Exact Target are one of the best outbound delivery systems out there. ExactTarget’s latest earnings guidance was $376-$379m for the year. In Q1 2013 they had revenues of $88.9m and a net loss of $11.6m. Disclaimer: Endava are an ExactTarget partner.
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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.
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.
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.
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The photo opposite shows two adverts from an in-flight magazine that I saw recently (they weren’t facing each other in the original magazine). Both adverts have a QR code in the bottom corner of the ad.
The first question any self-respecting marketer should ask themselves is why put a QR code on an in-flight magazine. The user can’t zap the code and see the website on an aeroplane.
So the first rule, is use QR codes sparingly. Don’t use them at all on in-flight magazines.
Next, I ask you to look at the hotel advert closely. Are you capable of typing into a browser the domain name at the bottom of the advert next to the QR codes? I would imagine most people are capable. So there’s no point of having the QR code there, which goes to the exact same URL (I’ve tried it) as the human readable domain.
On the Wenger watches ad, the QR code is more sophisticated. The QR take you through to the Seaforce range of watches, which matches the model in the advert. That’s a start.
If you are thinking of using QR codes, do so sparingly. And if you still want to use one, please include a referrer code (you can make one up) to track how many people zapped the code.
Back to the first rule: if you’re using a QR code, make sure someone will have an Internet connection where they see the code.
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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:
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.
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:
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.
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.
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.
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.
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.
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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.
There are now loads of agencies that specialise in social media. There are lots of traditional agencies which now have social media teams to help work alongside traditional digital (did you ever think you’d hear that term?) campaigns and marketing. I’m currently trying to enable businesses to think about social media in a different way – and not just for marketing.
Most people have to take an imaginative leap at this point which makes them uncomfortable. This is because our brains are hard wired – when we start doing something regularly in a specific way, we find it difficult to think of alternative methods.
I often give the example that people think of LinkedIn as one of two uses – lead generation or finding a new job. People who think of one of those uses find it difficult to understand the other use even though both are equally valid.
On Facebook, users, including the agency staff above, are comfortable using it for Messages and status updates from friends. Asking people to come up with alternative uses for Facebook is a bit like when Henry Ford’s quote “If I had asked people what they wanted, they would have said faster horses.”
I was with the social media team from an estate agency at a social media event recently and asked how they used social media. It was the usually Twitter and Facebook use cases.
I asked what they would like to be doing on Facebook and they found the question difficult.
I asked what they thought people would be using social media for in five or ten years’ time. Personally I think they could already be asking customers with their property on the market, to regularly include a ‘For Sale’ on their status. It’s similar to having a large ‘For Sale’ sign in their front garden, (except the reach is probably much further).
It’s time for companies to start using social media for uses beyond marketing. We’re encouraging clients to think differently about social media because of the sheer number of users (i.e. their potential market). I’m finding that asking them to think about five or more years into the future helps them break from their current mind set.
(And from tomorrow I’ll stop all the horse references).
Continuing my theme about naming conventions in the IT world, I think our industry is better at branding and marketing than branding and marketing professionals!
I mentioned that I took part on a Big Data/ BI (Business Intelligence) workshop recently. My first job after university – in 1994 (no gasps at the back please – I know I don’t look old enough) was as a developer providing an EIS (Enterprise Information System) for NHS clients.
We took large amount of data from Patient Administration Systems (PAS – again, no sniggering at the back if you work for Endava please (private joke)) and provided graphical dashboards which often exposed ‘intelligence’ in the data which would have taken much longer to process in standard databases. And the data was too large to import into Excel.
There are many off the shelf products, many of which are open source, which makes implementations far quicker to implement today than fifteen years ago.
Another great piece of re-branding is thin-clients. In the late 1990s, moving to a thin-client model (i.e. most of the processing was done by a server) was fashionable. We then moved back to thick-clients – where the processing is mainly done by the desktop. Then the Internet age was born, and we never heard about thin or thick clients, because they were rebranded as ‘browser-based’ and apps. Exactly the same model, just rebranded.
Infrastructure has gone through some great rebranding. The term ‘hosting’ was left untouched for 10 years, before virtualisation – which wasn’t really a new concept. Citrix have been doing it for ages in the desktop industry. But suddenly every CIO felt compelled to virtualise virtually everything (pun intended).
And then… “Cloud”. I remember speaking to clients early on about Amazon Web Services, and within three years every hosting company rebranded their virtual environments as Cloud. Nothing more than rebranding. My personal website is stored “in the Cloud”. When I first took out the contract it was a Shared server, then a virtual server… now a Cloud server. It’s just the IP address has never changed!
My final example of brilliant branding is Enterprise social media. Lotus were doing Enterprise Collaboration in the 1990s – boasting shared documents with workflow and permissions.
I’m looking forward to future rebranding – green screens becoming “eco-screens”, dot matrix printers becoming “banner printers”, email becoming “enterprise messaging”, word processors becoming “information asset collation”… the list goes on.
However, I think we’re about to see a step change in these revenues, because most m-commerce offerings are simply migrating their web offering to a mobile equivalent – either through app or a web browser. The statistics above are still mightily impressive, however there’s a lot more room to grow.
