Week 6 Analysis

For the final week of material, I tried to cover a variety of both readings and audio/video pieces.  The first article, on Googlenomics, was interesting and actually was not terribly surprising to me.  On its surface, Google seems like a very simple website, with a search engine and other applications available to the user.  However, we all know that Google is massively successful at generating revenues through its search engine, so it was not surprising at all just how much data goes into making the sponsored advertisements perfectly tailored to the consumer.  Specifically, it was fascinating to read about the instantaneous “auction” that takes place every time a search is run on Google.  It is no wonder that Google is such a profitable company when it has perfected these types of data algorithms.

The Camtasia presentation on advertising in video games was a fascinating one for me.  As a kid I was a video game junkie, and grew up playing Nintendo games like Tecmo Bowl and RBI Baseball.  While the graphics in these games were poor by today’s standards, the sports games had fake advertisements on the walls of the stadium, and I always wondered why.  In hindsight, it seems more likely that the advertisers themselves did not think of the video game as prime advertising space, as surely the video game manufacturer would gladly sell advertising space if the advertisers so desired.  While I do not play video games regularly now, it makes perfect sense for video games to provide a prime spot for advertisements.  Many top games resonate with both kids and adults, and the advertisements could serve to offset the cost of developing a game and/or reduce the price to the consumer.  It seems like this was a long time coming, and I wonder why these advertisements took as long to extend to video games as they did.

Similarly, I found the article on advertising amongst social networking sites to be interesting.  I am an avid Facebook user, and I could not name one advertisement that I have seen on Facebook recently.  This goes to highlight the point that advertisements on these sites receive little attention.  If the ads were targeted and offered me specific promotions or offers for goods or services that I like, I would be interested in receiving them.  However, it seems that more often than not these are just banner advertisements, which I give little or no attention to.  On the other hand, clearly Facebook is highly successful and is generating revenues through advertisements.  Therefore, at least some advertisers and some consumers are finding value in the various advertising channels available on Facebook.

Finally, I wanted to touch on four of the major points brought up by Eric Clemons in his article on why advertising is failing on the internet, and give my thoughts on each.

1)      People don’t trust ads

o   This is certainly true for me.  With the prevalence of viruses and malware online, I only tend to click on links that I know are valid and real.

2)       People don’t want ads

o   We live in a world where advertising is everywhere.  I would generally prefer to be able to surf the internet without being bombarded with ads, especially since I see and hear them constantly on the television and radio.

3)      People don’t need ads

o   Advertisements rarely influence me to try a product for the first time.  I either give something a shot because of word of mouth, or I am a regular customer.

4)      There is no shortage of places to put ads

o   This certainly rings true.  Advertising is everywhere in the physical world, and can be even more places in the virtual world.  Therefore, it becomes harder for advertisers to find the correct means for getting consumers’ attention with advertisements.

Week 6 Materials

Items Viewed / Read / Listened To

·         Secret of Googlenomics: Data-Fueled Recipe Brews Profitability

·         Camtasia: Advertising in Video Games

·         Article: "Advertisers Face Hurdles on Social Networking Sites," The New York Times, December 14, 2008.

·         Why advertising is failing on the internet

·         "Off Target" (from NPR "On the Media" program of October 16, 2009)

Week 5 Analysis

The readings and material from this week provided a broader variety than any of the previous weeks.  The introduction piece in The Numerati was interesting because it brought to the forefront what many know is going on behind the scenes.  That is, in this digital world, our every move is being tracked.  Before digital technology took hold, marketing was more difficult because consumer preferences were not as readily available and traceable.  Now that everyone interacts in this new world of technology, there is a seemingly endless supply of data that can be collected on us, our preferences, and our habits.  This information can be harnessed for the benefit of a wide variety of marketing opportunities.  I personally have been well aware of the fact that my activities online have created a consumer profile of myself, but I do not feel threatened by it or feel that my privacy has been invaded.  While I choose to make my information available online, I do so knowing that 100% of my activity online can be tracked.  This is simply the reality of living in a high tech world, and I believe the consumers are often better off for it by having better access to the products and services that we actually want to have.  If a marketer has easier access to reach me with offers on products and services that I actually want (based on my profile), both sides win.

