Tag Archives: advertising

11 ways to monetise large digital audiences

The Mail Online homepage - it's ain't pretty, but it attracts a huge audience
The Mail Online homepage – it ain’t pretty, but it attracts a huge audience

The UK’s Mail Online newspaper website now has 189.5 million monthly unique visitors, that’s two and a half times the population of the UK.

Working on a month of 22 weekdays plus 4 weekends, the Daily Mail sells 52.1 million newspapers, read by 129.4 million people. Whilst it’s difficult to compare those readership figures with the website’s monthly unique visitors, there’s probably the same level of inaccuracy in both figures, which can make them ballpark comparable.

Back to the website for a moment – how can a monthly readership of almost 190 million users be turned into revenue?

Continue reading 11 ways to monetise large digital audiences

Deloitte 2014 Predictions for Technology, Media and Telecommunications

Combined global sales revenues of smartphones, tablets, PCs, TV sets, video games consoles 1999-2018 Source: Deloitte 2014
Combined global sales revenues of smartphones, tablets, PCs, TV sets, video games consoles 1999-2018
Source: Deloitte 2014

On Friday I went to Deloitte’s Telco, Media and Technology 2014 Predictions Event at the Google campus in Shoreditch. It was only an hour and a half, but well-presented (only if you were sitting at the front, but the microphones were so bad I felt sorry for people at the back) and very well attended.

There were three speakers – Deloitte, Techstars and CSR, a Bluetooth/ home automation system. Continue reading Deloitte 2014 Predictions for Technology, Media and Telecommunications

Five Key Internet Megatrends: 2. Real money

Credit:
When will the advertising bubble burst?
Credit: http://www.turquoisebranding.com/2011/blogs/06/01/mad-magazine-billboard-advert/

Key points:

  • The marketing super bubble will burst
  • Look at Asia for real money
  • But we still need advertising for the discovering new products

The advertising industry has developed from a simple promotional industry, to the main business model for some of the biggest Internet companies.

In 2010, spending on advertising was estimated at $142.5 billion in the United States and $467 billion worldwide.

In the first quarter of 2013, Google advertising revenue was $11.9 bn. Advertising revenue was 92% of Google’s revenues for the quarter.

For the fourth quarter 2012, Facebook’s revenue from advertising was $1.33 billion, representing 84% of total revenue.

Google & Facebook earn advertising revenue by selling clicks on adverts, called CPC (Cost Per Click). CPC is a fantastic business model because advertisers bid for the keyword using two variables – the maximum they’re willing to pay for a user to click through to their website, and the maximum budget they’re willing to spend per day.

CPC is a great business model because companies will keep coming along and outbidding their competitors. Industry magazines contain articles asking their members to stop outbidding their competitors because it is out-pricing everyone in their market and increasing advertising costs for them all.

There’s a deeper problem with advertising though. Users don’t go to Facebook or blogs to shop.

I’ll even question whether people go to Google to shop. For instance, I’m writing this post on a Friday afternoon. According to Google, the top searches in the US today are:

  • George Jones
  • Nfl.com
  • Jarvis Jones
  • NFL Draft

Here in the UK there’s only one item in the top trend – Sarin. (To provide some context, there’s some evidence Sarin has been used in Syria).

Here’s another interesting fact. If you look at the top searches on Google, try looking for any searches you can actually buy. I’ve tried combinations of time periods and locations, and the majority of the searches are for specific websites – facebook, youtube, hotmail, and so on.

We are beyond the tipping point of advertising products to users.

We’re already inside a huge industry bubble, with too many businesses reliant on pure advertising.

There is a requirement to continue advertising though – for product discovery.

Like thousands of other homes across the country, we do our grocery shopping online. And the typical grocery shopping website is awful. It’s completely single-product focussed, based on Amazon ten years ago. A single page contains a single product for sale, and perhaps some small thumbnails along the side or the bottom of the page for recommendations.

Customers need to know what to search for to find this product - what about other varieties?
Customers need to know what to search for to find this product – what about other varieties?
Credit: http://www.flickr.com/photos/45501032@N00/3726589535/in/photostream/
Heinz soup varieties
Credit: http://www.flickr.com/photos/45501032@N00/3726589535/in/photostream/

Look at the image opposite, a tin of soup from Tesco supermarket. Compare this with the soup shelf in my local Tesco supermarket. The shelf contains many varieties of soup, so when I go to the shop and I’m looking for a specific flavour of soup, in my peripheral vision I’ll notice a number of other flavours.

This analogy can work in two ways. First, it can help Heinz sell more varieties of soup, and secondly it can help me to discover flavours of soup I might not have previously considered.

