Microsoft and New Media. The Yahoo! deal.

Microsoft needs a revenue source for its products and services in a future contended by Software as a Service, and one characterized by increasing acceptance of Open Source. Microsoft recently lost in its bid to acquire Yahoo with its well defined new media offerings coordinated with advertising revenue.

A Redmond Review article, (see Redmond Review Yahoo) cites physicist Mark Buchanan's report on mathematical studies of networks that show the phase of super-connected hubs (such as Google and Yahoo today) eventually give way to more egalitarian networks from the simple processes of history and growth. Many nodes connect to Yahoo or Google as a start to searching out information. However, Buchanan’s conclusion on networks is that “Whenever limitations or costs eventually come into play to impede the richest getting still richer, then a small-world network becomes more egalitarian, as seems to be the case with airports and a number of other real-world networks.”

Furthermore, according to Arms (2002, pp 211-215) there is no goal of indexing the Internet entirely by any of the search sites. There is a higher return on investment for improving the secondary aspects of the search tools so they integrate better with revenue generating functions such as advertising or sales of the web search engine for corporate knowledge management software solutions. We have reached a point where the technical costs to overcome the limitations of web search engines is prohibitive and a plateau in functionality has been set. As with airports, other sites will eventually catch up with the leaders, and not much will distinguish one from the other.

Niche search sites have established themselves as a brand. Today’s two largest super-connected nodes on the Internet get the majority of advertising revenue. However, the trends in marketing may also be working against the continuation of the current aristocratic nature of the Internet.

Marketing is moving away from mass advertising the same message to a large audience. According to Duncan (2005, pp 211-212) the value of the Internet is the ability to send custom messages to highly targeted customer segments. The reach of a relevant message to a small but coherent group is higher than a general and therefore mostly irrelevant message to a large group. As the ability to identify and verify audience characteristics for smaller, specialty sites improves, advertising revenue may shift from Google and Yahoo to this new direction.

Failure to buy Yahoo was good fortune for Microsoft, the price was dear and prospects not as profitable as imagined. Super-connected nodes in an aristocratic network often give way to more egalitarian networks over time, their advantage then lost. That time is now for Google and Yahoo.

References
Arms, William Y. (2001). Digital Libraries. The MIT Press.

Duncan, Tom (2005). Advertising & IMC. McGraw-Hill/Irwin.

The Impact of Data Quality on New Media Applications

Many of the new media applications discussed in this blog make intensive use of data stored in enterprise repositories. Such repositories can include not only the traditional customer databases, and site visitor data mining stores but also blogs and wikis, which are stored in relational databases. Supply chain applications make intensive use of data stores such as inventories and suppliers.

Data Quality problems impact a wide variety of information technology projects, and of course this includes those involving new media. In a 2005 report, Gartner estimated that data quality problems will compromise 50% of data mining projects or result in their outright failures.

Donald Carlson, director of data and configuration at Motorola discusses data qulaity problems with supply chain projects, "We have had major [supply chain] software projects fail for lack of good data." Craig Verran says that “We see 20% duplicate supplier records." He is assistant vice president for supply chain solutions at The Dun & Bradstreet Corp. His group assists clients with improving the data quality of their supplier data files. [see ComputerWorld]

How should the project manager protect the social media project from data quality torpedoes? At minimum, a data cleanse phase should be part of the project. Depending on the criticality of the project and the extent of the problem, such an effort should be a separate, preliminary project. A business case must be made that justifies the extent of project clean-up effort.

What types of data errors might a project manager encounter? Jack Olson (2003) in his book “Data Quality” explains the concept of data profiling in great depth. Here are is his error typology:

1. Column Property Analysis: Invalid values



2. Structure Analysis: Invalid combinations of valid values, in this case how fields relate to each other to form records.



3. Simple Data Rule Analysis: Invalid combinations of valid values, in this case how values across multiple fields in one file relate together for valid sets of values.



4. Complex Data Rule Analysis: Invalid combinations of valid values, in this case how values across multiple fields in several files relate together for valid sets of values.



