Media | Mark Neely's Blog

Accelerating shift from marketing to product/service re-design

Design Thinking, innovation, Media, Strategy, Web 2.0 1 Response »

Sep 192012

An interesting new study, conducted by Duke University on behalf of the American Marketing Association, has been published, and is well worth reading.

It provides a number of insights into factors influencing market development, growth strategies, fluctuations in marketing budgets and growth in social media marketing expenditure.

But the table below provides a real eye-opener for those unconvinced of the emerging influence of design thinking, and its related discipline, service design.

Key takeaway: Traditional advertising expenditure (that is, offline advertising) is expected to fall by 137.5%. Online spend will also fall by 10.2%.

What will Chief Marketing Officers be directing their marketing budgets to instead?

Designing and implementing better customer experiences (+26.8%) and, more tellingly, designing and developing new services (+52.4%).

My Facebook Nightmare

Culture, Media 48 Responses »

Jan 282009

It started with a phone call around 7.30pm on Wednesday night, January 14th. A concerned friend was calling from interstate.

“Mark, where are you?,” he asked.

“I’m at home. Why?” I replied.

“So you’re not in London?”

“No.”

“And you haven’t been robbed at gunpoint and had your wallet stolen?”

“No! What on Earth are you talking about?”.

“Mark, I am on Facebook right now, talking to you, and you’ve just told me that you’re in London, that you have been robbed, and that you need urgent financial assistance so you can get back to Sydney”.

“Oh crap!”.

Trying to Make Contact with Facebook

I immediately tried to log into my Facebook account. The login screen reported that I had used the wrong password. I guessed (correctly, as it transpired) that the hacker had changed my password to prevent me from accessing the account. I did a quick scan of the Facebook help pages and worked out that I could request that the password be reset, with the new password sent to my email account. I clicked to access the password reset screen, and Facebook asked me for details of the email address linked to my Facebook account. I entered my email address and it was rejected – the hacker had changed the email address linked to the account (presumably to stop the password being reset). Clever.

By this time, my mobile had rung several times and I had received multiple SMS messages from concerned friends, and the stress levels were rising.

I did another scan of the Facebook site looking for a contact phone number for their Help Desk or security team. Nothing listed. I looked for a contact email address. Nada. I did a couple of Google searches looking for any trace of a contact point (nothing, with the exception of the representative of their PR company).

The only option for making contact with Facebook that I could locate was to fill out their online form for reporting password problems, which I did immediately (in fact, I did it twice, one reporting the change of password, and one reporting the on-going phishing/scam activities by the hacker). Somewhat surprisingly, I received auto-confirmations of these reports to my email address, despite the hacker having changed the email address linked to the account.

I continue scanning the Facebook site for a direct contact address, first reviewing their Terms of Service and then their Privacy policy. Bingo – the Privacy Policy page listed the privacy@facebook.com email address. I sent them an email advising of the problem at 7.54pm, asking them to contact them immediately on my mobile.

I then jumped onto Twitter to ask my contacts whether anyone knew any representatives or employees at Facebook. No such luck.

A friend told me that my Twitter stream was still showing up in my Facebook status alert box (thanks to the Twitter app I had installed on my Facebook account), so I started sending a series of Twitter messages indicating my Facebook account had been hacked. Friends also started posting similar messages on my Facebook wall, trying to warn others of the on-going scam effort (although I later learnt the hacker started deleting these as soon as they appeared).

Leveraging social networks

For the next 24 hours, I waited.

I sent off several additional emails to Facebook (to their privacy@facebook.com email account, and to the return email address from which the auto-generated responses were sent, info+nszvnfe@facebook.com). I received no further responses.

The hackers were clearly still active in my Facebook account, as attested by the number of calls and SMSs I continued to receive. Several friends who had twigged to the scam played along with the hacker, and captured transcripts of the conversations, which they sent to me. The hackers were clearly sophisticated – the stories followed very closely to a script, but they were able to adjust according to the responses from my friends. They quoted Western Union account numbers for the transfer, and prodded my friends to “please hurry” as I was still in danger.

My levels of frustration and stress were steadily rising. The source of my stress was the fact that hackers were contacting some unknown number of my friends and trying to scam money from them, and I had no idea who or how many had fallen victim to the scam out of concern for my well-being. The source of my frustration was the fact that I could not raise anyone at Facebook to respond to this on-going criminal activity.

