Short Takes: 5.31.08

Here are some interesting XM and online marketing news items and links for your perusal:

• Google Cool to Web 2.0: On this blog, I've shared several news items and thoughts about the difficulties with making advertising work on social media (or Web 2.0) sites. It turns out Google agrees; Google CEO Eric Schmidt touched on these challenges in an interview, saying, "The web 2.0 architecture is not necessarily a revenue opportunity. This is not where the money is." And about Google's well-publicized advertising deal with MySpace, Schmidt noted, "MySpace did not monetize as well as we thought. We have a lot of traffic, a lot of page views, but it is harder than we thought to get our ad network to work with social networks."
  
  But Schmidt isn't closing the door entirely on social advertising. He thinks some sort of advertising may work on social media services, and he predicts it will need to be more experiential. Says Schmidt, "The advertising has to be more entertaining, more interesting, more immersive compared to what we have today." In other words, if you're going to interrupt consumers' conversations on social sites, you have to make it worth their while!
  
• Do We Really Need To Be Reminded To Include Our URL In Ads? I suppose this is an interesting report, but in 2008 I'd hope no marketer would need a study to know it's a good practice to include your Web address in print ads. According to MediaPost, the Magazine Publishers of America is releasing a study showing that including URLs in magazine ads drives readers to advertiser Web sites.
  
  The analysis of 833 print ads in seven magazines showed that ads with Web addresses were up to three times as likely to drive readers to a Web site, depending on the magazine category. The biggest increases came in the home, women's service and travel categories. So, be sure to include those URLs in print ads. In fact, include them everywhere!
  
• Internet Advertising Continues Its Growth: The Interactive Advertising Bureau and PricewaterhouseCoopers have released their full-year report on Internet advertising. If you follow online marketing, there is little surprising in this report:


• Full year 2007 Internet advertising revenues set a new record, totaling $21.2 billion, up 26 percent versus full year 2006 revenues.
• A handful of ad-selling company control most of the market; the top ten ad-selling companies accounted for 69 percent of total revenues in the fourth quarter of 2007.
• Search continues to command the biggest share of online ad dollars, with 41% of the total spend. Display advertising (which includes banners, rich media, digital video, and sponsorships) accounted for 34% of online ad revenue.
• Most online advertising is performance based (such Pay Per Click or Pay Per Action). Approximately 51% of 2007 full year revenues were priced on a performance basis, up from 47% reported for full year 2006.
• Internet advertising is now the third largest category of advertising spending behind Newspapers and TV Distribution. Internet ad spending is now slightly greater than that of cable or radio.

The chart I found most interesting was the one comparing ad spending for the first 13 years of the Internet (1995-2007) versus broadcast television (1949-1961) and cable television (1980-1992), presented in current inflation-adjusted dollars. Thirteen years into this new medium, Internet ad revenues stand at $21.2 billion annual. After the same period, television ad spending was $11.7 billion and cable was just $4.8 billion.


• Can Incentives Work to Boost Mobile Advertising? Harris Interactive released a study in which they asked consumers if they'd view advertising on their cell phones in exchange for incentives. A "surprising 35 percent" said would accept incentive-based advertisements; of that total, 78% say the best incentive would be cold hard cash and 63% said free minutes would be effective to get people to view ads on mobile phones.
  
  The implication seems to be that because consumers say they'd accept incentives to watch advertising that this provides some path for marketers to test in the infant mobile marketing channel. The concept of paying people to view ads has never worked in any channel; this revenue model simply isn't viable. Moreover, while survey participants may express a theoretical interest in getting paid to view ads, the reality of receiving a few pennies to see ads is never appealing in practice.
  
  The Harris survey also throws a bit of cold water on one of the most promising aspects of mobile advertising--that advertising effectiveness can be increased by using cell phone users' preferences in order to tailor ads to meet their interests and needs. Just 35% of teens said they would give away their personal information to advertisers even if there is an incentive.
  
  Mobile marketing is going to be huge in the future, but anyone promising easy marketing solutions with personalization or incentives is not learning lessons from the past.

Branding Hospitals and the Role of the Chief Experience Officer

Within most companies lives a corporate culture based on the fervent belief that if they produce the best product, they will succeed over the competition. This obsession with product efficiency may seem logical and sound, but marketing history is littered with products and brands that lost to inferior competitors.

I had a personal experience this week that caused me to consider how vital it is for companies to find a way to give attention to the consumer experience, even when the vast majority of people within an organization feel the product is of utmost importance. These thoughts occurred to me while I was sitting in a hospital Emergency Room.

I was not in the ER for myself but for my mother in law. My wife and I received one of those late night calls you don't want to get, and we found ourselves anxiously rushing to a local hospital. As it turns out, my mother in law will be fine--she's getting treated for pneumonia and should soon be on her way back home.

Once it became apparent my relative was going to be fine, my mind turned to branding in the competitive world of hospitals. You might not immediately think of hospitals as brands, but medical competition and advertising is increasing across the country as new facilities are built, more choice and responsibility are shifted to employers and consumers, and hospitals compete for the boomer's exploding medical spend.

It may be hard to remember, but hospitals used to be completely utilitarian and rather unwelcoming places run by people who saw no need to advertise or focus on the "experience" because they believed patient care was their only relevant concern. Nowadays, hospitals advertise and strive to improve the patient and visitor experience with mall-like architecture, valet parking, and upscale coffee shops.

