Businesses Don’t Let Your Employees Grow Up to be Mayors

Posted on December 1, 2010 by Morgan

Having an employee as your mayor is bad for business. As more users and businesses stream on to Foursquare to take advantage of its unique game play and marketing opportunities, it’s important for businesses to ensure that their Foursquare-using customers don’t lose interest in checking in because of a stalwart Mayor who’s entrenched atop the leaderboard simply because they work there. If none of this makes sense, read on to understand why this is important.

Part of the appeal of Foursquare, the fast-growing location based social network, where users “check in” to physical locations on their phones, is the ability for users to earn points, badges and special offers from businesses. A particularly coveted achievement in Foursquare is to become “Mayor” of a location. A Foursquare Mayor is the Foursquare user who has checked into that venue more than any other Foursquare user over the past two months. Think of it like a digital representation of your best, or most-frequently visiting customer on the network.

For Foursquare users, being Mayor at a business without a special offer is little more than bragging rights. A way to claim some small piece of ownership in a location, to be the most regular of the regulars. But this is a surprising motivation. Foursquare has become so popular due to the game mechanics built into the social network. Game mechanics are mechanisms, like earning points and Mayorships, that are built into the product that make you more likely to use and enjoy the service. With Foursquare’s success, the gamification of social networks and applications has exploded (for good and bad, but that’s another post,) but they are core to the Foursquare experience.

Which gets us back to why as a business you shouldn’t let your employees become Mayors, and should ask that they not check in when they get to work. Because when your employees occupy Mayorships they make a key achievement of the Foursquare game unachievable. Which dramatically reduces its effectiveness as a marketing tool and an experience as a user. When a Foursquare user can’t become Mayor, no matter how many times they check in to your business, they get frustrated. They may even give up on checking in to your business. They may even find somewhere else to go.

It’s true. You may be reading this thinking, as a marketer or business owner the last thing I need to worry about is whether Foursquare users can become Mayor, “I’m trying to run a business,” you say. And I hear you. And for big brands and multi-location chains, it’s even harder. How do you communicate to all store owners and all employees to keep Mayorships open? It seems like a low priority, if you can even call it a priority. But before you roll your eyes, take one quick look at the Foursquare GetSatisfaction page. There you’ll see hundreds of complaints about employees being Mayors of their favorite establishment. Which is a small, connected and passionate ecosystem is a significant amount. It’s a real problem, and it can impact your business and your brand experience.

Luckily he fix is easy, simply get a Foursquare account yourself, claim your business on Foursquare.com and monitor the check ins to your business.

Claiming Your Business on Foursquare - Image via Foursquare

If some of your employees are using Foursquare ask that they not check in while they’re working, or at least not every time, to the point where they’re they intractable Mayor. That’s it. Whether you have one store or 100. Simply monitoring check ins and identifying possible employee check ins will keep you on top of it. Communication and reminders to your staff about the benefits of the service and your rules for engagement while at work should do the trick (you might have to remind your team more than once.) But I don’t think you should ban your employees from checking in at work outright, it’s more nuanced than that.

The reason there is some nuance into how often your employees check in, is that you may want your employees to check in to get some visibility across their Foursquare networks. When a user checks in at a location, the other people in their network are alerted and the location is displayed on their phones. This can be a valuable way to create top-of-mind awareness among users in your area, which can lead to new customers. For example, if I see my friend has checked into a restaurant lately, I’m more likely to add that restaurant to my consideration set the next time I want to eat out. It’s powerful stuff.

So, it may make sense to let your employees check in to some degree, which is some free advertising to people near by, but as your traction builds on Foursquare it becomes critical that you ask your employees to refrain from snagging the coveted Mayorship.

Why isn’t there a way for businesses to identify employees so that Foursquare knows not to award them the Mayorship, you ask? Great question. And one that Foursquare has addressed, at least partially. If you’re a business who is running a special on Foursquare, you have the ability to identify Foursquare users who are employees so that they don’t impact the offer. Offers on Foursquare can range from “Check in here to receive XX% off your purchase,” to “Get a free drink with your Xth check in,” to “Mayors eat free on Tuesdays.” You can see that having a Mayor-only special when your customers have no shot at the Mayorship is just bad marketing and bad for customer morale. When running promotions on Foursquare then it’s important to understand which of your employees are using Foursquare and exclude them from eligibility.

