can employ. By exalting our real world examples of awesomeness, we don’t allow our best case studies to reveal the fundamentals of awesome thinking.

Our biggest challenge is to demystify awesomeness, to help it become a more understood and attainable pursuit. Only by working together to define, recognize, uncover and support awesomeness can we unleash awesome new companies, and create jobs that impart the personal benefits of delivering awesomeness to the marketplace.

Being awesome, especially in this economy, is incredibly difficult. Awesomeness almost always requires monumental amounts of self discipline, courage and persistence, along with a willingness to risk what we have to get to something better. Awesomeness demands that we stand against well established ideas, and openly challenge entrenched paradigms. The pursuit of awesomeness can cause friends, family members, and even our most trusted advisers to question our sanity. Because awesomeness can be disruptive to existing markets, there may also be some who don’t wish us well. The barriers to awesome are high.

Today the web gives us access to a wide and rich stream of information, ideas and communication. We can leverage this new channel to help the models behind awesome thinking become more understandable and embraceable, and help awesome success become more attainable. My question is this: How can we work together to explore and convey the principles of awesome thinking?

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Gravity vs. Electricity 09/18/2009

Posted by Paul Daigle in Uncategorized.
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gravvselect4 I think we can all agree that the world’s markets have changed dramatically over the last couple of decades. It’s a bigger world, in that more of us are out there competing for market share. It’s also a smaller world, as more of us are now competing globally. The ubiquity of the Internet has substantially lowered the barrier of entry by providing an inexpensive and direct distribution channel between any company and the world’s markets.

Yesterday’s markets, which were characterized by scarcity and exclusivity, have been replaced by new markets that are characterized by abundance and egalitarianism. It wasn’t all that long ago that everything we consumed came to us through a market of limitations. We were accustomed to limits in our choices, resources, knowledge, access and providers. Today we have almost unlimited resources and options to choose from in satisfying our needs, with new providers emerging to serve us every day.

These new forces are shifting power and attention away from the mass media and big business towards consumers and their networks, giving consumers more power and control than ever before.

Since we are all now forced to compete on a more level playing field, and one in which consumers can call the shots, what changes need to occur within our organizations, and within ourselves, to ensure we are able to remain competitive?

To answer this questions, I’d like to  introduce and define gravity and electricity as marketing concepts.

Gravity, a naturally occurring energy, helps to determine every object’s place and position within the environment. Using an object’s relationship to everything else in that environment, gravity helps objects move or stay in place. Gravity is a constant. It’s self sustaining. We can position objects to suit our needs, but sooner or later gravity will win out and relocate the objects, re-determining their relationships and roles.

As consumers and as people we are guided by internal gravitational forces which stem from our value systems, desires, tastes, aspirations, identities and relationships. We are motivated to action, or non-action, by these inherent forces. Our gravitational will is always at work, helping to keep us safe, grounded, balanced, and satisfied.

Electricity, on the other hand, is a force that is generated through the expenditure of energy and resources, and wielded to fulfill a task. Like gravity, electricity can be used to move objects, or to keep them in place.

When we work to elicit actions in people which aren’t directly aligned with, and fully powered by their gravitational will, we are using electricity. Anytime we work to motivate others to take actions that they wouldn’t have taken by themselves, we need a degree of electricity to accomplish it.

When someone successfully talks us into something that we didn’t necessarily want, and through our acquiescence we find ourselves in a position that’s less satisfying, we can be sure that electricity was used to win us over. When this happens most of us will take some action to reposition ourselves back into place, or into a new place of comfort. That’s our gravitational will at work.

In markets characterized by abundance and driven by the will of the consumer, gravity will always trump electricity.

Electric marketing was a best practice back when markets were characterized by scarcity. In those days a large share of voice and wide distribution allowed companies to create markets for their products. Though many brands continue to rely on costly electric marketing and advertising, electricity is losing its potency, and the long-held advantages of electric brands are slipping away. In today’s market the flagrant use of electricity can diminish a brand’s reputation and position. The belief that electricity can still create markets keeps many brands from recognizing and serving the will of their markets and using their considerable resources to appeal to that will.