Amazon’s one click ordering makes it easy to buy a product, and eBay’s feedback rating is a brilliant piece of loyalty marketing – once you’ve won an item via Buy It Now or through an auction, the feedback rating psychologically compels consumers to go through with the purchase without any of eBay’s manual overhead.
Both of these systems are great for impulse buying, but are separated from marketing.
The next version of m-commerce will marry brand marketing and impulse buying. Consider these two scenarios:
A consumer sees a poster advert in a train station promoting a new film. The consumer will soon be able to connect their smartphone to the poster – whether through the camera, wireless or another communication channel, and order tickets to the film at their preferred cinema.
A consumer sees a poster advert of a perfume. They connect their smart phone to the poster, enter a quick and fast security check, and that perfume is then ordered and delivered to the consumer.
These scenarios require a number of barriers to be broken down before the purchase process can be made quickly and easily. Consumers won’t have the time or inclination to enter 4 pieces of information from their credit card for each purpose – it needs to be simplified. A current example of this is PayPal’s mobile app which has been simplified recently to remove long passwords and replace them with a 4 digit PIN number.
In order for this new world to occur, three things need to happen:
The technology needs to be in place. As pointed out, with PayPal and existing smartphones, I think this is already in place.
Marketing agencies need to help design the buying process. The agencies will need to help the commerce store with the actual purchase rather than a brand awareness exercise – and this will be difficult to achieve. It will be a huge educational process and mindset change for marketing and design agencies. I don’t think this can be achieved with QR codes because they are still clunky; require their own app and a decent Internet connection. Most consumers still don’t understand what a QR code is. QR codes also fragment the buying process, sending consumers off to websites rather than enabling a one-click, under 20 second buying process.
The single fulfilment store. One key player that has the infrastructure to do this is Apple. Imagine if they rebranded the App Store as simply ‘The Store’. A consumer sees the perfume poster above, links their iPhone to the poster, and orders through ‘The Store’. Apple already has the payment information and owner’s address – in the App Store. They also have the cash to setup the distribution infrastructure. Other contenders to be able to do this are Amazon and possibly Google. Or we could see a new player/ brand emerge, who won’t need to worry about the legacy of ‘old’ e-commerce systems and behaviours. Tesco have tried a system in Korea, however I think it was more of a marketing stunt or a proof of concept. And when I mention legacy systems, the future of m-commerce described above will be single, impulsive purchases, probably linked to brands, unlike the Tesco video which is a small step forward from shopping online.
Once these three component are in place, consumers will consider this as standard shopping behaviour. The holy grail of marketing will have been achieved – Marketing will have become directly linked to the purchase.
If you and I have ever had the chance to discuss Twitter, you’ll know I’m not exactly pro-Twitter. I question its true marketing value or longevity. However I do have a fixation for non-celebrity individuals who have a few thousand followers, because they are clearly effective at marketing in the Twitter-space.
I regularly attend a few MeetUps and last night I went to one that I’d been looking forward to for a while – a talk by Bill Boorman who has some 8,500+ followers on Twitter. Bill is quite infamous for “saying it how it is” and his social media expertise for his own company.
Fundamentally, Bill likens Twitter to a local pub, where you can hear and join in everyone’s conversation. You wouldn’t walk in and try and sell something direct (OK, forget the rose sellers for a second). And you would be quite subtle when joining a conversation.
Here were his other main points:
Don’t plan too carefully; just build activity. Interestingly, I’ve heard that Facebook don’t have a strong content plan – they try not to plan too much because they prefer to be more market driven and quick to respond.
Bill came to the stage wearing a T shirt with a hashtag, @billboorman and on the back, his web address. And a hat (without any branding). I’m not sure many people could get away with that (outside of San Fransisco), but his point was to stand out from the crowd and be different.
Whilst Bill doesn’t claim to delay his tweets, he recommends tweeting first thing in the morning (7-9am), lunchtime and 4.15pm to 9pm. I.e. when people have some spare time.
Tweet less than 100 characters so that your tweets can be retweeted
Find Tweet chats and join in the conversation – think of the pub analogy again
Be different, don’t be normal
Talk to ten strangers every day
Bill’s view of social media and making money: “We give away [on social media] the stuff people used to charge for, and charge for the stuff people really need.” He talked about a plumber who puts up YouTube videos on how to do plumbing, and provides contact details if you really need a professional plumber. I guess it’s the plumber’s version of freemium!
Brands need to be careful of negative publicity and deal with it quickly, not just 9-5, and Bill gave an example of British Gas. He also described how tweeting whilst being made to wait on hold on the phone was a great way to get attention
I found it interesting that it took an hour before someone asked Bill what he does for a living. I knew he was in recruitment and sort of assumed everyone knew, but his recommendations above were very generic.
Another impressive point was that Bill spoke to 45 minutes and had a break before answering questions. He then had 50 minutes of questions which is very rare at a MeetUp. I went up to him at the end of the session and said I thought 50 minutes of questions was outstanding and he answered that he only does it for the engagement, not the initial ‘How to’ part – and I think that’s a key point in social media.