August 2007

Everyone knows that the Internet is the greatest business model changer since the advent of mass production. Companies and whole industries and are now faced with powerful questions and choices. How do they adopt and take advantage of the Web and position themselves for the future? Fighting a future where the Net is the predominant source of information for consumers is no longer an option. If you try and shovel against the tide you will get swept way. Some businesses tried this for a while with predictable results—some trade publications come to mind.

No industry has been affected by the Internet more than the residential real estate business. In the pre-Web days, brokers had a total stranglehold on the most precious of all commodities—information. You needed to engage a broker to get on the MLS system, and you needed a broker to learn which houses were for sale via MLS. The broker advertised in local papers, but to get the real info, you needed to go to them. Because of this barrier to competition and control of information, they were able to command nearly 7% commission when selling a house.

The Internet hit their business by opening up and freeing the flow of information. Market pressure forced them to put the MLS online, and now everyone is the world has the same information access. Buyers now search the Net for buying information, not to mention past sales data and anything else you would ever want to know. Discount brokers entered the market and commission has dropped to an average of 4% in NY and 5% here in Massachusetts. What is a brokerage to do? Put their head in the sand and hope the Internet goes away, or embrace it and make it work for them.

Based on my own experience, Coldwell Banker is a company that embraced the Internet and has used Private Media to create a bond with buyers. They invested in a site like nemoves.com, where they not only list their own houses, but their competitors. This is in effort to become a valuable resource for buyer and sellers. They also have content and links to relocation and buying resources. This helps build a relationship of affinity and trust with buyers. My Coldwell Banker broker also set up a private email feed for me and my wife. Every morning we received a message with updates, new listing and sales in our target towns and price range. When we clicked on a link we went to our broker’s private page. They have created their own Private Media channel, and it works. I just sold and bought a house through them and could not imagine using another company. They created a lifetime customer in me and my wife. What are you doing to create a lifetime bond with your customers? 

There is nothing worse than when a company uses another, usually old, ad campaign or tagline in their ads. This happens when companies are so devoid of originality or creativity that they use an old chestnut such as “got” as in “got milk?” or some derivation of “Just do it”. The lamest one I have heard recently was someone referring to their organization as “Not Your Father’s…” Type this tired slogan into Google and you get 371,000 mentions.   In fact, on the first page of search results I see references to “Not your father’s Talmud” and “Not your father’s sex shop”.  That combo would have made hebrew school more interesting, but I digress.

I wonder when people use this phrase if they realize that it was one of the most famous flops in adverting history. It worked so well for Oldsmobile that the brand no longer exists. When a company says “It’s not your father’s…” about their product it reinforces in a customer’s mind that the product or service is probably out of date and heading towards oblivion. When I hear it, all I can see is a 55 year old guy wearing a rug and Member’s Only jacket in Corvette with a 28 year old.  Not only is he not fooling anyone, but he looks ridiculous.  Is this you want for your brand? Don’t take the easy way out, you need to create a brand proposition that is unique and speaks to customers and prospects. 

I was reading one of my favorite marketing blogs, Seth Godin’s and came across this gem.  It is his complication of business clichés

They are fun to read, because we all use them and hear them everyday. We all know empty-suit types who live on these clichés, and would have nothing to say without them.  Seth feels people use empty clichés to avoid the truth and well, lie. I look at it a differently and think that people use them because they are easy and require no thinking.  It is easier to mail in a comment with a cliché than actually think originally and use the language as it was meant to be used. 

I’ll take this list one step further—nothing gets to me more than when these clichés are used in marketing and ad copy. It is painful to see phrases like: “A leading provider of”, “seamless integration”, “best of breed”, “value add” in an ad or Web page. When marketers take the easy and unoriginal route, they are saying nothing of substance, and not creating a meaningful dialog with customers and prospects. You have invested a great deal of money to get a prospect to come to your site or read your ad; so you need to say something meaningful with that opportunity. It is always harder to be original, but the rewards are worth it.