By recognizing and appealing to a market’s gravitational will, gravity brands tap the natural energies that exist within the market. When a new gravity brand uncovers and serves the pent up will of a market, the market’s networks can do most of the heavy lifting in moving its membership toward the new value proposition. For consumers, the process of being lulled towards a gravity brand is powerful and seductive. Gravity brands allow markets to feel that the brand belongs to them, and not the other way around, tapping into the market’s desire to remain in control. Consumer relationships with gravity brands create bonds that are impossible for electric brands to break.

Microsoft has long been one of the world’s most successful electric brands. One of Microsoft’s most successful electric marketing tactics was to leverage the ubiquity of the Windows operating system. By force-bundling the Explorer browser, Media Player, Office Suite and other Microsoft products onto personal computers, the company was able to quickly dominate those markets. Microsoft was successful using electricity because the software market was characterized by scarcity, and consumers weren’t yet acclimated to exercising there will within that market.

Over the years successful gravity brands like Apple, Firefox and Google have neutralized Microsoft’s electric tactics. Though Microsoft continues to produce high quality products, its reliance on electricity has often hampered the brand’s ability to appeal to the will of the market.

Last year Microsoft launched a promotion to pay web users for using its Live.com search site. In many ways the ultimate electric marketing tactic, this promotion failed to diminish Google’s gravitational pull on the search market. Today Microsoft is again leaning hard on bundling to promote and position its new search site, Bing. If Bing’s value proposition appeals to the gravitational will of the market, will wielding electricity help or hurt that appeal? Could Microsoft find better success by simply allowing its product to speak to the needs of users?

As a gravity marketer, it’s important to recognize that no market is ever truly satisfied. Today’s brands show us where the lowest center of gravity rests based on today’s offerings. As gravity marketers our job is to work to recognize where the gravitational will of a market leans, and to build offerings that can move some or all of the market into a more comfortable and advantageous position. Gravity brands must remain in lock step with the will of their market in order to continue recognizing and serving the market’s lowest center of gravity. Because the gravitational will of consumers and their networks is stronger than brand loyalty; any brand, whether they use gravity or electricity, can lose their market position when a competitor uncovers and serves the pent-up will of customers.

When a gravity brand allows consumers to leverage community, tribal or network benefits, it can produce a gravity-well. What makes gravity-well brands especially powerful is the gravitational force they exert on their markets can over-power the gravitational will of consumers.  How many Facebook users report that they dislike the site, but use it because all their friends are there? How many consumers buy Apple computers, when a PCs could satisfy their needs at half the cost, because of their strong tribal connection to the Apple brand?

Understanding why gravity trumps electricity is a paradigm, a way of thinking, and a means of operating. We can recognize and leverage gravity in everything we do, from product development, to marketing, to managing our personal and business relationships. Appealing to, respecting and leveraging the gravitational will of a person or a market can produce exponential returns. In a world characterized by abundance, gravity breeds security, stability, loyalty and satisfaction while electricity often produces doubt, anxiety, immobility, waste and resentment. As you go through your day, and you find yourself engaged by people, influenced by media and distracted by the many messages working to get your attention, ask yourself…

  • Am I being engaged by gravity or with electricity?
  • How does my answer affect the way I feel about the message and the messenger?
  • How does my answer affect the likely success of the message and the messenger?
  • What are the gravity brands and gravity wells in my life?
  • How do my favorite gravity brands appeal to my gravitational will?
  • Can I recognize the gravity brands and electricity brands in different markets?

Net Neutrality: What are we fighting for? 09/10/2009

Posted by Paul Daigle in Uncategorized.
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STIMost Internet users  know enough about Net Neutrality to know they support it. But if we take a detailed look into this debate, the battles being waged, and language being propagated, precisely what it is we’re working to protect can seem a little fuzzy. Has the Net Neutrality movement identified a position and agenda that can ensure we protect the Internet’s most basic and essential value propositions?