5. Value Rule Analysis: Results are unreasonable.

What are our options with bad data? There are three choices with the bad data: 1.) delete it; 2.) keep data as is; and 3.) fix it. There may be statutory or standards reasons that preclude you from deleting the data. Not all data is fit for use by the business or operational process you are improving or introducing with your project, so you can’t keep it as it is. The cost of fixing the data or the staff time it would take may be prohibitive. Where you draw the line depends on the impact of bad data.

References
Gartner (2005). “Salvaging a Failed CRM Initiative”; Gartner: SPA-15-4007.

Olson, Jack (2003). Data Quality; Morgan Kaufmann Publishers.

Age Compression

Clif Bar has successfully targeted children, the market for their zBar product. Why would kids be interested in a healthful energy bar. There is also a psychographic trend in play.

CLIF BAR has hit upon age compression effectively. Kaplan (2001, p 1) says “The other trend is psychographics and is known in the entertainment and toy industry as age compression. This, more specifically, is a very strong trend where young children want to grow up faster than ever before.”

They may also be in the psychographic segment that Duncan (2005, p 228) calls skippies – School Kids with Income or Purchasing Power.

References
Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Kaplan, Henry (July 9, 2001). Company Interview Excerpt
HENRY KAPLAN - NEWKIDCO INTERNATIONAL INC. The Wall Street Transcipt. Retrieved on May 24, 2008 at http://www.twst.com/notes/articles/map615.html

Fundamental Attribution Error

O’Brien (2007, p 1.) says that “People don’t merely form first impressions; they become attached to them. Social scientists have given this phenomenon a name: the Fundamental Attribution Error (FAE).” This is true forming an impression about people or brands. Often the first impression about a brand comes from the brand name, so FAE considerations should be evaluated in selecting a brand name.

Gawronski (2007, p 367-9) argues that culture plays an important role in how the FAE operates in forming first impressions. This is consistent with Duncan (2005, p 135), and I quote, “Cultural values that relate to clothing, music, food and drink can determine the appropriateness of marketing…”

Duncan then gives an example about selling alcohol in a Muslim society. I would add that this could be true in the U.S. as well, for example an alcohol salesman trying to sell prospects or customers at a local AA meeting would probably be considered inappropriate. Likewise, certain brand names may be culturally or socially inappropriate, for example Redskins.


References
Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Gawronski, Bertram, (2007). Fundamental attribution error. In R. F. Baumeister, & K. D. Vohs (Eds.), Encyclopedia of social psychology (pp. 367-369). Thousand Oaks, CA: Sage. Retrieved on May 24, 2008 from http://publish.uwo.ca/~bgawrons/documents/G2007EncycFAE.pdf


O’Brien, Timothy (September 2007). The Power of Personal Branding: Creating Celebrity Status with Your Target Audience. Dynamic Graphics. Retrieved on May 24, 2008 from http://www.dynamicgraphics.com/dgm/Article/28801

Measuring the Effectiveness of a Website

Chen and Wells (1999) have defined a measure to evaluate the effectiveness of a Website -Attitude Towards a Site (AST). To conduct the measurement, judges will evaluate a site based on three categories of characteristics: 1.) Entertainment, 2.) Informativeness and 3.) Organization. Chen and Wells selected the characteristics in each category from a literature search of prior studies and analysis on attitudes. They used willing MBA students as the site judges (p 29). Chen and Wells (p 33) qualify these results.

“It should be noted that this formula represents evaluation of this particular set of Websites by this particular set of raters.”

Different scores will come from different psychographic types. Lisa Sanders (2007, p 1) advises Website designers to use the concept of “personas” when creating a site. Personas are ”archetypical characters [who] represent specific consumer segments.”

So instead of doing the measurement with a handy group of available workers, use sample groups from the VALS, PRIZM, TR or other psychograpic segments making up the target audience and have them do the measurements.

The approach that Chen and Wells used by selecting available students is probably fine for a general packaged goods site like Coca Cola where there is an even distribution among psychograpic groups. However, some products will have more narrowly focused audience characteristics and so the AST measure of the site’s effectiveness would be more accurate if the judges doing the measurement have those characteristics themselves.

