Sunday, March 28, 2010

Reality is Very Important

I know much of Advertising is Hype. Everything is elastic. Commercials take liberties with products and brands to prey on your emotions for good or bad. Best example is Multi-Vitamins. I take one everyday. Yet there have been countless studies showing no benefit.

I don't believe Facebook and Twitter's numbers. They are hollow. We all see tons of inactive accounts. Yet it seems both sites claim all user accounts are active each month. That's like me saying I feel great every day even when I don't. They benefit financially if they numbers are believed. I have a Finance Degree. I can work the numbers and I know they fib. Whatever. I can careless what they say as long as my clients and future investors know the truth.

So Twitter has 70 million accounts and only 50 million tweets per day. Facebook has 400 million accounts yet only 60 million updates per day. I know many people who update their status multiple times per day. Nowhere does either site state how many people are on the site per day!

The closest Facebook shows is time spent of 55 minutes per day. But we all know many of us are signed in all day long while only spending 10-20 minutes on the site. This evasiveness benefits the VC's and the Companies. It creates hype and belief in the product in hopes of going IPO. Once the IPO happens they won't care anymore unless they lose paper/equity/money when that event happens (very likely).

Now I see article after article and tweets galore that Apple has sold out of the first run of I Pads. But not one article has a number of units. Only one article gave an estimate of 500,000. If that is true its a home run of sorts for $250 mil gross. But don't forget they are sold online and through retail outlets so Apples take is much less than that. And I will bet the R&D investment was more than that. But definitely a good start. But what if it was just 100,000 units? That's only $50 mil in sales gross. Not as impressive. Actually a potential bomb. But if Apple get's people believing the highest number possible, they will invigorate the App Ecosystem to create Apps for the product. And Apple really needs to have 3-5 million units out there to have a big enough ecosystem for App Developers to have hopes of making good money.

So my point is real numbers are important. Reality is important. And beware when you read or hear anything that doesn't have concrete details.

Monday, March 22, 2010

Bias and Why to be Wary of It

I am going to use two links here for reference:

Interview with a VC partner at Sequoia Capital, the second dis a long You Tube Ad for the Chevy Volt.

Sequoia Capital partner Mark Kvamme

Did You Know Video

It's ok for a Brand to try to convince us into buying or trying something. I champion Brands and if I can help them figure out how to get an action from someone I will, but I will always do it ethically.

During the 2008 election cycle I got many surveys from both the DNC and RNC asking my opinions. So many questions were biased and didn't give you the proper choices, they actually corralled you into what they wanted to hear. Same with Research of all sorts. Often Brand R&D efforts are skewed to trumpeting success because the folks doing development naturally are biased towards success. If this wasn't true why do so many product launches fail? And anytime there is an economic incentive for someone to hype, promote etc they will because their livelihood depends on it. You normally want to please the person paying you. Remember all those's and Sub-prime Mortgages that went bust, while the promoters and ones selling the hype made money knowing ahead of time they would be screwing people? Or the ratings agencies afraid to rate bonds as junk because they were afraid of losing business since the bond issuers paid for the rating?

The Chevy Volt spot is specially an example of skewed facts. It is easy to cherry pick and not give the full story. Some of the facts make you say DUH! India because of the massive population the 25% with the highest IQ's are more in quantity than the US population. That does not mean their 25% is more intelligent or has higher IQ's than say our top 25%. Or the number of jobs someone will have between 18 and 34. They don't qualify this with the 'because this generation got shafted, the worker-employer fabric having been destroyed over the last 25 years, and the crash in the economy keeping this group underemployed for years to come'. My point is bad facts, very poor qualification of the facts so why use them?

Next I just want to SHRED Mark Kvamme. Sequoia Capital made a killing during the boom. In fact many companies they backed and then cashed out of after the IPO left investors decimated. While VC's have a very important part to play in our economy you need to remember they only care about 1 thing only, and that is a return on their Equity Investment. They care nothing about the workers or investors beyond when they cash out. So never listen to a VC when it comes to talking about areas of business they invest in because they are inherently biased towards hype and promotion. If Facebook goes IPO at less than a $14 billion valuation all the investors lose millions if not billions of on paper equity value. They are going to do everything to hype Social Media as the end all. So he is going to hype all Social Media and Brands needs to cut through this BS to know Social Media has it's place but it will never replace traditional Advertising.

While Facebook keeps a clean site Twitter is a scary place. You might be placing Ads next to tweets from Racists, Nazi's, Haters, Preachers, screaming Satanists acting like Preachers, angry people wanting to kill Liberals and angry people wanting to kill Conservatives (ask for the hashtags!). And I do believe Facebook will go the way of Myspace and Friendster in the next 5 years so the day they have their IPO I am personally shorting the stock.