For the sake of exploring this issue, lets begin by recognizing the Internet as an on-demand network for distributed data, media and communication. Within this network our data and activities all compete for bandwidth. The ISP, Cable and Phone Companies that make up the Broadband industry are charged with managing the flow of this data. The issue of Net Neutrality arose when broadband companies became interested in managing the flow of Internet traffic more “fairly” and deliberately.

Net Neutrality opposes giving broadband companies any degree of control over the management of the Internet’s flow of data. Net Neutrality also opposes any system used by broadband providers to prioritize online data, applications, websites or technologies. Net Neutrality is as much a way for naming the fear of losing the Internet we have today as it is an effort to prevent large companies from changing the rules for online distribution.

So what exactly is Net Neutrality working to protect? Here are a few perspectives:

Net Neutrality simply means no discrimination. Net Neutrality prevents Internet providers from blocking, speeding up or slowing down Web content based on its source, ownership or destination. With Net Neutrality, the network’s only job is to move data — not to choose which data to privilege with higher quality service. -The Free Press

Network neutrality is the principle that Internet users should be in control of what content they view and what applications they use on the Internet. In our view, the broadband carriers should not be permitted to use their market power to discriminate against competing applications or content. Just as telephone companies are not permitted to tell consumers who they can call or what they can say, broadband carriers should not be allowed to use their market power to control activity online. – Google

Network neutrality is a principle proposed for residential broadband networks. A neutral broadband network is one that is free of restrictions on content, sites, or platforms, on the kinds of equipment that may be attached, and on the modes of communication allowed, as well as one where communication is not unreasonably degraded by other communication streams. The principle states that if a given user pays for a certain level of internet access, and another user pays for a given level of access, that the two users should be able to connect to each other at that given rate of access. – Wikipedia

Is Net Neutrality fighting to:

  1. Protect our right to go to whatever websites, use whichever web apps and download whatever content we choose?
  2. Ensure that every user experiences the same quality of service, speed and access?
  3. Ensure that every website, application and data file experiences the same quality of service, speed and access?
  4. Or all the above?

Are broadband (BB) companies trying to game the system to create market advantages for the few, or are they working to uncover the business models that can help them operate more competitively? Here’s an excerpt from a statement on the National Cable & Telecommunications Association’s website:

Those who call for regulation of the Internet in the name of “network neutrality” are offering a solution in search of a problem since there is no evidence of a market failure justifying the imposition of common carrier-like regulation on broadband services. “One size fits all” Internet Regulation would replace the workings of the marketplace with government regulation, and choose today what business models are, and are not, permissible. By contrast, in the current market-driven environment, companies have the freedom to experiment with multiple business models, producing more choices and competition in content and providers for consumers, and more innovation than ever before.

Is market failure a prerequisite for seeking regulations that can protect such a vital communications channel?  And shouldn’t we understand the types of business models broadband companies are able to pursue to ensure stability and transparency?

The Net Neutrality movement seems to believe that the way data moves through the system is already fair and equitable. The BB industry, on the other hand, is stating quite openly that they, as system operators, are better equipped to manage, prioritize and price the Internet to keep it fair and equitable. These opposing views, rigid as they are,  don’t lay ground for a constructive debate.

Al Gore was correct when he referred to the web as an information super highway. Like any large highway systems, or energy grid for that matter, the Internet will have to grow to accommodate the growing demands placed on the system. In the highway analogy we’re talking about more cars and more trucks carrying heavier loads. With the power grid analogy we’re talking about more consumers using more electricity for more and more activities. Online we have more users moving larger and larger qualities of data and consuming richer and richer streams of media. Each of these systems also contend with tricky peak usage periods: rush hour traffic for highways, hot summer days for power grids, peak usage hours and seasons for the Internet.

