Disruption Tour --- Run To Survive

Save the Customers, Save the Acquisition

By Michael Emerson
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Disregard for the customer's perception of the joint venture can be detrimental to the customer's brand perception -- even among the most dependable customer base. For example, when Macy's acquired Marshall Field's, a more than century-old brand in the Midwest, Macy's came off as not considering what the customers wanted.

When two companies merge, there is a seemingly endless list of factors to consider. However, while companies are committed to dedicating ample time and resources to align the operational combination of the two entities, it's all too easy to become overly engrossed in the nitty-gritty and lose sight of what matters most -- how the merger will serve the customer.

While the company takes so much care to ensure it remains fiscally healthy, shouldn't marketers put equal thought into how the merger will be received by the true determiner of the company's success -- the customer?

Niche Search Engine Makes Musical Salve for Song-Seekers

There's a new search engine in town. But unlike Google, Ask and AOL, which are increasingly joining multiple forms of content for an all-in-one search experience, this one has committed to one topic - music - and aims to do it exceptionally well.

SeeqPod not only searches - and typically finds - songs and music videos at high speed, it enables users to listen to and watch selections within search results.

The technology, dubbed "playable search," stems from biomimetic search and discovery technology, which was developed at Lawrence Berkeley National Labs. Its purpose is to "[mimic] the way the human mind might use context to make an recall associations," according to SeeqPod creators.

The niche search engine, which is still in beta, also acts as a powerful tool for bloggers and social networkers. Viral features allow users to embed Seeqpod-created playlists onto profile pages and blogs.

The company appears to be working on more features to connect users with more info at popular sources online, such as Wikipedia or MySpace.

Marketingvox.com

To Boost Profits, MySpace Ponders Commercial Potential of Members

The News Corp Svengali turns members into marketers To make the site more profitable, News Corp execs may allow MySpace members to post ads on the site and conduct transactions with one another. The site currently profits from ad sales and also takes a percentage of music sales conducted on the site via iTunes and Snocap and has seen a $10 million proft on $550 million in sales for the fiscal year ending in June, according to CNN. However, Murdoch wants to increase the site's earnings a staggering 20-fold for the current fiscal year, hoping to see $1 billion in sales and $200 million in profit. To achieve this goal, Murdoch wants to allow P2P transactions and marketing, but for a price. The site is considering a Google partnership to regulate - and monetize - user commerce. Marketingvox.com

Google's VP Predicts End of TV as We Know It ; HD Video at Apple Special Event?

Seekingalpha.com

Little-noticed because of the slow pre-holiday week this week, The Guardian cornered Google (GOOG) VP Vint Cerf at the Edinburgh International Television Festival, where he charmingly and convincingly (as is his wont) predicted the end of television as we know it. His actual words:

The 64-year-old, who is now a vice-president of the web giant Google and chairman of the organisation that administrates the internet, told an audience of media moguls that TV was rapidly approaching the same kind of crunch moment that the music industry faced with the arrival of the MP3 player.

"85% of all video we watch is pre-recorded, so you can set your system to download it all the time," he said. "You're still going to need live television for certain things - like news, sporting events and emergencies - but increasingly it is going to be almost like the iPod, where you download content to look at later."

Somehow, when Vint Cerf says things like this, they always sound so simple and obvious. But the implications of TV moving to become 85% downloadable and non-real-time are huge. A couple quick examples:

Cable TV lineup bundles become toast. You don't need 150 channels of TV for $99 a month if you're downloading the programs you want to watch whenever you want them. You just need a very fast Internet pipe. And $99 a month buys a lot of downloads, even if you opt for pay ones such as from the Apple iTunes Store.

Telco investments in TV become writeoffs. Telcos like Verizon and ATT are investing anywhere from $50 to $200 billion to supply traditional TV services to homes. But they may finish those rollouts just in time for real-time TV demand to fall off a cliff as consumers go to downloads. The result: investment write-offs as far as the eye can see.

