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.
Sunday, March 28, 2010
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 Dot.com'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 dot.com 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.
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 Dot.com'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 dot.com 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.
LINK
Flip the Funnel is Mr. Jaffe's Book which is linked here:
LINK
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
Link
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.
LINK
Flip the Funnel is Mr. Jaffe's Book which is linked here:
LINK
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
Link
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.
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.
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