Is managing this growth using egalitarian principles to produce a consistent and uniform experience really feasible, sustainable or fair? The Wikipedia definition above states that “A neutral broadband network is one where communication is not unreasonably degraded by other communication streams.”  Yet, when traffic is heavy and capacity is filled to the point of congestion, BB companies are forced to manage which packets take priority, in effect choosing whose communication is degraded. Demand and capacity are market forces that companies leverage to build more reliable and competitive offerings. If profits aren’t a driver behind addressing the skyrocketing demand for broadband capacity, then where do incentives to increase capacity come from? The “neutral network” is an ideal. It requires models to sustain it. Without those models it becomes nothing more than wishful thinking.

I think most of us can at least agree that we’ve uncovered a dangerous lack of standards for managing Internet data at the dawn of broadband’s ubiquity. We as consumers need to make sure that our best interests are served. We must also understand the challenges in meeting the increasing demand for capacity as we pursue important rules and regulations that govern how capacity is doled out.  Most importantly, we  must clearly communicate our priorities for establishing those rules. The Net Neutrality movement hasn’t accomplished this. Instead this movement has worked to protect the status quo: a market tied to idealistic constraints and disconnected from the market forces that can fund innovation.

If we want the industry to deliver an Internet where a single price of admission provides unfettered access to every app, page, file and silo, with the ability to stream as much content and download or share as much data as we’d like, with the assurance that everyone’s data will remain equal and uniform in both speed and accessibility, then perhaps we need to ask where we have seen this kind of market work?

To shed some light on the challenges that Broadband companies, let’s look at a single broadband provider, and how their fundamentals changed overnight with the launch of a single new streaming destination.

In December of 2007 England’s BBC launched its very successful iPlayer. From this single launch a leading British broadband provider was able to record a 5% growth in total average usage, a 66% growth in the volume of streaming  traffic, a 2% growth in the number of customers using their connection for streaming, a 72% growth in the number of customers using over 250MB of streaming in a month, a 100% growth in the number of customers using over 1GB of streaming in a month, and an increased cost of carrying streaming traffic from £17,233 to £51,700 per month.

Just yesterday at BB World Forum Europe, broadband providers called for help in understanding what the rules and regulations will be in building and operating what they call the Next-Generation Network (NGN). Net Neutrality proponents need to answer this call with clarity of purpose and with a true understanding of the challenges these companies face in meeting tomorrow’s demand for broadband.

Regulators need to go early and they need to go fast – there’s a long deployment cycle for some of what we’re talking about. Can you imagine if I called up an investor and said, ‘hey, how do you feel about investing in our fibre-to-the-home project, oh by the way, we don’t know what the rules are. -Scott Alcott, Executive VP, service delivery platforms at Belgacom.

The good news is that broadband usage has finally come into its own. Peer-to-peer file sharing, streaming video, audio, gaming and other rich media experiences are now integrated into the way we use the medium.  Tomorrow’s users will experience a far richer Internet than we have today. The question of what business models can enable broadband providers to continue scaling capacity to deliver tomorrow’s experiences is an important one. Our goal should be to define consumer rights, protect the Internet’s unique value propositions, and provide the BB industry with clear options for leveraging demand.

Where are we willing to allow market forces to exist? What are we absolutely committed to protecting?

When it comes to leveraging market forces, I believe users should have more responsibility for the capacity they use, and that broadband providers should be free to experiment with pricing models that leverage high speed and high capacity.

The Google statement above makes the point that “telephone companies are not permitted to tell consumers who they can call or what they can say.” True enough. But if I call Austria or China the phone company has every right to pass the higher cost of the call on to me. By reserving the right to do so they protect customers from added costs or lower quality of service because of my unusual demands on the system. You might think that our roads and highways are free, and the web is like a system of roads, so why can’t it operate in the same way. The fact is there are tolls for roads, bridges and highways all over the world that help ensure those assets are maintained for the people who use them.

Today some consumers already willingly pay extra for higher speed connections. The NGN will deliver an improved “ultra broadband”. The industry should charge a premium for NGN speeds while educating consumers on the cost/benefit equation of enhanced connections. We as consumers will receive more and more of our consumable entertainment, personal communication and 3rd party services from our broadband connections; and all of those offerings will continue to get richer and more dynamic.

