‘Tis the season for Christmas shopping hype. The ads are everywhere, so are the lights, the endless music, and daily wave of hype numbers about how great the web is for online shopping. Unfortunately, it’s a fountain of hype with almost no explanation.

 

Black Friday records.... blah, blah. Holiday shopping up dramatically... blah, blah.

 

In case you missed it...

 

• Online retailers saw market share of Thanksgiving Day traffic grow by around 18.8% from 2004, while the proportion of visits to those sites on Black Friday grew by 20.9% year-over-year (Hitwise)
• Online shoppers will spend $19 billion in November and December, a 24% rise over last year, (comScore forecast)
• The online ad market is set to hit at least $55 billion globally by 2010 (Piper Jaffray)

Am I the only one who is noticing these announcements have almost zero substance? Little analysis, and almost no discussion as to why or what the average guy can do to help reap some of the reward.

 

I did however come across one meaningful announcement... lost in the shuffle of press releases waves from dueling analysts offering almost no analysis but lots of numbers. Yahoo! and Aegis Group, a Connecticut marketing company, are working on a new metric – a metric that links online advertising with store sales.

 

Yahoo! is using Aegis Group for their savvy measurement and their expertise with econometrics analysis. Aegis likens econometrics to a branch of economics that “uses complicated mathematical calculations to measure the relationship between different events.” Aegis claims to “weigh myriad factors such as weather, price cuts and advertising quality in determining how sales are affected.”

 

Under the partnership, Yahoo! advertisers will pay extra for the service. Ah ha, another way for Yahoo! to boost its hungry revenue to satisfy the even hungrier analysts who demand more growth, more margin, more earnings!

 

Of course we have many, many different metrics for measuring online effectiveness (click through rates, conversion rates, cost per click, etc.) but this is the first one I’ve seen linking online efforts to offline sales. Though apparently comScore has something that few rely on.

 

Yahoo! and Aegis’s plan builds on an existing model to include data from Yahoo! showing users' exposure to online graphical and search advertising. This new model provides a focused assessment of online programs on Yahoo!, measured next to programs on other media, and gives insights and recommendations to marketers on both online and offline marketing spend. Marketers can choose to provide Aegis with data from other online sites, including direct marketing campaigns and Web site data, to get a broader view of their total marketing programs.

 

"Marketers need to be able to measure and make decisions about online and offline marketing campaigns with a holistic view," said Wenda Harris Millard, chief sales officer, Yahoo!.  "Providing this new service with MMA (Aegis) is a key step in Yahoo!'s continued commitment to providing marketers with leading tools to enhance and optimize their marketing spend."

 

"In many ways, online marketing can be more accountable than many offline marketing tactics, but there is still a real need to understand the total sales impact of online and offline programs on a common ROI basis so that optimal budget allocations can be made," said John Nardone, MMA Chief Client Officer. "Clients are shifting more and more of their total spend online, and need to move beyond measurement of clicks and page views to understand what is really working to drive sales."

 

Anyone come across a credible model for linking real world advertising with online use and sales?

 

INTRANETBLOG:

Save your dough, shut-down the rebels

CHICAGO, IL – There are sins, and there are deadly sins. My colleague Shel Holtz and I presented some of our favorite website sins (and the salvation or the answers to each) during our conference keynote this morning at the 2005 Ragan Web Content Management Conference. Here are some of our favorites...

 

#1 Deadly Sin – “Who are you!?”

 

If a user has to ask “who are you?” or “what do you do” upon entering your site, then you need to go back to the drawing board. It should be immediately self-evident (within 2-3 seconds) what the site is for and who it represents from the moment a first time user visits.

 

Sinner: www.Colette.fr

 

 

I still have no idea what this site really is for... I can’t even read the text on it and this is their home page!

 

Salvation: www.canada.gc.ca

 

#2 Deadly Sin – Scrolling to eternity

 

If they are at the specific content they want, users don’t mind a bit of scrolling.... maybe a few screens (3-4 or so). But don’t make your home page one big scrolling tome. Break it up into several pages and label them.

 

Sinner #2 – www.Amazon.com

 

 

Not surprisingly I’ve been challenged on this one.... “But Amazon is so successful they’re obviously doing something right!” Yes, they are. They had first mover advantage, a killer brand and an innovative development team. Amazon may get away with this but you won’t. Five screens of information, two dozen images and two hundred or so links on a home page is WAY TOO MUCH!

 

Salvation #2: www.HP.com

 

#3 Deadly Sin – Confusing checkouts

 

When a user has decided to buy something from you don’t hammer them with yet more sales pitches. Make it easy for the user to actually pay you the cash. If you swamp them with more sales and promotions then you can confuse and irritate an otherwise happy customer that may be chased away.

 

Sinner #3: www.Amazon.com (sorry despite your success you are again a big usability violator)

 

 

This is an example of a Sony Camcorder purchase and moving to checkout. Most of this checkout screen is more sales pitches and promotions... for Visa, for another camcorder, a charger, a bag.... it takes a while to realize your checkout item is hiding off in the right hand column, nearly halfway down the screen. Grrrrrr....

 

Salvation: www.Indigo.ca

 

Indigo.ca (Chapters.ca) gets it. The process is laid-out before the user with linear steps, shipping information, the item being purchased, access to help and resources, etc. Indigo wants the sale and is making it easy for you to pay them.

 

 

#4 Deadly Sin: Clipart craziness!

 

Clipart and stock photography just plain sucks. Use real photos of real employees, real products, real customers. It has meaning, relevance and resonates well with customers and employees.

 

Sinner #4: www.orangesoftware.com

 

Check it out for yourself... not only do they use some crappy art and choices they don’t just have one corporate logo, which in itself is clipart, but two crappy logos!

 

Salvation #4: www.WalMartStores.com

 

Wal-Mart gets it. They use real employees in their ads and real customers. And guess what? It works.

 

 

#5 Deadly Sin: Unavailable and under construction

 

Do I really need to say that your site should not be down at all, ever?! Unavailability for a few minutes a year because of maintenance is acceptable... nothing more.

 

Sinner #5: www.Georgia.gov

 

 

If you can believe it the State of Georgia website was down for almost three days over a weekend. And it was planned! Unbelievable!

 

Under construction... I don’t even have to say it but I will... if you have key information that is not available then don’t advertise it unless you absolutely have to. Don’t just throw up a cheesy under construction icon that is the bane of many, many users the world over. A great riff mocking under construction signs is offered by the School of Computing at the University of Utah (a hilarious read).

 

Salvation #5: http://www.jeffcomo.org/

 

If you must advertise that you’re under construction because there is vital information that is otherwise expected by your target audience then provide a short explanation, some context behind the absent content, and contact information as an alternative source to the web version.

  

--

 

If you’d like a copy of the complete Sins & Salvation presentation then please post a comment below with your e-mail address or contact me through the Prescient Digital Media corporate website (Contact Us).

’Tis the season for retail to be to top of mind, whether it’s because you’re making your list and checking it twice, fighting crowds or anxiously watching sales data to gauge the health of consumer spending, the main driver of our economy.

 

In the Internet world, retail is particularly fascinating now because analysts are trying to gauge on-line versus bricks-and-mortar purchases in the wake of U.S. Thanksgiving, the accepted start date in the frenzied race to acquire goodies to cram under the tree. This year, the story has been about how “Cyber Monday” would compare to “Black Friday.”

 

The latter phrase was coined to capture the importance of Thanksgiving Friday, the biggest shopping day of the year in the U.S., when retailers enter “the black” after months of luring semi-disinterested shoppers into their stores with discounted pricing.

 

The former phrase has only been in usage for a few weeks. It’s the day when shoppers return to the office and start shopping on-line, the location from which 58% of us make our on-line purchases according to comScore Networks.

 

The phrase also provides more insight about how savvy manipulation of hype-driven media gains attention, rather than providing an accurate measure of retail trends, according to BusinessWeek. 

 

The article reports that Shop.org, an association for retailers that sell on-line, coined the phrase in a November 21 press release claiming Cyber Monday to be “one of the biggest on-line shopping days of the year.” It is, in fact, the 12^th busiest day according to comScore and even trailed November 22 for sales this season.

 

So should we accuse the on-line retailers of living in a past era, one in which behaviour is driven by hyped events? Not all. This savvy industry understands as well as any that the Internet changes the rhythm of our lives, and is at the forefront of developing web tools that fundamentally change the way we shop.

 

In its new ranking of the Top 50 Retail Sites, Internet Retailer provides an interesting list of the innovations these companies have developed, including:

• Musicnotes.com developed software that displays a page of music, then plays the piece being shown while a cursor indicates which notes are playing.
• Peapod.com is equipping its delivery fleet with GPS navigation devices and providing customers with an update on delivery time with an e-mail, text message or phone call when the truck is 10 minutes away.
• BestBuy.com offers a kitchen and laundry planner that allows shoppers to create on-line plans of their rooms, then populate them with appliances. They can e-mail the resulting plans to friends, family or builders and print them out to take to the store when they buy the appliances.
• Circuit City Stores Inc. guarantees that items bought on-line will be ready to pick up in the local store in 24 minutes.