Another analogy of discovery is music. I use Spotify, which contains all my favourite music tracks, and listen to the car radio to discover music I might not have discovered on Spotify. If I hadn’t listened to the radio, my playlist on Spotify wouldn’t have changed since I started the service.

We need advertising to help us discover products and services outside of what we search for. The Internet, as great a tool as it may be, is still based on users searching for what they already know.

Book review (and much more): The Intention Economy by Doc Searls

The Intention EconomyOn 6 October 2009, Endava hosted an event for all the Premier League Football clubs (and a handful of European ones too) called Football Club Website of the Future. It was to mark the end of the transition of the IMG Digital team over to Endava.

We had a number of high profile speakers at the event including some of the Premier League clubs, IMG, Facebook, and Deloitte, who produce the annual Deloitte Football Money League report.

At the event I gave the introduction/ welcome presentation, and discussed two key concepts based on the experience moving from IMG to Endava:

  1. Football clubs have unrivalled levels of loyalty – a fan might change clubs once in their lifetime, compared to moving around financial services companies every few years.
  2. Technology trends in the marketplace.

The technology trends became a regular part of all our future presentations and events. As I look back on the various industry conferences we’ve spoken at or hosted, I can see how they developed from the Football Club Website of the Future event.

The first trends we highlighted included the following:

  1. Content won’t be free for much longer. Content overly relies on the advertising model as a source of funding. In the future, users will pay tiny amounts per page or function (such as a web search on Google, etc.) and there will be a central ‘agency’ for distributing these micropayments back to the content author.
  2. The web needs an SSO (Single Sign On) system to be the single method to log on to all websites with the same username and password (or another form of authentication such as facial recognition or text message). Facebook Connect had been launched for little under a year when we hosted Football Club Website of the Future, and I thought it was a brilliant first attempt at a web-wide sign on system. However, I didn’t (and still don’t) think Facebook is a trusted brand that I would use for everything across the web. I wouldn’t use it for my tax returns, share dealing, pensions, and so on. I would want the SSO system provided by a fully trusted organisation such as Visa, Mastercard or HSBC. It probably wouldn’t be a government or a dotcom company.

These trends have evolved, and I’ve started documenting them in much more detail since reading The Intention Economy by Doc Searls.

I was recommended to read The Intention Economy by a client when we travelled to Romania to show them one of Endava’s delivery centres (where the project management, development and testing is executed). At dinner one night I went through some of the trends, and the client asked whether I’d read The Intention Economy. I hadn’t even heard of the book at the time. The client said that many of the trends ran parallel to Doc Searls’ thoughts.

When I returned to the UK I bought the book within an hour of landing.

When I started reading the book, it was a strange feeling. It was like someone reading back to me some of the presentations I’ve been giving for the last four years (only he is infinitely more articulate and structured!)

The book covers a dozen or so different topics for the future under the banner as a customer-centric economy. These include the Single Sign On concept above, the unsustainable advertising bubble, cookie tracking, modern legal contracts, so-called loyalty schemes, big data, ownership, and the core of the new economy: VRM.

I first reported about a VRM tool (it was a mobile app) that I’d seen on holiday in Israel last summer. I called it a personal CRM tool at the time, which Doc Searls calls VRM, for Vendor Relationship Management.

The concept of VRM or The Intention Economy is simple – we are constantly being pitched stuff all the time – buy this, buy that, this is why you need this or that. However technology should enable us to say “I want this thing, who wants to match the price I’m willing to pay?”

The example in the book is landing at an airport and entering into your VRM system “I want to hire a car, with 5 seats, and can hold 3 large suitcases, and I want to pay $x for 6 days”. Searls calls these ‘personal RFPs’ (Request For Proposals). After submitting this request, the hire companies will return a result with offers.

I don’t agree with everything in Doc Searls’ ecosystem.

He highlights the overuse of cookies, i.e. tracking technology. Although the use of cookies has become too much – his example is the top fifty childrens’ websites installed a total of 4,123 cookies seems extreme. These cookies are then used on other websites to make the advertising more relevant. However cookies are mainly used to track behaviours, not individuals.

The chapter on online loyalty is over simplified for the real world. I often give an analogy that website personalisation [via the use of cookies] is the online equivalent to an old fashioned shopkeeper who recognises customers when they walk into their shop. This is a good thing – I like how Amazon knows about me and recommends relevant products.

Whilst I completely agree with Searls’ key point that the advertising industry has become a huge bubble that now sustains such a large industry, it is necessary. If there was no advertising, customers simply wouldn’t know about new products or services. There needs to be a balance. In June last year I posted an article about Tencent in China, who have revenues of $1.5bn per quarter – not from advertising:

I find it fascinating that whilst most US/ UK B2C digital offerings are focussed on advertising models, especially Facebook and Google, Tencent are earning money from subscription models and e-commerce.