The industry should also be allowed to place reasonable restraints on the bandwidth capacity user can access with basic service. Users involved in ultra-high capacity activities like peer-to-peer file sharing should pay for the increased demands they place on the system. We should encourage the Broadband Industry to experiment with pricing that leverages a range of reasonable connection speeds and capacity allowances to discover what the market will bear. We should also ensure that local and regional markets give the consumer a healthy amount of choices among  BB service providers to spur competition.

Why should we do this? Because the costs associated with delivering data over the Internet continues to decrease year after year, even as usage skyrockets. Allowing BB companies to prioritize data by user contract will not drive up rates. In fact, it could lower rates for average users. And it can give the BB industry a framework for managing capacity and leveraging market forces, ensuring that the way data is managed online remains fare and transparent.

TV, radio, print, mobile communications, energy, you name it… just about every form of media, communication format and utility has succumb to some form of tiered pricing based on usage. This has helped communication, media and technology companies produce products for a wider variety of markets (Cable, Satellite Radio, Online Subscriptions). Tiered pricing is a proven model for keeping markets competitive, selection rich, and quality high.

My allowing the BB industry to pursue pricing models based on usage, the Net Neutrality movement can ensure that we protect the web’s most vital value proposition.

Not too long ago distribution channels were scarce. The enormous difficulties inherent in reaching out to mass audiences with communication, information or products was the single largest factor in determining what most of us bought, read, watched and, often times, thought. That world is gone because the Internet has created a marketplace where barriers are low and distribution is cheap. We must focus on ensuring that big business can never leverage market conditions to reclaim those old advantages around distribution. Prioritization, which will always be an important part of a transparent and fair Internet, should always be determined by our contracted relationships with our broadband providers. If I’m paying for a specified broadband speed and capacity, I should expect that my connection to the entire Internet universe, and all my online activities, will occur at that contracted rate. Broadband companies should never have the right to prioritize the speed or accessibility of a given website, technology, service or company based on their relationship, or lack thereof, with that company. The BB industry should be allowed to prioritize packets by the users within their networks, and not by the data, technology or content being consumed by those users.

At yesterday’s BBWF Europe summit industry executives struggled openly with the challenges of delivering broadband services over mobile platforms.

…prioritization of services will be an issue on mobile networks, particularly as they start transporting healthcare and other services. For example, an instant heart-read or a diabetes feedback is certainly more important than YouTube. Prioritization does matter. – Steve Pusey, CTO of Vodefone

What if the YouTube stream I’m viewing is showing me how to help my friend, who’s gone into diabetic shock? Industry prioritization by content is dangerous for too many reasons. We as users should get the Internet that we choose, at the speed and capacity that we pay for. Net Neutrality should redefine or refine its position to allow the BB industry to explore new business models through direct relationships with its customers, and the marketplace. Net Neutrality advocates should refocus on protecting an equal playing field for content. This compromise can help ensure that we will all experience the same high value Internet on a higher performance Internet infrastructure in the years to come.

The quest for a reliable Internet business model 06/07/2009

Posted by Paul Daigle in Social Identity, Social Media, Uncategorized.
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roundsquarehammerIn March of 1998 I joined online advertising leader DoubleClick, and spent my very first week of employment at our company sales conference in Scottsdale Arizona. The company had just gone public and the first dot com gold rush was well underway. On that first morning I got my introduction to the company CEO and VP of Sales, Kevin O’Connor and Wenda Harris Milliard. The room was filled with bright, attentive DoubleClick employees, mostly from the media sales division, and there was a buzz of excitement in the air. I’d worked with many smart people over the years, but I’d never seen an organization exude this mix of passion, intelligence, ambition and confidence.

That morning I heard what the future would hold for me and my new colleagues. The future of business and personal communication would be written online. This we all knew.  DoubleClick would power this future by facilitating the one reliable  business model that had fueled the success of every other mass media channel… advertising. The Internet’s capacity for 2-way communication would deliver a Holy Grail for advertisers. DoubleClick’s technology platform would serve the right ads to the right users at the right time. Our mission: to make advertising work online. Our goal:  world domination. We would all play a role in changing the world forever.  So began a ride that would take me through the web’s first wave… ending years later with mass layoffs, an end to DoubleClick’s role in the sale of Internet media, and the company’s eventual acquisition by Google.

