Getting a Buzz from Potatoes

Something to inspire!

Situation: You handle sales and marketing for a commodity product that’s been around for hundreds of years, defies attempts to differentiate it, is bashed by the medical establishment, and is suffering from declining sales.

Question: Given the choice, would you look for a job in another industry, or attempt to turn things around?

If you’re Chris Voigt, Executive Director of the Washington State Potato Commission, you turn things around.

Source: USDA

Voigt chose to change public attitudes by going on an all-potato diet for 60 days in 2010, and promoting it via social media.  The video shows what he did, and what he accomplished.

<p>60 Day Potato-Only Diet from Washington St. Potato Commission on Vimeo.</p>

Results

• A Yr/Yr survey showed the percentage of people who believed potatoes are bad for your health declined from 24% in 2010 to 18% in 2011.
• For the grand sum of $366.90 Voigt established two websites, and let viral marketers take care of the rest.  This is less than 0.1% of the Washington State Potato Commission’s annual marketing budget.

Do you have a potato in your hands?  Hot or otherwise?  Then take a lesson from Chris Voigt.  As Trout and Ries have advised for 40 years, no product is a commodity unless you treat it like one.

 

e-Books Rule

The demise of Borders has everything to do with the changing dynamics of book distribution, but is no reflection on our appetite for reading books.  Based on a survey of 1,963 publishers by BookStat, estimates of book revenues were $27.9 billion in 2010 - slightly less than 2009, but a 5.6% increase over 2008.

 

Some Highlights

• 2.6 billion books sold in 2010, including 114 million e-books (but does not include sales of the growing sector of self-published works)
• Printed book sales were flat, but e-books rose from a 1% share of the market in 2008 to 6.4% in 2010.
• E-books represent 1.8% of children’s book sales which, as a category, declined 7.6% against a rising tide.
• Revenue from religious books increased a hefty 11.1% (have we turned from Ben Bernanke to a higher power to turn the economy around?)

Read the data summary here, where you will also see this impressive cubic representation of publishing categories, formats and distribution channels.

Some considerations:

• Book reading is not dead.  Far from it.
• The market for books is (arguably) elastic.  Reduced e-book prices have not hindered sales, as was feared.  The increase in sales of e-readers and tablets may well be increasing the demand for books - something there’ll be a better handle on when 2011 data is published.
• As in the recording industry, the battleground here among publishers and e-book e-tailers (Amazon, Apple, Google) is distribution.  Where the ultimate spoils will go is still undetermined.  
• E-books would not enjoy their pricing and uptake advantage were it not for on-demand distribution and archival via the cloud.   
• With storage and network speeds a factor in the distribution of on-demand music and video, is it any wonder that, for the price charged, e-book distribution is a nice business to be in?   Data storage equivalencies:
  • 1 hi-res photograph = 1 large e-book novel
  • 1 downloaded music album - 200 books (they each retail for about the same) 
  • 1 HD video rental at $5.00 = 25,000 books 

 

Are You Mobile?

I couldn’t resist reproducing this chart put together by the folks at Gist - the social contact manager - that was recently acquired by RIM.

Spend a few minutes soaking the data in.  Interesting questions - and implications - arise, like:

If 3 of 5 workers don’t need to be in the office anymore, then why do almost half (46%) say they are most productive at the office?

If IT managers at 87% of firms supply mobile devices, then why do more than half of employees purchase their own?  What headaches will IT experience with regard to compatibility and security?

Enjoy!

LNKD Takes It on the Chin

As referenced in one of my recent blogs, the problem LinkedIn has been facing in its high market valuations stems from comparisons of its revenue model to those of Facebook and Twitter.  As this chart comparing ten tech stocks shows, two analyst downgrades within 3 weeks and S&P's downgrade of U.S. bonds have combined to kick LNKD into the basement.

(Disclosure: I do not hold any position in LNKD.)

While the revenue model may be similar (based in good measure on display advertising) both the usage and the expected eyeball traffic are very different.  

LinkedIn's potential and financial performance should not be judged by the same standards applied to Facebook and Twitter.  

Unlike the broad market appeal of Facebook (especially) and Twitter, LinkedIn caters to a niche market - business networking and job-seeking.  Aiming at a narrower market is not a bad thing.  It just means fewer potential eyeballs.  Further, LinkedIn has no need to be a forum for posting photos of the family vacation, or ranting in 144 characters about the economy. 

Investors want bang for the buck.  But they should carefully examine LinkedIn’s potential for growing revenue relative to the cost of securing and maintaining it long term.  LinkedIn will never be the size of Facebook - by any nominal measure.  They need to examine the return, and the prospects for maintaining or improving that return long term - just as they would for any stock.

Likewise, advertisers want bang for the buck, too.  Their interests are best served when they identify their targets, and use media that deliver terrific payoffs in reaching and influencing those targets.  They should understand the payoff matrix that LinkedIn delivers for their ad dollars, and decide on that basis.  

A huge leap in the share price of LNKD didn’t suddenly make it a ‘must buy’ for advertisers.  The past week’s decline doesn’t render it a poor advertising choice, either.

 

 

The Wah Factor

Question: What do these songs, and the recording artists who performed them, have in common?

• Voodoo Child (Slight Return) by Jimi Hendrix
• White Room by Cream
• The Theme to Shaft by Isaac Hayes
• All Along the Watchtower by Jimi Hendrix
• Whole Lotta Lovin’ by Led Zeppelin

Answer: they were best-selling hits, and featured guitar instrumentals made memorable by the use of a wah-wah pedal.