But if you’re not running a special, if being the Mayor isn’t tied to any financial reward for your customer, it’s still important to the game dynamics of the platform, and therefore important to your visibility on Foursquare. Because if your Foursquare-using customers sense that it’s pointless to check in to your venue, you lose visibility to a highly motivated, connected, and outgoing community of people in your backyard, costing you potential future business and the goodwill of your best customers – the one’s stopping in to buy something, and to become Mayor.

Google Gaga for Groupon’s Growth

Posted on November 30, 2010 by Morgan

The rumors started Sunday night with a note from Vator News that Google acquired Groupon for $2.5 billion. Now Kara Swisher over at BoomTown puts the number of the Groupon Google Deal at $5-6 billion. Whatever the number, the reasoning behind it is clear. Google is in a desperate hunt for revenue growth. Groupon is the fastest growing business on record. Google wants to finally crack the local nut after years of battling for SMB dollars with yellow page directories, Groupon is a sensation among small business owners. Those two factors make Groupon a must win for Google, and they’re willing to pay a premium for it.

Image representing Google as depicted in Crunc...

Image via CrunchBase

Google needs Groupon for growth. Google has no doubt been on a tear, but in 2009 they slowed, dramatically. Google advertising revenues grew 59% YOY in 2007, 29% in 2008, and just 8% in an admittedly tough economy in 2009. And in 2010, it looks as if advertising revenue will grow somewhere in the neighborhood of 15% if Q4 revenues are in the ballpark of the rest of the year. And while most companies would love to see this track record of growth, it can’t be satisfying to Google execs who have seen companies like Apple see their revenues and market caps up big. And even private companies like Facebook and Twitter are reporting big gains in users, big gains in advertising revenue (with Facebook’s purported $1 billion in revenue this year) and getting impressive private valuations.

It’s clear. The battle for web dollars is on. Google is turning more into a utility with good but not great growth while the aforementioned high fliers are getting the growth, the spotlight and the valuation. For Google, Groupon is the perfect antidote. An infusion of growth for a company that really has no other answers.

Think about it for a minute. Google’s big acquisitions YouTube and DoubleClick are not growth centers. Heck, YouTube is specutively a break even business unit at best. Their enterprise apps, mail, and other products are seeing user growth; but not revenue growth. And Google’s recent spate of product launches (refinements to search, HotPot, etc.) don’t point to any new revenue champs coming from internal teams. All this leads to Google looking for growth, and there is no better growth story on the Web right now than Groupon.

Groupon is enjoying 50% margins and an estimated $50 million per month in revenue. That’s a shot in the arm for Google’s bottom line. And Groupon isn’t even operating at scale yet. They’re still rolling up knock-offs, hiring sales and copywriting staff like crazy, and innovating on the product side to bring Groupon to everyone. And even if small businesses lament Groupon and even if Groupon’s not a great marketing strategy for business, it’s popular, it’s easy and it works to drive numbers to local businesses. And Google, for all it’s done on AdWords and Places has not been able to capture the imagination of small business like Groupon has.

For small business owners Google is hard and confusing. AdWords is competitive, expensive, requires keen oversight and intensive setup to get right. And even after doing all of that, the search query volume for “Pomona pet store” just isn’t high enough to drive real traffic and business to small business. And as anyone in the directory business can tell you, it’s not about branding, it’s not about being findable, it’s all (and I mean all) about making the register ring. Yellow page companies have been chasing this grail for years, with click to call technology and in-depth customer reporting, all in a desperate effort to tie results back to spend. And while Google has a much clearer ROI path and performance model, they can’t drive foot traffic, phone calls and new customers like Groupon can (and like the Yellow pages used to.)

But the yellow pages are expensive with high monthly minimums, and even with the advent of new performance plans on things like search and click to call, the industry doesn’t have a strong way to drive new business in waves (like Groupon) or have clear ROI reporting in line with Google’s.

Which gets us back to Groupon, because Groupon solves the two problems that Google and the yellow pages don’t solve. They get awareness, and lots of it. The Groupon rushes are famous by now. Google can’t generate demand like that, they can only help to harness existing demand and drive it in your direction. They can’t make more people search for teeth whitening; but Groupon can set off a wave of people who suddenly realize they need to brighten up their incisors. Groupon also has the low cost and the yellow pages can’t compete with that; their monthly minimums come and go every month for the entire year. Groupon, in contrast is pay for performance. You only pay for each person that buys, although, you pay out the nose.