In my day-to-day life, I am sure that I am exposed to dozens of hospital billboards, TV spots, and print ads, but none of them stick. Since I have no immediate need for medical care, these ads get none of my attention. Certainly they are working on some subconscious level, but for all the marketing spend these health organizations make to reach me--an aging boomer--I am aware of no change in my awareness, consideration, or preference for nearby medical facilities.

But if hospital marketing is easy to ignore, you know what isn't? A trip to the ER when your relative is in urgent need. The experience you have in the hospital as an anxious, fearful, info-seeking, support-needing consumer is worth a thousand billboards featuring smiling, stock photography nurses.

Clearly, there is nothing more important than that my loved one receives immediate and effective medical treatment. But, it is also clear that this isn't the only thing that matters. The hospital I was visiting also wants to earn my trust, respect, and preference for some future time when I need to make medical decisions for myself or a family member.

As it turns out, my experience in the ER didn't leave me feeling this particular hospital was terribly compassionate. The desk staff was indifferent and unhelpful; the waiting area was messy and uncomfortable; ancillary staff such as cleaning and security personnel were often downright rude; and no one seemed to think that keeping relatives informed was a priority.

What good does it do to spend millions on ads to convince consumers your facility is the most caring if the experience you provide isn't caring? Winning the trust and respect of the thousands of distressed and needy visitors who pass through the hospital every day is where the organization can live up to the compassionate brands they wish to create. It's also the best way to create the kind of Word of Mouth that gets people talking about and recommending one hospital over another.

Do I really want hospital leaders more focused on the cleanliness of waiting rooms or pleasantness of desk staff rather than patient care? Of course not, but even organizations that deal in matters of life and death still have to find a way to focus on the consumer experience if they wish to succeed.

How can hospitals--or any organization--balance the need to focus on both product and the experience? Perhaps the Cleveland Clinic has an idea worth emulating: They've appointed a second CEO--a Chief Experience Officer. M. Bridget Duffy, MD knows that patient care is important, but she also sounds a lot like a smart marketer when she speaks of "competitive differentiators" and of focusing on the "patient and employee experience." Says Duffy, "People today are seeking more than just the best clinical outcome, (and) will start seeking institutions to go to that will deliver on both" clinical outcomes and experience.

Of course, giving someone the title of Chief Experience Officer won't do anything unless the position has authority. At the Cleveland Clinic, their second CEO (or the CEO² or the CXO) has the support of the first CEO, which lends "visibility and credibility."

Organizations might ask themselves if appointing a Chief Experience Officer is the right idea, but I think the better question is why the CMO isn't already filling this role. If more CMOs saw themselves as--or were permitted to act as--responsible not just for the advertising budget and outcome but for the entire consumer experience, organizations would be better equipped to create marketing and consumer experiences that are coordinated, seamless, and successful.

In the age of transparency, there has never been more need for more consistency between a brand's advertising and the experience it provides to consumers, so perhaps all CMOs should become CEO²s or CXOs!

Short Takes: 5.27.08

Here are some interesting XM and online marketing news items and links for your perusal:

• Video Viewing Surges: This week's least surprising interactive news story comes from Mediapost, which reports that online video viewing continues to rise. According to comScore's Video Metrix service, U.S. Internet users viewed 11.5 billion online videos during March, 2008, representing a 13% gain versus February and a 64% gain versus March 2007. Continuing the unsurprising news is that Google sites (primarily YouTube) are the most popular video sites, accounting for 38% of all video viewing, up 2.6 points from the prior month. With so many consumers surfing for video entertainment, you'd have to figure somebody (probably Google) will eventually figure out how to make advertising in or around video clips relevant, welcome, effective, and profitable, wouldn't you?
  


• Yahoo On Top; Google Nowhere in Sight: It's not often you can see a category list of top online destinations and not find Google in or near the #1 spot, but in this case they're not even on the list. MediaPost published a list of the top sites for financial news and information; Yahoo leads the list, and Google is notably absent. The search giant has a decent finance site, but for some reason it's never gained traction unlike just about everything else Google touches.
  
  Another unusual thing about the financial site data is the demographics. How often do you see a demographic breakdown of online users and find less than 10% under the age of 25? This group is older (with a mean around 40 years old) and wealthier (with mean HH income between $75k and $100k). On this blog, I've shared information about how affluent Web users feel (and are) ignored to some extent by online advertisers, so if you're seeking the affluent online, all you need to do is follow the money news.
  
  
• Viacom Threatens the Internet: I normally have little patience for hyperbole, but this time it seems warranted. Google filed court documents that claim Viacom's suit against Google's YouTube, "threatens the way hundreds of millions of people legitimately exchange information," and they're right. Viacom is suing the video sharing service for its inability to keep copyrighted material off its site.
  
  While any owner of Intellectual Property can sympathize with Viacom as it combats the tidal wave of consumers posting its content to YouTube and other video-sharing sites, there seems little chance Viacom can win this suit. According to MediaPost, the Digital Millennium Copyright Act (DMCA) provides "safe harbor" that protects YouTube from liability for copyrighted material posted by users, and Groklaw notes, "Viacom is essentially asking the court to rewrite the DMCA safe harbor provision, and rewriting the law is exactly what courts are not supposed to do."
  