Any garage bank guitarist who has plugged into an amplifier to emulate the rock or R&B riffs of the great lead guitarists has likely tried his hand - or more aptly, his foot - at using a wah-wah pedal.  It is so named for the distinctive wah-wah sound it makes when notes are plucked, and the pedal is rocked.

I used to own one of the originals - a Thomas Organ Cry Baby that I purchased in the late sixties.  It would be worth much more today than the $10 I sold it for in the 80s, realizing how extraordinarily difficult it is to imitate the craft of Jimmy Page and Eric Clapton.

What I didn’t know until I came across this NYT article is that the wah-wah pedal came into being entirely by accident in 1966.  The Thomas Organ Company, in re-designing Vox amplifiers made popular by The Beatles, came across a knob that added mid-range boost to guitar sound.  The electronics were married to an organ volume pedal, and the wah-wah pedal was born.

The wah-wah was one of a long line of solid state effects pedals, re-modeled amplifiers, mixers and processors that helped create the ground-breaking music of the late 60’s and 70’s.  The transistor and developments that would occur later changed how songs were composed, played, recorded and re-assembled to create the music genres that are well-known today.

The developments in electronics and digitization that occurred in the recording of music soon altered how music was distributed.  The early 70’s ushered in cassette tapes and Stereo 8-track cartridges that made music portable (players and automobiles) by offering an option to bulky turntables.  The media stood up to wear and tear far better than vinyl discs.  They took up less space on store shelves, too.

Compact Discs, pioneered by Sony, followed shortly after in the late 70’s.  Sony’s addition of the Walkman line - for both cassette tape and CDs - beginning in the 80s, made music truly portable.  By 2000 the first MP3 players were coming on the market.  Apple’s iPod stole the show beginning in 2001.

The rest - hard disk storage, Napster, iTunes, streaming audio, the dislocations experienced by the recording industry - we know well.

When I look at what is happening with social media and cloud computing I find myself thinking back to what has transpired in the music industry over the past 45 years.

It was difficult in 1966 to predict what would happen with the music industry no matter if you were an artist, a producer, an engineer or a recording company that distributed the IP.  It’s just as difficult now to predict how the changes in social media, and the processing and storage of data of all forms, are going to evolve how we work, and how and what we sell and market.

Agility, courage to depart from what has become comfortable, and willingness to accept and try new things are essential to build competencies, careers and businesses.  Pssst.  But don't get rid of all the old stuff ... it may be worth money one day

LinkedIn Feels the Pain

It’s an unfortunate coincidence for LinkedIn that reporting for its first Quarterly Earnings Release since its May IPO should occur during the Debt Ceiling fiasco in Washington, this week.

The combined body blows from the government wrangling, poor U.S. employment and consumer spending reports, and unease over Spain and Italy in the EU have sent stocks tumbling.  Add to this Wall Street’s sensitivity to SEC wrath by ensuring that ratings by their analysts are not influenced by the underwriting department.  It’s a volatile mixture.

Yesterday, it added up to some bad news for LinkedIn: Morgan Stanley joined JP Morgan Chase in downgrading LNKD.  That both MS and JPMC were major underwriters of the LinkedIn IPO in May makes the news sting.  LNKD has now dropped 17% since JPMC issued its downgrade mid-July.

As I blogged yesterday, the real issue in the minds of the market is LinkedIn’s ability to achieve the long term revenue growth implied by its stock valuation.  I don’t think the outlook is at all shabby.  Like it or not, though, LinkedIn is being compared to Facebook and Twitter - especially when it comes to advertising revenue generation.

Yes, they are all social media.  Yes, paid advertising is a large revenue source for them.  And perhaps the stock valuation has been made against the wrong standard.  However, LinkedIn’s target market and its offerings are more narrowly focused than those of its two companions.  This doesn’t make it bad to own as a stock, and it doesn’t make it a poor choice for advertisers.

What's Up With LinkedIn?

What’s up with LinkedIn?  Revenue, profits and membership, for starters.

LinkedIn’s first quarterly earnings report (August 4) since its May IPO showed an unexpected profit (4 cents a share), Y/Y revenue up 120% and membership up  61%.  As industry observers are most interested in its long term guidance, the company projected full year revenue of $475 million. 

Will LinkedIn fall short of long term expectations?  A look at its subscriber base may shed some light.  Market researcher Lab42 surveyed LinkedIn subscribers in July 2011.  Lab42 looked primarily at two things: what they use it for, and how often they use it.  

Here’s the primary use among LinkedIn subscribers:

Next, here’s the frequency of access:

 

However, here’s what I suspect is making Wall Street analysts cautious.  LinkedIn’s slides show reveals that in 2Q11:

• 82 million unique users performed 7.1 billion page views.  
• Subscriptions accounted for 20% of revenue, marketing solutions for 32%, and hiring solutions for a whopping 48% of revenue.

LinkedIn is a Rolodex, contact management aid, and prospect finder all rolled into one - and it’s a pretty good one at that.  But it’s nothing compared to the scale and variety of use of Twitter or Facebook (graphic below).  In short, there’s simply a much broader offering, larger user base, and a lot more going on at any time in both Twitter and Facebook.

It’s a simple matter of economics.  For advertisers, reach and frequency continue to be the Holy Grail.  Twitter and Facebook offer more of both.  That is why they are the better bet for attracting long term ad revenues.

LinkedIn will prosper, but the Wall Street calculus - driven by the voting of advertising dollars - favors higher market capitalizations on both Facebook and Twitter.