Today, eleven years later, the the future that Kevin and Wenda described that morning has yet to arrive. Why DoubleClick failed in its mission is a long, complex saga, filled with faulty assumptions, miscalculations, PR missteps, consumer misconceptions, and an eventual Industry wide loss of confidence in Web1.0.  The journey from irrational exuberance to irrational despair that characterized 1997-2002 is in many ways still being felt, and in some ways relived, in the Internet of 2009. The web still feels like a place of unfulfilled promises and unrealized potential.  A business model that can reliably fuel this now essential, mass communication platform has yet to arrive.

This reality has fueled many new ideas about the future of business, marketing and communication.  Chris Anderson’s Free: The Future of a Radical Price, Charlene Li’s Groundswell: Winning in a World Transformed by Social Technologies and Thomas H. Davenport  & John C. Beck’s The Attention Economy : Understanding the New Currency of Business each stab at the beast from different angles and with different swords.  A common thread within all three perspectives is the realization that consumers are now in the driver’s seat. Value, relevance, customization and two-way relationships are how tomorrow’s companies will win.  Funny, as it was consumer fears and pressure around privacy that destroyed DoubleClick’s ability to execute on its ambitious plan to bring true consumer targeting to online advertising. Winning now requires that we win the hearts and minds of consumers. The DoubleClick story shows how even B2B companies can find it difficult to survive if they fail to bring consumers along for the ride. The game is no longer about just selling products or services.  Instead, the game is about cultivating deep relationships and building strong brand reputations through the creation of unique value, customized experiences and a culture of openness.

The Internet has become a 24/7 gauge for social reputation. Keeping consumers close and engaged and acting both responsibly and responsively is how brands are successfully  managing their reputations and relationships, especially during difficult times. Twitter, a company that has succeeded in winning the hearts and minds of  users, was able to navigate months of scaling issues and hundreds of disruptions in service without harm to it’s reputation. The iconic Fail Whale is an example of the amazing things a company can accomplish when they take consumers along for the ride.

Where are the business models capable of fueling the web’s future likely to be found?  What tools will become essential for managing social reputation and consumer loyalty? I believe the best hope for serving customers and maximizing revenues may lie with OpenID. Open social technology will help companies  build brands, services, media and experiences that both reflect and custom-serve the consumer. OpenID can help brands strengthen their relationships by maximizing user experiences, relevance, functionality and value… the keys to winning in a consumer driven world.

Using relevancy and targeting to maximize ad revenues 05/24/2008

Posted by Paul Daigle in Uncategorized.
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googleeyeglassIn my last post I discussed how the key to growing a successful and sustainable online advertising businesses is to give users relevance through a healthy attention economy. Google, the Internet’s most profitable company, delivers ad relevancy both within their domain and across the web.

Google developed a slightly better method for ranking websites at a time when Alta Vista, the former leader, watered down its search mission to compete with full service portals like Yahoo. By enhancing search relevancy, Google won the search market.

In 2003 Google introduced AdSense, a tool that serves cost-per-click ads by analyzing and targeting page content on publisher sites. AdSense gives web site owners an easy way to bring contextually relevant ads to their pages. By monetizing web pages with existing CPC advertisers AdSense enabled Google to spread its cost-per-click business across the open web.

Google has clearly demonstrated that the key to online advertising success is relevance. As the owner of operator of an ad driven business your mission must becomes centered on helping your users find relevant ads. This may sound strange, as we all are conditioned to view advertising as a distraction, but if you work with advertisers that have something to offer your users, it’s important that your users and your advertisers are able to connect are the right time.  How can you accomplish this? There are 2 basic methods. One is by targeting user consumption, and the second is by targeting user profiles.