When you put it all together, Groupon is a sexy, sexy target for Google. For all of Groupon’s misgivings, it’s a hot company; a big growth opportunity and a model that small businesses get and like, for the most part. So if Groupon is the right play for the company that wants to be the yellow pages of the Internet, the next question becomes the price tag. At $5 billion, this is no small potatoes, and represents Google’s biggest M&A deal ever. The questions are numerous – will Groupon be able to maintain margins in the face of stiff competition (currently at %50, the answer is NO,) will Groupon be able to scale efficiently, will Groupon be able to continue it’s growth? Not likely and not likely. There are only a handful of companies that have successfully cracked the local nut, their names are AT&T, SuperPages, Local Insight Media, Dex and a handful of others; all have large sales forces, and all have low margin, low growth businesses. Interestingly, most have had to reorganize via some form of bankruptcy or acquisition. Can Groupon buck that trend? Questionable. But they do have things going for them that yellow page companies don’t, like no cost of goods and production of books as massive cost centers.

So is $5-6 billion worth it to Google? Buying growth is expensive and companies will pay a premium for it. Just look at Disney’s acquisition of Marvel for $4 billion, all in the name of growth among tween and teenage boys. For Google and Groupon, time will tell; but I think the answer is yes, because Google needs growth, Google has the resources to scale Groupon and Google can leverage the wonderful world of advertiser bundles to sell things like places, tags, and AdWords to advertisers who make Groupon just part of their advertising/marketing mix. I argued that Groupon is not a marketing strategy; but Groupon, combined with thoughtful search, and other localized online marketing can be a part of a coherent small business marketing strategy. Google has all the pieces to deliver that value.

Let me know what you think.

Groupon is Not a Marketing Strategy

Posted on November 26, 2010 by Morgan

Image via Wikipedia

Groupon‘s UK Managing Director Chris Muhr opined today that the reason Google would want to purchase Groupon was because Groupon has “…something that Google does not have and no one else has and that we have really tapped a new market,” but is it really a new market or have the just tapped into the greed and laziness of businesses who long for days of old media? I think it’s the later, which is why the idea of Groupon is at once appealing and dangerous to small businesses and brands all over. But first a bit of background.

How Groupon Works - Groupon highlights one business in each city every day with a sale that’s too good to pass up. (They also have “side deals” and Groupon Stores, but we’ll focus on the main deal here.) Usually 50% or more off retail price of a service or item. They like to focus on a price range that makes the item easily bought on impulse and guide businesses to try to stay under $50 for the best results. So if you sell wine for $30 a bottle they’ll want you to offer it for $12-$15 on Groupon. Then Groupon takes 50% of every transaction successfully processed through the offer. So to continue the example, if you sell wine for $30 regularly, you’ll put in on Groupon at $12 and you’ll end up with $6 per bottle sold. They’ll also set a tipping point for the deal to be activated (the “group”" in Groupon) and will also let you cap your deal at a certain amount of sales. It’s pretty easy to see that if you don’t have much margin built into your product, you’ll be in the red on every sale, depending on how you structure your Groupon. And if you can give up 75% of revenue and still make a profit, it’s likely going to be a very small one, which means you need to sell a lot of units to make any money.

So, then why does a business use Groupon? Businesses use Groupon because they can drive a large number of visitors to a store location with a single event. They hope that the new customers reached by Groupon will buy additional items above what is advertised (if you’re losing money on your Groupon this is considered a “loss leader” strategy,) and/or you hope that they become loyal customers that come back. But I also think they use Groupon because they’re lazy. That’s right. Lazy. And here’s why.

Groupon works a lot like a newspaper ad used to. You find the biggest circulation possible, you make an appealing offer and you hope that you get customers that will come in and like your business. It’s the old “spray and pray” model of marketing that worked so well in the days of mass production and mass consumption. Get it in front of them and they will buy. It takes little thought, little effort. It doesn’t take cultivating relationships, building a brand or finding customers who really need your service. It’s the laziest form of marketing out there.

If you’re a business you have four critical attributes that help drive sales: your brand, your prices, your awareness level and your location. There are of course many more; but let’s look at these four for a moment.