On Thursday night, after another evening and attempts to sleep punctuated by concerned calls and SMSs, I decided I needed to try to engage with local law enforcement agencies.

Around midnight, after answering another call from a concerned friend, I started researching my options. I called the Australian Federal Police (who, helpfully, have a 24/7 telephone service). Unfortunately, while they were familiar with the issue, they were unable to help (they pointed me in the direction of ScamWatch, a service run by the Australian Competition and Consumer Commission, a government consumer watchdog, for tracking scams, illicit multi-level marketing schemes and the like. As it was after midnight, I completed an online form describing the problem.

I then found the Australian High Tech Crime Centre. Unfortunately, it seems to be little more than a brochure-ware site that does not list any contact details. It did have an online form however, so I also submitted an alert via their site.

(At the time of writing, I have not received a single response from either the ACCC or the AHTCC.)

I returned to the Australian Federal Police Web site, and located the contact phone number for the New South Wales e-crimes squad. Unfortunately, there was no answer on the telephone number listed, nor a voicemail service.

By now, it was 1.30am, and I was at my wit’s end. I decided it was time to leverage some of my “social network” to address this issue.

I am a subscriber to Professor Dave Farber’s Interesting People mailing list. I knew this list had numerous computer security researchers as subscribers. So I penned a quick email, asking for help:

Dave,
I am writing partly to vent my frustration but mainly in the vain hope someone on the IP list can help me out.
My Facebook account was hacked approximately 40hrs ago. I discovered this when I was called by a concerned friend who wanted to confirm that I was being held at gunpoint in London and desperately needed him to wire me cash (via Western Union) so I could escape the country and return to Australia. Of course, I was not in London, and it was not me he was chatting to on Facebook.
I immediately attempted to log into Facebook, but the password had been changed. So I tried to reset the password, but the email address linked to my Facebook account had also been changed. I could not access my account.
I spent an hour scanning the Facebook site looking for a contact phone number. No such luck. I completed 2 different incident reporting forms, and received auto-confirmations. I then scanned their T+Cs and Privacy notices and discovered the privacy@facebook.com email address and sent an email to that address.
40 hours later, I have had no response from Facebook, and I have been alerted by friends that the perpetrators are still active on my account, initiating chats with people begging for help and a money transfer. I just alerted several authorities in Australia (though it is now 1.30am in Sydney, so had to use online forms). Unfortunately, the Australian Federal Police (who do have a 24hr hotline) couldn’t help me (they referred me to a Scam Watch service!).
So I am asking whether anyone on the IP list has a direct contact with an appropriate stakeholder at Facebook, or some specific advice on who I might contact in the US to get the account suspended and the perpetrators locked out (or, better, traced and apprehended).
Any feedback appreciated.
Regards,
Mark

It was clearly the right step to take. Within minutes of the email being distributed to mailing list subscribers, I received numerous offers of help. Within an hour, I received an email from Chris Kelly, Facebook’s Chief Privacy Officer, indicating that my email had been passed onto him, and that his team was on the case. Within an hour of Chris’s email, I received an email from Facebook Support, indicating that the account had been suspended. The hackers, it seemed, had been locked out.

Unanswered questions

I sent an email to both Chris Kelly and the support team thanking them for their assistance. However, I could not let the matter rest, as there were too many unanswered questions.

1. How did the hacker get into my account in the first place? Did they ‘brute force’ my password, or did they appear to already know it? (I have my theory that they exploited a known security weakness in the Twitter API).

2. Which of my friends did they make contact with? (so I could contact them personally and ensure no-one fell victim to the scam).

3. Why did it take Facebook over 48 hours to respond, and only then after my public plea for help which was passed by an external contact into the hands of the Chief Privacy Officer.

(Incidentally, only yesterday – 12 days after I submitted my original incident report via the Facebook online form – did someone from the Abuse department follow-up that report, and only then it was to note that it appeared it had already been dealt with).

4. Why doesn’t Facebook publish a contact phone number or the email address of a real person (such as the Chief Privacy Officer) as an escalation point?

I have received no answers to questions 1, 3, or 4, despite following up with Chris via email.

With respect to ascertaining which friends the hackers had contact with, I received this advice from Facebook:

Unfortunately, we cannot release the information you requested unless we receive a valid subpoena or court order. You should contact a lawyer or your local law enforcement agency and discuss this issue with them. If you decide to pursue legal action, have the lawyer or officer contact us at privacy@facebook.com, and we’ll provide more information about the process.