Why isn't The Intention Economy owned by Creative Commons?
Why isn’t The Intention Economy owned by Creative Commons?

Doc Searls is the editor of Linux Journal, so he is a strong advocate of open source. He puts his case for open source in the book, however it’s unbalanced and I see the software industry from the opposite side of the fence, where vendors do want to earn profit from selling software. He then moves on to discuss why Creative Commons (essentially open source Intellectual Property). At the end of that chapter I agreed with his thoughts on this, and decided so change some of the content strategy on this blog – make it more open and not hold back on personal thoughts. However, The Intention Economy book is copyright!

It’s a shame that Searls doesn’t have any retail experience. Although he cites a number of conversations with CEOs of huge retailers, they are completely biased towards their own model (e.g. of not having loyalty schemes) rather than providing a balanced argument.

The Intention Economy is the best business/ technology book I’ve read for a long time. I thoroughly recommend you read it. The style of the writing with lots of short chapters, and an opening argument and closing ‘so, then’ closing argument makes it easy reading.

Most importantly though, Doc Searls gets across how companies need to get back to customer centric organisations. The current organisational trend is that branding and marketing and advertising and other departments within an organisation are becoming more distant from paying customers, even during the recession.

We need to reverse the trend and put the customer first. This can be accomplished through changing corporate culture (making senior managers physically meet customers in their own environment) and systems such as VRM.

I’m delighted to see large organisations begin to do this. At the Visa conference last week, before I’d finished reading The Intention Economy, I could see how the CEO and CTO were discussing key concepts from the book – putting customers first.

An example of buying Twitter followers

Crowd

While I was travelling recently, I heard he following marketing story. A car dealership ran a radio-only promotion to win Superbowl tickets (a random lottery style competition) in return for visiting their showroom. The campaign was run in complete isolation, meaning that if a radio listener visited the showroom’s website, there was nothing obvious to endorse the advert.

They ran the campaign for a few weeks and the response was… zero. Not one person visited the showroom.

The dealership called a digital agency with just a few days to go before the Superbowl, and asked them to implement a campaign using the dealer’s Twitter account. The dealer had just over 50,000 followers, so the agency went to work designing and implementing a campaign.

After a few hours the agency wondered what had gone wrong… not one follower had engaged with the campaign – either entering an online competition, retweeting, or most importantly, visiting the showroom.

The agency had run digital, including social, campaigns in the past and were surprised at the lack of engagement. They spoke to the dealership and found out that they had ‘bought’ the 50,000 followers.

To me, this demonstrated the immaturity of the dealership on a number of levels. Firstly, all marketing campaigns need to be aligned across channels. Secondly, buying Twitter followers needs to be recognised as buying a disloyal and untargeted ‘user base’. I’m being careful not to describe the ‘user base’ as fans or eyeballs because there’s no evidence to suggest they are actual people – as Facebook found out immediately after its IPO.

I would guess that the reason the dealership bought the followers is that after launching a Twitter account and struggling to attract followers, buying them seemed easier and quicker – but in the long run, they were an unengaged statistic of absolutely no use whatsoever.

Photo courtesy of James Cridland on Flickr

 

Research online, purchase offline – the stats

This is a great whitepaper from Google which describes some consumer research about users who investigate products online, and then purchase offline.

We’ve all been through the Google search, competitive search, price match, then walked into a shop – this report shows how this process is actually more valuable for retailers, because users who do this usually end up spending more.

How to get help with online marketing for small businesses

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Last week I was invited to a networking event hosted by Rob Tyson of The Tyson Report and Triberr.

As regular readers will know, I am interested in small UK businesses, mainly because my grandfather started a small shop in Camberwell shortly after the war, which my dad looked after until retiring some five years ago.

I’m acutely aware that small businesses need as much help they can get, and in some ways the Internet has created a level playing field, but small businesses struggle with the complexities of the Internet and it takes too much time to research the necessary material.

Step forward Rob Tyson. Rob has created a subscription based website which helps small businesses understand the nuances of Web marketing.

His website is based on a freemium model – a lot of content is free, the first month costs £1 and thereafter it’s £19 a month.

I spoke to Rob at the event, not for as long as I’d like because there were lots of others there, and he seems a genuine guy who wants to help small businesses. I asked him what his long term plans are, and whether he would help large companies, and he said that he wants to focus just on smaller companies at the moment – usually less than a dozen people, running a business as well as a website.

At the networking event was a wedding photographer who has reduced his marketing spend (at one point he was spending 50% of his revenue on marketing) through Rob and a charming lady who is setting up a London tour guide business and needs help promoting it online.

I’ve read Rob’s blog, and it’s straight up, direct content. There’s no fluff, and something to take away from every post.

If you’re a small business, I recommend following Rob on Twitter and taking a look at his site.