How should we measure a creative effort? Many methods exist for Websites. Chen and Wells (1999) have theirs. Jenamani, Mohapatra and Ghose (2002) have theirs. Green and Pearson have theirs. When we talk of such measuring, I like to keep in mind one of my favorite quotes, so although lengthy, I paraphrase it here (see Steinbeck, 1941, p 2-3):

"The Mexican Sierra (a game fish) has 17 plus 15 plus 9 spines in the dorsal fin. In the lab the way you count them is to open an evil smelling jar, remove a stiff colorless fish from formaldehyde, and count the spines and write the truth.

In open water, the Mexican Sierra is a rapid swimmer. If it strikes hard on the line so that our hands are burned, if the fish sounds and nearly escapes, and finally comes in over the rail, his colors are pulsing and his tail beating the air, a whole new relational reality has come into being.

It is good to know what you are doing. The man in the lab with his pickled fish has set down one truth about the spines and has recorded many lies. The fish is not that color he sees, not that texture, that dead, nor does he smell that way."

References
Chen, Qimei and William Wells (October 1999). Attitude toward the Site. Journal of Advertising Research. Retrieved from EBSCOHOST on July 8, 2008

Green, David and Michael Pearson (Fall 2006). DEVELOPMENT OF A WEB SITE USABILITY INSTRUMENT BASED ON ISO 9241-11. Journal of Computer Information Systems. Retrieved from EBSCOHOST on July 5, 2008.

Jenamani, M and P. Mohapatra and Ghose S (2002). Benchmarking for Design of Corporate Websites. Quarterly Journal of Electronic Commerce. Retrieved from EBSCOHOST on July 8, 2008.

Steinbeck, John (1941). The Log from the Sea of Cortez. New York: Viking.

Good and Bad Brand Names

According to Duncan (2005, p. 80-81) the key characteristics of a good brand name are 1.) It incorporates the benefits in the name; 2.) Has a positive association to some cultural touchstone; 3.) It is distinctive; 4.) And it is easy to spell and say. These will be the criteria used to evaluate the brand names I consider to be appropriate and those that are not.

Two good brand names

Microsoft
Microsoft has the world’s second most valuable brand and its brand name is a part of that value. It ranks only behind Coca Cola, and has a brand valued at nearly $60B, according to InterBrand (August 1, 2005, P 94). Here is a link to the top 100 brands: Top 100 Brands .

Microsoft’s brand name incorporates the benefits or services that are gained: this company’s products are for people who need software to do tasks on a microcomputer device. Additionally, the brand name is easy to say and spell. Finally, I think is has had a positive association with smallness. Kearns describes how Microsoft does not understand big enterprises and its primary customer base is small businesses. A geek's Small is Beautiful

I would also add to small businesses, small departments in large organizations. I have been in both situations in the mid-to-late 1980s and there was a large grass roots movement of small organizations that looked at Microsoft as providing information technology we could afford and use. It turned out to be true. The momentum from its successes in small organizations propelled Microsoft to its position today.

Polo
Duncan (2005, p 147) says: “Aspiration, status, and luxury are themes frequently used in marketing communications.” The Polo brand expresses that in my thinking. Polo is the sport of aristocrats. So I associate it with class, and since I have airs above my station it appeals to me. It is also simple – easy to say and spell.

In Time magazine, Koepp (September 1986) quotes NY Times fashion critic Bernadine Morris referring to Ralph Lauren and Polo: "He's acquired a certain reputation for clothes that are, you know, with it. But not too with it. Not enough to shock the boys at the bank." That is the sense I get from the brand name also, stylish rather than formal but acceptable anywhere. An appeal to upper-middle class aspirations. Bernadine on Ralph.

Two bad brand names

Old Crow
One brand name that seems inappropriate to me is Old Crow. This is the brand name for a bourbon whiskey originally distilled by Dr. James Crow, the inventor of the sour mash process for manufacturing bourbon. The name is simple, but has depressing connotations. I associate the name with dereliction. It says to me that the benefit of using this product is I end up with a sign around my neck, “Will work for alcohol.”