  Google has vowed to fight to the Supreme Court if necessary, and with implications that could impact some of the most popular sites and online activities, this case is worth watching.
  
  
• What Makes an Agency "Up and Coming"? According to this interesting article from Mediaweek, the agencies to watch are getting noticed with a focus on search, online experiences, viral content, and social media. Given those are the hottest marketing trends, I guess that should come as no surprise. Check out the brief but informative profiles of five up and coming interactive agencies: 360i, Big Spaceship, Deep Focus, EVB, and Schematic.
  
  What is interesting is how often in this brief article it is mentioned that an agency leader doesn't think in terms of advertising. Quotes include, "I think the interactive space is moving from media buying...", "When (he) thinks of the model he wants his agency to follow, he talks about architecture, not advertising," "(He) is rethinking the primacy of the ad campaign, which social media is rendering irrelevant," and "(He) has never considered himself an adman." Advertising is dead; long live advertising!
  
  
• Experiential Billboard: Periodically, I run across an Out Of Home execution that really rises above the clutter of ignorable billboards. From Adland comes this Saatchi & Saatchi campaign for Kill Bill featuring a blood-drenched billboard, street, and cars. You may love this or hate it, but you have to admit it's tough to ignore. If a consumer is grossed out by the OOH campaign, they probably weren't a good target for the bloody film in the first place.
  
  
  

Advergame With Caution

As the reach of television and print decrease, advergaming presents enormous opportunities for marketers to engage consumers, especially the teens and young adults who are toughest to touch via traditional media.

The advergaming landscape includes everything from casual games (such as those found on Wrigley's Candystand) to "Big Gaming" (which merges body motion with virtual gaming, such as the Fullhouse-developed in-bar-only March Hoops game for Miller Brewing) to PC and console games (such as the highly-publicized Burger King games for the Xbox and Xbox 360). Burger King sold and distributed their games via discs, but Microsoft now has an easier way for marketers to distribute games to owners of Xbox consoles. Xbox Live, a service that permits Xbox 360 owners to download games, permits third-party developers to distribute their own games via the network.

Toyota became the first brand to create and release a game over Xbox Live. Yaris, the game, was designed to promote Yaris, the moderately-priced subcompact car focused on young consumers. The game features a Toyota Yaris with a giant tentacle that reaches out of the roof to shoot enemies as the car rockets down a futuristic tunnel. (Sadly, the tentacle is not an actual option on the car.)

Of course, as with any marketing program, getting every detail correct is vital. In an article on the International Herald Tribune site, Shahid Khan, a partner at IBB Consulting Group, speaks about how games can help brands reach a younger demographic. "This group does not want to be advertised to, (so) it has to be a really good game. If it is a really good video game, then it won't matter if it was made by an advertiser."

Unfortunately, reviewers and those in the Xbox Live community have not found the Yaris game up to their expectations. One gamer in the Xbox forum came to the game's defense—if that’s what you call it—by saying, “let's keep in mind that this game is an advertisement, and a thinly veiled one at that. It's not meant to be great; in fact, it's really not even meant to be enjoyable beyond its intended purpose, which is to get players to consider buying a Toyota Yaris.” The game site Joystiq posted a review that speculated the developers, “created Yaris with an objective I can only believe is to cultivate anger in those who play it” and said, “Even at the price of free, this lemon isn't fun or worth the sticker price.”

Branded games should make a statement and get people talking; Yaris did this, but it probably wasn’t the brand impression or the sort of reaction for which the brand had hoped. The game has some fans, but the buzz has been more negative than positive. (The game apparently didn't do much to help the developer, either; Joystiq reports that Castaway, creator of "the despicably-disgustingly-dreary Xbox Live Arcade game Yaris," has since closed its doors.)

Advergaming can be a powerful tool in the experiential marketers' toolkit, but a branded game cannot be confused with an advertisement. Getting a game right requires attention not just to the brand’s message but also to every aspect of the game—graphics, animation, game play, control, rewards, pacing, and scoring.

If a branded game misses its mark, consumers will be left with a negative brand impression. But done right, an advergame can create the kind of attention, time commitment, and "Word of Mouth" to which few traditional ad campaigns can aspire.

Branding Your Employees By Paying Them To Leave

Thanks to Cindi, who occasionally blogs at UX Beyond, for sharing this incredibly inspirational article from Harvard Business Publishing. The item is about Zappos, which of course stands as one of the most remarkable brand building stories of the past decade.

Zappos has done many things right to build its business from $70 million five years ago to $1 billion today, and here is one of those: The company starts new employees on a four-week training period that immerses them in the company’s strategy, culture, and obsession with customers. After the first week, they make “The Offer”: “If you quit today, we will pay you for the amount of time you’ve worked, plus we will offer you a $1,000 bonus.” Zappos figures if you’re willing to take the company up on the offer, you obviously don’t have the sense of commitment they are seeking.