What the “Cyber Monday” phenomenon demonstrates is that much of the media will respond to a well-written press release with as much alacrity and obedience as parents will to a child’s demand for a hot toy. That approach, and the growth of blogs it helps fuel, is the topic for a different article.

 

In the meantime, I have to find a pink guitar for a three-year old girl. And I don’t care if I find it on-line or in a store, as long as I find it in time to put under the tree on December 25^th.

Those of us that are in the business of selling products and services to other businesses (B2B) know full well that traditional consumer marketing does not work for our business. There is no better way to waste your marketing money than on traditional advertising on radio, television or newspapers.

 

B2B marketers prefer to spend their money on more traditional, organic methods, but with an increasing budget directed to digital and e-mail marketing. In fact, according to a Forrester Research study highlighted by e-Marketer (B2B Marketers Shift Budgets to Online), in-person event marketing such as tradeshow participation is the number one preferred tactic of B2B marketers.

 

 

Although TV is listed as the 5^th most popular tactic, I’m sure you’d find that much of that TV advertising is targeted cable TV advertising on specialty channels such as the Money channel or MSNBC.

 

Of particular interest to digital strategists such as myself is that no digital marketing makes it into the top 5 tactics. After the military and education, B2B were the first early adapters of digital marketing and electronic sales. Electronic Data Interchange (EDI) was being used by many B2B companies before many of us had even heard of the Internet. Despite this early mover advantage into the digital world, B2B marketers have not discounted more traditional methods such as face-to-face and PR.

 

The good news for digital media buyers and marketers is that digital marketing –such as e-mail marketing and paid search – is being used more and more often by B2B companies and is projected to be the number two tactic of choice by 2008.

 

 

ANALYSIS

 

Traditional, organic marketing such as in-person events and public relations works best for many B2B organizations. Digital marketing, particularly targeted permission marketing (see Web marketing (part III): E-mail marketing ), is becoming more effective and will continue to garner more and more of the marketing pie. Increases in digital marketing budgets will continue to be at the expense of less successful media such as newspapers, printed newsletters and radio.

 

RELATED FEATURES:

 

Web marketing (part III): E-mail marketing

Web marketing (part II): Paid search

Web marketing (Part I): search engine optimization

 

If you can’t beat ‘em, join ‘em.

 

If only the record companies had thought this way when Napster first hit the scene instead of spending tens of millions of dollars in legal fees and associated marketing trying to fight downloadable music. Well, that’s mostly in the past now as the labels have come to learn the power of e-commerce, thanks in-part to iTunes.

 

A remarkable new study released this week by NPD Group found that iTunes has begun to displace retail chains in music sales. In fact, people are buying more music from Apple’s iTunes than from big chains such as Tower Records and Borders. Wow.

 

In Q3, the top 10 retailers were as follows (note: numbers within parentheses denote retailer unit-sales position in Q3 2004):

 

1. Wal-Mart (1)
2. Best Buy (2)
3. Target (3)
4. Amazon.com (4)
5. FYE (10)
6. CircuitCity (Tied for 5)
7. Apple\iTunes (14)
8. Tower Records (Tied for 7)
9. Sam Goody (Tied for 5)
10. Borders (9)

Despite the fact that iTunes has only been around for a couple of years, there are only six retailers that sell more music.

 

“The ongoing and growing popularity of Apple’s iTunes Music Store now positions the company as a leading music retailer, and continues to legitimize legal digital music retailing,” said Russ Crupnick, music and movies industry analyst for The NPD Group. “With the growing interest in digital music, forecasts of more iPod demand this holiday, plus the stocking-stuffer appeal of iTunes gift cards, we can expect Apple to increase its share even more by year’s end.”

 

If you’ve not yet identified what online threats could supplant your traditional business then you’d better do your homework. I guarantee you that Towers Records did not formally take into account three years ago the threat that iTunes has become today. In only a couple of years iTunes has managed to build a business that once took decades to build.

 

Internet speed waits for few.

New research reports that consumers are 50 percent more likely to be influenced by word-of-mouth recommendations from peers than by radio/TV ads. Growing confidence in consumer-generated-media (CGM) creates a strong impetus for marketers to influence this new media, and a recent survey from Bain & Company provides an excellent suggestion about how to start: keep your customers happy.

 

The “2005 Consumer-Generated Media (CGM) and Engagement Study” a new study of consumer behavior by Intelliseek Inc., contains interesting findings on the interaction between old and new media and the behaviour of Internet-savvy consumers:

·        “Active ad skippers” are 25 percent more likely to create and respond to Internet message boards, forums and blogs.

·        Word-of-mouth behavior among “familiars” trumps all forms of advertising and is more trusted than news or “expert commentary.”

·        Consumers are on track to post close to 2 billion comments on the Internet by the end of 2005.

While it’s critical for marketers to ramp up their knowledge of the blogosophere and develop strategies for managing their brand in this space, they can’t take ignore the source of the positive or negative comments that will be posted: the customer experience.

The Bain & Company survey indicates companies need to be more honest with themselves about their performance in this area. In a survey of 362 firms, the consulting company found that 80 percent believed they delivered a superior experience to their customers. But when they asked customers about their own perceptions, they found that they rated only 8 percent of companies as truly delivering a superior experience.

Bain went on to determine what criteria put the top performers into the elite eight percent, finding that they take a broad view of the customer experience and pursue three imperatives simultaneously:

1. They design the right offers and experiences for the right customers.
2. They deliver these propositions by focusing the entire company on them with an emphasis on cross-functional collaboration.
3. They develop their capabilities to please customers again and again—by such means as revamping the planning process, training people in how to create new customer propositions, and establishing direct accountability for the customer experience.

When was the last time you used “salesperson” and “Internet strategy” in the same sentence? If you did, the sentence probably also included either the phrase “reduce costs by using fewer,” or the verb “avoid.”

 

Salespeople are much maligned. Customers resent their pressure tactics, executives often question their commission cheques and the Kids in the Hall made them the subject of plunger jokes.

 

Worst of all, marketing strategists often ignore them, launching expensive campaigns that always factor in the Internet but frequently neglect the sales force. And that leaves the sales team still on the street, representing the company’s product and brand. But doing it badly and with poor information.

 

Tim Riesterer, in an article for MarketingProfs, describes this space as “no brands land”: the gap that exists between the 30,000-foot ad campaign and the 3.5-foot level, which is where the company’s sales team is persuading prospects to make a decision. Only they might persuade a customer to look elsewhere because their information and positioning is inconsistent with the company’s web site. Which the customer checked a few minutes prior to meeting with the sales person.

 

As Riesterer points out, many companies—especially those in complex b2b selling environments—have embraced consultative selling methodologies to differentiate themselves in a world of product parity. He quotes Evan Hirsh, author of Channel Champions, who writes that: “From these [sales] channels flow customer satisfaction, market share, revenue gains and profitability.” However, they have not translated the high level positioning on the web site into street-level value propositions and solution-messaging that align with the sales team’s training.

 

The effectiveness of these solution selling techniques can be boiled down to access to up-to-date information and productive use of sales time. In other words, sales effectiveness screams intranet.

 

That point has not been lost on CMS vendors or intranet thought leaders. For example, Prescient Digital Media's President, Toby Ward, wrote in a posting called “The intranet bolsters sales” in Prescient's companion blog that: “While there is a certain amount of guesswork involved it is easy to see that the intranet can have a positive effect on the bottom line and impact an organization’s sales.”

 

Which might explain why too few companies talk about their Internet strategy and their sales force effectiveness in the same conversation. Not only do marketers often create the strategy without considering the sales team, the methodology for developing an effective intranet strategy—which can be ideal for creating an effective sales intranet to complement an on-line presence—is often created by the HR or communications departments, who work in a different silo to sales and marketing.

 

So the next time you’re developing an Internet strategy intended to boost sales revenue, make sure you think about the sales team that is responsible for delivering those numbers. And if you need any help in determining how to help them manage information effectively, ask Communications how they developed their intranet plan.

You’d be hard pressed to find a better win-win-win relationship between consumers, an industry and technology than the travel market post-Internet adoption.

Of course, these gains could only be accomplished after the players got their strategy right.

There can be no doubt that the Internet is the technological backbone of the travel industry. According to Claria Corporation’s Feedback Research Division:

§         88 percent of consumers purchased or plan to purchase an airline ticket online, up from 50 percent in 2004.

§         Online purchases of hotel accommodations also increased in this year to 52 percent, up from 40 percent in 2004.

A quick examination suggests that the Internet and travel are nearly as good a combination as a pina colada and a palm tree:

• Tourism is an information intensive industry. The Internet provides technology that enables constant up-dating of information based on customer input, changes in product availability and price changes.
• Tourists cannot really assess the quality of the products or services they are buying until they arrive at their destination. Trust and proof statements are critical for delivering the comfort level required to commit an often significant percentage of household income to a purchase. The Internet delivers technology that makes it easy to compare choices, delivers immediate confirmation and documentation of reservations and builds a relationship between the buyer and seller.
• Tourists are strongly motivated by price. The Internet enables electronic order processing that dramatically reduces sales costs; automation scales back skilled labour costs; it disintermediates several layers of middle man; and it reduces the cost of physical space.