Your Brand – If you have a strong, growing brand, you don’t need Groupon. Your brand drives customers, customer loyalty, word of mouth marketing and strong margins. You can charge more, spend less on advertising and focus on growing your brand through unique experiences and high quality products. It’s a virtuous cycle, but one which few companies get into and fewer still that can maintain it.

Your Prices - If you don’t have a strong brand but you have incredibly low prices then you’ve defined yourself as the low cost leader, you’re first in the race to the bottom and you know you’ll live a life of low margins and need to move a lot of units to make up for it. You also aren’t ideal for Groupon because you probably have a brand associated with being the low cost leader, and Groupon’s pricing structure doesn’t work well in a low margin world (as outlined above.) If you’re priced in the middle of the market you really don’t have a lever for sales on prices because customers can go to the low cost leader.

Your Awareness Level – Among your customer base your awareness level is what drives repeat visits, word of mouth and new customer acquisition. If you have great awareness, if everyone knows that you’re the only 24 hour locksmith or the only tux rental place in town then you’ve got great awareness. If you’re one of 12 women’s clothing stores, like a Chico’s in a strip mall somewhere, you’re awareness level isn’t great. Groupon starts to sound like a good idea here.

Your Location - Unless you’re a virtual retailer with a strong ecommerce presence, you’re really limited to the surrounding area for your customers. How far they’re willing to travel to get to you is a function of all three above. Groupon makes sense here too.

So if you’re a middling business with little or no brand, little or no price differentiation, and a fixed customer base that is more or less only growing with the population in your area, then you have only a few levers to pull to make your business go. You can go about the hard work of building a brand in your community. Connecting with core customers, building word of mouth by creating an amazing experience, or demonstrating expertise above and beyond the competition. Or you can cut your prices, be the unbeatable low cost leader and price match anyone else. People know that they’ll get the lowest price from you and that goes a long way. Or you can increase your awareness by advertising, sponsoring events, etc. Or you can open more locations, a capital intensive process that may or may not work for your business.

Or, you can Groupon. Because with Groupon you don’t need to do any of that. You just spray and pray. Cut the prices on an item and let Groupon do the rest. But is that really it? Do the customers come back? Do the customers care that you exist? Do the customers remember who you are and where to go the next time they need something you provide? There are plenty of Groupon disaster examples on the Web that say “No.” Because without thoughtful marketing in place, Groupon is just a flash in the pan.

In the PR trade they say “Getting on TechCrunch is not a PR strategy.” I say “Getting on Groupon is not a marketing strategy.” And it’s where I think Chris Muhr is wrong. Google provides the savvy, thoughtful marketer a lot more than Groupon ever could. It provides the people willing to invest in their brand, their customer experience and their awareness with an avenue to showcase their business to people actually looking for them, not just people looking for a rock-bottom deal.

This goes for big brands as well as small businesses. If your brand is flagging, and you’re undifferentiated among your competitors Groupon is not going to solve your woes. It doesn’t matter how many gift cards you sell if you can’t convert those customers into repeat customers and advocates of your brand. And if you don’t fundamentally change your brand and the customer experience then Groupon will be nothing more than crack for your marketing department. Because each time you run a Groupon you’re high will be a little less than the last time and your hangover will be a little worse. For every Groupon you run, you dilute your brand a little bit. Do it once and it’s a marketing stunt. Do it over and over and you begin to redefine the value of your product or service. You hurt your brand and any differentiation you had. You’ve chosen the low cost leader, commodity approach. Prepare to accept the consequences.

So can Groupon work? Absolutely. Is it the right answer? Maybe once. Is it a strategy? Absolutely not. Is it easy? Too easy. Small businesses and big brands should focus on reengineering their customer experience from the web site to the warranty service. And when that is done then, maybe, it’ll be time to shout it to the world with Groupon. But more likely, the people that have been blown away by the change in your service will have already told the people you want to reach. Don’t be lazy. Do your job. Your brand and your bottom line will thank you.