I was also advised (rather unhelpfully) that I could also check whether there were any messages in my Facebook Inbox or Wall that might reveal who the hackers spoke to. Clearly Facebook were not going to lift a finger to help me determine whether any my my friends (that is, other Facebook users) fell victim to this criminal activity perpetrated via their service.

Not Over Yet

Unfortunately, the saga wasn’t over yet.

Once my Facebook account had been suspended, the Support team sent me an email asking me to verify my identity (i.e. that I was the original owner of the account). They did this by asking me to answer a security question that was posed during the original account creation process. Having confirmed my identity, they issued me with an email containing instructions on how to reactivate my account.

I did not want to reactivate the account until I had received some answers. Unfortunately, the hacker had other ideas.

That evening, I received still more calls. The hackers were active on my account. After it had been suspended. Before I had reactivated it.

I immediately fired off an email to Chris Kelly asking what was going on. The account was promptly suspended again. But how did the hackers get back in?

The Support team suggested my PC might be infected by a Trojan program or some similar malware, which allowed the hackers to see my email. Multiple scans via several different tools and online security services indicated my PC was clean.

They also suggested that somehow the hackers also knew my email account password (I used a GMail account as the contact point for Facebook). Possible, I suppose, but very improbable.

Facebook are yet to provide me with an explanation of how the account found itself reactivated, and who reactivated it. Presumably they have IP address logging capabilities and could easily determine where the reactivation request came from.

Media Attention

My email to Prof Farber’s Interesting People discussion list took on a life of its own. It was republished in Risks Digest as well as on the Wired magazine blog, under the amusing title of Kidnapped on Facebook.

As a result, I was contacted by a number of journalists and media outlets in Australia and overseas, who ran stories on the hacking event. Within hours of each article appearing, I would receive emails from other victims of similar incidents who were also unable to get any response from Facebook. I pointed all of these people in the direction of Chris Kelly, and most replied indicating that soon after making contact with him, Facebook was quick to respond.

(If any one reading this is having similar difficulties with Facebook, please contact me and I will put you in touch with Chris)

Does Facebook Owe a Duty?

One of the people who contacted me for assistance made the observation that he doesn’t “blame” Facebook for the lack of support, given they provide a “free” service.

Complete claptrap.

Facebook’s service isn’t “free”. Users pay for it by giving Facebook access to their personal data (which they data mine for commercial purposes), and by giving attention to the (targeted) advertisements that Facebook generates as a result. We “pay” by paying attention.

In this day and age it is simply unacceptable for Facebook to have such a pitiful incident response infrastructure. If it’s “virtual” members were citizens, Facebook would be a sizeable country. It is the custodian of private data for tens of millions of people, and that data is all too frequently being misused by criminals.

I would argue that Facebook owes a fiduciary obligation to its members to take a more proactive stance than they have to date. It certainly should immediately upgrade the infrastructure and processes that it has in place for dealing with criminal activities and identity theft.

I am still awaiting a detailed response from Facebook to my questions. I don’t hold high hope of receiving any.

Technorati Tags: Facebook, Scam, Phishing, Hacking, Kidnapped, Chris Kelly, Police, Crime, Criminal, Scammer, Nigerian

Major Media Failed the 2008 ‘Online Election’

Media, Web 2.0 Comments Off

Nov 052008

Given how late in the day it is, I suspect everyone is almost over the 2008 US election.

But I wanted to add a note about my experience in trying to monitor the election online today.

I watched the CNN TV coverage live, but wanted to compare/contrast their stats with that of other major US media outlets. So I monitored the Web sites of CNN, Fox News, BBC News, New York Times and MSNBC.

Each had a very similar approach to covering the vote counting – a map of the USA, with each state coloured according to their current status (i.e. leaning towards the Democrats or Republicans). Most also allowed you to mouse over individual states to get more specific information on the progress and projections for that state.

Now here is what bothered me: the data on all of the US media web sites trailed what was being announced on-air, often by a matter of minutes. The CNN site was particularly annoying, as they had both a ticker and a map on their homepage, and while the ticker kept in close synch with their TV ticker, the map was often 10 minutes behind the ‘live’ data. Same site. Same page. Presumably same data source. Different update speeds.

(The BBC was a potential exception, as their web site was often minutes ahead of the other sites, but I did not have access to their broadcast, so I could not see whether the two channels were in synch.)

How did this happen?

