Wednesday, April 1, 2015

Why Meerkat and Periscope Will Not Change the World

Even before SXSW, you could tell which new app would be heralded as the "hot new thing" at this year's conference. Meerkat launched at exactly the right time (March) and had exactly the right appeal ("I'm doing something interesting right now that you must see!") to create a wave of rapid adoption in Austin, but whether the live-streaming video service can convert that buzz into real-world success is far from certain. A careful evaluation of the opportunities and challenges faced by Meerkat and other real-time video broadcasting services, including Twitter's Periscope, suggests a rockier future than many are predicting.
As has happened for most "hot apps" to rise out of SXSW over the past decade (see Quora, Google+, Foursquare, Hashable, GroupMe, Beluga, Sonar, Highlight, etc.), many bloggers have been (too) quick to announce the many ways Meerkat and Periscope are destined to change marketing, social media and the world. As someone who has worked in digital innovation for 20 years, it is exhausting to see how quickly people jump from one new bandwagon to the next, desperate to be the first to anoint each the "next big thing"--a habit that says much more about their need for attention than it does about the technology.
Even in the midst of SXSW, when the buzz was white hot and Meerkat was ranked near the top 100 iOS apps, I had serious doubts about its future. I expressed them on Twitter and found myself in an argument with a couple of early Meerkatters who clearly thought they were destined become the PewDiePie of this new platform. That dialog hardly encouraged me to change my opinion. It came as no surprise to learn that Meerkat is already sinking precipitously. On Sunday, Meerkat had dropped to #523 on the US iPhone download chart; two days later it had fallen even further, down to 669th on the US chart. It seems the app that rapidly came out of nowhere is returning there just as quickly.
I do not think we will be talking about or using Meerkat in any significant numbers within a matter of months. We may see Periscope rise (pun intended), but I have doubts if even Twitter's own live-streaming application can attain broad appeal and usage. Here are the reasons Meerkat is destined to fail and why live-streaming video will be an interesting niche rather than a mainstream game changer:
  • Meerkat is built on someone else's platform (or at least it was): We have seen this problem since the early days of Windows, when eager young developers created new applications, only to see Microsoft adopt the same functionality into its Windows OS. More recently, Zynga rocketed to success and then stumbled when Facebook changed its rules to discourage the flurry of annoying posts from friends wanting everyone to become virtual farmers. (As a result, Zynga lost 70% of its value since its 2011 IPO and continues to battle lawsuits from shareholders who claim they were misled.) And it happened again two weeks ago, when Twitter changed Meerkat's access to the Twitter's API. Meerkat cannot survive or thrive without Twitter, and Twitter does not want to support a product competitive with its own Periscope application, so inevitably Meerkat will lose. Building a business model on someone else's platform will always remain a risky proposition.
     
  • We're not all broadcasters: One mistake that social media pros and influencers have made time (Quora) after time (G+) is that they evaluate new social platforms based on their habits and preferences rather than others'. In 2011, as social media "experts" abandoned their Facebook accounts and declared Google+ a "Facebook killer," the rest of the world shrugged and continued using the platform that already contained all of their friends and family. Normal people (i.e., those who do not know their Klout score) cannot pull their "audience" with them from one platform to another, nor do they have a burning need to broadcast their lives to the world as do digital influencers. This last point is key to explaining why digital insiders are wrong so often about new social and communications services--the vast majority of the world does not share influencers' insatiable need to transmit every thought and experience. Meerkat was perfectly suited to appeal to mass influencers while leaving others puzzled about all the fuss.
      
  • SXSW isn't the real world: There is a good reason each year's "hot new SXSW" app tends to fade from view--SXSW is not the real world. Since Twitter rose out of SXSW in 2007, I cannot think of another app that used SXSW as a launching pad to the mainstream. Foursquare came closest, but today it is seeing declining usage and little buzz. Other apps like Groupme, Sonar and Hashable were all the rage in Austin for a couple of weeks but never caught on outside of the SXSW bubble. There is a lesson here for evaluating SXSW buzz: The needs of the world's most digitally connected people while attending the world's most digitally connected event are simply not a good proxy for the needs of people who have busy lives, job stresses, family demands and are mostly overwhelmed with their existing digital communication channels and apps.
      
  • Streaming video isn't new and isn't growing rapidly: I cannot imagine how all the excitement over Meerkat and Periscope must look to the folks who developed platforms such as Qik, Livestream, Justin.tv and a dozen other live-streaming platforms that have been around for years. Sure, the new live-streaming apps offer great social features and terrific user interfaces, but apps with similar capabilities have long been available. Of course, you could argue the same about Facebook, which was preceded by SixDegrees, Friendster and Myspace, but the difference in that case was that each successive social network was more popular than the last. This is not the case with live-streaming video apps, which are not seeing any sort of profound growth or success. After a rapid start, Qik faded and was eventually acquired and shuttered by Skype, while Justin.tv eventually shifted out of broadcasting the real world and into the more interesting business of broadcasting gameplay via Twitch.
      