Apple (AAPL) and Google suddenly have new TV market power. Apple has spent more than two years developing its iTunes video store and Apple TV. Google paid more than a billion dollars for YouTube. Yet with the end of TV as we know it, these investments are now bargains as those properties become the new Boardwalk and Park Place of the new TV business, since they monetize the new Internet video model. And yesterday's announcement that Apple has opened an iTunes video store in the United Kingdom means these companies are only adding to their leads.

Forrester mobility VP Maribel Lopez and I discussed this exactly phenomenon the other day when we both contemplated not even bothering to subscribe to cable TV in the future. And while Vint Cerf, Maribel Lopez, and others like them are early adopters of technology shifts, those shifts in demand do have a way of snowballing into major trends, especially as the economy softens and consumers look for ways to save money.

It wasn't that long ago that cable TV bills were $20-$30 a month; now many US households have cable TV bills in the $100-$200 range. The end of TV as we know it has bears the possibility that those bills may return to their past smaller sizes -- and in the process bring an end to the TV business as we know it too.

***********************************************************************

Speaking of the Internet bringing the end of TV as we know it, everyone seems to be expecting new music and iPod offerings at the Apple Special Event in Moscone Center on September 5. But what has gone more or less unnoticed is the fact that Akamai, Apple's long-time Internet content partner, has announced that it is adding high-definition video to its Internet distribution offerings.

A coincidence? Perhaps. But add the fact that Apple TV, a product whose revenue is being recognized as a 24-month subscription model like the iPhone, sports high-definition outputs, yet has no high-definition iTunes content yet, and you've got a high-definition shoe ready to drop sometime; the only question is when. Given we predicted high-definition movies and movie rentals would be announced in September back in June, we're expecting iTunes to add high-definition content as well as movie rentals next week.

Full disclosure: the author holds both Apple and Google stock at the time of writing.

Carl Howe

TheFind.com Acquires Glimpse

From Techcrunch.com

Shopping search engine startup TheFind has acquired the high-fashion shopping site Glimpse.com for an undisclosed amount. It’s an early deal for Glimpse, which just launched this year.

TheFind is a comparison shopping search engine that crawls many shopping sites across the internet (190 million products at over 500,000 stores). Other shopping sites often charge for the privilege of getting listed in engines like Shopping.com. This keeps the results page clean of nonsensical results while generating some extra revenue.

The impetus for the deal was to increase their offering targeted to the female market. TheFind will be powering the shopping search for Glimpse.com, enabling the site to cover more online boutiques, specialty fashion retailers, and brand stores.

TheFind was founded in 2003 and launched their main search site last year after running a of their technology on FatLens.com. They are funded by two rounds of financing totaling $23 million from Bain Capital, Redpoint, and Lightspeed Ventures.

Update: It sounds like Glimpse was out of cash and shopping themselves around. Rumored price was less than $100k.

Return On Investment (ROI) In Direct Marketing

By Kevin Hillstrom

Minethedata.com

We hear a lot of talk about ROI, or "Return On Investment", when evaluating direct marketing programs.

Catalogers know that paper drives more total sales, and more total profit, than any other form of direct marketing.

E-Mail marketers know that e-mail drives the best "ROI", measured as "total profit divided by total cost". E-Mail marketing has almost no cost associated with it, making it a tool marketers must use, and use properly.

Paid Search marketers know that they reach customers at a "time of need", thereby providing the most "efficient" form of advertising known to-date. No other form of advertising cuts out the waste of uninterested shoppers like paid search ... except I guess for natural search, which has no cost associated with it.

Portal marketers know that they make the brand known to customers who have not purchased previously. They know their investment is best measured on a "lifetime value" basis ... short-term metrics are not appropriate for portal advertising.

Objective: Drive large volume of sales/profit from existing customers.

Solution = Catalogs.

Objective: Precisely target merchandise to existing customers.

Solution = E-Mail, Paid Search.

Objective: Precisely target merchandise to customers in-need.

Solution = Paid Search.

Objective: Make your brand aware to potential customers.

Solution = Portal Advertising.