Even the mainstream media has commented quite frequently about the importance and role of the Internet in the 2008 US Presidential election, in terms of both generating donations and motivating volunteers to join campaign activities, and in dramatically increasing voter registrations.

Much was made of the incredible viewing figures that political satire and comedy segments (especially the Palin impersonations on Comedy Central) were pulling online – often far exceeding their broadcast viewer numbers. Social networks like Facebook, and microblog services like Twitter have generated unprecedented traffic around political groups, conversations, debates and commentary.

Just as TV ‘made’ John F Kennedy – his superior telegenic appearance giving him the edge over Richard Nixon in the 1960 debates, the first to be televised – Obama’s campaign was given an immense boost due to the manner in which it was able to engage voters via the Internet (embracing and extending the lessons from Howard Dean’s campaign).

The abovementioned media outlets had plenty of warning that there would be significant demand for online information and analysis during the election and vote counting, but they clearly dropped the ball.

Are Poor Metrics Holding the Online Industry Back?

Interactive, Media, Strategy, Web 2.0 3 Responses »

Oct 292008

A recent survey by McKinsey highlights the growing challenge faced by marketers in deciding how to allocate their media spending:

The rapid growth of online advertising hides a serious challenge: the digital world has developed faster than the tools needed to measure it…A June 2008 McKinsey digital-advertising survey of 340 senior marketing executives around the world shows the breadth of the gap between what’s needed and what’s available. Hobbled by nascent technologies, inconsistent metrics, and a reliance on outdated media models, marketers are failing to tap the digital world’s full power. Unless this problem is addressed, the inability to make accurate measurements of digital advertising’s effectiveness across channels and consumer touch points will continue to promote the misallocation of media budgets and to impede the industry’s growth.

There are three problem areas:

1. Media Planning – New tools are needed to help media planners compare the impact of on- and offline efforts.

2. Conversion measurement – Greater insight is required into how online messaging converts target consumers into making online and offline purchases.

3. Social optimisation – Targeting methodologies have not yet adapted to the changing context in which individuals are consuming online content; in particular, changed context(s) within social environments and how word-of-mouth and recommendations fit within this category.

The survey found that over 50% of respondents were not happy with the current processes for media allocation and measurement. Surprisingly, only 50% of respondents indicated that they used click-through rates to determine the effectiveness of their direct-response advertising – which suggests the rest are preferring qualitative over quantitative measures. Only 30% of respondents indicated that they considered the offline impact of online advertising.

Few in the online industry would claim that the ‘measurement challenge’ has been solved, but it doesn’t seem fair to suggest that poor metrics alone is holding the industry back. Despite having access to over a decade of data on how to use the online medium effectively (either as a stand-alone channel or in conjunction with other channels), it seems that a sizeable number of marketers have failed to adapt their toolkits and processes, or invested in the requisite skills to optimise the ROI of their online spend.

Technorati Tags: McKinsey, Online Marketing, Marketers, Metrics, Media Planning, Conversion Measurement, Social Optimisation, ROI, Measurement

The next ‘re-intermediation’ business opportunity?

entrepreneurs, innovation, Media, Strategy, Web 2.0 3 Responses »

Jul 302008

I recently had cause to investigate how you might use a utility/cloud computing service, like Amazon S3, to provide an efficient and modestly priced solution to serving up video-on-demand content services, as an alternative to the more traditional offerings of streaming video platform providers.

I was impressed by the level of intelligence behind not only the pricing of such services (just cheap enough so it makes more sense to outsource – Coase theorem at work), but also the dynamism reflected in the engineering of their underlying infrastructure.

Amazon, and others, provide some seriously ‘grunty’ utility/cloud infrastructure. The recent S3 outage notwithstanding, utility/cloud computing is here to stay. Its adoption by businesses is likely to be accelerated by the early successes of server virtualisation technology adoption by enterprise users, spearheaded by VMWare.

This points to an exciting new realm of opportunities for "middle men" to move this capability into the hands of consumers. Allow me to explain.

We are the last generation who will ever have to worry about launching an installation CD.

We are the last generation who will ever have to worry about disk (storage) capacity.

We are the last generation who will ever have to worry about CPU speeds.

Finally, but importantly, we are the last generation who will ever have to worry about bandwidth throughput (speed).

Imagine what you could do in a world when you’re free of these kinds of constraints.

We’re starting to see the potential indirectly, in the guise of the rapid proliferation of Facebook apps. These apps exist "out there". We don’t care where they reside. Importantly, we play no active role in their installation, configuration or management. Equally, these apps care little about the end user equipment/device or infrastructure being used to access and interact with them.