Who doesn’t have an opinion? That answer may be more chilling than you’d immediately presume. I’m a talk-radio, print-columnist and online content junkie, consuming more daily info than is probably good for me. Sometimes it’s an essay from someone I respect, but most often the content is heartfelt reaction (reaction to whom?) to syndicated columnists and talking heads expert at eliciting emotional reactions from their listeners and readers. Makes for quick road trips and typically, helps me form a position on issues.

The proliferation of commentary makes you think, and that’s the basic point of why people seek out others’ opinions. It should be utterly immaterial what your political, religious, or private life is all about to other people—it’s your life, you should live it without fear of response or consequence by others (presuming you abide by social & legal ethics). This includes the opportunity to speak your mind, state your case, and support your beliefs with your own thesis points.

Team of Rivals, a book about Lincoln’s cabinet by Doris Kearns Goodwin, bears this point out with incredible clarity. If you read it and understand these magnificent thinkers based on their own ideas and insights, most of the insights in the book are captured from their own daily journal entries. Lincoln and his cabinet were largely moral observers and political philosophers who overcame their individual base-level conflicts for the greater good of a young country. Differences between them were openly debated, and concessions to better points were made frequently. Except for the occasional duel, disagreements were kept in perpetuity on private papers, and not in the public eye. Compare this to the current political debate that takes place on You Tube, cable TV and the blogosphere. Nothing is private, and policy influencers cannot afford to be under the radar.

Today, media offers us the ability to read and form opinions as never before. Aggregators like Matt Drudge (The Drudge Report is one of the best) gather opinions across political spectrums and help readers create and debate opinions. Countless bloggers offer commentary that readers can chose whether or not to read and respond to—all in an effort to elicit conversation, perspective and debate on topics important to them.

In today’s media world there are no limits to available information and no excuses for being uninformed. Certainly, it will take an unidentifiable event to drive people to again document their ideas on paper journals, and forego the ease of electronic storage. So it goes. I have immense faith that people are destined to tire of forwarding emails that by association, they hope purports their own thinking, and will again rely on distinguishing their individuality through their own written ideas.

The Web and ease of electronic communication is a great forum for expressing your opinions and thinking on your own. My hope is that people take advantage of this. Quite a difference from the days of Lincoln when opinions remained in dusty journals destined for historians, but I’m buying my first journal today.
 

Depending on your perspective and how jaded you are relative to these things, Web 2.0 seems to quickly be on its way to becoming a cliché along the lines of “e-Business”.  Remember e-Business?  Ahhh, good times….but I digress.

Without question Web 2.0 is fundamentally shifting how we understand and engage markets, allowing both consumers and marketers unprecedented access to information about one another.  This transparency, timeliness and fluidity of interaction provide both a massive opportunity and an incredibly complex business challenge.  

Interestingly much of the buzz about all things Web 2.0 is focused on the enabling technologies with less emphasis on how, or if, these technologies and content address a fundamental business or consumer issue.  In some cases many of these technologies do a better job of contributing to the ever growing glut of information than they do providing meaningful tools or resources.  We don’t need more technology or content, we need more time.

So maybe Time 2.0 is a good moniker for the next wave of thinking.  Seems the key question we should be asking ourselves as marketers is “how do our efforts fit within the context of a consumers time?”  In an attention economy, marketing which aspires to provide maximum value in minimal time is marketing that understands and appreciates the realities of everyday life.  Winning the hearts and minds of consumers is largely based on demonstrating an understanding and respect for their beliefs and values.  If we respect the use of time, we can demonstrate we share the same values about the most precious of resources.

Last March, my family was skiing with a large group in Vermont. My thirteen year old son (who spends his time pursuing either speed or jumps of some nature) broke his wrist on our last afternoon. We made it to the local hospital about 7:00pm, and he was in a cast and home by 9:00. I had noticed he was unusually anxious about the time, and about getting out of the hospital, so naturally I presumed he was in pain, and that he needed to get back to the security of his home and family. Wrong.