Objective: Acquire new customers.

Solution = Catalog, Portal Advertising, Paid Search

I didn't even talk about affiliate marketing or shopping comparison marketing, which also fit into this story.

Obviously, there are many different objectives and solutions, my list above is abbreviated and short. Strategically, consider what you want to accomplish, and allocate your advertising mix on the basis of total sales, total profit, and your objectives.

Don't be swayed by folks who tell you that one form of advertising is "better" than another. Each type of advertising has a purpose. Each type of advertising excels within one specific set of metrics.Copyright (c) 2007 Kevin Hillstrom:

Give a marketing story a try: http://bertthecorgi.blogspot.com

The credit crunch can help venture - One man’s ceiling is another man's floor

By Keith Bejamin

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I believe the current credit crunch can actually help venture returns. Why?  Because it will help build momentum for the technology IPO market, which is what really drives venture returns.  Investors have finally demonstrated a willingness to buy technology IPOs. There were some 36 technology IPOs in 2006.  I expect to see that number roughly double in 2007. 

In the middle of the liquidity crisis, VMWare went public, traded up sharply and stayed there. 

Why do tech stocks now look better?  Because alternative investments don't look as attractive.  Investors shied away from tech stocks for years, fearing the post-bubble risks.  Leveraged investing strategies were perceived as less risky. For the last five years, I’ve watched the skyrocketing returns from hedge funds and buyout funds with jealousy, wondering if I was missing something.  I believe we have just witnessed a sharp shift in perception of the risk for those leveraged investing strategies. 

I have taken a long-term view on the positive potential for venture returns, but admit it’s been a bit tiring to be in the less loved asset class.  I have assumed that much of the returns from hedge funds and buyout funds have often simply been a function of magnifying small fundamental returns with significant leverage.  Of course, there are some great managers in each class who deliver strong fundamental returns, but that seems to have been the exception.  Less credit and/or more expensive credit will hurt these asset classes.

Fortunately, venture is not dependent on credit. I do not see a sustained credit panic and public market meltdown.  I believe the financial markets will recover, albeit with tighter credit.  The current environment could prove ideal for venture returns.  My key assumption is that technology IPOs become more attractive as public market investors look for investment returns from growth, not leverage.   

All this reminded me of Paul Simon's song.  As hedge funds and buyout funds may have hit their ceiling, there is a good floor under technology venture today. 

I believe the current credit crunch can actually help venture returns. Why?  Because it will help build momentum for the technology IPO market, which is what really drives venture returns.  Investors have finally demonstrated a willingness to buy technology IPOs. There were some 36 technology IPOs in 2006.  I expect to see that number roughly double in 2007. 

In the middle of the liquidity crisis, VMWare went public, traded up sharply and stayed there. 

Why do tech stocks now look better?  Because alternative investments don't look as attractive.  Investors shied away from tech stocks for years, fearing the post-bubble risks.  Leveraged investing strategies were perceived as less risky. For the last five years, I’ve watched the skyrocketing returns from hedge funds and buyout funds with jealousy, wondering if I was missing something.  I believe we have just witnessed a sharp shift in perception of the risk for those leveraged investing strategies. 

I have taken a long-term view on the positive potential for venture returns, but admit it’s been a bit tiring to be in the less loved asset class.  I have assumed that much of the returns from hedge funds and buyout funds have often simply been a function of magnifying small fundamental returns with significant leverage.  Of course, there are some great managers in each class who deliver strong fundamental returns, but that seems to have been the exception.  Less credit and/or more expensive credit will hurt these asset classes.

Fortunately, venture is not dependent on credit. I do not see a sustained credit panic and public market meltdown.  I believe the financial markets will recover, albeit with tighter credit.  The current environment could prove ideal for venture returns.  My key assumption is that technology IPOs become more attractive as public market investors look for investment returns from growth, not leverage.   

All this reminded me of Paul Simon's song.  As hedge funds and buyout funds may have hit their ceiling, there is a good floor under technology venture today. 