Photos are the Love Letters of the Social Web

Posted on November 24, 2010 by Morgan

Instagram, Hipstamatic, Path, the list goes on and on. Photo taking, editing and sharing apps are gaining momentum right now as more and more people use quick photos to communicate with their friends and family. Years after Flickr and Facebook reinvented the photo as a shared, social object, these new apps are transforming how we communicate, from short text-based status updates to candid, interesting photos. Some people are wondering why these photo sharing apps are so en vogue right now, but I think the answer is pretty simple – people want more than text to express themselves. As the on-board cell phone camera technology has improved pictures have become a more viable and attractive way for people to express themselves online. With our new cameras and better upload ability photos have become the new love letter for the web.

We’ve talked about the “statusphere” since the dawn of Twitter. Short text bursts were our our only option if we wanted to participate in the social web. But they were lacking. Sometimes, words just don’t do it. Text is great for relaying information, facts, quotes, etc. but photos are a much more emotional. They not only serve an information need, they serve an emotional and phatic need as well. These facets are often missing in text form, or if they’re there, aren’t nearly as profound or effective.

So now, instead of typing what we’re doing, we’re sharing what we’re doing visually with these apps. Our phatic expressions previously text-based, are being replaced, and in a hurry. The rush to join Instagram and the rest of the photo sharing/taking apps is a direct response to this emotional void that photos fill that text just can’t touch.

For example, I share photos with my girlfriend throughout the day. We snap pictures of what we’re doing, our kids, our workspaces, our shopping carts, our friends, and more. These aren’t award winners and they won’t end up on the mantle; but they’re a powerful way to say “I’m thinking of you. I wish you were here. I love you.” A picture of my son coloring is far more emotionally engaging than a text message that says “we’re coloring,” and that is what makes the photo sharing so appealing to us as users.

But there’s another thing going on here. Because people could MMS well before Instagram came along and they could share on Flickr and BBS’s long before that. And I think the secret ingredient is the filters that come on these apps. Because when you take a photo you’re documenting an event; but when you add a filter to the photo you’re adding a mood and personality to the moment. You’re marking it for posterity. You’re able to add what the camera can’t see. You’re making each picture special. And that last step is what makes sharing so interesting. In some way, you’re able to idealize the moment, and that makes sharing far more interesting for both the sharer and the recipients. It isn’t just cold reality captured by an unforgiving, inhuman lens. Rather, it’s the scene as it appeared in your mind (to some reasonable approximation anyway,) and you’re able, in some small way, to share your life the way you see it.

And people love this. Because it’s their editorial touch on the reality captured by the camera. And it lets them put their voice into the picture. The picture and it’s alterations say as much about the person as anything else they share.

This ability to alter the mundane into something special resonates with users again and again and again. We see this behavior and rapid adoption whenever a company can add an extra layer of meaning on top of an everyday item. For example, it’s not Starbucks coffee, but what the coffee and logo say about the drinker and how it makes that person feel. It’s the design of the Mac and the aluminum casing and what that says about the person holding the laptop.

And now these photos are capturing and conveying that same idea. It’s not the photo necessarily, its presenting the moment the way we choose to represent it, and what that says about us and who we are and the life we choose to lead. The photos are love letters to the people we love and care about and to ourselves. They make the mundane significant and add importance to what we experience, big and small.

Idealizing these moments is what makes these photos the love letters of our time, and what makes these apps so popular.

There are important ramifications for this change in behavior from a business and social media strategy standpoint as well. As more people share and engage around photos brands will have to find a way to participate in this preferred way of sharing content online. The Daily Beast reported that photos and videos get more interaction on Facebook than text updates. Images and videos get more comments and likes than text updates (on average,) which puts them in more Top News streams and in front of the customers they’re trying to reach. How can brands adapt to this? By sharing more photos and video of course – photos with an emotional appeal that resonates with their customer base.

It goes beyond just social sharing though, and has much broader implications for product design and development. How do you let your customers express themselves in a way that resonates with them, that helps them depict an ideal/romanticized version of their world? How do you give customers lightweight ways that they can take the raw product and add their idealized filter to it to make it truly one-of-a-kind, truly theirs? How can you help your customers portray not just their reality, but the reality in their mind’s eye?

Increasingly we are able to share more about our lives via text, photo and video. And increasingly we can craft and present our lives to be displayed perhaps not as they are in the harsh light of objective reality; but in the idealized vision of our own emotional lens. And products, like Path, like Instagram, that give us the ability to capture that state and to share with our loved ones and the world that our life is filled with interest and wonder and love are the ones that will continue to succeed in the social space. They say photos are worth a thousand words. In an age when people proclaim that SMS, Twitter and status updates are killing our language, these photos show that expressing our love to those we connect with and care about is healthier than ever.

