Hitching Your Boat to Customer Advocacy

I recently wrote about how McDonald’s and RIM had flamed out with their #hashtag campaigns on Twitter. Not pretty.

However, I admit that I am somewhat conflicted about this because I completely subscribe to the notion that customer advocacy will drive successful companies to sustainable competitive leadership. Gone are the days when a company could rely on IT investments for productivity enhancements and supply chain management for lower cost of goods; those things are still necessary but they are also commoditized, your competitors can make the same backoffice investments and the effect will be nullification of any advantage you previously enjoyed.

Institutions of all stripes are at a crossroads when it comes to how they take advantage of the goodwill that is extended to them by customers who are happy with them. The old way would be for the company to productize customer testimonial and package it up through traditional channels… the problem is that this is like going to a zoo that features puppets and animatronics instead of actual animals. Customer testimonials don’t work because they are not believable, customers have figured out the game and aren’t playing along.

Esurance is doing something that is really worth watching, they have built an advertising campaign that comes down to a simple message, “go to our Facebook fan page and see for yourself”. They let it all roll out in, apparently, an unmoderated format and the effect is that the negative comments actually amplify the positive comments.

I like this a lot, no pun intended.

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Retargeting Ad Campaigns

I read that RadiumOne raised more money at a valuation rumored to be $200m. I can see that.

Retargeting is very popular and for good reason, it works. You have seen this in action, you go to a website and then the display ads seem to follow you in subsequent unrelated websites that you click on. What is happening is that the first site uses a retargeting script provided by an ad network partner and that script drops a cookie on your computer through a pixel, which then triggers the display ads to show up for, usually, 5 or 6 more impressions.

At Get Satisfaction we do not buy vanilla display ads, search keywords, or pay for placement of content. Everything we do is organic with one exception, we run a persistent retargeting campaign through Retargeter.com.

The reason I do this is that I see the results in click-to-paid conversions. Using a “burn script” in my shopping cart I connect site visitors who enter my trial account process with those who click on external display ads served by Retargeter so each month I can calculate the cost per customer acquisition on my ad spend. The stats I get for impressions, clicks, and conversions easily justifies running the campaign for another month and that is exactly what I have been doing for going on 6 months now.

I pay attention to display ads served by companies now and it’s really pretty surprising to me how many companies are, apparently, also running retargeting campaigns.

Eye Tracking

I read the linked post below and had to think for a couple of days about the notion of eye tracking as a result of augmented reality products will result in a new advertising currency.

The idea of eye tracking in advertising is not new, indeed eye tracking as a field of study is not new having first been credited to the work of Louis Émile Javal in the late 19th century who discovered that when we read our eyes don’t follow the text in a smooth motion but a series of short jerky ones. From the 1970s to the present this field of study has expanded dramatically as technology has enabled the precise measurement of corneal reflection, which is how eye tracking works.

It is in the field of automobiles that the research has been most successful in commercial applications. Mercedes, and others, have developed systems that alert drivers when fatigue overtakes them (falling asleep when driving) and in combination with onboard radar systems to alert drivers when they are approaching a hazard and not responding accordingly, in extreme cases the computer will take over the car and force a slow down.

Basically these applications are focused on safety issues, not what Thomas Carpenter is suggesting, that this technology could be used to fuel new growth in advertising.

[From Eye-Tracking Will Be The New Click-Throughs]

As augmented reality products use eye-tracking to achieve a realistic virtual overlay like in the recent GM augmented windshield, they are getting more information than just how to align the graphics. Eye-tracking adds a new dimension to the data exhaust. As any professional poker player will tell you, the eyes are the window to the soul, and to the tell. Someone holding pocket kings might look down at their chips the moment they see their cards in anticipation of seeing a bigger pile later. Players wear glasses for a reason. The eyes can give away important information.

Eye tracking has been applied in advertising in public venues, such as on billboards, and in web usability. In the latter it is performed in controlled environments and with control groups, not broadly deployed to the public. The reasons for these cases being in a public venue or in an opt-in basis is obvious… privacy. In order to track the eye you are by definition tracking the person who is attached to said eye and that simply should not be possible without consent.

The privacy issue is exactly why I believe Carpenter is way too early in applying this to automobiles or any other mass market device that operates as a private space. There are other concerns related to how governmental entities would access such data for purposes other than originally intended, such as is the case with automotive communication technology. Despite all the feel good advertising by OnStar about remote vehicle shutdown capabilities, these requests can only be initiated by the owner, in other words the police chasing a vehicle for failing with some drunk guy behind the wheel will be met by a wall of silence if they call OnStar to have the vehicle disabled.