Why Yahoo and eBay Should Merge?

By Only EBay

www.seekingalpha.com

I hate to bring up this idea again. After all, I was already justifying why Yahoo! (YHOO) and eBay (EBAY) needed each other over a year ago! All of those reasons still hold. But I have to say, if it was already an interesting combination back then, it is an absolute no-brainer in the current competitive climate. To avoid repeating myself, I will focus this post on one often overlooked piece of Yahoo! that is sure to excite eBay. Alibaba Group.

For those of you that need refreshing, exactly two years ago, Yahoo! exchanged Yahoo! China and $1 billion for a 40% stake in Alibaba Group. Yahoo! thus became Alibaba Group's single largest shareholder. Two years later, Alibaba Group has consolidated its leading e-commerce positions in China and is estimated to be worth north of $10 billion - a sum which I suspect is conservative at best. The Alibaba Group portfolio is comprised of various properties, but two in particular are most relevant to eBay.

The first, Taobao.com is the leading online auctions website in Asia - claiming 30 million users and $2.2 billion in GMV. This would make Taobao.com less than 10% of eBay's size. But winning in a hyper-growth market that could eventually be larger than eBay's core geographies is worth a significant premium. Online auction markets are natural monopolies and by just about any metric, Taobao.com dominates China.

The second, Alipay.com is China's leading online payment company. Just yesterday I posted about their international expansion and how they pose a greater threat to PayPal than Google Checkout (GOOG) and Amazon FPS (AMZN). There is little public data on Alipay metrics but one has to assume they are the defacto payment option on Taobao.com. If PayPal's merchant services business is booming, I can only imagine the incredible potential of Alipay in China.

For eBay, whose experience to date in China has been poor at best, Yahoo!'s 40% stake in Alibaba Group has to be incredibly valuable. That said, Change of Control and Right of First Offer provisions may make it impossible for eBay to ever actually own this stake following a deal with Yahoo!. But even in this case, the value they would generate from the sale would be far superior to that currently recognized in Yahoo!'s market cap.

Voice, the (Often) Forgotten Media Channel

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By Laura Marriott, President,

Mobile

Marketing Association

 

My phone rings, it’s Alec Baldwin from “30 Rock.” He’s calling to tell me to watch his new show, but the message contains personal information about me—my interests, where I live—all delivered from Mr. Baldwin himself. After the Alec personalized message, an announcer then comes on with more information about the show as well as providing details on when it is aired. Wow! Ok, I am in the mobile space so I have been sent a bunch of these from my friends in the industry, but every time it makes me laugh and I generally will pass it along to others.

For the past few years, the majority of interest around mobile marketing has been mobile data… text messaging, mobile video, mobile web… all great opportunities for the brands to extend their reach and their message to the consumer—but let’s not forget about voice. Voice applications are growing in popularity and are often the forgotten media channel when a marketer looks to offer mobile as part of their cross-media initiatives. According to Gene Keenan, VP of mobile strategy for Isobar, “Voice is still the killer application. As an agency, we use voice because it has the largest audience and has the ability to entertain, engage and inspire in ways that text messaging can’t.”

The excitement and growth of voice is also reflected in statistics from Telephia, which shows the average number of calls sent and received monthly was 208 during the first quarter of this year, as compared to 198 in the same quarter a year ago. The average monthly total voice minutes used per subscriber are also increasing from 738 last year to 780 in the first quarter of this year. (Date based on information from post-paid, non-corporate liable customers from top four national

U.S.

carriers.) Another interesting fact that we have seen in the Telephia data is the difference between voice and SMS calls sent and received as illustrated in the table below from first-quarter 2007 figures. As the graph illustrates, younger mobile subscribers are heavier users of SMS as opposed to older demographics who tend to be heavier users of voice. Voice creates an opportunity to target these older subscribers.