This is how software (and services-powered-by-software) will look for all users within the next decade.

The promise of utility/cloud computing infrastructure, then, is that it will finally hide the technology. And history tells us that when technology ceases being ‘technical’ – when technology shifts from the core of the experience to the periphery – immense behavioural changes follow.

Now back to the opportunity for middle men.

While utility/cloud computing infrastructure has hidden (or, at least, is starting to hide) the technology, it is still a fairly immature offering, in that – as a product offering – it is largely focused at technical users.

While it is easy to setup an Amazon S3 account, for instance, it is still quite difficult to configure and manage the services that you purchase/consume. This represents an unnecessary hurdle in the current environment, in which – thanks for ‘mashup’ services and the like – non-technical users are being increasingly encouraged to ‘develop’ software-based solutions to every day problems.

This creates a market for an intermediate layer: companies who take utility/cloud computing services and repackage them in a way that makes them accessible to non-technical users. Companies like Morph have taken a step in the right direction, but there is still plenty of scope for innovation in this new market niche.

Technorati Tags: Grid computing, utility computing, cloud computing, Amazon, Amazon S3, Morph, VMWare, S3 outage, disintermediation, hiding technology, virtualisation, mashup

$1 CPM industry standard?

Media, Web 2.0 2 Responses »

Jul 182008

I just had a quick scan through a report by JP Morgan’s Internet analyst Imran Khan, titled Nothing But Net, released in January 2008.

In an almost throw away line, he notes that "[m]ore than 80% of online inventory currently sells for less than a $1 CPM," with an average CPM rate of just $US3.31 for display advertising in 2007.

As indicated in the two charts below (the first showing the global market, the second the US market), while rates are forecast to lift in coming years, they won’t do so by any order of magnitude.

I found these figures quite surprising, given that in several recent projects, clients were forecasting (and, based on trading history, expecting to secure) CPMs ranging from $A30-$A70.

There are a number of contributing factors that create pressure on CPMs for display advertising, with the primary two causes being:

- A glut of non-premium advertising inventory (as mentioned previously, sites like Facebook are generating so much traffic that it completely devalues their inventory)

- Low adoption of ad targeting platforms and other revenue optimisation techniques.

But how did it come to pass that display advertising rates have slumped so low?

The rise of ad networks, which aggregate unsold/distressed advertising inventory and sell bulk quantities at low rates to advertisers who are happy to run "spray and pray" campaigns, is certainly a factor.

Another factor is that marketers expect a much higher correlation between digital marketing activities and confirmed sales than they do in any of the ‘offline’ media, which I have also covered previously. This is quite ironic, yet by viewing online marketing as undifferentiated from other types of direct response campaigns, marketers have driven CPM rates down.

However, the main reason why CPM rates for display advertising remain at such artificial lows is that publishers (and the online industry in general) have still not developed a compelling story for advertisers when it comes to achieving ‘best practice’ for display advertising in online brand/branding campaigns.

With the dominant mindset among marketers being that the online environment is a sales-focused medium and, consequently, the aim of online campaigns is to secure reach, they buy based on tonnage: how many impressions will you deliver for my budget?

Publishers need to start the process of educating marketers about engagement and, in particular, the types and degree of engagement that can be achieved within an online, interactive environment that could never be achieved in other, display-like mediums (such as newspapers, magazines and TV).

Importantly, publishers need to get marketers thinking about how online advertising can be better utilised to achieve brand awareness, interest and preference. Marketers need to recognise why online advertising should be part of the marketing mix at all stages of the purchase cycle, rather than only at the ‘buying’ stage.

The first step in this process is to get everyone on the same page as to what ‘engagement’ is and, importantly, how you can tell whether you have it (yes, another metric!).

The second step is to recognise that the ad units themselves need an overhaul. Display ads have been around since the very first Web browsers were released (some 15 or so years ago). This might lead you to think that they are now a ‘mature’ product. But display advertising is still a very young format, when you consider how long print and TV advertising formats have been around. There is still plenty of opportunities to refine and evolve the advertising formats themselves.

Lastly, publishers need to recognise the importance of creating and sustaining their own brands. Having a well-defined, understood and trusted/respected brand is key to achieving engagement with audiences. Furthermore, publisher’s brands create the opportunity and the context for introducing advertisers (and their brands) to the audience.