On the other hand, I was not aware just how much advertising data was being transmitted by my smartphone.  Intuitively it makes sense that if I surf the internet on my phone instead of at home, there is no difference in the amount of data that becomes available to advertisers.  However, the GPS functionality leading to targeted advertising was not something I had thought of.  Silly me, but I thought I was using my GPS to help with directions and to find places to shop or eat based on where I currently am.  However, it makes perfect sense for this to be a prime advertising opportunity.  If I am looking for a place to eat, and happen to be just down the street from a local restaurant, it is a great opportunity for their advertisement to pop up on a Yelp search or other similar GPS-enabled application.

The History of the Internet podcast was quite an interesting run through of all the background on the internet that I did not previously know.  Most notably, my friends and I have always had fun with the idea of Al Gore inventing the internet, so it was funny to hear Frank dispel that myth in the podcast.  In addition, my friends often discuss what the next advances in technology will be, so it was interesting to hear about the future internet predictions in the podcast.  Most of us are well aware that the leading internet communication device in the future will be a mobile product rather than traditional PC’s.  However, the discussion about the blurring line between physical and virtual reality was quite interesting.  Already you have social networks online, second life software, and various other ways that people live their lives on the internet.  I am interested to see how this will further evolve in the future as virtual reality continues to move into our physical world.

Finally, I wanted to touch on the brand engagement report.  We have studied a lot in this course about how various companies engage with their consumers, including on Twitter and other Web 2.0 outfits.  However, the companies that I have spent time researching for this class (Johnson and Johnson and Motorola) have not been the best at engaging their customers.  Therefore, it was interesting to read case studies of what some of the leaders in brand engagement are doing to promote themselves.  Not surprisingly, brands like Starbucks, Google, and Amazon were near the top in brand engagement.  However, I was surprised to see companies like Thomson Reuters, SAP, and Accenture doing so well.  These are brands that you traditionally associate with being leaders in their respective fields, but not brands that you would put in the same class as consumer brands like Starbucks.  However, SAP, for example, has an extensive blogging network and utilizes social media aggressively.  Therefore, just because it is a brand that everyday consumers do not come into contact regularly, significant brand awareness can still be created by leveraging Web 2.0 capabilities.

Week 5 Materials

Items Viewed / Read / Listened To

·         "Introduction," in The Numerati, pp. 1-16

·         Brief History of the Internet

·         Chapter 4: "Critical Components of a Successful Web Analytics Strategy," in Web Analytics: An Hour a Day, pp. 75-97.

·         Article: "Advertisers Get a Trove of Clues in Smartphone," The New York Times, March 11, 2009.

·         Report: The World's Most Valuable Brands. Who's Most Engaged?

Week 4 Analysis

This was an interesting week of material that has left me thinking about the seemingly infinite number of different business models that a company can utilize in its online marketing activities.  I wanted to focus this week’s blog posting on how the material on the various business models could be applied to the seemingly viral social media sites like Twitter that are currently searching for a revenue generation strategy.

The question about whether Twitter will ever make money is an interesting one.  We have all seen in the news the venture capital and other equity investments that have gone into companies like Facebook and Twitter that give implied valuations to those companies of several billion dollars or more.  However, what is going to be the business model that these companies will use in order to turn those implied valuations into real cash flow return to the shareholders?  It is clear that both Twitter and Facebook have something unique in that they have created a community that not only has millions of followers, but those followers are also willing to part with their personal information (address, email, preferences, etc), which provides these sites with a seemingly invaluable database of information.

Despite the fact that Evan Williams was being tight lipped about Twitter’s revenue model, it seems like either the affiliate or advertising business models that were discussed both in Michael Rappa’s article and in Gil and Frank’s podcast would make the most sense for Twitter.  To me the biggest asset that both Facebook and Twitter have is a database of customers who regularly visit the site, which translates into significant traffic on the sites.  Using an affiliate model, various advertisements could be targeted to Facebook/Twitter users based on their demographics and preferences, and if a customer clicks through to that advertisement or subscribes to the product or service being sold, the social media site would receive a share of the revenue.  This model would work well because Twitter and Facebook have the ability to leverage their database of personal information on customers in order to appropriately tailor the advertisements to specific customers who would be most interested in the product or services the advertisement is pushing.  Alternatively, a similar model can be used whereby Facebook/Twitter simply sells advertising space on their site, and again utilizes the database of information they have on their customers to appropriately target the advertisements.  Because of the power of Facebook and Twitter, it seems feasible that these companies could use a hybrid model of both affiliate and advertising.  That is, the business would pay to advertise on the social media site, AND the social media site would also get paid a revenue share (as an affiliate) if a click through transaction occurs.  This type of “double dipping” seems feasible given the power of the databases that these sites possess.