Q1 2007     Number of Calls Sent/        Number of Calls
                  Received                              Received
                 Mean                                   Mean
13-17          255                                      435
18-24          290                                      289
25-34          251                                      170
35-44          227                                         90
45-54          194                                         57
55-64          133                                        14
65+              89                                           6

Voice provides an opportunity to hook the consumer and then possibly have them engage in more advanced services via text, video, Web, etc. Voice is easy for the consumer to interact with based on their current experiences with their device, so there is no learning curve. A few agencies I spoke to told me that some of the most successful campaigns to date have been voice campaigns. “The numbers are staggering,” said Keenan.

A typical voice campaign can generate upwards of 200,000 consumer engagements in one campaign. The viral aspect is also significant—with an average pass-along rate of six to one. Today, voice is a great way to engage the consumer and build brand awareness; it is not so much of a revenue-generating opportunity. Voice is an important part of the mobile media mix.

Voice applications allow consumers who are not familiar with data services to interact with their favorite brands to buy mobile content, send greetings to their friends or engage in other types of mobile services. One fun campaign that I participated in recently was from VariTalk for the Virginia Tourism Board www.devdev.crookedroad.varitalk.com/
The consumer enters information about themselves or the person they would like a voice call to be made to—and the application creates a country song for the targeted recipient based on information provided by the consumer. I have already passed this off to at least 10 other people (note the above the viral pass along rate). Other voice applications have parents signing up to send pre-recorded calls to their kids from characters or celebrities. Elmo could soon be calling you to say, “Wow, you tied your shoes today.” Imagine how that would make a consumer feel about their favorite character. Talk about brand awareness!

Opportunities for further growth of voice services come from companies like SingleTouch Interactive who have perfected the vanity code or Abbreviated Dialing Codes (ADC) for mobile. The programs provide an easy means for consumers to access mobile content through voice services—either downloadable content or streaming audio. Tom Hovasse, SingleTouch’s general manager and EVP, tells me, “Our founder, Tony Macaluso, wanted his mother to be able to download a ringtone as simple as 1-2-3, hence our ADC service. We have been able to capture a much larger audience with voice.”

The opt-in requirements for these programs are the same for voice as for data (as defined by MMA Consumer Best Practices at http://www.mmaglobal.com/bestpractices.pdf in order to protect the privacy of the consumer and ensure repeatable experiences. If you want to try an ADC service, try #BET or #MTV for downloadable content and #FOXN for streaming audio. Interestingly enough, ringtone downloads are doing the best today—but for the older demographics, streaming audio feeds, like the news, are doing well as well.

“Voice programs like the Pound Program from SingleTouch have been very successful in programs like #BET, #MTV and work with Univision (#323). Voice provides an easy and effective way for the consumer to get desired content without having to learn text. The services hit a different demographic and teaches the consumer how to access content through the mobile device, and will translate into greater usage of more advanced data services,” said

Chris Black

, director of mobile marketing and interactive media at AT&T Mobility.

Mobile advertising is also making itself known through the mobile voice world. Companies like Jingle Networks through their 1-800-FREE-411 service are reaping the benefits from the consumer’s familiarity with voice services. 1-800-FREE-411 is a free, directory assistance service where the consumer listens to a 10-12 second ad on the front end of the service and then a 15-second ad just before the number is delivered to them. The service currently generates about 21 million calls a month. The viral effect has also been a significant for the 1-800-FREE-411 service to raise consumer awareness around their service. The mobile directory assistance services also help educate consumers on voice search. Lyn Chitow Oakes, SVP of marketing for Jingle tells me, “Pay-per-call lead is perceived as more valuable than a pay-per-click lead” by the advertisers who are interested in leveraging their services. The reason is that consumers are interacting with the service when they are looking for a specific product, and usually when they are ready to buy. The service also offers the ability for consumers to receive the information through text and multimedia messaging. Again, using voice services to raise awareness and ultimately educate those consumers who are not familiar with mobile data services.