 

The Financial Times provides a number of examples of how the players have all won as a result:

• Consumers: Not only has informed choice risen steeply and costs declined, holiday travelers are enjoying tremendous flexibility: holidaymakers used to be restricted to 7- or 14-day holiday periods; now the average length of stay is 4.8 days.
• The industry: despite tremendous challenges, the U.S. Internet travel industry grew from US$5 billion in sales in 1999 to US$20 billion in 2003, a number that is still growing dramatically.

 

So what were the winning strategies?

 

• Rethinking the product offering. With consumers using the Internet to buy flights, accommodation and rental cares separately rather than in packages, tour operators responded by either diversifying into specialists holidays and upscale breaks, or creating sites that allowed customers to choose component parts.
• Creating an Internet-specific business model. Lastminute.com, Expedia and Travelocity buy travel products  and use the Internet to find buyers.
• Dramatically increasing efficiency. The winners have learned to process large numbers of orders and inquiries with less human intervention. Not only does this approach drive cost out of the system, it allows them to collect extensive customer data which they utilize to create a better product.

I hate spam. You hate spam. We all hate spam. Yet, just like negative political advertising during the heat of a hot campaign, it works brilliantly.

 

In fact, except for traditional direct marketing, there is no single more effective marketing tool.

 

Here are some of the numbers:

 

Ø       Only telemarketing has a higher ROI than e-mail (IAB)

Ø       In Q2 2005, the open rate fell to 23.6 per cent versus 2004 (DoubleClick)

Ø       Bounce rates, which were at an all time low at 7.9 percent, declined 25 per cent from 2004 rate (10.5 percent) (DoubleClick)

Ø       Orders per e-mail delivered were 0.35 percent in the fourth quarter of 2004, an all-time high and much higher than the previous records - 0.30 percent (DoubleClick – based on  2.5 billion e-mail sent)

 

That last number is very telling. It means there’s a sale, on average, for every 300 e-mail solicitations sent. While it depends on how you do it, the cost of sending 300 e-mail is next to nothing. And this is why e-mail marketing continues to be wildly successful despite the stigma against spam.

 

To be honest, the real winners are not those marketers that are spamming (though some are wildly successful), but those that undertake permission marketing.

 

Permission Marketing

 

Coined by online marketing guru Seth Godin, permission marketing is a sales approach used by a marketer to obtain advanced, explicit permission from a sales prospect before sending them marketing information. In other words, a person gives you permission to sell them – usually in the form of opt-in e-mail.

 

Of course, we’re all familiar with opt-in e-mail – usually it involves signing-up for a newsletter and then they ask you to also divulge some personal information and whether or not you’d like to receive some special offers. Double opt-in means you are sent a confirmation when you agree to sign-up and you’re expected to confirm that you are in deed providing your permission to receive marketing information.

 

Permission marketing is a big business. Generally speaking, PM is more effective and the response and conversion (sales) rates are higher because people want to be marketed to (yes, of course, plenty slip through the cracks and still treat this marketing as spam but it’s still more effective than blind spam). 

 

Show me the money

 

“What kind of returns can I expect?” you ask. Well, it depends on many factors of course. A key of course is the quality of marketing list...

 

• Are your e-mail targets voluntary opt-in subscribers?
• Are they past customers?
• Do they know what to expect from you?

The more your subscribers know you, know what to expect, and have purchased from you, the better your success.

 

Like any business, you do have to spend money to make money. However, you don’t have to break the bank.

 

In a ClickZ column this summer Jeanne Jennings featured in a great e-mail marketing case study The Little E-Mail Marketing Budget That Could. The company, Dakin Farm, is a small, family-owned specialty foods company in Vermont.

In 2004, Dakin Farm had an e-mail marketing budget of a little under $14,000. It sent regular marketing offers three times per month (on average) via e-mail to its subscriber base of some 13,500. The return was huge. Total sales equaled $185,000. That’s an ROI of 1300%.

The click-through rate was fairly standard: only 4.34% of recipients clicked on specific offers. But of those that clicked, 98% bought.

Jennings quotes the following reasons for success, right from the owner’s lips (Sam Cutting IV):

• Everyone with a direct response Web site should build an e-mail list and send offers, even if the list is small.
• Measure response to e-mail offers.
• Determine your breakeven.
• Increase the frequency of sending e-mail to a level that feels right and is above breakeven.
• Ensure every e-mail contains a strong offer.
• Use short deadlines as a call to action.

More Tips for success

Firstly, use e-mail to communicate with your customers, but get their permission:

Ø       Double opt-in is strongly recommended

Ø       Opt-out option on all correspondence Privacy Policy is a must (PIPPA requirement)

Ø       Third-party lists is strongly discouraged; ditto for sharing

Ø       Provide links to back issues and related information

Ø       Write succinct, punchy subject lines

Ø       Don’t be shy – be persistent

Jeanniey Mullen (also a ClickZ columnist) recently cited an insurance company (My Last ClickZ Column Had A Typo) that decided to re-connect with e-mail subscribers that had not read an e-mail from the company in the past six months. The company established a system that automatically sent a message to those subscribers who hadn’t opened an e-mail in the subsequent six months.

The e-mail team used the following subject line:

"WTF! Don't you like our e-mails?"

For those of you that don’t use instant messaging, WTF stands for “What the ____ (expletive)?

The response to the edgy but frank e-mail was impressive: 25% of those non-readers opened the e-mail. And, over 500 replies came back replying why they weren’t reading the e-mail messages – valuable feedback for future campaigns.

Bottom line: don’t be shy – get out there and start getting to know your customers (and potential customers). They want to hear from you.

“In 2005, Employees Will Waste 551,000 Years Reading them (blogs),” says Advertising Age, based on a ‘study’ of U.S. employees.

 

551-thousand years “wasted.” This is the equivalent of trillions-of-dollars in lost revenue.

“35 million workers -- one in four people in the labor force -- visit blogs and on average spend 3.5 hours, or 9%, of the work week engaged with them, according to Advertising Age’s analysis,” writes Bradley Johnson in Advertising Age (see What blogs cost american business). “Time spent in the office on non-work blogs this year will take up the equivalent of 2.3 million jobs. Forget lunch breaks -- blog readers essentially take a daily 40-minute blog break.”

 

What?! You’re reading my blog, as we speak, at work?! How dare you waste company time and money!! For shame!!

 

Yes, that hollow squishing sound is resonating from my firmly planted tongue in the side of my cheek. It’s drilling a hole powered by sarcasm and incredulity. Incredulous as I have lost my faith in Ad Age if that’s the type of ‘infotainment’ they’re passing as journalism. No offense Bradley, you’re a fine writer and I’m sure a great guy, but this story is flawed.

 

In short, this is not a real study – and certainly not scientific – and the findings are flawed. For example, an important point that I strongly question:

 

"Based on ComScore's tally of blog categories, this suggests just 25% of blog visits directly connect to the job. Employees this year will spend 4.8 billion work hours absorbing wisdom from other blogs that may enlighten visitors but not amuse the boss."

 

This is a massive assumption that would cost a professional researcher his or her job. Just because 75% of blog categories are not related to jobs doesn't mean it is what people are reading when they are at work – or at play.

 

It's important to note that I read a lot of blogs and I also write and lead a couple of blogs so I base my comments on a lot of experience.

 Another finding:

 

"Count all business blog traffic, half of tech and media blogs and
one-fourth of political/news blogs as directly related to work."

 

Haha – an incredible leap of faith! Even if it was true how does anyone know which half of tech blogs people are actually visiting during the work day? What if it is the half that is work related? Who decides which tech blogs are
work-related or not? What is a work day?

My work day typically begins at 7am and ends at about 11pm with blocks of time dedicated to family, meals, etc. in between. In fact, I began working at 4am this morning, but that’s not typical. My point: there is no typical workday and we don't fully understand with any certainty at all what people are reading during what should be productive work time, and we're only guessing at what blogs are considered work and not work.

 

I was just researching digital video cameras online. On the surface that could easily be assumed as "non-work". However, I'm looking to buy a new video camera to record our usability tests with client users. That most certainly is work that could easily be assumed as play.

Finally, the Advertising Age survey – like many other surveys conducted by magazines today has a questionable sample size and methodology. I’ve not gotten a firm answer on this, but I believe it was an online survey of subscribers – a self-select survey and only a sample of niche readers, mostly tech heads, not a sample of the total working population of the United States. They invited 5,000 readers to complete the survey. Typical response rates to these invitations average between 1% and 2% -- making the likely response rate to this survey likely in the neighborhood of 50 to 100 respondents (a paltry unrepresentative sample). Therefore the survey findings are completely invalid and only guesswork that are conveyed as being reality.

I asked the writer, Bradley Johnson, Editor-At-Large for Ad Age, about the study and challenged him on the validity. Johnson says “that Advertising Age's analysis, as we noted in the story, is a "best-guess extrapolation done by reviewing blog-related surveys and data. This was not based on an Ad Age survey; it is a best-guess review.”