Here's another thing they do: Each year Zappos publishes a Culture Book and offers it for sale on their site. The 2007 edition is 324 pages long and includes hundreds of short essays written by Zappos.com employees and business partners explaining what makes the Zappos company culture unique and successful. It includes everything from anagrams ("Zealous Adventurous Positive People Offering Service") to haiku to these words from Tony Hsieh, Zappos CEO:

“To me, the Zappos culture embodies many different elements. It’s about always looking for ways to WOW everyone we come in contact with. It’s about building relationships where we treat each other like family. It’s about teamwork and having fun and not taking ourselves too seriously. It’s about growth, both personal and professional. It’s about achieving the impossible with fewer people. It’s about openness, taking risks, and not being afraid to make being afraid to make mistakes. But most of all, it’s about having faith that if we do the right thing, then in the long run we will succeed and build something great.”

Perhaps, if you're the jaded kind, you're thinking that Zappos buys all of this employee loyalty, but according to an article from DirectMag.com, Hsieh readily admits that Zappos underpays. “In terms of salary, we are either at or below market. The higher the position, the more below market we are. At the VP level, you're probably making less than half of what you could be making somewhere else.”

Zappos does pay 100% of their medical and dental insurance and offers free lunches, snacks and drinks daily, but Hsieh insists his team is dedicated because of the company culture. “Co-workers will burst into song and dance at random intervals throughout the day,” writes human resources staffer Christa F. “Upon request, the CFO will groom your hair.”

(True story: Fifteen years ago I was working in a Human Resources department of an insurance company when, during one stressful week, I was speaking to peers about how the pace would soon improve. I broke into song, singing "Tomorrow" from Annie, which was the exact moment our conservative VP entered the room. I got a talking to about professional behavior, which was but one of the many tiny nails that went into the coffin of my insurance career. Even though I can't think of the last time I've engaged in spontaneous workplace musical theater, it's clear I am much better suited for the world of experiential marketing than for insurance.)

So, does all this work? Zappos is private so data is hard to come by, but it reportedly operated at break even while growing at a Compound Annual Growth Rate of over 70% over the past five years. And in 2006, it was reported that Zappos eked out its first profit — about 1%, according to Hsieh.

Marketers often speak of touchpoints, but it's easy to forget that the most frequent and important touchpoints are the many daily interactions consumers have with the people who comprise your organization. No advertising can overcome consistently poor service or product experience, so the importance of finding and keeping the right people--and then making sure they are the living embodiment of your brand--cannot be overemphasized.

Think of it this way: Given the opportunity to share up to 500 words for your organization's "Culture Book", what would your employees say? Have you so thoroughly communicated your culture and brand to each and every employee that they understand it, internalize it, make it their own, and could find hundreds of interesting (but related) ways to share it with others? If not, how can they possibly represent it when communicating with consumers? And, in the age of social media, what are they saying about your culture and brand in their private communications, blogs, and Twitters?

Experiential Art: Marketing Imitating Art Imitating Life

I think there are some great things Experiential Marketers can learn from the world of art.

Earlier this year I was at the LA Municipal Art Museum and saw a very interesting and interactive exhibit created to get people thinking about their roles in saving the rain forest. On one wall was a giant, colorful painting of a rain forest, but it was obscured by a translucent sheet. The sheet had squares delineated with dotted lines, and inside each square was a graphic of a single tree. Visitors were encouraged to take a slip of paper from a fish bowl, and if the slip contained a dot, they used a pair of scissors to snip out a single square, revealing more of the painting and making a point about the importance of each tree.

Here's another example: I've long been a fan of performance art, particularly things that occur in unexpected places. One group that regularly creates fascinating and fun experiences is Improv Everywhere . Visit their site and enjoy the pranks/performances/flash mobs in Grand Central Station, a mall food court, and a hardware store.

Along the same lines, one of my favorite YouTube videos of the past year is of a cappella group Naturally 7 performing on a subway car in London. When they unexpectedly break into song, riders at first look nervous and try to ignore the group, but soon everyone in the packed car is pulling out cameras, cheering and dancing. Check out the video below--the energy and emotion in this video clip are infectious!



Another great example of experiential public art is an installation appearing in both New York and London. Right now a giant drill bit is emerging from the ground, but soon a 37-foot-long, 11-foot-tall "Telectroscope" will appear. This will permit people in New York and London to see each other in real time and life size. The intent is to give citizens of both cities the feeling they are peering through a transatlantic tunnel (but I hope it won't ruin it for you to learn there is technology involved.) You can learn more about the Telectroscope project at NYTimes.com.

The artist, Paul St George, teamed up with British arts organization Artichoke, known for creating another spectacular public art project, the Sultan’s Elephant, a 42-ton mechanical child and animal that launched many a viral video back in 2006 (see below).



From a marketing perspective, what I find so inspirational about these works of art is:

• These experiences interrupt people from their lives and expectations to provide something of interest that demands attention. Too often, "experiential marketing" is reduced to a tent or a truck found at an event--which is exactly what consumers are coming to expect at every sporting event, festival, etc.
  
• The experiences themselves are incredibly involving. You can't walk into the environmental art installation and not pick a slip of paper, hoping you get one with a dot so you can be part of changing the experience for all who follow you. You could try to ignore the singing in the subway car, but eventually your body will betray you and start to move with the music--and before long you're dancing. And how can one not stop, examine, and walk around a giant drill bit emerging from the ground?
  
