Go Where the Fish Are

As the saying goes, if you want to catch fish, then go where the fish are.

Marketers are heeding this obvious advice in choosing where they are increasingly directing their online ad spend dollars.  New research findings reveal what - at least for now - is becoming the prevailing wisdom of this ongoing shift.

Mobile Devices

The steady consumer progression to mobile devices is alive and well.  Marketers are now realizing that their campaigns must be adapted to mobile devices.  A recent report by STRAT, gleaned from a survey of Ad Agencies, suggests that some marketers are even racing to beat the clock.

Though Android gained the most ground with agencies in the second quarter (16 points), iPhone maintained its lead by adding another 10 points.  Further, Apple’s intro of the iPad 2 has now resulted in 46% of agencies designating it as a necessary mobile platform for their clients, placing it firmly in third place.

Google and RIM Aiming to close the Gap

What becomes interesting is the comparison of this data to Nielsen Company’s report of 2Q11 market share data for Smartphone operating systems.  Surprise!   Apple’s mobile OS (iPhone and iPad) is not the market leader.  It runs a fairly distant second to Android, 12 share points behind.  

Three observations:

1. Establishing positioning leadership is a proven marketing strategy.  Apple first did this for a short time in 1980 against PCs before losing out to Microsoft and Intel.  This is not a mistake Jobs is prepared to make a second time.  There is far more at stake than device shipments alone.  
2. Google heard the mobile wakeup call after the iPhone’s initial success, and began to scramble quickly.  It’s first step was to garner platform share as the means for attracting applications developers and advertisers.  With Google’s continued acquisition of small companies in the mobile marketing space, it is aiming to put an enticing value proposition in front of the agencies.  Its strategy is different from its once-collegial competitor.
3. RIM may have missed the wakeup call, but it eventually smelled the coffee.  The announcement of RIM’s new product line on August 3 indicates that (1) short term, they know they must pull applications to make their devices attractive to consumers, and (2) the RIM OS must attract agency dollars if RIM is to stay in the game.  RIM at least has the advantage of being in a better position to close the gap than HP or Nokia.

Social Media Sites Become the Destination

We’ve seen this play out before in the broadcasting industry.  The networks controlled the industry by controlling the content and distribution end.  Radio and TV manufacturers, strong early on when consumers bought their devices to gain access, soon became a commoditized second tier to the network.  Likewise, mobile devices are not the end game.  That lies where content intersects with consumer interest.

Marketers have used the internet like broadcast media for years, placing banner ads and interrupting users with pop-ups and placement ads.  As Google states, though, now only 1 in 1,000 users click on ads, spending a mere 11 seconds on them.  

As the NYT reports, social media is changing the entire marketing view of advertising and promotion.

Advertisers are backing off the direct pitch, and increasingly opting to take users to social media destinations like Facebook and Twitter.  What’s intriguing is how they are doing it.  The ads themselves are integrated with Facebook and Twitter content, often giving them a website-like appearance.  Users stay within a familiar context, retain site and content control, and do not have to put up with anything naggingly intrusive.

Implications

The game is now shifting beyond devices and their platforms.  It’s about the movement to social commerce - anytime, anywhere.

Consider that Facebook and Twitter continue to build huge user bases, and are beginning to garner big advertiser followings.  Also consider that social commerce requires a Facebook and a Twitter.

A new marketing channel is evolving.  

The old channel consisted of TV and radio manufacturers, newspapers, broadcast media and Madison Avenue.  Content was static and served up massively to millions at a time who all saw or heard exactly the same thing.

The new channel players are the mobile device manufacturers, the OS programmers, mobile carriers, Madison Avenue, San Francisco’s media firms, and social media sites.  Content is created by tens of millions for hundreds (or millions) of others to see.  Nothing is static.  Content does not roll of an assembly line.  Users create their own context, and their own content channels.

The heady market valuations among social media firms suggest that they may well hold the big cards.

Because that’s where the fish are.

Social Technologies Change Sales and Marketing

When it comes to understanding and applying social technologies to solve business problems, Sameer Patel is at the head of the class.  He runs Sovos, a company devoted to the task, and writes an interesting blog about connecting the enterprise using social technologies.

We first met in 1999 when I was building a very large sales portal.  It required several technologies to support it.  As I lacked the expertise to make those choices, Sameer came to the rescue.   A year later later he came to my aid again when we embarked on adding collaboration technology. 

A decade ago, social technologies were limited to file sharing, chat, directories and message boards.  Today’s social technologies for internal business have come a long way - SalesForce Chatter and Microsoft Sharepoint, for example.

During the past year Sameer and I have talked through the intersection of social technologies and sell-side business processes - usually over coffee at Peets.  He’s done a fair bit of development work in how to use social technologies to give sales and marketing a boost - enough that he’ll soon present his thoughts in his blog.  I’ll post the link when it’s published.