There are legitimate privacy issues that need to be resolved, or at least make eye tracking (or gaze) capabilities related to advertising purely an opt-in technology which would force advertisers to offer something of value to the audience in exchange for the additional data.

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Opinion vs. Expertise

It’s not often that I disagree with Mike and I am not ready to fully do that here but he is not fully centered on the core issue either.

Kimball is correct that he should be better defining his brand and proving his worth — that’s what we’ve been saying all along. But you can do that without insulting the riff raff, as well. You can do that while embracing the “bottom up” process. You can do that without being a total snob that has no time for the people who actually pay your salary.

[From Cook's Illustrated Editor: I Wish All Those Amateurs Out There Would Just Shut Up | Techdirt]

The underlying issue that Kimball is pointing out is that the internet has become one great big !%$@$^ book club… everyone has to have an opinion about everything (don’t think I don’t realize the irony of ME writing THAT sentence). Kimball’s point is that real expertise is acquired through great effort, not just through the ability to peck away on the keyboard and hit publish, and that authority directly correlates to the relationship you can expect with your audience.

The second point that Kimball is right to make is that advertising has been the seed of destruction for magazines in the food space, but more broadly I would say across the board. Taken online the display advertising model deployed by the vast majority of publications is simply unsustainable and in the process they are destroying the delicate balance between content and advertising.

Case in point is the restyled Bon Appetit magazine, which has gotten really light on content and really heavy on advertising in all forms; if it takes you more than 15 minutes to read the last issue I would be very surprised, and color me shocked when advertiser products are rated “top 5″ out of, say, 7 tested products. It’s almost as bad as automotive magazines where no product is ever rated “don’t buy this piece of shit” because every possible product is being advertised in the magazine.

The fascination with lifestyle has also distorted Bon Appetit and alienated their core audience… who I cannot imagine are really that interested in celebrity chef interviews. The remake process for Bon Appetit probably resulted in a more intense discussion of what type of typefaces they would use than what type of content they would be providing their subscribers.

Cooks Illustrated goes into excruciating detail about food and how the process of preparing is affected by the chemistry of food. I have subscribed to this magazine for years and marvel at the lengths to which they will go to find the ideal process, ingredients, and tools, all the while challenging the conventional wisdom about what is the proper method. When it comes to presenting food expertise it is without question that serious foodies, professional and amateur alike, will agree that Kimball has earned his stripes in the expertise department.

Secondly, Cooks Illustrated does not have any advertising, it’s entirely content driven, and what that means is that Kimball’s interests are completely aligned with that of his readers. His is the only publication that I know of that actually has a “not recommended” category for product reviews, and they don’t hesitate on recommending products that are cheap grocery store staples if in fact they are the best ingredients based on taste.

Mike is right to point out that Kimball comes across as a petulant snob with nothing but disdain for food blogs and websites, but Mike fails to acknowledge the broader point that Kimball is making, which isn’t just about defining your brand, that the internet has devalued authority. This is a point I think we can all agree is an issue to be resolved (the measurement of authority).

Where we end up is at an interesting intersection triangulated at by both pieces, which is that the internet has not destroyed traditional publishing but rather exposes the vacuous nature of many established publishing brands. This leveling of the playing field has followed the path that many technology dependent industries have followed, which is that distribution and gatekeeping is increasingly not the dynamic that your business relies on but rather the ability to engage and sustain a valuable audience. Given Kimball’s resume and actual experience in building Cook’s Illustrated, I think he is exceptionally well qualified to opine on the state of affairs but like Mike I would appreciate a little more humility in the process.

Lastly, this is a very interesting discussion because with newspapers dead set on charging for online content we are going to see in realtime what the relationship between newspapers and readers really is.

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If the Shoe Fits…

When I saw this on Drudge I thought the picture was related to the story, when in fact it was attached to a story about North Korea. There is something Orwellian about any mobile service that enables detailed information sharing with advertisers.. if a carrier wants to offer a free version of their service that linked to advertisers and behavior tracking, great but the fact remains that I pay a monthly service fee for my mobile phone service and I should not have to be subjected to intrusive behavior tracking.

The story is very clear that the tracking is related to web browsing and installed apps, so in many ways it is like what happens with cookies on the desktop web and there isn’t much of controversy about cookies anymore. The critical difference is that cookies don’t also report back what files I open or who I email, or at least it would be considered a gross violation of accepted practices to do so. What handset manufacturers and carriers are enabling is precisely such a violation by allowing apps to report to advertisers, for example, GPS coordinates.

This has the potential to be very troubling, but like many privacy issues I will reserve final judgement based on actual implementation details.

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Newspapers Grow Web Traffic, Still Going Bankrupt

Nielsen reports that newspaper web traffic grew 16% in December. Great news, but it doesn’t matter what their traffic is, the underlying advertising model is broken and it won’t heal itself.