Brands Beware: My Klout Score is a Farce

Posted on November 21, 2010 by Morgan

A lot has been made of Klout scores lately. (update: good read from on how to fix Klout by Mark Krynsky, a funny Klout rant by Michael Sean Wright) Brands wanting to get positive word of mouth on Twitter are using the score to ID influencers that can help build buzz by sharing their experiences with their audience. Disney, Virgin America and Fox Television are just some of the brands that have tapped Klout as part of getting buzz online. The Palms Casino announced the formation of the “Klout Klub” which will use Klout to determine the type of treatment and upgrades you receive based on the amount of influence measured by the service. But brands need to be careful using Klout, because, most Klout scores are a farce.

Klout only measures the “influence” of the individual on Twitter and Facebook, and doesn’t, by definition, take into consideration the individuals true influence. Not only that, but the algorithms used by Klout to measure influence on those networks seem questionable at best. Klout scores are primarily a vanity metric, and their relevance, is at best, directional. But they definitely don’t tell the whole story, and brands that use them to deal with online influencers can find themselves blowing off people with extreme influence that just don’t calculate on the high end Klout influence score.

The problem is not that Klout is inaccurate. It’s not even that their tagline is misleading, “The Standard of Influence.” They’re a new web service after all, trying to tackle a near-impossible task of ranking every user on the social web as it relates to influence. The problem is the lack of sophistication that brands have when it comes to understanding the complex nature of influence online and connections across these networks. Klout being inaccurate is just like any other stat being inaccurate. It’s fine, until you start making business decisions based on flawed data. A brand who stakes building their reputation on Twitter using Klout as their guide is making a grave error. They’re paying attention to bad data, which can be more dangerous than no data at all.

As brands wade into the social web and look to influence conversations to the positive benefit of their business they must realize that there isn’t a tool or service that can actually do the heavy lifting for them. They need to participate, observe and (wait for it) listen to the conversations that are impacting their business. Only then can they be confident that they are reaching the true influencers that are relevant to their business.

To demonstrate the point, here are 11 people that have loads of online influence, and even tons of influence on Twitter, should they choose to use it, that have lower Klout scores than me. I’ve got a 63 as of the time of this writing. These folks all use Twitter frequently regularly, so the idea that use=influence, while flawed to the core, is even inaccurate in these cases.

On this list we have CEOs, well-known and respected authors and reporters, the founder of the largest social media organization on the planet, and the guy that started this whole social Web thing with The Cluetrain Manifesto.

Doc Searls – Klout 56 | Doc Searls’ blog

Co-Author of “The Cluetrain Manifesto”, founder of VRM, Fellow at Berkman Center for Internet and Society at Harvard, much, much more.

Tim Street – Klout 56 | Tim Street’s Site

Tim’s founded one of the most influential online TV series with French Maid TV, and is the leading voice in online video and content creation.

Sarah Lacy – Klout 58 | Sarah Lacy’s blog

The author of two books, with writing and video credits including BusinessWeek, TechCrunch, Yahoo! and more.

Brett Bullington – Klout 46 | Brett Bullington’s LinkedIn profile

Respected investor, including board seats on Digg, Oodle, Next New Networks and more. Investor in Flickr.

Kristie Wells – Klout 56 | Social Media Club

Founder of Social Media Club, the world’s largest organization of social media professionals with more than 200,000 members.

Stephanie Agresta – Klout 49 | Stephanie Agresta’s Blog

EVP of Social Media at Weber Shandwick, and founder of TechSet, the popular event organizer at premiere social media events.

Ryan Holmes – Klout 49 | HootSuite.com

CEO of HootSuite, one of the leading social media dashboards.

Cathy Brooks – Klout 55 | Cathy Brooks’ Twitter Stream

Well-respected thought leader about the impact of the social web on business.

Bryan Elliott – Klout 50 | LinkedOC

Founder of Action Sports Network and LinkedOC networking groups with nearly 10,000 members. Hosts influential thought leaders in the OC with his popular events.

Mark “Rizzn”Hopkins - Klout 56| SiliconANGLE

Editor in Chief at SiliconAngle. Former writer for Mashable.