Just how can an social technologies help organizations improve sales and marketing processes, and make them more effective?

One answer lies in making it easier for employees with complimentary expertise, interests and charters - no matter how geographically or functionally separate they may be - to self-identify and collaborate on common ends.  There are, however, less obvious ways of applying social technologies to help businesses accomplish the impractical - if not the impossible.

Consider this: the way large firms choose markets, and allocate sales and marketing resources to them, has not changed in 70 years.  Large firms achieve economic scale by mass producing the goods - and services - they sell.  A firm may have thousands of SKUs on its price list but, as with automobiles, these represent economically manageable variations on a handful of product lines (color, horsepower, memory, disk drive capacity).

However, variation is the enemy of scale economics.  

As Henry Ford said of his Model T, “You can have it in any color you want as long as it’s black.”  Product line managers work the trade-offs between unlimited choice and financial sense.  Engineers and designers devise ingenious ways to offer choice and variety at minimal cost (e.g. 250,000 apps for the iPhone, computer memory and storage plug and play design).

Marketing and sales coverage follow suit.  Sell-side resources are allocated based on establishing market segments that yield the largest revenue at the highest margin.  The largest multi $B technology vendors seldom stray far from segmenting markets in classic ways: geographic, Buyer size (SOHO, SME, Enterprise), Vertical (Pharmaceutical, Financial, Government) and by application or use case (payroll, patient records management, securities trading).

Multi-$B firms are build on the foundation of one-to-many.  One-to-one has never been a scalable proposition.

Social technologies change this.  Firms no longer need to abandon the long tail. Social technologies make one-to-few and even one-to-one market relationships not only possible, but profitable.

• Social media enable niche buyers to not only self-identify but, through wikis and message boards, band otherwise disparate buyers together to solve common problems.
• Internal collaboration technology similarly brings like-minded sales people, marketers, engineers and designers to work on market opportunities that lack the size to be officially blessed at the corporate level.
• Marketing and user support materials can be created through connected communities, and provided at negligible cost.  Social networks including support websites, wikis, blogs and micro blogs do the job just fine.  Vested interests drive the content and instill them with vigor.

Readying one’s firm for this is no small feat.  It requires equal measures of vision, courage, commitment, and the willingness of managements to step outside their comfort zone.  It also requires a willingness to take risk, accept that failure may occur, and to learn and try again.

None of this can happen with committed and forward-looking leadership.  None of it will occur without hard work and a little luck.

Put Sameer's upcoming blog on your 'must read' list.  I can't think of better brain food for those who want to change the economics of sales and marketing.

A Fire Under Twitter?

Twitter recently filed regulatory documents indicating that it had sold $400 million in new shares.  Internal sources indicate that the same investor has advanced a matching $400 million to give insiders a shot at liquidity.  This should keep their foot off the IPO accelerator.  $800 million is serious money by any standard.

Who is the investor?

It’s none other than DST Global (formerly Digital Sky Tecnhologies).  It’s the same Russia-backed investment group that took a serious - and similarly structured - stake in Facebook in 2009.  DST has been happy to spread the wealth to others in the social media game, including Groupon and Zynga.

Yuri Milner (age 49) is DST’s founder.  Beyond being an investor of note in social media, he came to the attention of Bay Area residents last spring when he bought a $100 million house in Los Altos Hills.  It’s the most expensive house ever sold in the U.S.

The jury is still out on whether Twitter can deliver an advertising model that justifies its $8 billion valuation.  Revenues are estimated at $200 million annually and, though it runs second to Facebook in advertising placements, it lags far behind in the rear view mirror.  One needs to bear in mind, though, that Twitter is a newcomer to advertising.  It began collecting revenue in April, 2010.

That said, DST and its cadre of associated investors are not the type to roll the dice and cross their fingers.  One has to believe that a careful assessment of Twitter’s go-forward revenue options has been made, and given the thumbs-up.

According to data published by eMarketer this week, Twitter has quadrupled its number of advertisers in 6 months to 600, and re-signed 80% of them for campaign renewals.

As I wrote yesterday, Twitter ranks second to Facebook in terms of current and planned Ad campaign use by marketers (87% to Facebook’s 98%).  However, only 36% of marketers claim satisfaction with the results from campaigns run on Twitter versus 69% satisfaction on Facebook.  That’s a 2 to 1 advantage in Facebook’s favor.

Twitter stills has a long way to go to tune its advertising model.  After only 5 quarters in the game, though, it has made noteworthy progress.  If the volume of email I receive daily pitching white papers on how to use Twitter to drive revenue is any indicator, the market has already placed its bet on Twitter figuring out its revenue model.  Soon, and effectively.