 

Of course, that the ‘study’ is not in-fact a study at all but a best-guess is completely glossed-over and hidden in the story.

 

Don’t believe the hype. Be careful of what you read and don’t feel guilty about reading worthwhile blogs that build your knowledge and intelligence for your job. Use a grain of salt with every blog – including this one (www.IntranetBlog.com) – and always dig deeper to understand the methodology of any study that makes outlandish claims that seem excessive or too good to be true.

 

RELATED ARTICLES:

McDonald’s beefs-up intranet blogs

Blogging The Intranet

 

The growth of VOIP and the threat it poses to the trillion dollar telephone industry is attracting well justified attention and creating lessons in Internet strategy no one can ignore. But the performance of the established telecoms demonstrates that while there’s never a good time to dissatisfy a customer, a “cable guy” approach to customer service is particularly ill timed now that alternative technology is available.

Web guru Tim O’Reilly forecasts that VOIP’s participatory technological model will disrupt the established telephone players. The father of disruptive innovation, Clayton Christensen, cites VOIP as an excellent example of why all industries should evaluate the opportunity or threat created by the radical business models it exemplifies.

Another theory, enthusiastically articulated by a friend of mine who has chosen VOIP over her landline, is: don’t piss off your customers.

While not grounded in the same academic rigour as O’Reilly or Christensen, her experience provides a case study of what happens when an industry facing intense competition fails to provide even basic customer satisfaction: she eradicates them from her life.

The growth of VOIP is remarkable. Japan already has over 8 million subscribers today andIDC predicts that the number of residential VOIP subscribers in America will grow from 3 million at the end of 2005 to 27 million by the end of 2009.

Such growth inevitably captures the attention of the business press, such as The Economist which produced an in-depth report on telecoms and the Internet. It provides startling evidence that the telecom industry will be devastated by VOIP.

The report holds up Skype as a leading example of a disruptive agent terrifying the incumbents, and not because of its current business performance. The three year old company will only make US$60 million in revenue this year and will likely not be profitable.

Skype earns attention because of the credentials of its founders who clearly grasp the participatory, collaborative nature of Internet technology. Niklas Zennstrom and Janus Friis also founded KaZaA, and its their combination of of philosophical insight and business acumen that has drawn the attention of Tim O’Reilly, an influential proponent of Internet-enabled collaboration.

Skype is also a poster child for Christensen’s theory of disruptive innovation, a player that can take out entrenched incumbents by kneecapping them with superior pricing tactics. Consider Skype’s model:

§         It can add 150,000 users a day without spending anything on new equipment or marketing.

§         With no marginal cost, Skype can thus afford to maximise the number of its users, knowing that if only some of them start buying its fee-based services—such as SkypeOut, SkypeIn and voicemail—Skype will make money.

§         As a result, according to Zennstrom: “We want to make as little money as possible per user. We don't have any cost per user, but we want a lot of them.”

§         This is the exact opposite of the traditional business model in the telecom industry, which is based on maximising the average revenue per user.

Not only does the Skype business model have experts like Rich Tehrani, the founder of Internet Telephony, predicting that in the future all voice communication will be free, recently released statistics demonstrate that VOIP may completely eliminate traditional phone service.

According to the Telephia Emerging Personal Communications Options (EPCO) survey of high-tech households, Internet-based telephone service (or Internet telephony) is replacing traditional landline phone service among those who have chosen VOIP.

§         53 percent of high-tech households subscribing to Internet telephony have completely replaced and disconnected their landline phones. (High-tech households are identified as those who currently subscribe to at least three bundled or emerging services—e.g., wireless data, video-on-demand, Internet-based telephony, satellite radio, broadband, DVR, etc.—or expressed an intent to purchase four or more services.)

When asked what the primary reasons were for subscribing or having interest in Internet-based telephone service, the high-tech households responded with explanations that strongly reinforce the pricing model implemented by Skype:

• 59 percent said savings on calls within the United States was the top factor in making the switch.
• Among those who showed interest in adopting Internet telephony, but have not subscribed to a service, 30 percent said that bundled package deals were a key reason for their interest.
• For these “intenders,” 17 percent said interconnectivity across different communication services was important.
• 15 percent cited the ability to switch between telephone networks.
• 11 percent mentioned caller ID on TV as a reason for interest.

Which brings us back to my friend. An executive with a multi-national software manufacturer, she and her husband fit comfortably into the high-tech household category. But she never mentioned the factors above when telling us why they have removed their landline and are now exclusively using VOIP and cell phones for their voice communications.

She chose to disrupt her telephone provider after it was unable to resolve a technical problem after seven service calls (all of which required her to be at home and not all of which resulted in the appearance of a service technician) and long-winded explanations from CSRs about how she might not actually have a problem with her phone line.

There are few industries in which the stakes are as high as telecommunications and the differences in business models between disruptors and incumbents are as stark. Nonetheless, everyone evaluating an Internet strategy must be following the developments in the industry because of the important lessons it provides.

But one can only hope that we don’t need to read the work of business and web theorists to understand that forcing a customer to endure seven service calls to not resolve a problem will motivate them to switch the moment an alternative is available.

Paid search gets a lot of press because it’s making a big bang. However, many advertisers and web managers are still confused about this hotly evolving science (or art depending on your perspective).

 

Paid search allows an advertiser to pay for small text ads, that sometimes look like they are regular search result listings or they are offset from the regular listings as small promotional boxes, and are served up alongside regular search result listings. For example, do a search for “intranet consulting” and you will produce the following:

 

 

The paid ads are those that are highlighted by a red box (the red boxes are strictly for illustrative purposes). The regular search result listings appear as they normally do in the center of the page.

 

In publishing the ads, you choose the keywords that you want your ad associated with. In the example above, advertisers are paying to have their name associated with the term “intranet consulting.” The advertiser only pays only when someone clicks on the ad. This rate, called Cost Per Click (CPC), is determined by how often users search out that phrase or word, how often they click, and how big the competition is for advertising with that phrase.

 

 

The big players in this space are Google and Yahoo! (which bought Overture) with Google still leading the way. MSN recently broke into the space and others offer it but have miniscule audiences in comparison.

 

Paid search also allows you to track exactly how you’re doing: how many times people are seeing your ad, how many are clicking through, and what is the exact cost to you the advertiser.

 

 

However, paid search is part art and part science. You may want to have your ad associated with keywords and phrases, but you will have competition. And getting the top spot is not yet determined solely by price but my algorithm. However, MSN, Yahoo! and Ask Jeeves are all moving to a highest bidder model.

 

Bidding on keywords can be very expensive if you have rivals jockeying for position. Alternatively, you can bid on more obscure keyword phrases that no other advertiser is using where you can assure yourself the number one ad placement, but you won’t get as much traffic as more popular search phrases.

 

To determine what keywords to associate with your ad, there are a couple of tools:

 

·     Hitwise's search term analysis – type a phrase and it will list the sites that receive the most traffic and their percentage share of the total traffic generated by the phrase.

·     WordTracker – competitive analysis tool to seek out the best keywords based on over 300 million keyword phrases.

·     Pay Per Click Galaxy - generates thousands of keyword phrases to consider and experiment.

·     Google link analysis – type in your URL and find out what websites link to your website. 

While traditional online display advertising (banner, spatials, etc.) accounts for 45% of all online advertising, paid search advertising accounts for 34% of the marketing (JupiterResearch) and is growing at a massive clip. In fact it won’t be long until paid search advertising passes all other forms of online advertising. The study forecasts paid search to exceed banner ads by 2010. At the same time, the cost-per-click is anticipated to grow from $.39 in 2004 to $.58 by 2010.

 

Despite the increase in cost, paid search clearly is good bang for the buck. Forty-two percent of the study respondents that classify themselves as sophisticated marketers plan to increase their paid search budget next year.

 

RELATED FEATURES:

Web marketing (Part I): search engine optimization

The Amazon Lesson

One always has to be careful when using the word “never,” but I can say with confidence that our clients never initiate an Internet strategy without considering how they will manage the groups of people who will be affected by the initiative, particularly the team developing the plan and the users of the sites.

 

Given the wealth of information about the role people play in developing the Internet—notably usability studies and the detailed metrics generated by all sites—everyone understands the need to factor the human element into their Web strategy. Likewise, books like The HR Scorecard: Linking People, Strategy and Performance have ensured that very few organizations undertake any critical strategic process without incorporating people into the equation.

 

But while all organizations think about managing groups, the Internet is increasing the need to think about managing individuals. Organizations must be aware that a single customer can spark a raging customer service firestorm with one well-written blog. They must also challenge and engage each knowledge worker, who works on a computer linking her to the addictive wonders of the Internet or, even worse, job search sites.

 

Whenever we talk about individuals, of course, we have to start with ourselves, which Peter Drucker did when he wrote his excellent article on managing oneself. In it, he puts the Internet into humbling context for those of us who make our living by singing its praises.