• Finally, these experiences engage emotions, which is essential to creating a memory. For the improvisational theater, some passersby at first are frightened (or at least are made uncomfortable) that something unexpected is happening, but this emotion engages their attention. In other cases, it's a sense of curiosity or anticipation that is engaged. It's easy to understand, as you read or watch videos about these examples of experiential art, the emotions they evoke.

Art may seem to have little to do with marketing, but what are Leonardo's Mona Lisa or Michelangelo's David except strong, well-recognized brands that have stood the test of centuries. If only our marketing programs could create a mere sliver of their awareness and positive associations!

The Benefits and Pitfalls of Social Media: Lessons from Disney's Virtual Magic Kingdom

My friend, Erik Hauser, shared a great article over on the Experiential Marketing Forum. Disney is closing a virtual community it created in 2005 to promote the 50th anniversary of Disneyland. According to the Wall Street Journal, this news is being met with some disappointment and anger by those fans who have come to use and love the Virtual Magic Kingdom (VMK).

The challenge Disney faced is one created by the success of this marketing tactic. According to the WSJ, "Disney says it never intended the 50th-anniversary promotion to run this long." This 18-month endeavor was extended by two years, but given VMK was not launched to be a permanent online community, and considering Disney has fee-based virtual communities such as Club Penguin and Toontown, the company had to make a tough decision.

I have no personal experience with the VMK or any information other than was shared in articles and blogs, but I have learned a great deal about experiential marketing by observing Disney's actions over the years. I believe this situation provides some great lessons from which experiential and interactive marketers can learn.


If You're Going to Make Something a Campaign, Do So From the Start
If you're going to do something cool, interactive, and most importantly functional on the Web and you intend it to be short-term (i.e., a "campaign"), make sure that is communicated from the start. It sounds as if Disney did this and VMK members are upset anyway, so clear and obvious deadlines won't necessarily avoid the potential problems but may help minimize them.

The important thing about taking a campaign approach is that this requires special care for experiential marketers. If all you're doing is launching a traditional ad campaign, no consumer will care when it ends. But if your campaign brings consumers something of value that they'll use regularly (and if the whole point of the campaign is to provide a tool that people will want to use time and again), this requires deliberate planning, communication, and transparency from the very beginning. For example, perhaps Disney did this, but they might have launched VMK with a prominent banner counting down the number of days until the end of the program so that everyone had their expectations set (and could thus manage their own level of engagement) from their very first VMK experience.


Proceed Cautiously With Temporary Social Network Strategies
We understand a whole lot more about social networks today than back in 2005 when the VMK launched. Today, in the era of Facebook and MySpace, the concept of a temporary social network seems difficult to understand. I think we can all sympathize with VMK users when we read lines in the WSJ article such as, "Disney plans to throw everyone out of VMK and lock the gates -- erasing their online profiles, lives and collections of virtual trinkets and real estate." (I know how I'd feel I lost my Twitter account name, my email address, and/or my Facebook profile.)

In 2008, it's easy to see something that not even Disney might've suspected in 2005 when VMK launched: A place where people create their online selves and form real human connections is not a place that should be temporary. It's one thing to create a social campaign that borrows some aspects from social media--such as product ratings or profiles--but it's quite another to build and then destruct a living, breathing community. We experiential marketers can get excited about the opportunities social media offer us, but we need to proceed cautiously and respectfully of our audience, since true success creating a community can become it's own problem.


Monetization Comes in All Shapes and Sizes
I have no idea what Disney did or didn't try with respect to monetizing the VMK. In his EMF post, Erik says that Disney tried several ways to monetize the community and failed. I'd be interested to learn more.

Obviously, charging a monthly fee is one way to monetize a social network, but it's the sledgehammer approach--easy but crude. If it works, the community can become financially self-sustaining, but if it doesn't work, you'll kill the community.

Some social networks are beginning to find ways to generate revenue through the sale of virtual items. China's QQ made an operating profit of $224M last year; in contrast, the hottest site of 2007, Facebook, lost $50M last year. The vast majority of QQ's profit comes from the sale of digital goods, games, and mobile services.

We cannot know what Disney tested or explored, but it seems unlikely they proceeded without first considering how to turn this active community into a revenue-generating service.


Measure, Measure, Measure
Even though we may sympathize with disappointed VMK users, we all understand that Disney has an obligation to stockholders to ensure value was being created continuing to operate VMK. Knowing the care Disney takes with measurement and with its brand and marketing decisions, I strongly suspect Disney wouldn't have decided to shutter VMK without testing the ROI it was generating.

The question is, while VMK clearly had raving fans, was the fan base large enough (the site had only "a few thousand daily users" according to the WSJ) and the impact wide enough to produce either hard results (increased Disney resort visits or purchases) or soft results (positive impact to brand perception)? We can't know the answer to these questions, but I'll bet Disney knows--and this is probably why VMK is closing.


If Your Fans Are Raving Fans, You Can't Make Everyone Happy All the Time
One thing my time studying Disney has taught me is that successful brands walk a fine line. The more successful you are, the more strongly your customers feel about your brand, and the more they take ownership of that brand, becoming not just "customers" but "brand ambassadors". You can see this not only with Disney, but also with Harley-Davidson, Apple, and other great brands.