Social Media Advertising: Forming, Storming ...

Here are some interesting highlights taken from some social media advertising research reported today in eMarketer.

80% of companies with 100 or more employees are forecast to conduct marketing activities on social media networks this year.

A smaller proportion of companies - two-thirds - are already advertising on social networks.  Adding those who plan to brings participation up to a nice ... 80%.

Here’s a tidbit to think about: most agree the effort will be very valuable, yet only 54% of social media advertisers are satisfied with results.

If one wants to understand the valuations that are being place on Social Media firms, this table provides more than a few clues.  With 98% of survey respondents either currently running, or planning to run, campaigns on Facebook, it’s no surprise that few are willing to take the risk of not reaching out to Facebook’s 750 million users.

It should also come as no surprise to learn that, at 62% of respondents, Myspace garners the highest proportion of survey respondents who’ve never advertised on it, and have no intention of doing so.  Sorry, News Corp.

The real game changer, though, lies in how advertisers assess the effectiveness of their ad placements on social media.  Combining the “Excellent” and “Good” scores puts happy faces of 69% of Facebook advertisers.  It’s closest rivals are YouTube with 46%, followed by Twitter with 36%.  

Don’t gloss over the blue bars in the chart, though.   A sizable chunk of that represents the proportion of respondents who simply don’t know if there’s any bang for the buck.

What’s to make of all this?

In the absence of knowing whether social media advertising is effective (and, most don’t know) few firms are going to sit on the sidelines.  It will take many of them another 2 - 3 years to know whether they’ve placed their bets well.

The Question of Pro Bono

Last week I was twice asked my point of view regarding pro bono work.  I didn’t have to think hard about my answer.  I support it (at least for myself) under two circumstances.

1. I don’t collect any fees for anything I blog about or generally post to the web.  I write to gain exposure.  I view making my writing freely available as the cost of gaining exposure. 
2. I happily devote 10% of my company’s time to assist non-profits (the Starving Artists variety).  I do it because I genuinely like to give something back to the community.  I don’t see it as a cost.

I don’t provide anything for free if the motive of the person - or the entity - requesting it is profit.  That said, I do get requests from the profit seekers.

No one outright asks me to do something free.  Requests are usually put forward as a quid pro quo: you do this for us and you’ll get plenty of great publicity (reach, exposure, etc.) in return.  That statement is typically accompanied by data and charts that not only show how much attention I’ll receive, but seemingly imply that the scales of good fortune at tipped decidedly in my direction.

Hmmm.

So, I had to smile when I read Seth Godin’s 7/30 blog on the subject of the price of exposure.  I share his view.

In reading it, I couldn’t help but laugh heartily when I watched script writer Harlan Ellison’s video that Godin had included.  It’s a riot!  Give it a look.

Each of us is our own clearing house.  We decide what to put in the public domain, and what to put a price tag on.  We draw our own line between what we do for personal gain ( or simply to eat and pay the bills) and what we do to contribute to society (to the degree that it matters).  Think through where that line is for you.

Seth Godin and TV 2.0

I’m a Seth Godin fan.  He’s viewed by many as a revolutionary marketing thinker.  To me, though, he’s very good at making sense out of how to apply marketing to an always-on, internet-connected world.  He does so in an unorthodox, contra-Madison Avenue way.

Seth Godin’s telescope brings insights into view.  He then puts these into metaphors to explain what the rest of us see but have difficulty putting into words.

Case in point:

The advertising all of us have absorbed since 1930 is based on a model of control - manufacturers speaking one-way via print and broadcast media.  They controlled the message and its destination. 

It’s a model that has been in place since 1930.  It’s a tick of the second hand on the human clock perhaps, but it’s all most of us have ever known.  

The along came 1995 and internet, and the “new media” soon thereafter to change all that.  Now, every individual with a point of view has the opportunity to reach and affect millions for the cost of an online connection.

Many companies continue to apply old media methods to new media to new media uses - what Godin calls TV 2.0.  Unfortunately, new media and old methods are oil and water.  The two just don’t work well together.

If you want to understand why, then set aside 10 minutes to watch this video interview of Seth Godin.

Pack Your Parachute Carefully

“I do not risk my money until I can verify the facts.”   - Baron Rothschild

I came across a story about Warren Buffett that wonderfully that cuts to the chase regarding risk-taking.

It seems that an acquaintance of Buffett’s was doing his level best to persuade him to invest in a startup he had come across.  Buffett listened until the man had presented his case.  

Buffett then asked him: what did he figure were the odds of the company being successful?

The man mulled it over momentarily and then responded: 50-50.

Upon hearing that Buffett raised his hands and brusquely responded: if I told you a parachute had a 50% chance of working would you jump out of an airplane with it?

The pitch ended there.