 

“In a few hundred years, when the history of our time will be written from a long-term perspective, it is likely that the most important event historians will see is not technology, not the Internet, not e-commerce. It is an unprecedented change in the human condition. For the first time—literally—substantial and rapidly growing numbers of people have choices. For the first time, they will have to manage themselves. And society is totally unprepared for it.”

 

After frightening us in the opening lines, Drucker offers reassurance by providing insights into how to become prepared for the challenge. And interestingly, one piece of advice forms a strong backbone for initiating an Internet strategy, because it describes how to combine both the effective management of human resources with the opportunity to challenge smart people with the phenomenal appeal of Internet technology.

 

“Effective organizations put people in jobs in which they can do the most good,” writes Drucker. “They place people—and allow people to place themselves—according to their strengths. The historic shift to self-management offers organizations four ways to best develop and motivate knowledge workers:

• Know people’s strengths.
• Place them where they can make the greatest contributions.
• Treat them as associates.
• Expose them to challenges.”

Like most great business advice, this is simple to say and hard to do. But we can only hope that after receiving this counsel, organizations never initiate an Internet strategy without considering how they will manage the groups of people who will be affected by the initiative, but also understanding how best to follow Drucker’s four tips for developing and motivating knowledge workers when creating the plan.

 

HALIFAX, NS - If you’re taking the time to read this then I need not remind you of the power of the web. But just in case you’ve recently come back down from the mountain or emerged from a getaway in a cave here are some of the latest numbers, for the record:

 

·         Almost 80% of North Americans have Internet access

·         More than 50% have made online purchases (Ipsos-Reid)

·         A majority use the Internet as a decision-making tool

·         The Internet cited as the most influence on luxury purchasing (cited by 44% of affluent purchasers) (IAB)

·         39% of North Americans use online banking (Ipsos-Reid)

·         73.5% of e-commerce sites estimate sales growth of 15-35% this year (35.5% estimate growth of 35% or more) (Internet Retailer)

·         60% of chain retailers estimate web sales growth of 25-200% (21.7% expect growth of at least 100-200%) (Internet Retailer)

·         Time spent online by adult Canadians has increased 50% since 2002 and Internet use is ready to overtake watching television (Ipsos-Reid)

 

The power is present, significant and growing. For those that seek to further harness their this power there are a number of marketing practices worth noting. In the first of a three part series, I will examine one of the most important Internet marketing disciplines, search engine optimization (SEO) – a requisite for maximizing the value of your website.

 

SEO

 

In short, SEO is the optimization of your content pages and classification and labelling of content to increase your rank in search engine results. In laymen’s terms, to get the best ranking possible when someone uses Google to search you out.

 

Some perspective:

 

·         56% of users make use of a search engine on any given day – 4 billion searches in August (comScore)

·         54% of searchers only view the first page of results (comScore)

·         In unaided recall, the top three search listings outperformed banners and tiles by three to one (ND Group)

·         55% of participants' online purchases originated on sites found through search listings, compared to 9% from sites originating from banner ads (ND Group)

 

So why is Google so important? Well, Google accounts for nearly 50% (47.3%) of all search engine queries by Internet users – almost 2 billion searches per month (as of August 2005). The others lag behind:

 

·         Yahoo! (20.9%)

·         MSN (13.6%)

·         Others (18%)

 

RANKING DETERMINANTS

 

Improving your website’s ranking requires some education and reconnaissance. It’s important to understand the algorithms and determinants that factor into Google and other engine’s ranking process, including the big three:

 

·         Click popularity (number, relevance, text) – how often your site is clicked on from links on other sites

·         Format, placement and content of the page title tag – the relevancy of the title that appears in the top of your browser (e.g. HealthyOntario.com – Consumer health information & health services for Ontario, Canada)

·         Link popularity – how many other websites of relevance link to your website

 

Other ranking determinants include:

 

·         Use of keywords in URL names (e.g. www.dresses.com)

·         Keyword frequency, weight, prominence and proximity

·         Meta tags

·         ALT tags

·         Comment tags

·         Themes and overall site design

 

IMPROVING YOUR RANKING

 

It is not necessarily easy to improve your ranking. Especially if your competition has a head start of several years or is also working hard to improve their SEO. If you’re selling dresses online and have just set-up a website, then it’s more than just a matter of tinkering to unseed Dresses.com as the first search result listing when searching out “dresses.”

 

However, there is room for improvement and with time and some hard work you will improve. Firstly, your website needs to be solid; rich in relevant and fresh content that is well designed, categorized, laid-out and tagged.

 

Secondly, ensure that people are visiting your website by way of links on other sites. Build up the links to your website by trading links. “I’ll link to yours if you link to mine.”

 

Other recommendations:

 

·         Build content partnerships with other sites so that you can trade and share content (and links)

·         Register your website with all of the big engines and portals including AOL and DMOG (Open Directory Project)

·         Establish your credentials as “thought leaders” and place articles or ‘leadership’ columns on relevant webzines

 

AVOID AT ALL COSTS

 

There are dos and don’ts to SEO. Our recommended dos highlighted above can boost your traffic and (if applicable) your revenue. The don’ts could get you banned from Google and others. Avoid...

 

·         Cloaking your website – don’t establish mirror websites of your primary website in an attempt to fool the engines (they will figure it out and won’t be happy)

·         Joining link exchanges that aren’t relevant to your content for the sole purpose of increasing ranking – it’s not just enough to have links, the links have to be from relevant content

·         Write text or create links that can be seen by search engines but not by users – all links should be viewable by the user

·         Send automated queries to Google to monitor your site's ranking – automated programs make Google angry L

·         Use programs that generate automatic pages of links or ‘doorway pages’ – see the above about making Google angry L

 

SEO is one of the most important marketing undertakings you can invest in, but not the only marketing consideration. In the next installment I’ll discuss email and permission marketing.

 

A new report from Nielsen/NetRatings adds to the quantifiable impact of blogging, in this case the ancilliary benefits generated by blogs. The organization reports that traffic to image hosting Web sites has skyrocketed due to the massive rise in blogging activity this year.

• As a category, image hosting sites have grown 406 percent to more than 14.7 million unique users since January 2005, accounting for nearly 10 percent of active U.S. Internet users.
• In July 2005, 20 percent of active Web users, or 29.3 million people, accessed blogging or blog-related Web sites, growing 31 percent since the beginning of the year.

While no business people (especially ones who derive revenue from digital images) would ignore these stats, they might question the applicability to business strategy when they learn that female teens between the ages of 12 to 17 years indexed the highest out of the age groups broken down by gender.

 

There’s an easy explanation for this demographic trend—social circles have moved on-line, web journals provide a great means for getting to know someone and teenage girls like to meet people—but companies that look beyond those demographic fine points will see the inherent power of the Internet as a social media and refine their Internet strategy appropriately.

 

The same social impulse that draws teenage girls to blogs sparks the mass collaboration that is capturing business interest and rewarding companies that learn to harness its power.

 

In a comprehensive article on the topic, Business Week, provides a number of statistics on how on-line collaboration impacts various industries, including:

 

 

 

• Telecom: More than 41 million people use Skype software to share processing power and bandwidth, allowing them to call each other for free over the Internet. Partly as a result, combined 2005 revenues of AT&T and MCI are expected to fall by $7.4 billion, or 15%.
• Media: Reversing the traditional broadcast model, more than 53 million Americans have contributed material to the Net, such as product reviews and blog postings. At least 10 million blogs, some drawing more visitors than mainstream news sites, are now read by 32 million Americans.
• Advertising: Search engine Google instantly polls millions of people and businesses whose Web sites link to each other, producing an entirely new ad venue that grossed $3.2 billion last year, up 118%. That compares with an 8% increase in TV ad spending and 5% in newspapers and magazines.

Mass collaboration challenges numerous business principles, notably the command-and-control structure instituted by most corporations. Not surprisingly, then, the early winners have been upstarts rather than established businesses.

 

Nonetheless, companies like Hewlett-Packard and Proctor & Gamble have tapped into the power of mass collaboration, learned to manage the social impulses of their customers and employees and generated solid business results through their efforts.

 

It’s a trend that all organizations will need to watch. Just like  teenage girls are discovering that image-intensive web journals are a great way to meet people, organizations that harness the power of mass collaboration are becoming very popular in their own social scene.

 

 

 

The Internet has taught us the value of permission-based marketing, but it has also demonstrated the importance of customer permission: what and how will your customers permit you to sell to them?

 

The Internet spawned exciting new companies like Amazon and Ebay which found innovative ways to communicate with and sell to customers. It also rewarded existing players that grasped how to reengineer themselves while still delivering a consistent brand experience. Dell provides a great example of the latter case, famously incorporating an Internet strategy—disintermediating the channel—into its brand with its “be direct” slogan.

 

Recent statistics on e-commerce transactions and an announcement in a shift in strategy from Dell demonstrate yet again that customer permission remains a critical consideration when contemplating a web strategy.

 

In its assessment of best selling product categories for July’s top 10 e-commerce sites, Nielsen/NetRatings reported that EBay led the pack in total purchases with 26.4 million in July, followed by Amazon and Symantec  with 4.6 million and 1.1 million purchases, respectively.