Laurie Percival - Klout 48 | Lalawag

Founder of Lalawag, influential Los Angeles tech scene blog.

If the Palms or any other brand decided to ignore these people while paying attention to me (or treating them differently than me,) they’d be doing a huge disservice to their business. It’s up to the strategists that are working with these companies to inform the business owners of the inaccuracy of the data, the value that they can place in it and the work they need to do to ensure that they’re reaching the people that really matter to their business – regardless of the score assigned to them by Klout.

Woz: Android Will Dominate Mobile. Jobs: Yawn.

Posted on November 18, 2010 by Morgan

Steve Wozniak told reporters yesterday that Android would become the dominant smart phone platform, not the iPhone. Of course, this got the tech blogs in a buzz, with Woz’s Apple ties and the classic open vs. closed platform debate making this quip juicy link bait. But I couldn’t help but think that Steve Jobs sees this quote and just yawns. Literally.

Does anyone think that 1) Jobs is worried about Android becoming the dominant OS or that he wants the iOS on every phone and 2) that Android’s destiny is preordained? I don’t think so.

If we define “dominant” by the number of devices carrying the OS, then there’s no way that Jobs is worried about it. Look at the market caps of Apple and Microsoft. Look at the install bases of both. Jobs knows that winning doesn’t mean putting your device in every hand. It means creating a profitable ecosystem and customer base that wants to pay a premium for a premium product. The idea that Apple would suddenly want to be the commodity leader in the ultimate commodity technology market completely ignores Apple’s strategy since Jobs’ return to power. Apple is about premium products, premium experience. It’s not about OEMs, licensing across a million platforms and trying to get every single member of the mass consumer market using their products.

If Android becomes the largest share of mobile phone OS installs it has little impact on Apple as a company, and less still on their mobile product strategy. Of course, they want to get people into the walled garden and let them know how nice and cozy it is so that they’ll grow their customer base – but they aren’t trying to be the Windows of the phone world, that hasn’t been their corporate strategy to date, and there’s no reason to think it will be in mobile now.

Jobs knows that being the commodity leader is not being the market leader. But giving Android the commodity crown now is also flawed. Android has a long way to go before regular users will adopt it, recommend it and use it.

Woz makes the mistake of equating “more features” with greater product desirability by the market. We know, from countless historical examples, that this just isn’t true. In fact, I’d argue that a more limited OS is more desirable to most consumers. Take my mom for example. She just wants a phone that works. She doesn’t want a phone that works like her PC. She HATES her PC. It takes forever to load, is still filled with garbage from OEM installs of anti-virus trial offers and doesn’t offer a seamless experience in any shape of the word. The last thing my mom wants in her pocket, when she needs to make a call, is another implementation of her disaster of a PC experience.

This is where it will be difficult (not impossible, just difficult) for Android. How do you keep the user experience high on a device that should just “work like it’s supposed to?” People have learned that computers crash, have performance issues and are generally a pain. But people have learned that the phone just works. Just like cars. Just like electricity. Consumers will get frustrated if the Android marketplace and software emulates the PC experience. They won’t adopt it in large numbers.

And if the Android market isn’t secure there will be a public perception problem about the safety of installing apps. We’ve already had the stories of malware in the Android App store. These will take hold and create challenges for the OS in public adoption. Users aren’t sophisticated enough to navigate this themselves, and when people start losing business contacts due to viruses on their phones the backlash will follow.

So while the tech industry can crown Android now, and call it the soon-to-be dominant OS I can see the folks at Apple, Jobs particularly, sitting back and yawning. Knowing that 1) it doesn’t matter if it does come true and 2) it’s not guaranteed to, anyway.

Update: Apparently Woz was misquoted and basically sums up what I said above in his response here:

According to Steve, that’s about it — he says he’d “never” say that Android was better than iOS, and that “Almost every app I have is better on the iPhone.” Woz did say he lightly prognosticated that Android would become more popular “based on what I’ve read,” but that he expects Android “to be a lot like Windows… I’m not trying to put Android down, but I’m not suggesting it’s better than iOS by any stretch of the imagination. But it can get greater marketshare and still be crappy.” He’s not shy, that Woz — listen to him say it all for yourself after the break.