All too many publishers fail to adequately engage with their own audiences and nurture their relationships. Until they solve this part of the equation, they will be hard pressed to improve advertisers’ perception of value for their advertising products.

Technorati Tags: CPM, Cost Per Thousand, Marketing, Display Advertising, Engagement, Audiences, Nothing But Net, JP Morgan

Is social media driven by a loss of faith?

3rd Horizon, Media 1 Response »

Jun 052008

A few weeks ago, I was invited to speak at the Walkley Public Affairs Convention, on the issue of social media.

My presentation was titled ‘Just because everything is different, doesn’t mean anything has changed.’

In it, I sought to outline my thoughts on what were the key driving forces underlying of the growing consumer embrace of social media.

To my mind, it boils down to three converging trends – Anxiety Overload, Enforced Autonomy and Institutional Failure.

But before I get onto exploring the socio-cultural context of social media’s emergence, let me revisit my presentation’s opening point (reflected in the title), which was that although we live in a world of constant change, nothing much has really changed in the media sector.

Media has always been inherently social – Media has traditionally served the role of creating the a ‘conversational context’ for audiences. Social media platforms have merely created new (that is, additional) places for audiences to converse. What is different this time around is the increased visibility of those conversations.
The ‘blogosphere’ is, in my view, largely an echo chamber – The blogosphere is highly self-referential (e.g. Blogger A writes a blog post. Blogger B reads it, and then writes a blog post referencing Blogger A’s post and adding his/her viewpoint). Importantly, most blogs are heavily reliant on mainstream media as the conversation starter (e.g. Blogger A watches news segment on CNN, or reads article in the New York Time, or attends an industry conference, and then and blogs about it, which is then referenced by Blogger B etc.). Of course, there is original thought leadership within the blogging community, just as there are bloggers who provide first hand coverage of events (which are then echoed by traditional media). My position is that such blogs are in the minority.
Media business models are still based on ‘attention economics’ – It is true that the economics of media has radically shifted. Digital distribution channels have reduced distribution scarcity, which has created a more (but not totally) even playing field. However, media business models are still focussed on ‘attention economics’, as they have been for quite some time. The primary revenue model is still that which has endured for centuries: aggregate attention, then monetise through various mechanisms.
Consumers’ demands are driven by rapid adaptation – Yes, today’s audiences/consumers are highly demanding, but that is simply not new. Consumers very quickly adapt their expectations of products and services. Today’s shiny new toy quickly becomes an expected feature. Let me give an example. Try to recall the sense of happiness you experienced when you acquired your first car. It was probably second-hand, but for you it was bliss-on-wheels. It represented a milestone in life, freedom etc. Now imagine how happy you would be if you had to use that same car today as your primary transport. How happy would you be? As you’ve grown older, as your economic power has increased, your expectations have changed. You want something better. The same applies to all products and services. What was a perfectly good computer 2 years ago is now perceived as a doddering device. Your 50 inch CRT TV an ancient beast. Your first broadband connection was a triumph, now you’d see it as agonisingly slow. Consumers’ constant adaptation (and thus demand for something new) has been the cornerstone of capitalism for centuries.

So, yes, while we have witnessed considerable economic, technological and behavioural change, the change isn’t really as ‘revolutionary’ as many proclaim it to be. Indeed, it is wholly predictable.

Economic Lifecycles

In the latter part of my presentation, I pointed out how long it takes for technologically-driven economic lifecycles to complete a full circle.

Your typical cycle has four stages:

Scientific Discovery – The stage during which science discovers or creates a new capability.
Technology Development – The stage during which that new capability or discovery is converted into ‘technology’ (that is, an embodiment of applied knowledge).
Business Adoption – The stage during which the technology is adopted by some businesses to achieve economic and/or competitive advantage.
Organisational Entrenchment – The stage during which the technology is universally adopted or no longer creates economic or competitive advantage.

(My source for much of this thinking is an excellent, but little known book titled It’s Alive: The Coming Convergence of Information, Biology & Business, by Christopher Meyer and Stan Davis, released in 2003)

I gave the example of how it took four decades (yes, 40 years) for electricity to become organisationally entrenched (that is, to be used within a majority of businesses and households). A few weeks after my presentation, the Harvard Business Review published an article which confirmed this thinking.

In their paper titled An Exploration of Technology Diffusion, Diego Comin and Bart Hobijn studied the adoption of 15 technologies across 166 countries and found that, on average, it takes 47 years from the date of their invention for technologies to be fully adopted.