When your consumers take personal ownership of your brand, it yields incredible results. It also means you cannot please all the people all the time. Almost any change a successful brand makes will initially be greeted with some level of consternation from the consumer "owners." The key isn't to avoid making anyone unhappy--since that is the road to paralysis and ruin--but to make sure you make the right "big decisions" and manage as best you can the "small decisions."

A Disney example of this was the closing of the 20,000 Leagues Under the Sea ride in Disney World in the mid 90s. Every attraction in Disney parks has its fans but this ride was being underutilized by guests, and with EPCOT offering a view of real sea life, it must have seemed silly to continue maintaining this faux submarine ride through a lake of plastic fish. When Disney closed the attraction, some people were upset, angry letters were sent, petitions were launched, and Disney fans complained and consoled each other on the precursors to today's social networks (such as Prodigy's Disney Fans Bulletin Board, of which I was a member.) But people got over it; they didn't stop loving Disney; and they didn't stop visiting the resorts.

I don't know the care that was taken launching or closing the VMK, but I trust Disney to be careful marketers, to be considerate of their guests, and to make smart decisions when it comes to these sorts of actions. While there is some implied criticism of Disney's actions in the WSJ article and on some blogs, it seems to me that given the strength of its brand, the company may have done everything right and still ended up disappointing some passionate Disney fans.

In fact, this may be the scariest lesson of all: Big success with experiential marketing can come with its own set of problems, so its important not just to envision huge success but to plan for it. Whether it's the viral campaign that goes so viral you find yourself hosting expensive terrabytes of data and bandwidth, the widget consumers add to their site that shuts down once the campaign ends, or the social site that becomes more social than anticipated, success is great, but it can come with its own set of issues.

Mobile Marketing Won't (Primarily) Be Ads (For Long)

Obviously, cell phones aren't new technology, but for most U.S. consumers, smart phones and the mobile Web are relatively novel. As cell phone capabilities grow, so to do new opportunities for marketers, but those of us in the business need to learn from the past and consider with caution the early success that is being reported with mobile banner and text ads.

Cell phones provide multiple ways for marketers to engage consumers, but many brands are thus far approaching mobile marketing in somewhat traditional ways: with banner and text ads. This approach--testing in a new medium something that worked in older media--has been repeated several times in the digital era. For example, in the early days of the Internet, the first marketing tactics borrowed from the paradigm of print advertising, and soon banner ads were appearing beside content. Another example is the way many marketers are testing Digital Signage by repurposing static print ads or existing video television spots.

When traditional advertising methods are brought to new technologies, the ROI experience can be predicted with some confidence: The first brands to try a tactic will enjoy initial success, encouraging other brands to follow suit. But as that tactic becomes more common, consumer attention and results decrease, forcing marketers to find more creative uses of the technology. For example, early Internet banner ads, because they were unexpected and new, saw significant click rates; the exuberance over this early success helped create the dot-com bubble, which burst in part because click rates plummeted as banner ads went from new to ubiquitous to annoying to ignorable.

Since mobile ads are still new, it isn't surprising to see early reports that indicate this tactic is working. According to a commissioned study by IAG, small banner ads on mobile devices result in the same level of brand recall as a :30 spot on TV. Also, the study found that "mobile banner ads produce clickthrough rates exponentially higher - at 2 percent - than online banner ads, where clickthrough rates have fallen to about 0.3 percent."

But even if tiny banner and text ads are working today, will they tomorrow? There is no reason to think that banners will succeed on the third screen any more than they have on the second screen. In fact, evidence that banner ads on phones will go the way of banner ads on the Web can be seen in the huge increase that is projected for U.S. mobile ad spending: from $878 million in 2007 to $1.7 billion in 2008 to $6.5 billion in 2012. It seems highly unlikely that a 2 percent clickthrough rate will be sustained when $6.5 billion of advertising is crammed into consumers' mobile phones.

More evidence that ROI and CPMs (cost per thousand rates) for mobile text and banner advertising will decrease can be found in the Q3 2007 Forrester Technographics report, which revealed that consumers perceive text ads and banner ads on cell phones as very untrustworthy; while more than 30% of consumers with mobile phones found brand Web sites and subscribed emails as trustworthy, less than 7% found text and banner ads on cell phones trustworthy. In addition, 48% of cell phone users found sponsored links appearing beside mobile search results annoying, and 56% said the same of banner ads at the top of mobile sites.

Some people expect that ads on phones may get a boost in the next year or two when carriers test mobile service that is free and supported by advertising. While it's not wise to bet against Google, I am dubious this approach will work in the long term. Totally free, ad-sponsored services have generally not proven economically feasible. Even television isn't free any longer--how many of you reading this actually receive free television over the airwaves versus paying for basic cable channel access? Attempts to sustain no-cost, ad-supported ISPs failed, so while CNN.com is free, your Internet access to reach the site is not.

In addition, the math doesn't really work for free ad-supported cell phones. The cost for mobile ads is around $20 CPM at the current time. This means each single view of an ad is worth around two pennies to marketers. In order to replace an $80-per-month cell phone bill, a consumer would need to see 4,000 ads each month. That's 133 ad views a day, and if each view lasts just five seconds, this would require 11 minutes of observing ads every 24 hours. My guess is most consumers won't mind the $80 bill in comparison.