Becoming a Content Mill is Not a Viable Social Strategy

Posted on November 18, 2010 by Morgan

A revolution is coming, and it won’t be televised. This, according to Michael Malone’s piece in Forbes, which is based on his research for his latest book, “How Companies Win: Profiting from Demand-Driven Business Models No Matter What Business You’re In.” Malone refers to an upcoming industrial revolution that America misses out on:

The biggest structural economic shift, the one Venky has discovered and which is the launching point of the book, is that over the last decade, the global economy has experienced a fundamental and historic shift from centuries during which supply and demand were roughly balanced, to our current situation in which supply significantly outstrips the demand available to absorb it. This is largely the result of the relatively new science of Supply Chain Management, which systematized the process of marshalling resources to bring products and services to market. The implication is that most modern business strategies are now obsolete, as the new competitive battlefield has now shifted from supply to that of finding remaining pools of profitable demand. (emphasis mine)

That alone is enough to provoke a radical change in how businesses are organized and how they behave. It suggests that most companies, including the most successful, no longer have a lock on survival because the ground has suddenly shifted beneath their feet. That, of course, is the recipe for a business revolution.

The article is eye-opening and has me thinking about the day that my son might leave the US to go work in Brazil, because “that’s where the jobs are, Dad.” But it also got me thinking about the here and now and our own information revolution that continues to shake the ground beneath our feet. Take the above quote and apply it to social media marketing, broadly defined as trying to reach consumers across the new publishing tools responsible for this flood of information, blogs, Facebook, Twitter, etc. I think the analogy of the global supply chain in producing manufactured goods applies nicely to the information economy as well.

Blog platforms, low-cost hosting, Facebook and Twitter are the Supply Chain Management pieces of the information economy. Before them, brining content to the marketplace was hard and expensive. This barrier to entry made information scarce and valuable. But the technology improved to make the supply of information to the market more efficient, turning information into, in many cases, a commodity. This isn’t news to anyone reading this of course, but it does continue to have broad implications for businesses and brands trying to reach customers on an ever-crowded Web.

And the reason that brands are having trouble is because the market of information continues to evolve rapidly. Companies are still trying to figure out how to contribute content to the marketplace so that they’re found in Google, so that they can drive thought leadership, so that they can be heard. The problem is, the market timing for that is past. The technology has made the creation of content so efficient and cheap that we’re swimming in it. Business models like Demand Media’s and other the other commodity content producers are making the content market more and more crowded and less valuable. And a traditional company can’t keep up and can’t win in that type of battle.

In a over saturated market, putting more supply out there is like pushing on a string. You can do it, just don’t expect anything to happen because of it.

While it’ll always be important as a company to communicate with the market, just creating content is no longer enough. When your social strategy is based on content creation, you’re sure to fail; because consumers aren’t looking for content – they’re looking for content they want.

This is where Malone’s premise provides insight on how to succeed in our new information marketplace. It’s not about adding to supply, it’s about identifying areas of the conversation that still have profitable demand. And that’s why most traditional marketing advice about reaching customers on the social web is dead wrong. It’s not enough to create blog posts, videos and infographics if they don’t address some remaining or untapped demand in the marketplace. And this is where marketers need to do a better job. As a marketer in the social web you have to look at areas where demand still exists, and if you don’t find any you have to test and probe until you find it. Because your company will only win when it finds and leverages that untapped demand.

So how do you find that demand? That’s the tough part, as often the market doesn’t know what it wants until it sees it; and as a brand you have to continue to test and learn to find it. But there are a few constants that always are in demand, in one shape or another. Looking at how your brand can aid people in achieving the following is a way to suss out potential opportunity.

Making people’s lives easier
Making people happy
Making people feel good about themselves
Making people successful

Those are the areas of continual demand in our information economy. As a social marketer you should be looking at your programs and determining if what you’re contributing is advancing the above goals of the people you’re trying to reach. If you’re not doing any of the above, it’s likely that you won’t tap the demand that will drive your business success.

The information revolution has brought us the technology that has made delivering content to the marketplace efficient, 140 characters-efficient, but too many of us are still seeking for success in a market which doesn’t have much room for stand outs. Instead of focusing on the tools and technologies we should focus on finding the untapped demand, putting our time and effort into creating the messages and products that will make people’s lives better, easier, happier and more successful. Only then will we find the success in our social marketing programs – viva la revolucion!

P Morgan Brown

A work in progress

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