Google’s business targets consumption. A user searches for a specific word or term which demonstrates an interest in a product or content, allowing Google to tailor advertising and web site results that are aligned with the consumer’s immediate needs or interests. Similarly, Google’s AdSense looks at the content being consumed and serves ads that are topically aligned with that content. Both of these methods bring users relevant options that they wouldn’t have had access to otherwise, which is why Google’s response rates are so high and their ad products are so profitable.

In order to provide users with relevancy based on content consumption, your site must be easy to navigate based on need. Clear and thoughtful menus, channels, grouped content, keyword search tools and other drill down methods allow you to create user value and carve out effective advertising opportunities. Yahoo’s Auto, Finance, Real Estate, and Jobs channels each work to build user and advertiser communities around specific needs. The focus of these environments commands much higher ad rates by allowing timely introductions and fueling competition for premium placement. Unfocused pages on the Internet generate .01-.35 cents for every thousand pages viewed. Synergistic environments can often achieve effective CPMs (Cost-per-thousand) of $10-$20. AdSense generates effective CPMs of $1.00- $15, often times doing so on content that wouldn’t sell in a traditional ad-media marketplace.

Whereas consumption targeting is time-based (targeting real time needs and consumption), other methods for targeting are user-based. By identifying and publishing your demographic, psychographic and behavioral data in your media kit, you are building the basic targeting tools that media planners use to consider whether your audience is right for their message.

There are other technology-driven targeting methods that utilize user cookies and/or personal registration data. These methods allow companies to serve relevant ads that are not contextually tied to current consumption. If your company assigns user-cookies that track which users spend time on your food and recipe pages and search on food and recipe related words- you can use that data to serve those users food and recipe related ads even when they are involved in activities that have nothing to do with food. This type of data allows you to create more opportunities to reach specific user segments. If you have an online registration process that records user demographic information like age, gender, industry, interests, income or other personal attributes, you can leverage this data to help advertisers filter out the users who are not in their target market. These capabilities command much higher ad rates because they allow advertisers to concentrate their impressions to ideal users, which eliminates waste.

Both of these methods utilized stored user PII (Personal Identifiable Information).

The key privacy principles which govern the collection and use of PII are “notice” and “choice”. Any ad targeting based on PII needs to be transparent to end-users and to respect their privacy preferences.”  Peter Fleischer, Google’s Global Privacy Counsel,

In other words your privacy policy should clearly state how you collect and use PII, and allow users the means to opt-out of any or all PII targeting. When properly managed, most users will understand that you’re using their data responsibly to bring them relevancy, and will feel that their privacy and security is in good hands. When best practices are ignored you risk the kind of public relations problems epitomized in the past by DoubleClick and Facebook Beacon . Using your PII data to develop ad inventory that you can sell as targeting or filters ensures that you’ll keep your users and their personal activities private and safe.

Advertising is about relevance, efficiency and measurability. Selling online advertising opportunities that maximized these important aspects are crucial to your long term success.

Attention economies and the ad-driven business model 05/20/2008

Posted by Paul Daigle in Advertising, Attention Economy, Internet Business Models.
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AttEcoThe value of most online companies will remain tied to their ability to turn usage and page-views into dollars. This makes the creation and sales of effective advertising opportunities as important as winning users for many companies.

Pursuing an ad driven business model isn’t a sure path to profitability, as even big online successes struggle to attract and grow ad revenue. So, how viable is the online advertising model for most companies?

I believe online advertising is both viable and important for a majority of Internet companies that serve more than 10,000 users per month.  Advertisers do more than pay for linked real estate. By associating themselves with your brand they substantiate the value you’re creating, and the value of the users you’re attracting. When done right advertising also gives  users access to a wider range of relevant products, services and resources. Building a healthy ecosystem of paid advertisers, business partnerships and affiliates can make your site more valuable and attractive to users and potential buyers.

To qualify your ad revenue potential, first take a close look at your audience membership and what they share. What ties your community together? What distinguishes your content or technology. Are you able to  locate a healthy universe of advertising and business development prospects that can help your users and communities succeed in their common pursuits? Is so these are the very companies that you can help succeed through comprehensive and custom-tailored ad programs.