It was also extremely interesting to listen to Evan Williams effectively state that Twitter is most focused currently on making the product better rather than monetizing what they have.  This struck me as interesting because this is exactly what Mark Zuckerberg continually has said about Facebook (as well as what was relayed to us via the movie The Social Network).  That is, despite the phenomenal success and traffic that these sites draw, the founders believe that they have only scratched the surface of what they can become, and are therefore not yet concerned about how they are going to turn it into big money.  However, despite these outward statements it is obvious that both within the company and amongst the company’s equity investors there is some significant thought being put into a revenue generation strategy.  Time will tell what these companies will actually do, but I see both Facebook and Twitter being major forces in online marketing because of the followings that they have developed.

Week 4 Materials

Items Viewed / Read / Listened To

·         "Business Models on the Web

·         Video: "Gil and Frank Discuss Business Models”

·         Video: Will Twitter Ever Make Money? - Twitter CEO Evan Williams Responds

·         Article: "The Economics of Giving it Away," The Wall Street Journal, Jan. 31, 2009

·         A taxonomy of internet commerce (2006)

·         5 business models for social media startups (2009)

Week 3 Analysis

Another week of interesting materials!  It was a bit of a challenge to get through everything given a busy week of business travel and KD graduation, but I was able to get through all the material and was glad that I did.

I listed to both Gil and Frank’s discussion on the Long Tail, as well as Chris Anderson’s writing about it, and had some of my own thoughts.  I am skeptical as to whether online advancements have really served to push a larger percentage of sales toward the Long Tail.  On the contrary, it seems to be that online availability (i.e. iTunes, Amazon, etc) would increase sales across the board.  I tend to believe that those folks who are interested in purchasing more small-name novelty products were buying those even before these items became available on iTunes and Amazon.  For example, if total record sales were 100 and 10% of them were the Long Tail items, I believe that the absolute number of sales would significantly increase as distribution of records go online (i.e. on iTunes), while still only 10% of the sales were in the Long Tail.  Therefore, everyone wins.  More of the “hits” will sell, as will more of the Long Tail items.  I’d be interested in seeing empirical data that would agree with or refute my thoughts, as I’m not convinced that the Long Tail is benefiting comparatively more than the mainstream hits.

The NPR audio regarding Twitter was especially relevant because I am just getting started on Twitter, thanks to this class.  For the longest time, I asked the exact question that the segment focused on: what is the point of Twitter?  However, after using it for a few weeks, much like many of the people interviewed in the NPR piece, I’ve found that Twitter serves as a great resource for true real-time news.  As an example, as much as I hate to admit it, a few weeks back I was quite interested in finding out who the next “Bachelorette” would be, which was being announced on The Jimmy Kimmel Show.  However, I was not near a television at the time, so I relied on the Twitter community tweeting the news in order for me to find out.  Another example was just yesterday as I was driving back to Bloomington and was stuck in standstill traffic on I-70, I relied on Twitter to inform me what the cause of the jam was.  While I have not been tweeting myself (I used Facebook’s status updates instead), I have been impressed with how the Twitter community can serve as a great source for up to the minute news.

Finally, I wanted to comment on the two pieces on changing marketing strategies and market segmentation.  The seven segments was an interesting piece as it focused more on the reasons that consumers go online and how to market to them rather than segmenting them based on typical demographics.  I tend to think that a combination of both the traditional demographic segmentation and the new online strategies are needed.  The seven segments described are interesting but I feel that they may not be all-encompassing.  There are bound to be other consumers going online that do not fall into one of those segments.  Therefore, it seems to be that utilizing traditional demographic based market segmentation as well will ensure that companies have a grasp of all their potential customers and their market segments.

Week 3 Materials

Items Viewed / Read / Listened To

·         Chapter 1: "The Origins of Social Media," in The New Influencers, pp. 1-14.

·         Podcast: "Gil and Frank Discuss the Long Tail”

·         Chapter 3: "Making the Transition to the Social Web," in Marketing to the Social Web, pp. 31-47

·         Chapter 1 "The Long Tail," in The Long Tail, pp. 15-26.

·         The Seven Segment System for Online Marketing

·         The Point of Twitter (from NPR "On the Media" program of April 23, 2010; 9 minutes)