  • The world has already voted, and people prefer pre-recorded video to live: One filter I use to evaluate new technology is how well it fits into existing models of human behavior. In the case of Meerkat and Periscope, one only needs to look at the early days of television, when all video was live, and compare it to the prerecorded network programming of today. The problem is that live TV is generally not polished, well paced or exciting; Jon Stewart may make moments in Congress look funny, but have you ever tried to watch C-SPAN live? The same is true outside of TV--consumers can watch live concerts by artists on Concert Window, but they still opt to stream the slick music videos on YouTube and Vimeo in much higher numbers. And Fathom Events beam live performances from The Met to theaters around the country, but far more people show up for the latest over-produced but disappointing Adam Sandler film. The entertainment industry long ago shifted out of live broadcasting and into prerecorded, edited, post-produced video that corrects the problems of live performance.
     
  • The world is timshifting more than ever rather than watching live: Not only have consumers shown a preference for prerecorded entertainment, they are increasingly rejecting the tyranny of watching anything on someone else's schedule. In today's fast-paced world, ever more people are timeshifting, opting to use streaming, DVRs, Netflix and YouTube to watch video when and where they want. Meerkat and Periscope are entering a world at a time when fewer people watch video as it is broadcast than at any time since TVs entered homes in the 1950s. This should tell us something about the appeal of real-time video, which is...
        
  • "Live" video brings no additional value over pre-recorded video outside of very specific use cases. Live TV is today reserved for special situations like American Idol (real-time voting), news and sporting events (real-time occurrences with broad appeal) and the rare stunt programming (real-time risk that Allison Williams' Peter Pan may trip over a prop on live TV.) If Hollywood cannot find a way to make live video appealing outside of select use cases, what does this say about the experiences you and I might broadcast? How many opportunities will you have to share urgent, timely, in-demand content? Will that beautiful sunrise or your dog's amazing tricks really be of interest to people in real time? Is posting a video to Instagram of something that occurred in the ancient era of two minutes ago really going to degrade the viewer experience? The reality is that outside of some select use cases, such as newsworthy events (the tragic explosion in NYC) and entertainment (Jimmy Fallon broadcasting a rehearsal), most of us have precious little reason to use Meerkat and Periscope to broadcast anything to others in real time.
      
  • Most brands will be too risk-averse to adopt live video: While many agency bloggers are predicting (and hoping) marketers will adopt Meerkat and Periscope in large numbers (and pay agencies to develop the live content), I struggle to see how most brand brands will accept the risk of raw live video. Even in the age of Facebook and Twitter, marketers still maintain tight control over the planning and vetting of content, and in those rare situations when brands staff "newsrooms" for real-time marketing, compliance and legal personnel are on hand to approve every word and image. You think brands are now going to point a camera live at an event or person and trust everything that happens will be appropriate, on-message, legal and compliant? All it takes is one person wearing a branded T-shirt, dropping an F-bomb or having difficulties with the product on a live video, and someone's head will be on a platter.
      
  • Few brands will have anything to share that people will need to see in real-time: Finally, even if brands can overcome the various practical and legal challenges associated with live video, will they have anything worthwhile to say in real-time? Today, organic reach for brand content is falling, with brand posts disappearing from Facebook news feeds and being ignored on Twitter. If most brands cannot find a way to be interesting with the luxury of time, what would they stream that might demand consumers drop everything right now to watch it live? Video is powerful, but between Instagram, YouTube, Vine and other platforms, are brands really lacking for ways to share video?
To be fair, I anticipate Periscope will see reasonable adoption and some exciting uses for very specific purposes, but I do not anticipate broad adoption for this or other live broadcasting platforms. Before we buy into yet another round of hot-new-thing-forever-changing-communication-and-marketing hype, I suggest we step back, assess the needs and wants of real people, consider which brands have opportunities and which do not and ensure we do not invest limited time and budget in yet another digital boondoggle.