If the past repeats and mobile banner and text ad results begin to disappoint, then another form of traditional advertising may flourish on cell phones: video ads. As wireless broadband access becomes common and more consumers begin to use their phones to watch video, it seems likely some sort of pre-roll or inserted video advertising may generate results. While this sort of advertising has yet to prove its worth on consumer-generated video sites like YouTube, it is working well on sites with proprietary and in-demand video content such as Hulu.com.

Of course, marketing is already flourishing on cell phones and will continue to to do so, but the most successful marketing won't involve placing or displaying ads on a phone. Instead, the best mobile marketing programs will create a welcome experience consumers enjoy via their cell phones.

One recent, terrific example of an engaging program comes from Volkswagen. Taking a multimedia approach, VW's "What the people want" campaign offers a national polling effort that utilizes voters' responses gathered online and via mobile devices and distributes the results across the Web via a site, vw.com/whatthepeoplewant, online banners and outdoor executions.

The most interesting aspect of the campaign is the 3,685-square-foot interactive billboard in Times Square. Echoing VW's new TV ads, the billboard pictures the bug parked behind his microphone, alongside the headline "The people want their voice to be heard." Using their cell phones, pedestrians text their yes or no responses to the poll questions appearing on the sign, and their texted votes are recorded live on a news ticker.

This campaign from Crispin Porter + Bogusky doesn't advertise to consumers but engages them in a dialog. It doesn't merely display something and expect the consumer to be interested; it involves consumers in something they'll enjoy, while still communicating important brand attributes and product information. This is an exciting mobile campaign that demonstrates how to tap the real potential of cell phones.

Short Takes: 5.19.08

Here are some interesting XM and online marketing news items and links for your perusal:

• Virtual Worlds for Research: Thus far, the buzz on Virtual Worlds has exceeded the real impact. Despite all the magazine covers it garnered in 2006/7, Second Life has had just 1.2 million users log on in the past two months. By comparison, eBay gets more people visiting its site in a single day. Eventually, online 3D worlds will be big (for something other than gaming), but for now virtual worlds are mostly a curiosity.
  
  But this doesn't mean marketers can't use virtual worlds today. MediaPost offers an excellent example of how CPG brands are using an online 3D world for market research. Knowing that many consumers can be swayed to purchase a brand other than the one they intended upon entering the store, consumer brands must battle for attention at the point of purchase. Testing POP strategies in real stores is expensive and subject to a great deal of bias due to uncontrollable factors. A company called MarketTools offers brands the opportunity to create a virtual shopping experience that online survey panelists can access on their PCs. Respondents are able to "shop" using a realistic depiction of the aisles complete with high-resolution package graphics, shelf talkers, coupon machines, signage and other marketing tactics. Check out the article for more details.
  
  
• What Is Your Brand Tag? This site cannot be used for any serious market research, but it is an interesting and fun place to visit: Brand Tags presents visitors with a series of brands and asks them to enter the first word or phrase that comes to mind. While visiting the site, you can also browse the brands to see a cloud representation of words entered for each brand. Since brands only really exist within the minds of consumers, the result of this online experiment is a map of brand attributes (but since the survey population is uncontrolled, this doesn't do much to help brands understand brand perception within their target audience.)
  
  The results provide the good, the bad, and the ugly of brand perception. Take Wal-Mart, for example. Perhaps Wal-Mart's core audience is not surfing to BrandTags.net, but the words I'd imagine Wal-Mart execs want at the top of the list aren't there. Positive brand terms like "value" and "low prices" are around the 15th most commonly cited. More popular words entered by visitors include slightly less positive terms such as "cheap" and "big" and much less positive words including "evil," "china," and "crap." Not every brand suffers from the same image problems--automaker BMW's top words include "car," "expensive," "german," "luxury," "quality," and "fast." How does your brand rate?
  
  
• Unexpected Theater for Travel Site: I'm rather a fan of live and unexpected performances as a way to create a memorable experience for consumers. What could be less expected than a scene from a musical breaking out on your bus, in a restaurant, or in this case, in an airport terminal?
  
  Taking a page from Improve Everywhere, LastMinute.com created some unexpected theater in an airport terminal. The aim of the project was to create a viral video that promoted theater package deals. While I love the concept and respect the execution, I had a hard time seeing what this all did for LastMinute.com since there seems to be a weak link at best between the performance and the brand. Nevertheless, in a world of ignored ads, you can see how hard it would be to ignore or forget this experience...

Social Media Disasters (or How Not Having a Social Media Strategy Can Hurt)

Remember when the Web was young--really young--and some companies actually debated if they really needed a Web site? For a brief period, there was a question if investing in a Web site was really necessary, given that many thought all this Web stuff was for geeks and kids.

Before it became obvious the Web was changing everything, the general consensus was that while having a site might provide little benefit, NOT having a site would be a detriment. So, brands went about launching version 1.0 of their Web sites. (Check out Disney.com circa 1996--quite a difference from that site today!)

I share this trip down the memory superhighway because I believe history is repeating itself with social media. Just like that point in time in the Internet's infancy, social media has not yet been understood or embraced by most organizations and brands. Even if the ROI is hard to calculate today, it would be wise to consider the harm done by NOT having an organized approach to social media.

