Christian Prada on Strategy

According to a recent eMarketer article based on a report from DM2PRO and Quattro Wireless, apps for social networks in addition to mobile apps are under consideration by more marketers than ever before. Among those marketers who already had an app in 2009, Facebook was the leading platform.

Spending on social apps, however, will stagnate even though more marketers have already developed the applications.

Fewer than one-half of marketers created either a mobile or social app in 2009, but most plan to invest in a mobile app this year. The iPhone is the platform of choice, followed by Android.

There’s some solid reasoning behind the choice to move more resources to mobile. According to Scott Monty “The strategy: [is to] create more opportunity for engagement with customers. On social networks, we’ll see a greater opportunity for reach, targeting and sharing, but with mobile there’s more creative control and the ability to have a message stick with the recipient longer.”

The top one-third of marketers using mobile apps planned to up their investments by 75% or more. The reasons:

• increase in mobile use by target audience
• increased standardization in mobile
• better tools to build mobile apps
• and notably: the ability to create flashed based cross-platform apps.

Summary: during 2010 we are going to see interesting cross-platform app based campaigns leveraging each of  the distinct characteristics of social and mobile.

Tomorrow night at 6pm in Santa Clara, California, the MIT/Stanford VLAB (Venture Lab) is hosting an event on the future of virtual goods titled Virtual Goods: Runaway Growth Opens New Opportunities to Monetize.

Virtual goods are quickly becoming a powerful new online monetization model, with users buying gifts, swords, clothes, and other digital items to enhance their experience in social networks and games.

Today the market for Virtual Goods (VG) is already $1 Billion in the United States alone, and is expected to grow 80% to $1,800,000 next year. In Asia, the market is already seven times that of the United States, $7 Billion and more amazingly, in China, VG revenues actually exceed on-line ad revenues.

This event is going to be very very interesting with Justin Smith founder of Inside Network, the first service dedicated to providing business information and market research to the Facebook platform and social gaming ecosystem as the moderator and Brian Balfour, Founder and VP Product Marketing at Viximo, Jude Gomila, Co-Founder and President of Heyzap, Bill Grosso, CTO and SVP Product at Live Gamer, as well as Owen Mahoney, CEO at Outspark as panelists. I’m very excited to be part of the team organizing this outstanding event.

Space is limited, reserve your spot today as we are projecting no walk-in tickets availability tomorrow. Look forward to seeing you there!

• When: Tuesday, December 8, 2009
• Time: 6:00pm – 8:30pm
• Where: Sun Microsystems Auditorium SCA03, 4030 George Sellon Circle, Santa Clara, CA 95054 (map) (not Stanford GSB)

Technically, augmented reality refers to the technology that layers different kind of information, for example pictures, sounds words, etc. over live video. In its December 2009 issue, Esquire placed augmented reality markers that using a computer with a webcam trigger additional digital content on the computer’s screen. The Barbarian Group provided the augmented reality technology and Psyop the animations.

I scanned the Esquire cover which you can download and print to try it yourself. To run the augmented reality, you’ll need a software which can be downloaded from Esquire here.

In the past I worked on various marketing campaigns that combined online and offline into a comprehensive marketing mix. The Esquire example certainly shows possibilities for a seamless marketing integration between the digital and real world. I can imagine a billboard campaign where consumers point their smartphones and access a tailored augmented reality according to location, time, weather and other info, and that can be also constantly updated with real time offers. Interesting possibilities, yet I believe there is still real friction for consumers: They have to download and install an application (and of course have a smartphone able to run it).

You probably heard about Mint, the personal finance site that launched two years ago and was acquired for $170 million last month by Intuit.

The following video of Mint’s CEO Aaron Patzer’s presentation on building startups from the ground up, gives a lot of answers to questions presented to entrepreneurs launching a startup in Silicon Valley. I had to learn this stuff on the job– Aaron’s highly recommendable disclosures and advice includes:

• Cofounders and employees
• Incorporation
• Financial modeling
• Funding Rounds
• Goals and milestones for each round
• Handling investors

The presentation’s deck is available here .