Breen (2007, p 87) discusses a fortress brand and I think the point can be extended as a fortress brand name also. He says “the successful brands stumble: They fail to evolve. Bangle calls them ‘fortress brands.’ Deeply rooted in their heritage and values, they are inflexible, unmovable, and ultimately stuck in time.” Who do you love.

This happened to the Old Crow while its rival Jim Beam made early and profitable forays into premium and superpremium bourbons. America changed significantly from the 1950s through the 1980s and Old Crow had not kept up. Old Crow had gone into receivership in the 1980s and was acquired by its rival, Jim Beam. The 1980s saw an accelerating change in American drinking habits. Single malts and premium whiskies had captured the attention of affluent drinkers while vodka and rum appealed to the younger generation. Asimov (2007, p 1-2) gives a capsule summary of this trend during that time period. The Rise of Premiums.

In prior times, it had appealed to its colonial origins, which explained its brand name, as in this advertisement typical of its campaigns in the late 1950s and 1960s. Example Crow Ad. The historical appeal of its brand name no longer seemed relevant to the new America. In any case, with its losses from the shift in drinking taste, it could no longer publish effective advertisements to explain the funny name.

Today, some 30 years on, the name alone, without the advertising, projects it as a train-yard favorite. It rather suggests the use of industrial strength chemical extractants in its processing, with kool-aid like substances added afterward to hide the clorox aftertaste. Today, Jim Beam and its holding company, American Brands relegate the Old Crow brand name to its low-end offering.

Beam offers an interesting contrast in its advertising during that tumultuous time. Example Beam ad. Sean Connery was featured in its ads during the 60s and 70s. He seemed to me, at that time, to be considered cool to all age groups. American Brands seemed to have the pulse of its target segment in terms of both product innovation and brand image. Today, very few people understand the Old Crow Brand Name and by its lonesome it sends negative vibes.

Redskins
The Washington Redskins football team has a great history on the gridiron. However, this is another case of America changing and a brand name that is stuck in the past. Today there is a rising level of complaints that the brand name is a racist slur, insensitive and insulting to a significant group of Americans. I think as this movement (to change the name) becomes more prominent, the brand name will be increasingly associated with base and backward prejudice. Time to rethink.

The coalition against the name is not relying merely on moral suasion. It has filed action with the trademark section of the US Patent and Trademark Office. According to AP (August 2006), three trademark judges agreed with the complaint and were ready to revoke trademark status. A successful appeal has stopped this action for now but has not stopped the determination of the groups organizing to oppose the name. Redskins Name Problems

References
Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Life Time Value

A customer’s Life Time Value (LTV) is based on a common management process of discounting future values or revenue flows by a discount rate so they can be compared with cost outlays to decide if we stay in business doing some action or another. Spiller and Baier discuss Life Time Value on pages 18, 75-76.

Group 3 (see Foreman, 2002) holds that LTV analysis is no longer relevant “because it’s difficult to focus on speeding bullets.” They further assert that with modern interactive technology, “a better price, better service or a wider selection could be just a keystroke away. This makes customers less committed, not to mention completely undermines the LTV model.”

My first thought about less committed customers is the discount rate would reflect the risk of lower future revenues caused by this diminishing commitment. It also struck me that discounting future revenue streams is standard financial business practice that has spread to IMC.

When dealing with other people’s money, such as shareholders or other investors, we incur a fiduciary responsibility. To protect our stakeholders and ourselves we follow standard business practice unless we think we can make a better case for not following it that will hold up in court if it comes to that. Muir and Schipani (2007, p 2) also remind us that in addition to tort action, “regulatory use of finance theory” is now part of the corporate governance mandated by Sarbanes Oxley (SOX). SOX was passed to keep investors from getting fleeced by fountain pen conspirators masquerading as management.