Walking in the door, he went straight to YouTube, where he searched for and quickly found video taken that afternoon of him and his friends on Sugarbush. It had been about five hours since the accident, and there it was: 5:45 minutes, edited with audio by the Red Hot Chili Peppers, and complete with opening and closing graphics. And the director/editor (also 13) had to drive three hours to get home. The most amazing part of this—there were already 350 views of the video.

User-generated content is a reality of all age groups. Kids rely on it for entertainment value, adults rely on peer groups for advice, and businesses rely on their own customers for testimonials to prospective new customers. Virtually no other form of content has been so universally adopted in such a short timeframe.

Of course, there are risks when you let content be posted with minimal screening, and you know what they are. But does it also enhance a brand’s perceived confidence by not over-editing or censoring content generated on their site? Are prospective customers more likely to purchase a particular item of clothing or energy drink because it was featured on a free video spoof and was viewed 3mm times? Looks like the shift is on and yes, that is exactly what’s happening.

Take YouTube phenomenon Tay Zonday, whose song “Chocolate Rain” has generated 7,600,000+ views in four months and is available for download?. Then, look at how many others are already parodying this song (although the beat is excruciating, watch “Vanilla Snow” right after “Chocolate Rain” for an excellent laugh; currently, Vanilla Snow has received about 1mm views), and you get a feel for the power of user generated content. It’s a quirky approach to custom media, but with significant views daily, you can be confident it’s rattling the sensibilities of traditional media companies too stubborn to feel the new wind blowing.

When 13 year-olds are living for free, user-generated content, it’s time to pay attention to the new face of media that has arrived. And marketers in the world of custom media have got to harness the platform and drive their clients to make smart deployment of the medium to remain relevant.

The 2008 race to replace President Bush is well underway, and it bears watching how the candidates will be using media to get their message to voters.  I think we will start to see them move further away from the traditional ads of the past and start to embrace Private Media—taking directly to the voters using their own media channel. Traditional political advertising on TV and radio is dreadful. There are basically two types of ads—the “pro” ad where the candidate stands in front of a flag on a factory floor or farm and proclaims he is for all that is good and holy, especially lower taxes. The ad usually ends with a posed shot with his Stepford wife and 2.5 perfect kids. Then we have the “negative” ad, where a candidate is beaten up for some past vote or comment (usually twisted from the real facts) and is shown is the most unflattering picture they can find—usually in a grimace. They are all the same no matter which side runs them, and I would guess people tune them out and don’t pay attention anymore.

I think we will see the major candidates bypassing traditional media and speaking directly to potential voters. The Sopranos parody Hillary Clinton put on her site is just one of many ways the candidates are using blogs, social networking sites, You Tube, email and meetups to talk directly to the people and not going through the filter of traditional media. I am sure they will still spend obscene amounts of money on the public airways, but the tide may be changing.

It will be interesting to watch who will use Private Media more effectively. For the past 20+ years, the Republicans have been much better marketers than the Democrats.  Modern campaigning is no different than the latest marketing campaign to sell a car, new movie or fashion. The GOP has been just flat out better at TV ads, direct mail, database mining, and they own talk radio, which is just another form of ad driven entertainment.  Laura Ingraham and Bill O’Reilly may want Hollywood to shut up and sing, but they are in the same business as Susan Sarandon and Alec Baldwin—show business. (more about that in a future posting)

Just a hunch here, the Democrats will do a better job of exploiting private media and web 2.0 technologies. Those talents and technologies skew younger and to a more diverse generation. Will Private Media propel the Democrats to the White House; or will they find a way to blow an election that is their’s to win? We will be keeping our eye on this over the next 18 months- right now it is anyone’s to win.

When I became a Mom, I immediately joined the ranks of a highly valuable community.  OK maybe not apparent to the naked eye, but for marketers, the “Mom” target is highly profitable.  We do a lot more than make decisions about diapers and dishwashers.  We run households: often with the authority and management skills many of us once utilized in business. 