 

It’s interesting to see what their customers are buying from the companies, notably that a brick-and-mortar company, Wal-Mart, has succeeded in winning customer permission to offer a new product, while Internet players like Ebay and Amazon remain constrained, to varying degrees, in the product categories in which they started:

• Photo services accounted for 52 percent of online purchases at Wal-Mart.com, with photo pick up at brick and mortar Wal-Mart locations.
• Ebay’s top selling product category was Toys, Games & Hobbies, the company's original product offering.  But this category only accounted for 29 percent of its customers’' purchases.
• Amazon continued to rely heavily on book sales, which constituted 57 percent of purchases on that site.

On the Dell front, the company has announced a new higher-price line of consumer PCs. Marketed under the existing “XPS” name, the new machines, Dell says, combine “the ultimate in performance, experience, and service.” While it still sells machines for as low as US$299 after rebates, the company is hoping this fundamental shift to move into a higher priced product will reverse poor sales trends  by delivering a higher average selling price.

 

By doing so, Dell will be testing its customer permission, not just what product it will be permitted to sell, but also at what price point. More significant, it will also be testing how it will be permitted to support the new product. Dell’s service has become a mini-Internet phenomenon, which has prompted the company to announce a beefed up service offering for the XPS machines.

Yahoo! makes billions – but not from original content. Yahoo! makes money from other’s content by providing access to it – either by linking or aggregating.

 

Yet Yahoo! is hiring writers and correspondents to develop original content. Hot on the heals of hiring a roving war correspondent (see Content is king), Yahoo! announced the hiring of 10 financial news columnist

 

Why start hiring writers? Yahoo! is doing quite well thank you very much, but they know that content is king and are investing because that’s what we want. 66% of Americans with Internet access read online news on a regular basis. Purchases of pure content (think Wall Street Journal Online and others) is expected to top US$2 billion this year.

 

People love news. News is now the most read content on the Internet. Fueling the need for news is the news junkie’s heroin – RSS.

 

To review for those that still haven’t sampled the drug,  stands for Really Simple Syndication. A script that allows users to "subscribe" to content within a client – such as as My Yahoo! or Feedster – that aggregates RSS content feeds. RSS is often most associated with blogs, podcasts and news sites. This blog of course has RSS subscription options as well. With the number of blogs at 15 million and growing at a rate o 80,000 per day then it’s a good think we have something to help us keep track of all of it.

 

RSS is now being used by most major news sites and publishers including CNN, CBC, BBC, NYTimes.com, Amazon, etc. Even Microsoft is getting in on the game with plans to incorporate RSS in the next generation of Windows.

 

Surprisingly, most don’t even know that they are using it. A Nielsen/NetRatings survey this month of 2,129 online U.S. panelists showed that 83 percent of RSS users didn't realize they are using RSS. Nielsen speculates that people are likely signing up for customization services such as My Yahoo! without realizing that such features are powered by RSS.

Advertisers are now also heavily tapping into RSS. There are networks of blogs where an advertiser can buy a single ad appearing in numerous blogs. Ad-supported RSS feeds are now being offered by Yahoo! and WashingtonPost.com with marketers like American Express, Continental Airlines and Verizon. Just a few weeks ago Washingtonpost.com started putting ads in its RSS feeds.

Could advertising agencies be facing the same fate as blue jean manufacturers? It’s a possibility raised in a recent Wired News article about a new site called Adcandy, which allows the public to contribute their original advertising ideas. In doing so, the sites’s founder, Per Hoffman, wants to tap into one of the great strengths of the Internet: it’s power as a collaborative tool that unleashes the creativity of so-called amateurs. “People want to participate in all forms of culture, so why not commercials, for better or for worse?” says Hoffman.

 

Contributors can win cash prizes from $50 to $500 for their phrases or campaign ideas, which prompts Carrie McLaren of Stay Free Magazine to suggest another power of the Internet: it’s ability to demolish the economics of long-standing business models. “It’s safe to say that $50 for a winning idea would be comparable to sweatshop labor in the advertising world,” observes McLaren.

 

The challenges facing advertising agencies in the Internet age are well documented. Their business model, evolved over the last century, is to develop creative for brands with big budgets. Their primary revenue stream has become the fees they tie to a percentage of a media buy, which principally means television. With brands and budgets in flux, and new media both challenging television and offering skinnier percentages for media buys, could agencies be vulnerable to the transformative economics of “sweat shop” labour that have ravished other industries?

 

Before envisioning hordes of black turtlenecks on street corners with (elegantly designed and hip) signs reading “killer creative for food,” you may want to check out Alan Deutschman’s article in Fast Company about Wenda Harris Millard, Yahoo’s chief sales officer, who’s responsible for bringing big-brand advertisers to the Web site.

 

Deutschman leads with the statement that: “traditional advertising is in deep trouble,” but goes on to observe that: “The Web always had the potential for reinventing and reinvigorating advertising. With its unique ability for measurement — tracking who clicked on an ad and how they interacted with it — the Net promised to solve the classic problem stated by department-store pioneer John Wanamaker: ‘Half the money I spend on advertising is wasted; the trouble is, I don't know which half.’ But in its early years in the 1990s, the Web couldn’t deliver the mass audiences needed by national consumer brands. Lately, though, Millard has been instrumental in showing Madison Avenue that the Internet has developed the audience reach, the technology, and even the creative ferment to realize its great potential.”

 

Whew, it looks like the agency model is safe. Or we could discover that shouting “wassup” really is as easy as it looks.

With all the talk about usability, technology and killer applications there is still one thing that stands above all others: content. Content is still king.

 

“Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting,” said Bill Gates in his infamous 1996 article, Content is King – nine years ago.

 

In reality, most of the money is still being made on transactions. But content is delivering the transactions. The Wall Street Journal Online sells the content directly. Giants such as Google and Yahoo! sell targeted advertising based on content. Amazon sells goods but uses content to drive those goods.

 

But we’re not all in agreement here...

 

“Content has never been king, it is not king now, and is unlikely to ever be king,” wrote Andrew Odlyzko, Head of the Mathematics and Cryptography Research Departments at AT&T Labs, in his article Content is Not King. Odlyzko argues that a massive portion of the traffic and transactions on the Internet is still represented by e-mail, corporate intranets and other non-content related transactions including instant messaging and electronic data interchange (EDI).

 

“The Internet has done quite well without content, and can continue to flourish without it. Content will have a place on the Internet, possibly a substantial place. However, its place will likely be subordinate to that of business and personal communication.”

 

And yet companies continue to invest huge sums into content on their respective websites. Yahoo! is a prefect case in point. Yahoo! is investing in news. The portal has hired a roving war correspondent, CNN and NBC veteran journalist Kevin Sites. Sites will spend the next year traveling to 36 war zones around the world, reporting on those ‘hot spots’ and what is transpiring.

 

Why is a portal company that earns billions on aggregating other organization’s original content now starting to invest in original content? Because content pays. Users want to read it; advertisers want to pay to reach those users.

 

Outside the free content that advertisers support, consumers are also paying directly for content. In 2002 consumers paid more than $1 billion on pure content and the expenditure is growing at a huge clip. Total consumer e-commerce purchases on the Internet this year are expected to surpass $13 billion. And of those that aren’t purchasing online, many are using the Internet to research their purchase.

 

A Unity Marketing survey of affluent consumers found that the Internet is the media that has the most influence on luxury purchasing. The Internet was cited by 44% of luxury consumers as very or somewhat important in influencing their purchasing. Articles and reviews are second, with 42% reporting being influenced by editorial matter. Traditional advertising is well behind: newspaper ads (31%); television programs and commercials (28%); and magazine advertising (24%).

 

Internet authors and pundits will continue to dominate popular discourse with talk of usability, technology and applications – all of which are less important to consumers and are merely princes to King Content.

This past season, fans of Entourage, the HBO comedy about a young rising star in Hollywood and his three best friends, were provided with some fictionalized but real-world insights into the power that internet journalists and bloggers can wield in making or breaking the success of big-money ventures. Students of Internet strategy would have also picked up on the lessons to be learned from managing a nuanced relationship with an online community.

 

In one episode, the lead character, Vincent Chase, attends the San Diego ComicCon to promote his upcoming movie, Aquaman (“It’s like Spider-Man…but underwater!” says Vincent’s overbearing agent).  When Vincent blows a promotional interview and antagonizes an influential internet geek and blogger (loosely based on Harry Knowles, the founder of Ain’t It Cool News.com) Vincent's manager has to find a way to pacify the blogger so he won't turn his fan base against the Aquaman project and sink it before it's even started shooting. The episode tore a page from the reality of “geek media” sites and the impact that their online editorial opinions can have.

 

When the first drafts of a Catwoman movie script began circulating around the Web in 2001, readers of Ain’t It Cool News (AICN) were able to follow the development of a movie that had piqued interest since the release of Batman Returns in 1992.  But news leaked and rumours spread about the low quality of the scripts, the limited budget, and the constantly shifting cast and crew attached to the movie. Readers who frequented the AICN site began the low (online) rumble of discontent. 