Monday, March 16, 2015

"Purpose" Never Retires

Purpose is true north that never varies.
http://www.flickr.com/photos/22998854@N02/7163227255
A lot of companies give lip service to "purpose" nowadays. I get tired of attending conferences and reading articles where business "purpose" is equated to Corporate Social Responsibility (CSR) initiatives, as if purpose is something a firms buys and plugs into a small corner of the organization with the goal of generating PR and purchasing goodwill.
USAA is widely recognized as a firm that leads with purpose, and it is a purpose that is earned primarily with sweat and focus, not just dollars and charitable donations. What "purpose" really means at USAA was demonstrated by a recent announcement from President Obama about the Veterans Administration. Joe Robles Jr., who just retired as CEO of USAA, was named the chair of a new committee to assist the struggling VA. The goal of this group is to provide short-term and long-range priorities to improve VA operations and services.
In the history of thankless tasks, this may rank near the top. At an age when most take on the challenge of improving their golf handicap, Robles is dedicating himself to improving one of the largest bureaucracies in the world.
In the 20 years Robles served as USAA's CFO and CEO, he personally demonstrated what purpose really is, never missing an opportunity to remind employees and leaders of the association's mission: To facilitate the financial security of those who serve their country and their families. He personally gave his time to organizations that helped active service members and veterans, and in his role as leader, he constantly demonstrated USAA's purpose by promoting measures of how the organization achieved its mission above and before measures of how the organization achieved financial success. As with many companies that lead with purpose, USAA has no difficulties achieving the latter because of its commitment to the former.
After serving his country for 28 years in the U.S. Army and then being employed at USAA another 21 years, you might think that Robles has done his duty assisting the military community. But just one month after retiring from USAA, he is again putting himself in a position to improve the lives of veterans and their families.
Of course, Robles is not the only leader to demonstrate that purpose never retires. Jimmy Carter remained active in international and domestic affairs long after he left office, traveling the world to conduct peace negotiations, observe elections, and advance disease prevention and eradication in developing nations. And former CEOs as diverse as Bill Gates and Herman Cain have used their fortunes and political clout to advance their causes and world views.
But so powerful is Joe Robles' purpose that three years after leaving the employ of USAA, I still am inspired by the strength of his purpose. He demonstrates that purpose is not a strategy or PR tactic; it doesn't come from focus groups and research; and it is not CSR. Robles' sense of purpose resonates so strongly because he demonstrates that purpose is something you are and do; something that drives you to continue when no one would blame you for stopping.
For Joe Robles, purpose never retires. Even after leaving USAA, his sense of purpose continues to serve as an example for USAA employees (both current and former) and for other corporate leaders.

Sunday, March 8, 2015

Seven New Social Media Studies You Probably Won't Hear About at SXSW

This week is the annual SXSW Interactive conference, where social media elite descend on Austin to party on Sixth Street, post selfies with people who have higher Klout scores and pick up the mad schwag liberally distributed by startups. A few may even wander into conference halls to see some presentations, although that is far from certain.

This will be my third year staying home, and while I will miss the chats and parties, I will not miss the general sense that SXSW is a missed opportunity for the social media industry. All the best and most experienced minds in the business gather in one spot, but few find themselves in sane, sober and expansive conversations because it is hard to focus on serious topics when one is screaming over an indie band or dashing from the Convention Center to South Commerce to West 6th for events.

Although SXSW Interactive has tended to feature more hype than criticism, perhaps 2015 will be the year when reality sets in. At last fall's Social Shake-Up, I was pleasantly surprised at the candor at which people were discussing declining reach, difficult social metrics and social media marketing obstacles. It will be interesting to see whether the predominant buzz from this year's SXSW is about social media marketing difficulties or the more typical chatter about the next hot new app.

If SXSW Interactive gets serious about substance over hype, here are seven recent studies that should be mentioned from stages in Austin. All challenge assumptions about the value of social media marketing and offer the sorts of data that should guide tough decisions about investments and strategies in the social channel this year:

  • Bounce Exchange find poor organic social acquisition and conversion:  In 2014, Bounce Exchange analyzed more than $1 billion of e-commerce revenue. Their research found that organic traffic from these companies’ social media channels accounted for only 1.2% of clients’ overall revenue. Moreover, conversion was 1.3%, less than half of their clients’ overall average. (Source)
      
  • Source: The Center for Marketing Research at the
    University of Massachusetts Dartmouth
  • The Center for Marketing Research at the University of Massachusetts Dartmouth finds fewer companies optimistic about tracking sales through social media: In interviews with executives at Inc. 500 firms, the UMASS study found a drop in companies tracking sales through social media, from 36% in 2013 to 32% in 2014. Even more telling, at a time when marketers are spending more on social media and should be improving their metrics, the number of executives who do not know if social is driving sales increased seven points, from 11% to 18% (and another 44% believe it accounts for less than one percent of sales).