I will be the Featured User on Business Exchange on Wednesday, October 14 for 24 hours.

Business Exchange is a service of BusinesWeek that allows users to create business topics, collaboratively aggregate content and connect with other business focused users around these topics. The goal is to have access at the right time to actionable insight delivered in form of a feed.

Check my profile and contributions that led to be BX’s Featured User here .

Your customers have their own idea about your brand and with today’s social technologies they communicate with each other and decide what your brand is. Listen to what they say and:

1. Find out what your brand stands for: Monitor the difference between the message you are trying to get across with what your customers or people and general are talking about.
2. Understand how the conversation is shifting in time: Social media can give you better answers than surveys on a weekly or even daily basis. There is a growing evidence about the correlation between social media buzz and sales.
3. Identify the influence sources: Find the people talking about your products, the so called influencers and cultivate them.
4. Manage PR crises: Monitoring your brand is an early warning system allowing to respond to a crisis before it escalates.
5. Generate new ideas: Listen and you can tap into the ideas your customers may have for new products or services

If listening to your customers is your current goal, expect at some point to be talking to them using social technologies– every fruitful conversation includes listening and talking.

You realized your company needs to get involved in Social Media, but don’t know how to implement it? Follow these four proven steps to create your Social Media plan:

1. Define the engagement type of your customers
   It is crucial to know what your customers are already doing– your strategy should leverage this activity. Define whether they tend to be creators (of content), critics (posting ratings, reviews, etc.), collectors (of information), joiners (of networking sites), spectators (reading blogs, listening podcasts, etc) or are simply inactive. A helpful tool for this assessment can be found here.
2. Define your Social Media goal
   Your company can pursue five basic goals with social media:
   • Listen: The use of Social Media for research and better understanding of your customers
   • Talk: The use of Social Media to extend the existing digital marketing spreading messages about your company
   • Energize: The use of Social Media to fuel viral marketing via your most engaged customers
   • Support: The use of Social Media to enable customers to support each other
   • Embrace: The use of Social Media to crowd-source your product/service development
3. Define your Social Media strategy
   Basically the Social Media strategy should provide an answer to the questions: a) how will you engage your customers? and b) how will this engagement grow over time? Keep always in mind that the Social Media strategy should align the type of engagement of your customers with your company’s Social Media goal. For example you don’t want to build a social media strategy to enable customers to support each other (Support Goal) only to find out that your customers are more like to join social networks like Facebook (joiners group).
4. Define your Social Media platform/technology
   Last but not least, it is relatively easy to decide on the appropriate technology (blogs, wikis, widgets, social networks, etc.) once you defined the engagement type of your customers, your social media goals and strategy.

Josh Bernoff, co-author of Groundswell: Winning in a World Transformed by Social Technologies (Harvard Business Press, 2008) and  Senior VP at Forrester Research released the latest analysis regarding the adoption of social media and its technologies: This year more than four out of five online Americans are active in either creating, participating in, or reading some form of social content at least once a month.

First of, a little background information. Forrester analyzes consumers’ participation in social technologies with a tool called the “Social Technographics Profile” (check my post and use the same tool of this analysis here). The profile puts online people into overlapping groups based on their participation.  Groups and  behaviors are graphically shown in a ladder (Figure 1):

The ladder categories are kept consistent to allow Forrester to make year-to-year comparisons, across ages and genders, and across geographies. Thus, more interesting than the results of 2009, is the trend over the last 3 years (Figure 2):