 

Fans barely had time to digest the casting of Halle Berry in the lead role before a torrent of online vitriol was spewed at the revelation of a costume design that was, even by comic book movie standards, considered ridiculous. (Taking a swipe at this in Entourage, Vincent almost walks away from Aquaman when he sees a prototype of the horrendous costume, prompting demands for “costume approval” rights.) It also didn’t help that staff writers at AICN had less-than-kind words to say about the Catwoman project from Day One.

 

Ultimately we all know how much of a bomb Catwoman became (worldwide gross of $74 million versus a production budget—not including marketing—of $100 million). That really should have come as no surprise, given a full three years of negative commentary and speculation.  The studio and producers responsible for the mess either ignored or dismissed the vocal opinions of a rabid online fan base—which, ironically, constituted a majority of the very audience the project was targeting in the first place.

 

The Web is an amazing vehicle for reaching a mass audience with timely information, creating a buzz, and fostering an all-important user community that can become the biggest supporters of your product or service.  But the flip side is that if you upset that audience, or fail to address their desires concerns and needs, that fan or user base that you have spent so much time courting can turn on you and have a real-world negative effect on your bottom line.

We’ve all seen them: Annoying banner ads and pop-ups which implore you to smack a duck in the head for a free iPod, or answer an absurdly simple question for your very own chance to become part of the latest multi-level marketing scam.  While they may be dubious in their content and frustrating in their execution, these simple games take advantage of a marketing and advertising opportunity available to the internet which no other media can claim: Interaction.

 

For an excellent example of this, consider Pizza Hut’s partnership with Sony’s online computer game Everquest II.  The game, one which demands constant vigilance from players in 7 – 10 hour spans as they run through dark and dangerous dungeons, certainly seems a ripe market for convenient, fast and deliverable food.  Couple that with a hardcore gaming subculture which doesn’t traditionally stress soy milk or pilates, and advertising in-game should send players running for their telephones.

 

Pizza Hut, however, saw that and upped the ante –  Instead of having players phone for delivery, (telephones are so 1876) they literally put the ordering feature in the game.  All you do is hit the enter key as if you were going to say something, type ‘/pizza’ and a browser window automatically opens up into Pizza Hut’s online delivery system.  With a few simple clicks, and even fewer once you have an account, your pizza is on its way and your character in the game is still alive and well – this sort of thing matters when dying can cost you hours of what many gamers consider to be work.  

 

If you were killed, of course, perhaps it was not by a monster but rather by another player – and if you saw that they were in the infamous players guild “The Syndicate”, then you’d probably know that they only beat you because their guild is sponsored by Thunderbox PC, and that you only lost to them because they had such an amazing computer.

 

Because you, of course, are so much more skilled than they are.  If only you could have a Thunderbox PC, you’d show them all.  Or maybe they have a high-end nVidia video card, the kind you see exalted when you log in, and to which you can immediately click on to buy.  These are the other kinds of interactive internet strategies – one where people are sold to based not on what they don’t have, but rather what someone else does, where an interaction with someone else online mostly consists of their foot interacting with your behind.

 

All this, of course, begs the question: What’s the advantage in the first place?  To my mind, it consists of the fact that a step in the consumer process is essentially eliminated: No longer is there any delay between an impulse sparked by a marketing initiative and the decision to follow through with it.  You can reach your potential clients when their want for your product is at its genesis, its sweetest moment, the instant before any kind of reconsideration begins.  Interaction is the fusion of desire and chosen response, the ender of the moment between deciding that you want pizza and only then deciding from whom you will get it, or if you should in fact get it at all (does this computer game make me look fat?!) With interaction as part of your internet strategy, your product can go from one amongst many to residing at the forefront of a collective and cultural subconscious.

During my summer vacation this year, I enjoyed two seemingly unrelated activities that rolled into one important strategic lesson: I did a few dives in British Columbia, and re-read Larry Bossidy and Ron Charan’s outstanding book Execution. The lesson came together from a phrase that is drilled into scuba divers: “plan the dive and dive the plan.”

 

The slogan is important for divers to remember when entering a dangerous element in which their survival depends on a limited supply of air and the fact that the deeper they go, the faster they deplete air and the slower they need to ascend. The environment also contains numerous distractions, which can either draw you deeper than you intended or make you lose track of time. Hence the need to plan carefully—factoring in the planned depth and the number of safety of stops required on the ascent—and the discipline to stick to the plan, regardless of the interesting marine creature you might spot, 20 feet deeper than planned, when your air is running low.

                                                                                                                            

The connection to Execution? The great value of their book is that Bossidy and Charan stress the importance of a rigorous strategic planning process, which must result in a clear and realistic plan, as well the corporate-wide discipline to execute the plan. In other words: plan the dive and dive the plan. The book’s sub-title is “the discipline of getting things done,” and Bossidy, the CEO of Honeywell, explains why he places a premium on accountability and the role it plays in creating a culture of discipline: “I start with the premise that your higher quality people want to be held accountable, because it gives them an opportunity to display their performance. To do that, I try to give them clear objectives and goals, so they can be measured against those objectives and goals at the end of the period, and they can demonstrate that they've been accountable.”

 

For divers, the pressure gauge on the air tank provides the measurable statistic and the water supplies the accountability. For business people, there is no equivalent leading indicator to a pressure gauge nor are there business penalties similar to running out of air 60-feet below the surface. The absence of such incontestable metrics and consequences may be why we’ve all experienced “deadline creep” or witnessed plans re-written mid-way through the quarter because none of the milestones have been attained.

 

Of course, there are consequences for companies who fail to achieve their objectives, and in Execution Bossidy and Charan point out that many organizations struggle with the gap between goals and results. They develop great ideas and bold plans, but then don’t follow through properly. In other words, they plan the dive and then don’t dive the plan.

 

In the author’s view, planning the dive requires a great strategy that comes together block-by-block and is in synch with the realities of the marketplace, the economy, the competition, and the company's resources. Diving the plan means creating a realistic operating plan, with specific programs and actions and clear accountability. Such a plan breaks down the long-term goals into short-term targets that will force hard decisions to be made across the organization.

 

In Prescient’s experience, exactly the same process and discipline applies to creating a great Internet strategy. We provide our clients with rigorous methodology to plan their site, and clear milestones to follow in order to achieve a great site. In other words, we help them plan the dive, and show them how to dive the plan. But the sites have turned out to be great because the clients had the discipline to execute the plan, despite interruptions and competing priorities. That’s important because just as a diver can’t deny that she’s out of air, a company can’t deny that its highly visible Web site is underperforming.

 

 

 

 

For anyone who likes a great story about strategic achievement, the tale behind Motorola’s Razr phone has a lot of excitement: single-minded focus on one goal, a small team of passionate innovators, timely high-level intervention, clandestine development and a product that an industry thought was impossible. It even has a great ending: sales that exceeded total lifetime projections in three months, one million units of the US$450 phone sold within six months and an iconic product that revitalized Motorola’s image.

 

This yarn unfolds in an insightful article in a recent Harvard Business School Newsletter describing Motorola’s strategy for producing the Razr. The article also provides a great example of how reinventing the strategic process is critical for achieving success. While not as sexy as the topics described above, managing the process intelligently is important in any strategic development, and critical when developing an Internet strategy.

 

Scott Anthony, the article’s author, notes that Motorola’s new product development process allowed representatives from the major sales regions to assess the concept and then develop a forecast which helped Motorola decide whether to invest in that phone. “It was a complicated dance,” writes Anthony. “If a development team ignored features that a specific region deemed critical, that region would project low sales for the phone. The lowered forecast would make it tougher to get approval to move the project forward. Design teams knew they had to appease each region or their projects would die on the vine.

 

“Obviously, this system has pluses and minuses. On the one hand, it ensures that products reflect some critical in-market feedback provided by the regions. But, it can force designers to develop compromised products that end up being acceptable to everyone yet delightful to no one. More distressing still, the process can systematically stamp out highly differentiated, counterintuitive innovations such as the Razr.”

 

Early on, the Razr development team realized that the usual process would prevent it from maintaining a singled minded focus on one goal, which was simplicity. While they respected the rules of the game that governed product development, they knew the system wouldn’t work for them. So they invented new rules, positioning the product as one that didn’t need to produce high revenue.

 

“We kept on playing the icon card,” explains Roger Jellicoe, a director of operations who managed the Razr development project. “This product was represented as this iconic, image-leading, low-sales-volume program. I think the Razr got by all the internal processes because it was characterized from the outset as an exception.”

 

A web site isn’t a product, but the Razr story offers some important lessons for developing an effective Internet strategy. First of all, successful Internet strategies require a small, committed team and visionary high-level support. They also call for the correct process. Frequently, organizations fall into one of two traps when developing an Internet strategy. The first trap is insisting that the Web team adhere closely to established processes for project development, which may impose creativity-destroying requirements on the site. The second trap is assuming that because the Web isn’t a product, it doesn’t need a process, which results in no connection to business goals and no measurable objectives for the site.