The argument Group 3 is making, by my reading, is that because of the rapid change in the competitive landscape, future revenues will be less than expected. Their implicit assumption is that management cannot distinguish service or product from competition except by price and hence the dismal outlook for future revenues. It is not at all certain, however, that competition alone reduces us to fungible commodities. It also takes management believing that it has no other chips to play, such as improved marketing communication, superior customer service and the like.

Pine and Gilmore (1999, pp 1-3) show that exactly the opposite will happen when management has a more positive outlook and distinguishes the product or service of its company. They use coffee beans as the ultimate fungible commodity. They trace the costs through a brutally competitive minefield and Burger King has a low cost offering of Dewey Egbert coffee at $1.19 per cup. Yet Starbucks manages to sell an equivalent cup for $1.79. The difference is the creative work invested by Starbucks to improve the customer experience that allows them to charge a 60% markup over their competitors. We need to avoid making the ruinous assumption that competition results in a rush to the bottom with utter destruction of revenues.

On the other hand, social media is demolishing the business world. The Boston Consulting Group, in their Harvard Business School publication examines the impact new information technology is having on business strategy. The authors of the work, Evans and Wurster (2000, p 72) describe the disintermediation wrought by the new media as a “technology [that] allows for the richness/reach curve to be displaced, allowing new players to offer greater reach and greater richness simultaneously.” This results not in a re-segmentation of the old business but in an industry transformation to a new model. New models may very well not use the traditional practices of today, although this is only a possibility.

References
Evans, Phillip and Thomas Wurster (2000). Blown to Bits. The Boston Consulting Group. Harvard Business School Press.

Foreman, B. (2002) Are Lifetime Value (LTV) models outdated in the new world of global marketing? Group 3 Marketing. Retrieved August, 28, 2008, from http://www.group3marketing.com/downloads/LTVarticle.pdf

Muir, D. and Schipani, C. (June 2007). ARTICLE: THE USE OF EFFICIENT MARKET HYPOTHESIS: BEYOND SOX. Michigan Law Review. Retrieved on August 29, 2008 from LexisNexis.

Pine, J and J Gilmore (1999). The Experience Economy. Harvard Business Press.

Spiller, L. and M. Baier (2005). Contemporary Direct Marketing. Pearson/Prentice-Hall.

Elaboration Likelihood Model and Choice in Social Media

The Elaboration Likelihood Model can provide a framework for analyzing the most effective balance in the mix of social media you use for your communications. The best suited or least suited media for your communications depends on the individuals in the public to be influenced and the state of our communications with them. Since the receivers will be spread across a continuum of interest in your message, a mix of the media is appropriate, but what is the most appropriate mix.

Cacioppo and Petty define the primary relationships in persuasive communication as communication engagement and cognitive commitment. According to the model, the greater our communication engagement with the other party the more likely that party is to use what the model calls central route processing, which is to say a great deal of message related thinking. Media appropriate for in-depth thinking and evaluation of the message should be used in such a case.

When elaboration likelihood is high, topic-germane argument usually has the highest influence on the reactions to a recommendation. On the other hand, if communication engagement is low, what the model calls peripheral cues are best but only if they are crafted to allow the receiver to maintain a reasonable position without diligently thinking through the merits of the recommendation. In this case, more attention getting media that do not necessarily lend themselves to protracted analysis would be a better choice.

The 1986 date of the original work predates the wide-spread use of the Internet. However, a study at the University of Texas (see Cho) introduces a modified ELM that acknowledges key mediating variables. If they are considered, Cho concludes that ELM is adaptable to the Web. In addition to communication engagement and cognitive commitment, Cho also considers the correlation between the web site and category of communication, the attitude of a public towards a web site, and the attitude of a public towards web marketing communications. If we know enough about our publics, we can adapt ELM to the Web.

The social media I would place at the peripheral end of cognitive commitment, like sms ads, video short films and advergaming must have the message depth tested to see if the target public is ready to commit to processing it. On the other hand, the converse seems probable. When someone has reached the stage of seeking in-depth information about the topic, joining a blog, wiki or forum on the topic is a natural step.

Redmond Review has a comprehensive analysis, see Redmond Review Elaboration