It is an interesting exercise to look at the ‘social web’ in this broader context.

We are only really in the technology development stage of this economic lifecycle, and it may be a full 10 or 20 years – when business adoption of these technologies is in full swing – before we witness the true changes it will bring.

Social Drivers

Returning to my original point regarding the key driving forces underlying of the growing consumer embrace of social media. These fall into 3 clusters:

The continuing erosion of faith in institutions – In the past decade or so, we have witnessed a number of failures by the key institutions that have traditionally provided a sense of perspective and helped us to negotiate our way in the world: corporations, governments and the church. Debacles like Enron, misgivings over the withholding of information leading up to the Iraq war, and growing awareness of the failures of religious organisations to abide by that which they preach are some examples of the kind of events that have led individuals to question their faith in these institutions.
Increasing anxiety about the future – Individuals have a lot to be worried about, at both the personal (micro) and global (macro) level. There is plenty in our daily lives to worry about (the economy, our finances, job security, health etc.), as well as on a much larger scale (the environment, wars, terrorism, natural disasters, global pandemics etc.).
Technology- and economics-fuelled autonomy – As consumers and citizens, we are increasingly being told we need to become more autonomous; to take more responsibility for our well-being and futures. Governments are requiring that we take more responsibility for services that they traditionally provided – healthcare, retirement, infrastructure etc. Businesses are increasingly forcing their consumers into ‘self-service’ options – ATMs for banking, self-scan checkouts in grocery stores, automated telephony systems everywhere etc. As personal autonomy (and, thus, responsibily) grows, so too do individual expectations of, and complaints around personal control for such things.

Faced with these converging forces, consumers are making some clear choices.

In response to their diminishing faith in institutions, they have decided they should rely more on their friends (and not institutions) to tell them what they need to know.

In response to their growing anxiety about what the future holds, they have decided that they need better information filters to help them focus on what is more important to them.

In response to the expectation that they take greater responsibility, then they have decided they they will do so on their terms.

The products, services and platforms that we’re seeing emerge from the field of social media dovetail very nicely indeed with the decisions consumers are making in response to this socio-cultural context, and it is for that reason we’re witnessing such fervent consumer activity.

Technorati Tags: Social media, socio-cultural context, conversational context, blogosphere, loss of faith, institutions, anxiety about the future, technology, economics, automony, economic lifecycle

Are you an Alpha Socialiser?

Media 1 Response »

Apr 082008

The UK’s Office of Communications has released an interesting report – titled Social Networking – A quantitative and qualitative research report into attitudes, behaviours and use – examining the rise of social networking sites, and the people who use them.

Their reports combine both qualitative and quantitative research within the UK market. Interestingly, they have been able to devise a quantitatively-sound segmentation for users of social networking sites:

Social networkers differ in their attitudes to social networking sites and in their behaviour while using them. Ofcom’s qualitative research indicates that site users tend to fall into five distinct groups based on their behaviours and attitudes. These are as follows:

Alpha Socialisers (a minority) – people who used sites in intense short bursts to flirt, meet new people, and be entertained.

Attention Seekers – (some) people who craved attention and comments from others, often by posting photos and customising their profiles.

Followers – (many) people who joined sites to keep up with what their peers were doing.

Faithfuls – (many) people who typically used social networking sites to rekindle old friendships, often from school or university.

Functionals – (a minority) people who tended to be single-minded in using sites for a particular purpose.

Even more interesting is their categorisation of non-users of social networking sites:

Non-users also appear to fall into distinct groups; these groups are based on their reasons for not using social networking sites:

Concerned about safety – people concerned about safety online, in particular making personal details available online.

Technically inexperienced – people who lack confidence in using the internet and computers.

Intellectual rejecters – people who have no interest in social networking sites and see them as a waste of time.

You can download the full report here, and review the Executive Summary here.

Technorati Tags: Social Networking, Quantitative, Qualitative, Report, Non-Users, Alpha Socialisers, Attention Seekers, Followers, Faithfuls, Functionals, OfCom

Advertisers re-considering social networks?

Interactive, Media, Web 2.0 2 Responses »

Apr 072008

A recent article in Wired magazine highlights the problems social networks like MySpace, Facebook and Bebo are having with their cost-per-thousand (CPM) rates on display advertising.

They are averaging $0.13 (yes, 13c) per thousand, compared with industry averages around the $20 mark (higher for more targeted sites).