I could write a book on instances of bias but hammered it enough! So don't believe the hype in anything and always remember everyone has a bias. It's just human nature versus some evil plan. Beware of it.

Thursday, March 18, 2010

Flipping the Funnel and where it does and does not work

This post was driven by this very funny video with Brian Posehn doing stand up at SXSW poking fun of Joseph Jaffe and New Media.


Flip the Funnel is Mr. Jaffe's Book which is linked here:


The premise is that it costs less to keep customers than get new ones. This idea goes back to the stone ages when the first spear tip maker had his first competitor for business. I have 16 years of Customer Service and Account Management experience. I have seen from both sides companies not investing in quality or customer service and thus losing clients while replacing them.

Where this specifically works is in Service Industries and High Ticket Item OEM's whether consumer or industrial. Service is easy. Your not taken care of you flee to another company or person. Big ticket items have the highest potential for buyers remorse. Try a new soda flavor and you don't like it, you toss it but do not cause pain to the Brand. Will you really stop drinking Coke just because Coke Vanilla tasted like Waste Water? No. But if you are upset you bought that car and your stuck with it for awhile, your never going to buy that Brand again.

But does this work for consumer brands? Yes and No. Whenever there is an equal out there it is very hard to Flip the Funnel. Can Coke win all my business Flipping the Funnel? No. Never. Not anyone's. People will substitute Pepsi when the deal at the market means saving money. (See previous blogposts on how Point of Sale trumps Ad Spend every time). But Coke can do this at their Wholesale Clients like Restaurants that usually only offer one brand. That is someplace that Coke can Flip the Funnel because service will often trump a pure price play and their retail patrons can't choose the 'or equal'.

What about other Brands? I personally think we patronize certain Brands or Products and do not know why. We try something, like the price point and found no problems using it so we go back and don't actually think about trying another Brand or Product for a long time. I really don't think the Brand did anything besides get lucky. But often this is price driven. And when you sell on price often you are vulnerable to someone else's better price.

Now with Store Brands coming in with almost equal taste and quality it is really hard to win and keep customers without a constant effort of coupons and rewards. Super Markets and anyone with a Loyalty Card Program do this the best. It doesn't mean they are truly Flipping the Funnel with superior attention or service, but the bribe of something back for the patronage is very strong. Think Frequent Flier Miles or a buy 10 sandwiches get one free at your local Sub Shop. But again we do patronize places that are cleaner, happier employees, better quality stuff and know we have to pay more gladly. But I don't think the products themselves can Flip the Funnel because service is not involved. Service is required.

See my post on Skullcandy


High end brands definitely have an edge. They can combine quality with cache/image to keep you. Often this brings great service to the mix. Higher end products are sold at more upscale retailers that spend more to ensure the value proposition is there. And while a Brand might lose me if they product turns out shoddy, I won't blame Nordstrom's who gave me great service. Unless I specifically ask a sales person an opinion that turns out wrong.

For Service Industries or Big Ticket Items Brands MUST Flip the Funnel. For other consumer product Brands maybe spending a bit more on quality vs focusing on price will help them win more business.

Thursday, March 11, 2010

Bad research does no one good service

I get a lot of surveys. Political ones, Advertising Marketing, Harris Poll, YouGov, and other random lines of questioning. Often the questions themselves have inherent bias (Politics is great for this) or worded incorrectly in ways that fail to capture information.

But sticking with the Advertising/Marketing theme, it makes sense that more product launches fail vs succeed. There are competing reasons for this because of all the groups involved in the process.

Upper Management wants to increase sales, increase share price, etc. Often just mentioning to the market or shareholders 'a pipeline' of new products will help boost share price.

R&D will always have job security if they can pump out success more than failure. They also don't like to tell Management no, yet they also forget NPV and think budgets are bottomless.

Marketing and Sales are incentivized to have work to do when it comes to figuring out new products, product niches and revenue streams. This will require a lot of meetings that often have attendees who don't like meetings. This is usually an EGO play of sorts.

So it is really easy for those involved to con themselves into thinking something is going to be a winner. Hell none of us want to work for a loser, or on loser projects.

And market research can easily be skewed based on the questions asked to fit parameters to make everyone happy.

So I was asked a question:
Are you well traveled?

1] Never been out of the Country
2] Visited up to 5 Countries.
3] Visited more than 5 Countries.

Bad question. What is the purpose? If I visited 40 states and 3 countries in my life, travel 4-5 times per year to different places, I am more well traveled than someone who travels once per year and aside from 6 trips for 7 days each trip over seas, goes to the same resort each year.

Maybe it is to see who might need international products/services. But again I might think the first person more likely to seek new adventures than the second person.