 

LinkedIn’s future looking good

LinkedIn have had a third quarter and with quarterly revenues up 81% to $252m, they are set to have annual revenues of $1bn.

It’s still staggering how on revenues of $252 million they still only make less than 1% profit of $2.3m, although being fair to them, their EBITDA is $56m – 22% of revenue.

Their income is split as follows:

  • 55% Hiring Solutions (recruitment)
  • 25% Marketing Solutions (advertising)
  • 20% Premium Subscriptions (sales and headhunting)

This is a healthy mix – I’m still concerned how many Internet businesses are based on an advertising model. It works so well for some (Google), not necessarily for others (Facebook) and I prefer mixed models where it’s closer to a freemium or retail model (Spotify, Amazon and LinkedIn).

LinkedIn have successfully implemented the freemium model perfectly – most users can get value from the site without paying a penny. Users who want more information about other people’s profile, or want to contact people they’re not connected to, or look at who’s been looking at their own profile, can upgrade.

LinkedIn has become synonymous with Internet based recruitment and B2B business networking. Two thirds of LinkedIn’s revenue comes from the US, so there’s still huge opportunity in Europe and Asisa (22% and 7% respectively). To continue the B2B toolset acquisition, I would expect them to buy an events organiser such as EventBrite.

How Shazam is helping brands and broadcasters

This week we held our annual Endava Digital Media Supplier and Partner event, where we invite all our suppliers and customers together, to show some case studies and for suppliers to demonstrate their latest products and roadmaps.

There are always a number of interesting facts and trends that are discussed by each of the presenters, and I’ll cover some of them in the next few days.

One of the key case studies this year was from Drum, who we’ve been working with on some recent Cadbury projects.

Drum presented some Shazam case studies, which are particularly interesting to us because we’ve been working with Shazam already, and I already love their mobile app.

Shazam have been well known for a while for their music recognition service. You point your phone at a speaker for a few seconds, and a few seconds later you either receive a text message or an App alert to tell you exactly what the piece of music was.

Shazam are now helping brands with TV advertising by providing a second screen experience. So while you’re watching a TV advert, when the Shazam icon appears you point your phone at the screen and very quickly, you’ll get ‘extra features’ from the TV ad. It might be a competition, or a game.

This is one of the main reasons sport is so valuable to TV broadcasters. Almost all other types of show can be recorded, and users can fast forward through the adverts. However most people want to watch sport live, which means watching the adverts in ‘real time’. 

NBC have taken Shazam into the actual TV production process. As the video below demonstrates, when a users Shazams a snowboarding show, they saw any extra first person view of the snowboard run in their mobile providing an excellent experience.

Heard of Tencent?

Img-20120531-00031

Thank you to Tom Broom, a former colleague from IMG who moved to the Hong Kong office and sent me the photo above from one of their clients, Tencent.

Tencent is an interesting company. On its homepage it says:

Founded in November, 1998, Tencent, Inc. has grown into China’s largest and most used Internet service portal. In its ten-year history, Tencent has been able to maintain steady and fast-paced growth by always putting its users first. On June 16th, 2004, Tencent Holdings Limited (SEHK 700) went public on the main board of the Hong Kong Stock Exchange.

If ever a company undersold itself, Tencent would be at the top of the tree.

In a nutshell, Tencent provide a portal, and ISP service, as well as a gaming platform, e-commerce site, online payment provider, Instant Messaging tool, mobile portal, e-books and SMS services as its products and services.

Most people in the UK have never heard of Tencent, so here are some financial highlights from their Q1 2012 report:

  • Revenue for Q1 2012 was $1.5bn, an increase of 21.8% on the previous quarter
  • Gross profit was $923m, up 12% on the quarter and up 40% year on year. Operating profit was $586m (38% margin)
  • Less than $86m of revenue comes from online advertising
  • Net cash position of $3.2 billion

Their user numbers are equally impressive:

  • 751.9 million people use their Instant Messaging service
  • They had 167.4 million concurrent users  during the quarter
  • Instant Messaging users are still growing at over 11% per year

I find it fascinating that whilst most US/ UK B2C digital offerings are focussed on advertising models, especially Facebook and Google, Tencent are earning money from subscription models and e-commerce. They have found the holy grail of finding ways of getting users to pay for services. Apple have managed it with the App Store – before Apple, users simply wouldn’t pay for services via a mobile.

Tencent’s e-commerce site is remarkable. It contributed just under $120 million of revenue (8%) to Tencent. It’s growing so fast that it’s now a separate business unit. The e-commerce model is similar to Amazon – they sell their own products, and provide a market place facility for other retailers to sell their wares.

And finally, let’s do a stock market comparison against the West’s equivalent wonder child, Facebook – take a look here unless of course you own Facebook shares.