In particular, LinkedIn is said to be achieving $75 CPM because of its more targeted, business-oriented audience.

Now a CPM of 13c is very, very surprising – that means that each ad impression is being valued at $0.00013.

Page inventory (over)supply is probably a factor in the cost differential between the sites mentioned in the article.

There are likely to be fewer total impressions available on a site like LinkedIn than on a site like Facebook, which would cause price increases. Nonetheless, this supply/demand mismatch wouldn’t fully explain the pricing disparity.

My initial take on the economics of the CPMs quoted by Wired was that it shows that marketers are reinforcing their preference for targeted audiences.

However, this does not provide an adequate explanation for such minute CPMs. Even on sites with a broad spectrum of users, ad placement/serving technologies can very quickly provide more-than-adequate targeting. This is especially so in environments rich in audience profile data, as is the case with these social networking sites.

So if poor targeting is not the rationale underlying the low CPMs, what is?

I believe it is due to a growing awareness among more sophisticated marketers that different sites have different degrees of engagement with their audiences.

Users of social networking sites like Bebo and Facebook are absolutely ‘engaged’ with the site – they are using its features, browsing pages, consuming content etc. But the context of that engagement is wholly different to the engagement context on a site like LinkedIn.

I think this is the true explanation for the pricing differential.

The challenge for social networking sites, then, is to re-cast their advertising inventory around a new ‘stratification’ model that more accurately reflects the layers of engagement – including the different engagement contexts – within their sites. Only then will they be able to claim greater CPMs..but, then, only for some of their inventory.

Technorati Tags: CPM, Cost-per-thousand, MySpace, Facebook, Bebo, LinkedIn, Advertising Inventory, Display Ads, Engagement Model, Engagement Context

Is the trend towards Cost-Per-Acquisition campaigns sustainable?

Interactive, Media No Responses »

Apr 022008

One thing that is interesting in the on-going digital marketing metrics/engagement debate is that marketers expect a much higher correlation between digital marketing activities and confirmed sales than they do in any of the ‘offline’ media.

The interactive industry certainly made its own bed here. It has long touted itself as the only ‘accountable’ medium, and highlighted the fact that everything can be counted, tracked + analysed etc. It used this as the basis for talking up the value of advertising inventory in the online environment, but the very same arguments are now being used to dramatically erode the value of digital advertising inventory.

The reality is that there will only be a direct correlation between viewing an ad/offer and a sale in a small percentage of cases.

The consumer purchase cycle generally proceeds as follows:

awareness –> consideration –> intent –> purchase –> use

In most cases, it is very difficult for an online marketer to know where the consumer sits within that cycle at the time they see their ad. If your ad is the mechanism that puts a consumer into ‘awareness’ mode (as is the case where seeing an advertisement for a cruise makes the consumer think ‘Ah, I think I need a holiday’), then you’re not going to be able to draw a direct correlation between the ad view and revenue. Many months may elapse between the initial ad view and the final purchase. But without that ad view, there may be no prospects of a sale at all.

Online marketers seem to want to have their cake and eat it too. They only want to pay for performance, but they want the broadest possible reach at little or no cost (unless there is a confirmed buy). This ignores the fact that at any time a large percentage of viewers won’t actually be at the ‘purchase’ end of the cycle.

(It also ignores the fact that there are a range of other factors that need to be present to achieve a sale, including quality of advertising elements, attractiveness of offer, user-friendliness of purchase mechanism, brand, past experience, and myriad others…but that’s a discussion for another day).

Marketers must make the investment requited to move their target consumers through the purchase cycle, rather than expect their media partners to give them a free ride until the consumer is ready to buy.

The online industry (and content publishers in particular) certainly needs to remain an active participant in the evolving discussions around developing a new ‘engagement model’ and related metrics for digital advertising. However, it also needs to become more proactive in rebutting some of the implicit assumptions underlying advertiser’s increasing insistence that advertising inventory buys be struck on a cost-per-acquisition or similar performance-related basis.

Certainly there is a time and place for CPA-type agreements – such as where the marketer has already stimulated demand by an appropriate investment in online/offline campaigns designed to move customers through the purchase cycle. Nonetheless, the growing expectation that most, if not all digital campaigns should be structured on this basis is clearly unsustainable.

Technorati Tags: Consumer Purchase Cycle, Cost-per-Acquisition, Cost-per-Click, Online Marketing, Engagement Model, Offline Media, Awareness, Consideration, Intent, Purchase, Use, Content Publishers

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