Maybe it is to see who is more worldly, more exposure to different cultures? What if the second person went to England, New Zealand, Australia, Canada, Ireland, and Scotland. While the first person lives in LA, has 40% of their friends from other countries in South/Central America and Asia and travels for work to New Orleans, Mississippi, New York, Boston, Phoenix, and Denver.

Bad Question. Results will mean nothing for most angles.

Wednesday, March 10, 2010

Most Social Media is NOT About Conversations

I really do not know where this B.S. comes from. I have been using social media for a few years now. I started with Friendster, which led to Tribe, Myspace, Tagged, Facebook, and Twitter. The only Social Media that has Conversation potential is blogs.

I firmly believe a conversation is a 2 way interaction, discussion, exchange vs one way. And I think Brands and Agencies are listening to the hype from Social Networks and their Employees, Investors, Gurus, and Journalists who cover the industry and who have a monetary interest in the term Conversation.

For example:

Conversation - John and I spent 10 minutes last night at the bar discussing some new music we have heard.

Not a Conversation - John called me and said he will be by at 8pm to pick me up to go to the bar.

Blogs enable the first. Twitter and Facebook only enable the second.

Most social networks have short bursts or threads about a topic where people post to the topic, but often none of these posts even when put together are a conversation, but definitely for individuals they are not. This is due to technology limitations and formatting. The closest technology I have seen so far to real conversations would be Google Wave. But often it is the sheer volume of comments, spouts, posts in social media streams that make coming back to something so hard. Victim of its own success.

So a Brand can see what people are saying, get commentary feedback etc. But if I say I have an issue with Coke, and Coke engages me to talk, but instead of me others each put in one comment or even two, while Coke keeps responding all Coke has is a list of comments vs a real exchange/discussion.

Blogs allow this. There are some very successful Blogs like the or Huffington Post and Musings of a VC in NYC (link is to your left). If you look at the comments there is semi-conversation. A true 2-Way exchange.

But the rest it's not 'What people are talking about', it's actually 'What people are posting or commenting about'. HUGE difference. I rarely have more than 1 or 2 exchanges with people in the topic streams in Facebook and Twitter. Re-tweets are not Conversations. Having 300 comments to a Wall Post by 285 Individuals who have read none of the other comments is not a Conversation. Value to a brand? Yes! But not a conversation.

So in effect Social Media is about connecting and sharing comments, posts, subjects, content, but not about any sort of real discussions. It's ok to have the goal of getting people to post, comment, share commentary about your Brand or Product. That is healthy stuff. Especially if there is something you are promoting. Think of how much money you can save if you do this right. But be careful. You could be left scrambling if your message, offer, promotion doesn't travel.

Tuesday, March 9, 2010

General Mills Susan B Komen Cause Marketing Refrain

Cause Marketing is a hot topic in marketing circles these days. There is a great blog by Scott Henderson that specifically covers Cause Marketing and I think it is worth reading:

I wrote about the Yoplait Program last year and how I felt it had some serious flaws that made it seem to be disingenuous. The premise was Yoplait will donate some money to the Susan B Komen Foundation for every pink lid the purchasers sent back to Yoplait.

At the time I wrote General Mills (no response btw), and brought up that are they trying to get positive publicity, without having to pony up their full commitment. What if consumers bought Yoplait and didn't mail back the lids. Will General Mills blame the consumer for a failed charity drive? I mean cut the fat check and brag about it, but don't leave the opening for possibly getting off the hook.

My other thoughts were the wasted resources for this program. Envelopes and Stamps derived from trees. The greenhouse gases from the transport to mail the lids. And you need to pay people to receive and process the lids. Money that could just be given to the foundation. None of this made sense.

Sure enough today we found the envelope with the 17 lids and low and behold program is over. You may ask why we failed to send the lids back? Because who is going to send them back 2-3 lids at a time wasting even more resources? So you put them in an envelope tuck that away and eventually forget you have them. Our household likes Yoplait but normally buys a variety based on the store sales just like everyone else. And the lid campaign was not in the fore front enough to think about the charity work.

Saturday, March 6, 2010

Social Media Spout

There is this view about Social Media that I feel is completely unfounded. That is this great big place to advertise and can replace everything else we do. I think Brands are being suckered with the hype. And maybe feeling since it is cheap, if done right it will cut costs. I also think they over value listening, and undervalue making great freaking products or services.

The fact is Social Media is very clunky. It is mostly one way. And even when you can have conversations they are VERY brief. Such as commenting on Facebook posts. Or the occasion someone replies back on Twitter. The word 'conversation' in Social Media is a misnomer. In no way is Social Media having conversations like we have on the phone, email, or live.