If your site or site channels are built to serve specific user missions, affinities, demographics or activities you’ll have an easier time selling ads and keeping rates high. Synergistic environments in which site operators, users and marketers share closely aligned missions and purposes create ecosystems of interdependent concerns. Good examples of these are sites that focus specifically on woman, job seeking or music,  or channels that deal specifically with auto, gaming or finance related content. Targeted usage provides the opportunity for companies to compete for placement, which is instrument in sustaining and increasing ad rates over time.

Anyone who has sold advertising has heard prospective advertisers say “I don’t pay attention to banner ads and I don’t think other people do either.” How many of us would say that we actually pay attention to advertising? When we think about online advertising we think about loud, alluring, provocative, predatory or otherwise distracting ad content found on most websites. We have all become conscious of having to withdraw our attention in order to stay on mission. If we don’t do so, we can’t focus. But when users see ads of high interest, the thought that they are being targeted or distracted goes away completely because relevant messages often feel more like points of interest or valuable opportunities than distracting sales pitches.

“Attention economics today is primarily concerned with the problem of getting consumers to consume advertising. Traditional media advertisers utilize a linear model that consumers go through – Attention, Interest, Desire and Action. Attention is therefore crucial. -WikiPedia”

Consider user attention the new online currency. When your users give you their attention, repaying that attention with relevance will earn you and your advertisers more and more of their future attention. This creates conditions where your users and the advertisers who are capable of serving them can come together. The more relevant the content that each user experiences, the more attention they will be willing to spend in the future. Because most users have conditioned themselves to consume web content without investing their attention outside the content well, creating tailored environments where users are comfortable experiencing the entire page is important to maximizing the value of your inventory.

Within an attention economy advertising is considered consumable content. Therefore you must learn to view the kind of advertisers you work with and the types of ads they run on your site as important to your economy’s long term health and sustainability. Most of today’s online ad creative screams for attention because it must fight to compete for attention in economies built on distraction. It’s your job to help your advertisers understand that screaming ads in a high-quality and high relevance attention economy will only communicate desperation. Keep it clean, keep it tasteful and most importantly, keep it focused on the needs of the user.

So how to begin? Start by understanding that you have to start somewhere.  Most sites are best served by starting with business development relationships and affiliate programs that help create a advertising foundation and set the tone for what distinguishes the site’s community, channels and assets. It’s also better to start with small advertisers who can succeed with your audience than larger, less targeted campaigns that will fray user attention. You’re goal is to work to keep your ads and business partners aligned with your site mission and audience. When large “eyeball” marketers with big budgets come calling, always consider whether their participation on your site will help you build an economy of attention or distraction. When your environment leans towards distraction, every participant of your community and economy will pay a price. Remember, having dozens of competing and relevant advertisers will produce a competitive marketplace where your ad rates can go up. These relationships are much more important than those big budget “eye ball” advertisers that will never pay top dollar for your audience.

The following describers are helpful in assessing the health of a website’s attention economy. As you visit websites ask yourself if their economy is based more on attention or distraction. How do these characteristics effect your relationship with the site, and the way your attention is spent there?

Attention Economies are:

  1. Focused
  2. Relevant
  3. Personal
  4. Engaging
  5. Safe
  6. Interesting

Attention Economies create:

  1. Purpose
  2. Options
  3. Value
  4. Community

Distraction Economies feel:

  1. Unfocused
  2. Random
  3. Isolating
  4. Noisy
  5. Suspect
  6. Predatory
  7. Distracting
  8. Diverting

Distraction economies create:

  1. Fatigue
  2. Confusion
  3. Wilderness

If you can succeed in keeping your attention economy healthy, and in building synergistic environments that are sustainable, reaching a critical mass of marketers and users should provide the following Network Effects:

  • Advertiser response rates, conversion rates and renewal rates that are well above industry averages.
  • Users that visit more often and stay longer.
  • An advertising market place where competition for your best inventory justifies healthy rate increases.

These are the attributes that keep effective CPMs and total ad revenue potential on the rise, leading to a healthy and profitable Ad Driven business.