• Trend of Creators, Critics and Collectors:
  In the US, social technology Creators and Collectors grew slowly, and Critics didn’t grow at all. Creator activity appeals only to those who like to create or upload content, and regardless of the ease of blogging and YouTube uploading, this doesn’t appeal everybody. As for Critics, those who react to content, this group hasn’t grown at all. According to Bernoff, this is a result of a small but actual decrease in the number of people contributing to discussion forums due to the fact that much of this activity has been sucked into social network sites like Facebook.
• Trend of Joiners, Spectators and Inactives:
  Joiner activity exploded and Spectators became nearly universal. The explosion in Joiners from 35% to 51% of online Americans reflects the appeal of Facebook, as both press coverage and invitations from friends suck more of us into social networks. Spectators — those consuming social content — reached all the way to 73% of online Americans.
• Trend by Age:
  Looking at the data by age, the participation among those under 35 is nearly universal (less than 10% Inactives) and even among those 55 and over, is about two-thirds.
• International Trends:
  Europeans adopt these technologies more slowly than in the US, with about 40% Inactives in the countries where Forrester does surveys. The Netherlands and Sweden have the most participation, Italy has the most Creators, and social networks are most popular in the UK.

Summary:

This data should end any skepticism about whether social media is real. The trend is clear: soon, if a person is online, it will almost certainly be consuming some sort of social technologies. With the level of social content being put out there, it will be virtually impossible for anyone online not to be a Spectator. And last but not least, social media is usually thought to be a way to engage younger generations, but the data shows that participation of older generations is considerable and growing at faster pace than that of the younger ones.

Today a successful digital marketing strategy should always include social media, either in the company’s own site, microsite, etc. or in a social a networking platform such as Facebook, Twitter and the like.

An upcoming issue of Entertainment Weekly’s print edition will be embedded for the first time with a video player that will run ads for CBS shows and Pepsi.

The video player insert, made by a Los Angeles company called Americhip Inc., will be able to withstand the binding processes and mail delivery. The screen is 2.7 millimeters thick and has a 320×240 resolution. The battery lasts for about 65 to 70 minutes, and can be recharged with a mini USB cord via a jack on the back of it. The screen, which uses thin film transistor liquid crystal display (TFT LCD) technology, is enforced by protective polycarbonate. A speaker is embedded below it.

The cost is estimated at a several dollars per unit,  but the idea behind is to charge a premium for advertising that has potential to catch readers’ attention.

The ad comes in a heavy-paper package resembling the kind of novelty greeting cards that make noises. A roughly two-inch screen starts playing automatically as the page flips open:

This is an interesting development and if paired with other technologies such as RFID, maybe paves the road to the holy grail of all marketers: offline interactivity.

Almost 5 years ago, Chris Anderson wrote an article in Wired magazine describing the niche strategy of digital businesses that sell a large number of unique items, each in relatively small quantities and elaborated the Long Tail concept in his book The Long Tail: Why the Future of Business Is Selling Less of More (ISBN 1-4013-0237-8).

Many markets have historically been dominated by a small number of best-selling products. The Pareto Principle, also known as the 80/20 rule, describes this common pattern of sales concentration. However, by greatly lowering search costs, information technology in general and Internet markets in particular have the potential to substantially increase the collective share of niche products, thereby creating a longer tail in the distribution of sale (MIT working paper titled “Goodbye Pareto Principle, Hello Long Tail” by Erik Brynjolfsson, Yu Hu, and Duncan Simester).

After 5 years not much has changed of course and when designing a successful digital business strategy, the following forces should be taken into account:

1. The democratization of the tools of production: the universe of available content is growing faster than ever. Almost everybody can become a producer of content with the available tools. Talent is not universal but is widely spread– give enough people the capacity to create and gems may emerge.
2. The democratization of distribution: the Internet makes it cheaper to reach more people increasing the supply at the tail. That in turn translates in more consumption and sales, though prices tend to zero (free).
3. The connection between supply and demand: the technologies that connect consumers (like search, blogs, twitter, etc) is what drives demand from the head (popular products) to the tail.

To harness the power of these forces consider to:

1. Make everything available: Use mass/popular products (head) to attract mainstream consumers, but almost anything is worth offering on the off chance it will find a buyer (tail).
2. Lower your price at the head (mass market) and charge at the tail (niche).
3. Help consumers find the tail: Provide the tools such as recommendations etc. to give tail products visibility to consumers.