    Finally, the UMASS study found that Inc. 500 executives are losing faith that social has the potential to increase sales in the next year--the percentage of executives who indicate social is the tactic with the most potential to drive sales dropped from 16% in 2013 to 13% in 2014. That puts social media well below online advertising, less than business directory listings and equal to traditional print/broadcast media. (Source)
      
  • Source: Custora E-Commerce Pulse
    Custora finds social drives small fraction of sales compared to organic search, PPC and email: Custora tracked 100 million anonymized shoppers, $40B in e-commerce revenue, and 100+ online retailers in January 2015. It found that social media delivers just 2% of ecommerce sales. This figure is 91% less than organic search, 88% less than CPC and 87% less than email. Custora's data was no different over the holiday period. In its E-Commerce Pulse 2014 Recap, the company notes, "Similar to the trends last holiday season, and throughout 2014, social media (including Facebook, Twitter, Instagram, and Pinterest) is still not driving a substantial share of e-commerce transactions. Through the holiday season (November - December 2014), social media drove only 1.9% of all e-commerce orders - a similar share to holiday 2013, when it drove 2.3%." (Source and source)
     
  • Webmarketing123 finds that, when it comes to social media investment decisions, marketers are using assumptions rather than hard metrics:  A November 2014 study by Webmarketing123 found that that "many marketers still relied on 'gut instinct' when determining which channels to use for marketing campaigns, as the most-used weren’t always the most-measured." The report called social media "one of the biggest pain points for respondents." While 87% of B2B marketers used social media, just 17% were able to prove its ROI—that is the lowest percentage among channels used. As for B2C marketers, social is now the most commonly used channel, with 87% of B2Cs using social, but only 27% could calculate ROI. (Source)
      
  • MaritzCX finds that social media is not an influential information source for car buyers: MartizCX surveyed 60,000 people and found that social networks (Facebook, Google+ and Linked) were the 19th most influential information source when customers under the age of 35 research a new vehicle. While "Family/friend/word of mouth" ranked second at 18.8%, online social channels were much less significant, with "Chat rooms/blogs/forums" at 1.5%, online videos at 1.3%, social networks at 0.4% and Twitter (dead last) at 0.2%. Beating digital social channels at influencing car purchases are very traditional channels such as salespeople at dealerships (the top influencer at 21.5%), newspaper/magazine reviews (4.7%), TV ads (3.6%) and manufacturer's brochures (2.8%). (Source)
      
  • Source: CMO Survey
    The CMO Survey finds that marketers continue to use the least powerful social media metrics: It is amazing that the two most common social media metrics used by marketers this far into the social era are still Hits/Visits/Page Views and Number of Followers or Friends. We are well past thinking that top-of-the funnel metrics are a good way to measure any digital marketing tactic, much less social media. Less than a third of marketers evaluate social media based on conversion rates, and fewer than one in seven use customer acquisition cost.

    Even more concerning, there has been a decrease since 2010 in the number of marketers using bottom-of-funnel social media metrics such as Sales Levels, Revenue per Customer and Profits per Customer. Marketers are ignoring the most powerful metrics in order to focus on the ones that are easiest to collect (and to manipulate). (Source)
      
  • Source: Marin Software
    Marin Software finds social advertising significantly lags search and display: The Marin Software Performance Marketer's Benchmark Report is expansive, covering over $6 billion worth of ad spend from advertisers and agencies with budgets in excess of $1 million annually on paid-search, display, social, and mobile. First the good news for social media: The clickthrough rate for social ads is better than for display ads--social CTR was double that of banners on desktop and 50% greater on smartphones. However, while social ad clickthrough may beat display, it still pales in comparison to search, which has a 425% better CTR on desktop and 383% greater on smartphones.

    Once the folks who click on those ads arrive on your site, social conversion rates are downright dismal. Compared to social ads, display advertising's conversion rates are 255% greater on mobile and 900% more on smartphones. Social advertising conversions fare even worse against search ads; search ads deliver conversion rates 818% higher on desktops and 2100% greater on smartphones versus social ads.

    While social advertising offers the lowest cost per click (CPC), advertisers (at least those whose goal is conversion) are over-paying for social ads. Desktop social ads offer a CPC 82% less than desktop search ads but return a conversion rate 89% less than desktop search, making social advertising's cost per conversion around 65% greater on desktop. On mobile, social advertising has a cost per click that is 80% less than search ads but experience conversion rates 95% less than search, resulting in a cost per conversion that is more than four times greater in social than search. (source)

Will data like this get attention, discussion and consideration at SXSW, or will this year's conference continue its history of celebrating consumer adoption and the rare but unrepeatable successful case study? If SXSW attendees buzz about the growth of "dark social" and Audi's Super Bowl Snapchat success rather than explore what we have learned from our experience on the social networks that have been around for eight years, then we will simply see brands repeat the same mistakes on Snapchat, LINE and WhatsApp that they made on Facebook and Twitter.

For those attending SXSW Interactive, my wish is that you have more challenging, sober and enlightening discussions than you do drinks and that you leave Austin with more hard data than promo items.