As a Mother, I have been both inspired and insulted by the way in which we are spoken to by media.  Messages come at me from the shampoo in the shower to the cereal boxes on the table. Commercials, newspapers and magazines, spam, emails, billboards, store aisles, PTO newsletters are all filled with messages for my people.   

For me, good communication from companies or organizations ultimately helps me accomplish one of a few things:   1. Saves me time; 2. Saves me money; 3. Makes me a better Mom; 4. Makes me a better woman; 5. Inspires or educates me.  The order sometimes changes but the endgame is the same. 

It’s about the content.  Would I pass this along to my inner circle, the email list that I know would benefit from this valuable information.  Am I a better mom because I read this information?  Are my kids safer? Are we healthier?  Are my resources being used better? Is the message being delivered in an environment that I feel is trustworthy?  If marketers want to speak to me, they have to earn my respect and therefore my choice to spend some of my time with them, their message and ultimately their products.  I advise my clients to follow the golden rule: treat other like you would like to be treated. 

Doesn’t matter if it’s kids shoes or grocery store aisles: if you want to reach us, you have to do more than be loudest or biggest.  You have to earn our respect.  Win our time and our dollars by earning our trust.  Help us do our jobs better and very likely we will reward you with our share of market. 

Social Networking may be one of the hottest Web business models today. MySpace and Facebook have attracted tens of millions of young people, and increasingly, professionals. Many media companies are now making plans to enter the market for social networking for professionals or professional networking as I would call it.  

Recently I began using the LinkedIn site. My first connection was sent to me by a colleague who is working for a struggling company that is laying off people by the truckload. I signed up and soon received many more LinkedIn requests from colleagues who were recently cut loose from that company; and are looking for jobs or going the freelance/consultant route. In today’s world of rapid change and “no loyalty” everyone needs to keep an ear out for new opportunities. You never know when the bell tolls for you. The base need of money, career growth and survival drives LinkedIn the way hormones drives the social networking sites of the young.  

A more proactive aspect of LinkedIn is to seek out sales prospects and partners who can help drive your business, which is how I am using it. Within the space of a few weeks I have collected roughly 155 contacts in my network. (That makes me small time compared to the people Portfolio found in this recent article – one guy has 50,000+ contacts)  

A third of my list is current co-workers; partners and clients whom I talk to on a daily basis, but nearly two-thirds are past colleagues. While it is fun to re-connect with old friends, I do believe business will come from these renewed connections. I have a current colleague who was skeptical that online social networking would catch on among us “serious” professionals.  Once he saw my growing list he jumped in and is hooked. After getting in touch with some high powered business contacts, his skepticism is fading away.  

I think online professional networking is about to take off in a big way. This movement represents a new opportunity for media and advertising. These sites are sticky, and have great upscale demographics. Currently on LinkedIn, I see ads from Microsoft, BlackBerry, Equifax and Google Ad Words being served. Are social networking sites on your media buy?  Let me know what you think.

Today’s marketers have infinitely more media choices than their predecessors to have a dialog with their customers.  Technology such as broadband, wireless, mobile, IPODs, satellite and TIVO has put the customer in control of what they see and when they see it.  This technology is a bonanza for marketers because now they have dozens of measurable choices, but on the flip side it is harder than ever to get the attention of a consumer with traditional media.  Here is a personal example of how things have changed:

When I moved from NY to Boston in 1986, I lost track of my beloved New York Mets.  I would have to hope for a chance to see them on a network game of the week, or drive to Harvard Square to get an “out of town” newspaper such as the NY Post or Daily News which would be on racks next to Pravda, The London Times and the Daily Worker.   In fact, I watched game six of the 86 World Series in a Boston apartment full of Sox fans.  I imagine it felt the same way as being a prisoner in an East German jail when the Berlin Wall fell.  I was ecstatic, but somewhat outwardly restrained in my joy. 

I moved back to NY in 1996, and became addicted to non stop coverage of NY sports, then, only to move back to Boston this year.   Contrast my media choices from 20 years ago to today.