Andrew Osmak, senior VP at Lavalife Corp, and I spent some time talking about how they use voice services in their dating applications today. Lavalife will publish in print and television (an important cross-media element) local voice numbers for its customers to access the profiles of Lavalife users through Interactive Voice Response (IVR). Customers are able to listen to the profiles, leave anonymous messages, etc.—all through voice. The business model works by consumers buying buckets of minutes to participate, which today, will appear directly on the carrier’s bill, i.e. Sprint. “Voice is a great smooth way to offer our set of services to subscribers who do not know how to use data,” said Osmak.

What does the future hold for voice?

--Premium IVR is one of the topics that the industry is currently discussing. Conceptually similar to premium text messaging, premium IVR would provide the enhanced voice services for a fee. The MMA has recently launched an IVR Committee, currently chaired by mBlox and Cellfish, to focus on issues and opportunities like these.

--Single short code for both voice and text, where services can be accessed according to how the consumer would like to access and be available across all programs.

--Integrated Voice & Video Recognition (IVVR) could provide the opportunity for consumers to “hear it, see it and buy it—one call does it all.” The services are deployed in Europe today but not something we have seen yet in

North America

.

George Rogerson, EVP at Cellfish Media, tells me, “Voice can be more entertaining than text and can tell more of a story for the consumer. Voice should absolutely be a part of the multi-media equation for mobile entertainment.”

You may contact Laura directly at laura.marriott@mmaglobal.com. You may contact RCR Wireless News at rcrwebhelp@crain.com.

The New Complete Marketer

From Brand Autopsy Click Here... Posted: 31 Aug 207 12:05 AM CDT In its Autumn 2007 issue, Strategy+Business continues its series of articles on how Chief Marketer Officers can become more effective in their role. (I've blogged about past S+B articles on CMOs here, here, and here.) Gregor Harter, Edward Landry, and Andrew Tipping have written a very worthwhile article outlining six themes that separate under-performing CMOs from out-performing CMOs. You can read the article online or the PDF version. (Be prepared to fill-out a user registration form.) To entice you to read this article, I've cut/pasted tasty snippets from each of the six themes the authors contend CMOs much have to out-perform their peers. 1 | Put the Consumer at the Heart of Marketing "No marketer would ever admit to taking his or her eyes off the company’s prime prospects, so the concept of consumer-centricity may sound mundane. But successful CMOs don’t assume that familiar tasks will necessarily be simple." 2 | Make Marketing Accountable "For many enterprises, the development of accountability follows much the same path, as marketers learn to transform raw data into actionable planning. Stage one is evaluating what is being measured and how it is being measured; stage two is condensing scores of diffuse reports and metrics down to a useful few; and stage three is creating targeted analytics and a core report to gauge performance and help determine where best to focus going forward." 3 | Embrace the Challenges of New Media "To be successful in the 21st century, our interviewees agree, marketers must not just select and purchase proven instruments. The ferocious appetite for more access to consumers along with the willingness to go out on a limb and try new ways to connect with them are noteworthy characteristics from a group that, not long ago, took great comfort in the stability of mass mediaent ways.” The CMOs who embrace new media will be the early beneficiaries of this change, and the rewards for this commitment appear to be significant." 4 | Recognize the New Organizational Imperative "Marketing does much better when it’s incorporated into the greater business, say these thought-leading CMOs. It can drive growth more quickly if it is fully integrated with the different functions, and it can do so in a way that previous CMOs never realized was possible. For a CMO to be fully effective, all of senior management must have clarity about the marketing mission." 5 | Live a New Agency Paradigm "The leading CMOs are getting ahead of the advertising profession. They are assembling multiagency groups — a remarkable step that often puts business competitors at the same table and demands that they work together to create a better product. The CMOs may be polite about the new processes, but they’re also being firm. The mandate is to move on or move out." 6 | Remain Adaptable "Adaptability has to be inherent in every part of the marketing agenda. It’s not just the way you (as a marketing leader) adjust to new media. It’s the way you hire people, train them, and get your senior managers to sit down with a media-savvy mom. Most of all, it’s the way you drive marketing as an integral — and integrated — part of the enterprise, whose role goes beyond measuring the return of specific marketing programs to nurturing the overall health of the business and brands."