 

Avoiding these traps requires a process that enables the complicated dance described in the Motorola case. To be effective, an Internet strategy must include the perspectives of all stakeholders and users, link to organizational goals, incorporate best in class lessons from other Internet sites but still allow the Web team to innovate, which often means challenging long-held assumptions within their organization. For this reason, Prescient’s approach to strategic planning emphasizes process. The methodology is a collection of tools and techniques that enable each project to benefit from previous experience, successes, and leading best practices. Key advantages of our methodology include consistent terminology across projects, streamlined and repeatable processes, and most importantly, predictable results.

 

Of course, we love a great story about strategic achievement, and hope that if you have one you’ll share it. We like yarns in which they said it can’t be done, by the way.

 

 

 

We’ve come a long way since a business leader could pin a poster on the office wall displaying a picture of a lion sitting atop a line of text reading “the customer is king,” congratulate himself for creating a customer-focused culture and stroll off for a three-martini lunch.

 

All businesses now grasp that exceeding customer satisfaction has become the table stakes for staying in the game, and appreciate the intense effort that must go into truly understanding their customers in order to surpass expectations. They also know that the combination of sophisticated databases and web-based technology allow for unprecedented customer knowledge.

 

We’ve also learned that phrases like “exceeding customer satisfaction,” “table stakes,” and “unprecedented customer knowledge” have become mandatory in Internet strategies, and may occur more frequently than correct punctuation. And we also know that the powerful technology is frequently under-utilized. Despite ubiquitous statements professing the desire to know customers better, and the unprecedented technical ability to truly analyze their needs, it’s still rare to see companies which genuinely execute a web-enabled customer satisfaction strategy, and illuminating to witness the positive business improvements when they do.

 

A “cool” strategy

A recent case study in CIO Insight provides an excellent example of how Ben& Jerry achieve terrific results by using its site to execute a simple task: ask their customers what they want. Author Edward Cone observes that the site promotes brand consistency, important for such a “cool” brand, but in addition collects data that is critical for managing operations.

 

“The Web site also supports Ben & Jerry's hippie-licious brand image with prominent links to an anti-global-warming page, and another page that promises ‘50 ways to support peace,’” writes Cone. “But however altruistic the corporate culture, the site is built to sell ice cream. The Flavor Locator, which uses scanner data from Information Resources Inc. to track inventory in real time, is the most popular customer-service feature.”

 

The latter feature enables customers to find stores in their area that stock particular flavours, and in turn, allows the company to forecast demand for product and plan production. Anyone who has had to manage a supply chain based on the vagaries of sales forecasts will instantly appreciate the implications for cost and efficiency, and we can all relate to the customer satisfaction that results when a popular product is available. And students of Peter Drucker will recall his observation that the essence of marketing is having the right product in the warehouse at the right time.

 

In our experience, clients that retain Prescient Digital Media to provide strategic planning services are all seeking to link their Internet strategy to their overall business objectives, they all know that they must incorporate customers’ feedback into their plan and they know that executing the strategy requires hard work and dedication.

 

Because they often lack specific methodology for collecting user input on their web sites, however, they are always impressed by the detailed feedback we gather through a comprehensive heuristic evaluation of their existing sites, for example, which provides invaluable data regarding how customers rate the usability of the site.

 

Such strategic insight ensures that when the Internet strategy is presented internally, it contains phrases like “exceeding customer satisfaction,” “table stakes,” and “unprecedented customer knowledge,” but the phrases have genuine meaning and the strategy is supported by a thorough execution plan.

 

By the way, if anyone has ever had a three-martini lunch, please let me know. From my experience, they exist only in legend, along with marketing budgets too excessive to deplete and executives who don’t expect a return on their marketing investment. Of course, three-martini customer appreciation events, after official business hours, are another matter and I don’t need to hear about those.

Blogging is becoming a killer application that could rival e-mail’s impact on modern communications.

 

Yes, while e-mail still remains the quintessential killer application, some of its value is limited by the fact that once it’s sent and read (sometimes read) it’s often deleted and gone forever. A blog on the other hand can be archived, updated, edited, added upon and solicit and archive reader comments and additions.

 

Katrina provides an excellent case study of this muscle. Statistics reveal that blog postings of the name Red Cross increased by 10 to 20 times the normal amount to all blogs tracked by Intelliseek’s Blogpulse tool during the height of the chaos. Similar spikes were also seen at other not-for-profit organizations providing relief along the GulfCoast.

 

During this time of increased blog activity Nielsen/NetRatings statistics show that traffic at RedCross.org jumped massively. On August 31, 2005, Redcross.org jumped to more than 1 million visits – more than 32 times the average daily visits prior to Katrina. As of September 2, the site had raked in online donations through the website of $110 million – representing more than half of all the donations from all channels at the time.

 

One blog called TruthLaidBear.com, started a donation registration program tracking donations made by bloggers themselves. As of September 2, the site had tracked $430,203 contributors referred by 1,453 blogs (for a complete list of relief organization websites who accept donations see Fecal cholera death swamp).

 

Estimates show that there is somewhere in the neighborhood of 20 million blogs on the Internet. Tens of millions of people are reading blogs every week – many reading them daily.

 

This is the power of a killer application that continues to flex its muscle on a daily basis.

Respect the Competition

 

Andre Agassi’s run at the U.S. Open has provided a topical reminder of a key strategic lesson: never underestimate your competition.

 

In an interview, Agassi recalled preparing to meet a then-19-year-old Pete Sampras in the 1990 U.S. Open Final. Having beaten Sampras easily in their previous encounters, the brash Agassi told his coach: “I feel sorry for him. I’m going to keep making him hit balls until he implodes.” As all tennis fans know, Sampras demolished Agassi to win his first of 14 Grand Slam titles. And as even casual sports fans know, Agassi has since lost that cocky attitude, along with his mane of hair, and is now an intense competitor, but one who always respects his opponent.

 

A Safe Little Experiment?

With Steve Jobs announcing the new iPod nano and Motorola Rokr E1 cellphone, we have another topical reminder of the same lesson, but this time from the business pages.

 

In a useful discussion on Apple’s strategy, Business Week On-line notes that: “When Apple unveiled its first iPod in Oct. 2001, the market was a smattering of little-known devices used mostly for playing songs illegally downloaded off file-sharing Web sites. That's one reason why the music labels agreed to CEO Steve Jobs' plan to sell their music for just 99 cents a song. Besides, with Apple's anemic 3% PC market share, few record execs figured Jobs would be able to win over anyone other than his loyal base of Mac buyers. It would be a safe little experiment, letting music execs learn about the market while Apple picked up most of the tab.”

 

To paraphrase Business Week: Ooops.

 

Apple has sold half a billion digital songs and now claims 85 percent of the world market for digital music sales. As a result the record executives are suffering from the inflexibility of the 99 cents pricing model and cheering for other players who might be able to knock Apple off its leadership perch.

 

It’s easy to understand how a cocky young athlete could dismiss a competitor, especially one he’s easily handled in the past. But should we be surprised that seasoned executives would make the same mistake? Not really, because it happens all the time.

 

In the case of the record executives, it’s easy to understand how the error happened. Apple wasn’t a traditional competitor, so they lacked the insight into the computer manufacturer that they would have regarding players in their own market. For example, they did not grasp the significance of Apple’s strong competencies in usability, elegant design and great advertising, and the impact that strength would have in a market dominated by hip, tech-savvy consumers. Instead, they took a cursory look at easily accessible data—i.e. marketshare—and dismissed Apple as a threat.

 

Gain the tools to evaluate competitors

Unfortunately, we constantly see examples of business leaders who either fail to analyze their competition at all, or only give them a superficial glance. It’s a surprising error, especially when developing an Internet strategy, because competitors make all the necessary information readily accessible on their own sites!

 

Much like the record executives who lacked the methodology and knowledge to assess thoroughly the risk posed by Apple, many companies don’t have the tools necessary to properly evaluate competitors when developing an Internet strategy.

 

The thorough competitive benchmarking methodology and SWOT analysis that form the basis for our strategic recommendations, for example, consistently elicit positive feedback from our clients. They not only receive valuable insight about how they stack up, they often appreciate the reminder that they need to evaluate the competition.

 

For example, The Ontario Realty Corporation (ORC) strategically manages one of Canada’s largest real estate portfolios: over 6,000 buildings, comprising more than 50-million square feet of space, and 95,000 acres of land on behalf of the Ontario government. ORC has moved away from providing direct services to becoming a strategic manager of services with web-enabled communications being a key enabler. Therefore, their website needed to be able to fulfill this mandate, and they retained Prescient Digital Media to assist with the strategy.

 

ORC saw tremendous value in our competitive benchmarking strategy, which enabled them to make improvements to their strategy and incorporate valuable enhancements to the resulting site. Their Internet strategy has played a key role in attaining their overall objective  of becoming an innovative, service-oriented and customer-focused organization; in essence, becoming a “digital enterprise.”

 

For organizations like the ORC, the intent came before the methodology. Unfortunately, too few organizations have the intent and, unlike Agassi, learn to respect and truly analyze their competition. This is surprising when you consider that they don’t have the option of staying fit and waiting for their nemesis to retire, an approach that has allowed Agassi to continue his remarkable career. Along with his mature respect for the player across the net, of course.