I can read any New York newspaper 24/7 on the web in addition to dozens of Mets related sites and blogs.  I have personalized my sportsillustrated.com page with Mets news.  I listen to Mike and the Mad Dog on WFAN sports radio from NY streaming on the net.  I get Met games via the On Demand Season Ticket package from Comcast AND local radio broadcast on my XM satellite radio.  I could also watch them streaming on MLB.com, and get updates on my Treo, but that would just be overkill. 

From a media consumption sense I have not physically moved, I am still “virtually” in NY, so local NY advertisers are reaching me for products and services I do not want to buy, and the local Boston ads for baseball fans are not reaching me at all.  I have created my own Mets private media network that is not constrained by any platform or owned by any major media company.  The next time you use traditional media planning methods to reach your customers, think about this example and how your customers are now consuming media.  Are you still reaching them?  Are they where you think they are?  Is there a better way? Let me know what you think.

Everyone talks about the midmarket as some magical land of endless riches. It’s as if technology vendors and solution providers will be blessed with pots of gold if they catch the midmarket leprechaun—lucky charms included.Few technology companies are cracking the midmarket or anything below the “enterprise” level because they’re incorrectly sizing up the segmentations. Part of the problem is how they’re defining the various market bands.

The most common market segmentation model is the following:

• Enterprise - Greater than 1,000 employees/seats
• Midmarket - 100 to 999 employees/seats
• Small business - 10-99 employees/seats
• Consumer/home - Less than 10 employees/seats

The market breakdown is far more complex and segmented. Business consumers cannot be unilaterally placed in arbitrary bands based on their number of employees or gross revenue because even though “we” may say they’re midmarket, some very small companies have the IT infrastructure and support needs of very large organizations. Likewise, very large organizations may have thousands of employees, but very few “knowledge workers,” or people who use the IT infrastructure.Some vendors and analyst firms have subdivided the midmarket into upper and lower midmarket; midmarket and SMB; or midmarket, small enterprise and enterprise. Regardless of how they carve up the midmarket, they continue to treat the customers in this aggregated band as the same type of customer. This monolithic thinking typically results in unfocused marketing, higher cost in sales and lower revenue returns.

Technology companies should adopt a more flexible market segmentation model that approximates the position of customers in more realistic bands that reflect the maturity of their business and then adjust their position based on their unique characteristics.

In general terms, 2112 segments the market in the following bands:

• Large Enterprise - Greater than 1,000 employees/seats
• Small Enterprise - 250-999 employees/seats
• Midmarket - 50-249 employees/seats
• SMB - 10-49 employees/seats
• Consumer/Retail - Less than 10 employees/seats

Some may dispute designating the midmarket in the 50 to 249 seat band. Conventional thinking would say that it’s simply too low. The reality is far different. According to Internal Revenue Service reports, there are 31.3 million businesses in the United States, of which 29.9 million gross less than $1 million a year. If you assume that a million-dollar business can only support five to 10 employees, the bulk of the identifiable market actually falls below the SMB level. Once a company gets above the 50 seat level, they start to take on the characteristics of a formal business, but they remain informal and entrepreneurial. Once they peak above the 250 seat mark that they start to take on the characteristics of an enterprise. They have more formal departments, management hierarchy and purchasing policies. In other words, they look and act like an enterprise on a smaller scale. More importantly, they want to be treated like an enterprise.

Because many technology companies don’t understand that size doesn’t matter when you’re talking to a customer, they fail to engage with their prospects on a level that is meaningful to them. Don’t try to tell a $50 million company with 300 employees that they’re a small or midsized business. They may be small compared to ExxonMobil or Goldman Sachs, but they’re the big dog on their block and expect to be treated that way.

Correctly segmenting the market has a direct impact on go-to-market strategies, sales planning and cost of sales. Technology vendors and service providers should reassess whom they consider to be SMB, midmarket and enterprise, and then apply a right-sized products, focused market strategies and appropriate sales models to successfully reap the greatest return with the lowest cost of sales.