So when someone says it is about Conversations, I say What Conversations? You can not converse in any easy manner. People are so fleeting, they pop on make a comment and they are gone. Imagine having a real conversation with 300 sentences between two people. Now instead it is 300 people each giving one sentence and often not seeing any other part of the conversation!

Social Media is really a loose network of people, most of one's network are not close personal friends, but it does allow communication. Viral just means I post something that someone else says 'Hey that is cool let me pass it on' and so on. BUT since I only read/view 10% or less of the Tweets or Facebook posts due to the massive volume, just because you have 500 people in your network does not mean your reaching 500 people! In fact your lucky if you reach 100 of them. I still send direct emails to friends for things they need to see.

Listening is great. You can get a vibe. But you can't use listening to fix your problems. If your product sucks, it sucks. Do you need Social Media to figure that out? If your Sales Group isn't freaking at lack of Sales, or your Customer Service isn't freaking about 'problems' with the product before you find out via Social Media, you have an Organization problem!

If you can't drive people to your website, will a fan page really change things? Especially considering the huge limitations a fan page has vs. your website. And when only 10% of your fans will even see any posts or updates is your Social Media 'guru' telling you the truth or fibbing. There is a difference between having 1 million fans yet only having 50,000 visit your fan page each week or month. Which is the Social Media 'guru' telling you?

With Facebook exploiting all your content shamelessly and Snake Oil Hypsters like Pete Cashmore claiming the end to Privacy (so wrong), there is major opportunities for competition in this market.

Before you think I am a Social Media hater let me tell the good things:

I have found Twitter invaluable for Professional Networking and sharing of ideas. I have found Facebook as a nice site to communicate with friends but since I have so many it is not keeping me in touch or up to date with everyone, its very random actually. Kind of alike a Wheel of Fortune. Whoever posted to the Live Feed prior to my logging in and made the first page (I always have 300+ updates waiting) I see and react too. I never go to page 2. So I can't wait for a better technology to come out which is why I have hedged posting more photos since I don't want to have to upload everything else where.

I have been able to use Twitter and Facebook to observe how Brands are using Social Media, the good, the bad and the ugly. The successful ones always have something exciting like give aways or free content. Nabisco is giving away cookies for example. The unsuccessful ones such as Zappo's who have 1.5 million followers on Twitter but never talk about the brand, products, or specials. The last tweet I saw was pimping the CEO's Book! What a waste.

And I have been observing media. Media/News/Content is interesting. If I like a website I book mark it. I regularly go to these sites and read content. So seeing a Twitter feed every time a new article gets posted, or a post to a Fan Page in my Live Stream on Facebook for a site I already go to is kind of spamming me. Give me something different and new.

The one success I do see is 'Causes'. Social Media has been great to rally people for causes and NGO's. But not all wholesome. There are some hashtags on Twitter than even make me blush. People spouting hate, racism, etc. I hope Brands realize this prior to sending Ads into the Tweet Stream.

I also have seen some great give aways virally promoted via social media. Quizno's gave away 250,000 sandwiches last year. But you had to go to their website and sign in with an email. Often many music companies and acts offer free downloads for giving your email to them outside of the social network.

Lastly I know some companies actually have created private Social Media formatted websites to interact with focus groups and volunteers to discuss opinions and ideas in a very organized way. General Mills does this incredibly. So the technology is great I just think it isn't being used properly and that many companies are just lazy. They should be creating networks on Ning or proprietary platforms and inviting people.

Monday, March 1, 2010

What is success in Marketing?

I often come across as negative if I don't agree on something with the rest of the 'world'. Sometimes I belittle achievements incorrectly because I compare them to my own views, goals, experiences for myself, my company, or my clients.
Often we all get caught up in the Mega-Big, the Mega-Huge.

For example Avatar. Do you think going forward a movie must gross $500 million to be gauged a success now? That is ridiculous. On a more reality view if a business only reaches 100,000 people (0.033% of the US) and gets just 1,000 to pay $1,000 per year that is a Million Dollars. Do you make that kind of money?

The view of success is very subjective. I think before creating a Marketing Plan one must figure out the Goal of the plan first. And I truly do not think Impressions, Feel Good, Branding etc are Goals. Goals are Sales based on your Marketing Budget and resources (person hours). From there you can use the other ancillary activities to reach those goals. We often work forward instead of backwards. But backwards is easier. What does it take to meet the end goal?

And this who am I to judge if something is successful. In Mobile Marketing I often see PR articles about campaigns with results that seem awfully pitiful. But what if the end result is considered great by the business paying for the campaign? Shame on the Journalist for not contextualizing everything properly like a Sales Person would in a write up.

And while I might comment on a new technology or media channel as not having value, everything does have Value, it just has to be measured properly so the Brand can pay for that Value and not overpay.