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I wrote about this phenomena back in June last year and NOTHING has changed. More web traffic won’t close the revenue gap to offline and it certainly won’t be enough to sustain newspapers across the country. More significantly, if you look at the traffic spread in just the top 10 on Nielsen’s list, you start to get a picture for how difficult it is for a non-major media market newspaper to grow traffic.

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Newspapers and the Web

You may be wondering why I post so many items about newspapers and the web. Simply put, this is one of the most fascinating business stories of this decade, about how an industry that even today generates a significant percentage of original online content continues to frustrate itself through a reflexive tendency to want to control the medium through which content is delivered to audience.

Shafer’s piece does an admirable job of covering the history up to the web and how newspapers tried and failed over and over to achieve a digital business that represented their existing business model and industry values. I suppose you could make the case that Hollywood has been fighting a similar losing battle and that should be informative to the newspaper industry.

But that’s not the case, and I think I know why: From the beginning, newspapers sought to invent the Web in their own image by repurposing the copy, values, and temperament found in their ink-and-paper editions. Despite being early arrivals, despite having spent millions on manpower and hardware, despite all the animations, links, videos, databases, and other software tricks found on their sites, every newspaper Web site is instantly identifiable as a newspaper Web site. By succeeding, they failed to invent the Web.

[From How the newspaper industry tried to invent the Web but failed. - By Jack Shafer - Slate Magazine]

In the final equation this is also about how a fragile an industry’s business model can be. What works for newspapers in print doesn’t work to the same contribution level online.

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The Delicate Nature of Trust and Brands

If you look at what is going on in our global financial markets and many large business sectors (airlines and auto manufacturers in particular) the disease they are suffering from is a lack of trust among consumers.

The financial markets have witnessed wholesale capitulation by retail investors who understand that the market is functioning not on the basis of fundamental business strength and weakness, but at the mercy of large fund traders who are capable of moving any large stock 10% up or down on any given day irrespective of what the circumstances surrounding that business are. The retail investor sees these bear raids and bull runs are for what they are, insider dominated trading.

Volatility increases as the number of participants in a market decreases. Retail investors are sitting this out and the SEC and Congress are not helping, on one side is the SEC which has done little to create level playing fields in markets and Congress has distorted the markets with trillions of dollars of your money being committed to companies and industries that should not be getting free money. Insiders have polluted and corrupted every one of the bills that deal with economic stabilization, the latest outrage being provisions inserted into the auto failout bill that would provide a pay raise to federal judges and a provision that would let transit agencies off the hook for illegal SILO tax shelter tansactions.

On the business side, industries like American auto manufactures and airlines have done everything within their reach to tarnish their brands over the last 20 years and irrespective of whatever financial propping up they receive from Congress, the fact remains that their biggest obstacle to success over the long run are not credit markets or labor costs, it’s a lack of trust among consumers.

American cars and trucks are without a doubt competitive on quality benchmarks, every customer satisfaction and quality survey reveals this fact. Having had a wide range of these vehicles myself, I have no complaints about GM and Ford quality, in fact the GMC Denali that we owned at one point did not have a single issue that required service, beyond regular maintenance, and it was one of the best equipped and most comfortable vehicles we have ever owned.

If you look at the model lineup GM and Ford in particular you will see a strong portfolio of high mileage vehicles. Chevrolet offers 88 models (yeah that’s somewhat of a problem in itself) with an average fuel economy across the entire portfolio of 23mpg, while Toyota’s 55 models comes in at 21mpg. GM’s efforts on Flex-fuel (E85) have led the industry, 6% of their volume is now Flex-fuel vehicles (hybrids are 2% of Toyota’s shipments). GM alone has invested $750 million in development of the Volt, advancing state of the art not only in powertrain technology but also in battery technology.

What are the two biggest complaints that critics throw up on GM and Ford? They make crappy cars and the have not invested in fuel efficient cars and low emissions technology.

Even if GM survives (Ford is not in as bad a crisis and Chrysler simply won’t survive) the bigger challenge they face is that consumers don’t value their brand anymore. The same applies to the big airlines, while Southwest and JetBlue were cultivating their respective brands, UAL and Delta were doing just the opposite. Running new advertising, remaking the corporate logo, and self-flagellation among executives won’t change any of this.

Congress is in no better condition either, the public not only gives this Congress historically low approval ratings, they also have little confidence that Congress will be a constructive player in our current economic downturn.

Advertising in Applications

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Few things elicit the visceral reaction that advertising inserted in applications does. Just the mere mention of the word brings out a stream of critics who decry the intrusion that ads impose on usability and express dismay at the treasonous behavior of the developers and companies in question.