Jeremiah Owyang's blog has an interesting and lengthy list of brands that "got Punk’d” by social media. Visit his blog for all the horror stories, but several are worth highlighting here:

Taco Bell has rats:
A video of rats running around a Taco Bell in NYC was posted to YouTube. Soon after, duplicates and versions started multiplying, and to date these videos have been viewed around 1.2 million times. As a result, Yum Brands' stock sank, customers started doubting Taco Bell's cleanliness, and other franchisees were harmed from the bad PR.

• Implications to Operations: There is no longer such a thing as a small problem. Is it fair that one bad franchisee should impact business for 7,000 restaurants in a chain? Perhaps not, but what yesterday would've been one person complaining to friends can today be a national-scale PR disaster. With cell phone cameras, Facebook, Twitter, and YouTube, there has never been a greater need for companies to ensure they meet their promises across every touchpoint, every time. This means--at a time when pressures are increasing to cut costs--that more attention must be dedicated to hiring standards, training, monitoring, management, and ways of engaging and involving every employee in the brand.
  
  
• Implications to PR: Every PR department must have a plan for monitoring social media and rapid response. According to Customer Think, Yum Brands wasn't "totally asleep at the PR wheel." For example, it's CEO produced an online video apology, but unlike the dozens of rat videos, Yum Brands didn't post it on YouTube; as a result, a fraction of the people who saw the disgusting clips had an opportunity to see the CEO's response. Big business has to get comfortable using the same social media channels as consumers, but it must do so respectfully and transparently.
  
  
• Implications to Marketing: A CEO apology is a fine initial response, but how else might Taco Bell have used social media to combat the bad Word of Mouth? An Ad Age article entitled, "Taco Hell: Rodent Video Signals New Era in PR Crises," suggests using the Web for "defensive branding," which means making sure your response to a PR crisis is as visible as possible. In the days following the appearance of the rat video, bad news was broadcast from hundreds of media outlets and thousands of blogs, but consumers could only have found the company's response by digging into the corporate Web site.
  
  Another strategy is to buy and own unsavory keywords so that people searching for those videos and articles will see links to your official response. I'd also suggest Taco Bell could've "fought fire with fire," using YouTube videos to demonstrate the standards they enforce. Certainly this sort of positive video won't travel as far or as quickly as the negative video, but it would've been a cheap way to make sure consumers searching YouTube are as likely to stumble upon the company's point of view as they are someone else's.

Whole Foods CEO's Secret Blogging:
John Mackey, CEO of Whole Foods, was found to have engaged in anonymous posting about his own company's stock and that of a competitor's that Whole Foods was trying to acquire. He frequently disparaged the competitor's stock in an apparent attempt to weaken the value and improve Whole Food's bargaining position for the acquisition. The respected executive had his reputation tarnished, was forced to issue a public apology, and endured investigation by both the SEC and an internal committee within his own company. In the end, no charges were filed, but this embarrassing episode has overshadowed other Whole Foods news for the past year.

• Implications to Human Resources: Most organizations have a code of conduct and/or a company communications policy, but have these been updated in the past year since social media has exploded? Does your organization hand the policy to new employees along with a four-inch-tall stack of forms and manuals and assume it gets read, or are communication expectations regularly reinforced? Do your employees know what they can Twitter about your company, whether they can comment on financial or stock matters, or whether publicly posting criticisms of their employer will be tolerated?
  

Comcast Responds:
This is the story of a potential disaster that was largely averted. Michael Arrington, owner of the enormously popular blog TechCrunch, was getting bad service from his ISP, Comcast. Michael's connection was down and Comcast was not resolving the problem with the speed Michael expected, so he started "tearing into Comcast on Twitter." Problem is, he has 12,000 followers, so his tale of woe was reaching huge numbers of people, all of whom are early adopters and significant consumers of technology. Unexpectedly, 20 minutes after his Twitter post, Michael got a call from a Comcast executive who wanted to know how he could help. Comcast was monitoring Twitter and reached out to resolve the issue. What could've been a PR disaster was turned into a cause for praise and compliments, thanks to Comcast's proactive use of social media.

• Implications to Customer Relations: The paradigm for customer service has changed little over the past half century. A disappointed customer picks up the phone and calls for support when needed. The biggest changes in customer service technology have been the use of email and online chat (which benefits consumers) and IVR menus (which annoy most consumers.)
  
  A new way of managing customer relations is going to develop rapidly in the coming years. Rather than consumers taking their time to ask the company for assistance, the company will take its time to monitor consumer discussions for opportunities to offer help. Today, a complaint posted to a blog, bulletin board, or Twitter is likely to do nothing but encourage dozens of responses that are a variant of "That company sucks." But soon, with customer service personnel monitoring social media, the first response could be a helpful solution posted by a company representative or even a direct dial phone number offered for immediate assistance.

There is no established methodology for developing a social media strategy. One good place to start for some interesting reading is Forrester's Groundswell blog where they share a high-level overview of their POST approach. That stands for People, Objectives, Strategies, and Technology (with technology purposefully being the last thing to consider.)

Even if best practices are still evolving, I believe two things are vital for large brands today. The first is to begin to act immediately to the threats and opportunities created by social media. Social media is rapidly changing (even in the past week, with Google's Friend Connect posing a challenge to the "walled garden" approach offered by Facebook and MySpace), but that doesn't mean an organization should wait until everything shakes out. The risks associated with waiting are obvious when reviewing