Yesterday Nick Bradbury released a beta version of FeedDemon that includes a small display ad served by The Deck. As Nick states, his goal was to include the ads in a tasteful manner while also including highly contextual ads that reflect the predominately tech oriented community that uses desktop feed readers, hence the selection of The Deck.

I’ve watched the comments that first appeared on his post and then as the day went on. The comments reflected a good balance of 1) no big deal, 2) disappointed but understand why, 3) want to pay for an ad-free version, and 4) going to look at other products.

NewsGator has to support these apps not only from an operational standpoint but also from a continuing development perspective and the costs of running a datacenter that supports sync, 4+ million feeds, search services, and then the development of a complete portfolio of client products are daunting. We made client apps free a year ago and at that time made no commitment about advertising other than to say we were not doing it at that time. Nick has continued to develop FeedDemon, this is the 3rd release of the app since Jan. Even when we charged for the product, not all upgrades were free therefore it’s still a good tradeoff, IMO.

I looked at what we were doing with our client applications and rightly concluded that if we could generate some revenue that would offset the cost of supporting those apps, then that would be the responsible thing to do. As Nick (and Brent Simmons and Nick Harris) will support, what we talked about was the right approach to doing this. We didn’t want Viagra or University of Phoenix ads showing up in the apps and we didn’t want ads in feeds and we didn’t want interstitials. It was also important to not impact performance negatively so compact asynchronous ad streams were important.

What we wanted were ads that reflected the community of users who rely on these products and placement in an unobtrusive manner that, if we selected the right network partner, would prove to be actually useful to the community. Nick was the most skeptical but as he writes in his post, even he has been clicking on the ads because they are relevant to him.

The FeedDemon v2.8 release is a beta, it’s something we are trying and while we welcome the feedback it’s also important to recognize that adding ads to an app that is being made available for free is not unreasonable. It may turn out that this doesn’t work as well as we would like, hence the reason for calling this a beta, and we reserve the right to change our mind but from where I sit this is a good compromise that satisfies our financial requirements while also presenting ad content that is not distasteful or overwhelming to the user experience.

The reality about desktop applications is that very few outside of large packaged software apps can generate a large enough community of users who are willing to pay for them, at least not enough to pay at a level that supports those applications on a fully loaded basis. This is even more true when you are competing against some very good products that are free. A reasonable person might consider that the alternative of having the app go end-of-life is a less appealing alternative to running ads to offset the operational costs of supporting them. We’ve just gone through a period of time where you could reasonably make the argument for free as a business model but given the economic realities of right now and what 2009 is looking like, you simply have to rethink everything.

Lastly, for the part of the community that remains unsatisfied by this decision and wants to voice their criticism, don’t direct it at Nick, direct it at me.

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Why Aren’t More Advertisers Using Widgets?

Let’s see… why aren’t advertisers using widgets more often? Hmmm, maybe because advertisers are still largely defined by a display ad mentality that hinges on their ability to get consumers to click on a banner in response to cute creative or simply tricking them.

Until they go digital. Branded widgets are the refrigerator magnets of the Brave New World. These compact, portable little software apps — from video players to countdown clocks to makeup simulators — are inexpensive to distribute, free to the user and (often enough) distinctly useful. At a minimum, they carry an ad message wherever they go.

[From Garfield: Why Aren't More Advertisers Using Widgets? - Advertising Age - News]

Widgets do offer a substantial upping of the ante for advertisers but a few things are lacking. First and foremost, while widgets use script blocks to deliver the hosted widget, there are still far too many inconsistencies with the way that the 40+ destination sites handle widgets.

HTML widgets offer far simpler authoring and more reliable playback, but many social networks only want Flash widgets. Google, on the other hand, would prefer to have as little Flash as possible. Then there is the size issue and the fact that widgets that are not well behaved will cause a number of browser issues on page load.

The ability to track and report on widget traffic is quite erratic from one network to another and instrumentation of widgets can impose network and service overhead that causes problems all it’s own.

The biggest problem for advertisers is that while widgets are free for users, they aren’t free for advertisers and publishers who have to pay directly and indirectly to support them. With the vast majority of widget traffic going into social networks the CPM is atrocious and advertising networks want little to do with them because they don’t like, despite their assertions to the contrary, the long tail. Advertisers want to know where their ads, or in this case widgets, are residing because they believe, rightly I would offer, that their brand integrity demands it.

Despite all that, I love widgets and believe that they offer many compelling advantages over display ads, we just have to get beyond an advertising culture issue to hit mainstream with them. It’s kind of like behavioral and micro-targeting, every advertiser and advertising network says these are definitely the future, but very few actually ever explore using these techniques.