Advertising in the age of Social Media

I just finished reading and consuming all of the materials for week 6 and the topic of advertising, promotion, and public relations in the web world.  The article about Why Advertising is Failing on the Internet really stands out the most to me. 

Reason being, it seems like all I hear about when it comes to social media is how to monetize the site, or how to generate revenues, and how to make it profitable. It's definitely the hottest topic of discussion in my own life, as we try to monetize social casino content through various mobile channels.  But then I read the Professor of Operations and Information Management at the prestigious Wharton School, Eric Clemons, post that states, "People don't trust ads....people don't want ads...people don't need ads" and I could not help but immediately think of how the online titans like Facebook and Google will fare in the future, let alone all the small mom and pops that are trying to grow up and make it.  It just seems to defy logic.  But then again, his reasoning seems sound, but there is one additional point of consideration that really makes it sound that I would like to add...

In addition to online users not wanting it or needing it, I think the current social users primarily want to interact with friends, but they also get distracted easily, and the latter is what really limits the amount of time a company can advertise.  30-second ads like viewers see during the Super Bowl are not acceptable in social circles online, because users are not willing to even consider such a length ad.  They quickly move onto the next link, image, sound bite, you name it, and thus advertisers have extremely limited attention spans with which to work in the first place.  And to the previous point, Randall Stross is spot on when he cites, "Members of social networks want to spend time with friends, not ads."  These two points coupled together will spell the ultimate demise of traditional advertising techniques in the social media age.

If that is not enough to convince you anecdotally, then consider this article from June 2012 that empirically shows how ad funded internet models drained over $40B of venture capitalist money between 2002 and 2012.  At the time the article was published only an estimated 5% of global mobile revenues came from advertising.  And as the number of mobile and table users continues to exponentially increase, that does not bode well for those companies. The author, an executive advisor to large and emerging tech firms and advisor to venture capital firms, summarized his position with the phrase, "Traditional online advertising is looking like a $40+ billion money drain."  Wow.  That really does say it all.

Though it is quite interesting to me how the COO of Facebook, Sheryl Sandberg, spins it and states, "The goal of our advertising business is to get users to interact."  That would make sense given that Facebook is the world's most dominant social media application and platform, but it sure sounds a little fishy to me.  It's obvious Facebook is pushing ads, because it helps to keep their investors happy and make the company most profitable, as evidenced by the over $1.5B in revenues it earned last quarter that was propelled by ads.

But the underpinning lesson in all of this is that all social sites, and titans like Facebook included, need to be weary about their users' preferences and behaviors.  Trying to chase the money by continually monetizing the site, which can easily ultimately inhibit the user experience, can just as soon chase away the users themselves. 

Marketers need to seek new ways to promote awareness, bolster, and advertise their brands in this new web world.

Business Model Canvas: Pinterest

Pinterest is the latest successful site in the Web 2.0 era. 

The Pinterest site provides users the ability to "pin" images and videos to their pinboards, as well as the ability to manage that content based on user defined themes.  But beyond that, Pinterest allows their users to view each others boards and "re-pin" that content to their own boards.  Some say that Pinterest rivals Facebook regarding the rapid growth rate the site has experienced over the past 24 months.  It is estimated that the site grew over 1000% in 2012, and at current, Pinterest has an estimated 47 million active users. And what makes it attractive is that it appeals to individuals' desire and/or sentimentality to collect things, and the site attracts users who are drawn to imagery.   As you can tell from the graphic on the right, the user demographic can be broad and the business model canvas below lists some specifically. The Pinterest site also allows users to signup through Facebook and Tweet about their pinning activities.

Pinterest raises most of its revenues through venture capitalists and in their latest round of raising revenues they fetched $200M.  To date, Pinterest has avoided generating revenues from advertising, but there is obvious upside long-term revenue growth if they choose to go that route eventually.  Their costs are primarily related to the hosting, maintenance, and development of their website. 

Pinterest is unique in that it lets it users segment themselves based on the content on their boards. And based on the themes of their boards, the users are essentially creating their own more granular segments.  Additionally, businesses are keen on this technology, because they can use it for marketing purposes and furthering recognition and branding of their products.  And the site also offers some web analytics to let businesses know which pins are most popular, most repinned, and how the pins fare over time, which can give companies valuable insight.

As also noted in the business model canvas below, the channels used are PCs, tablets, and smart phones and propagated through user communities.  And the key resources for Pinterest are their website and their active users.


Business Model Canvas: Pinterest







Humans Reduced to Bits and Bytes

I just completed reading and reviewing all of the materials for week 5.  I now feel, in a word, "used".  Almost violated, though not quite. But certainly uneasy, and seemingly less than human. 

I have previously read articles in Harvard Business Review and the like about "Big Data" that explained how companies could use these volumes of data to better target their customers.  I thought it was really more an exercise in gleaning competitive advantage from "unstructured data" volumes.  That is until today.

Particularly after reading the introduction to The Numerati, and how mathematicians and programmers create algorithms from the world of data that is "a giant laboratory of human behavior" to target me more specifically, I feel vulnerable.  It's like they are cutting me down to just a few consumer preferences and behaviors while trying to stick a virtual siphon in my wallet.  And after reading how Tacoda uses cookies to track internet usage in order to determine patterns and essentially guess your next move, it is like every human being is being reduced to bits and bytes from simple little mouseclicks. 

And as if that wasn't enough, I read the article  Advertisers Get A Trove of Clues In Smartphones and it makes me feel almost unsafe.  Marketers can track my purchases and my location from my Smartphone to target me on something specifically nearby based on those pieces of information.  But if marketers can readily get that information, who else can??

Despite my uneasiness, this got my wheels turning and I had to do some more digging.  So I decided to research further Google AdWords to see more exactly how the technology works. 

AdWords allows keyword driven advertisements to show up on the right-hand side of the search page after a user search in Google. It is a pay-per-click service and sounds great for advertisers, though there are some things apparently that they too should keep in mind.  But after seeing it in further detail, particularly how marketers use my search words to target me, my concern is the personal information are companies able to track through the use of this technology.  Imagine how easily it is collected and how many companies can have it.  I sure hope they all have secure servers and upstanding employees!  I even reviewed Google's policy on information harvesting, but I am still not satisfied. 

To me this conjures the notion of Big Brother in George Orwell's book 1984, but it is even beyond that. Not only are they "watching you", but really their goal is to guess your next move and target a sale specifically for you at that juncture. 

It all feels right now as if I don't have the free will that I thought I did.  That the marketers know my next logical choice based on the preferences relayed in my previous searches, and they are going to help me make that choice.  And not having that free will would reduce me to something less than human, at least in a metaphysical sense. 

I have never felt so enlightened and disenfranchised at the same time!

On a separate note, during the writing of this week's blog I explored Google Analytics some more.  It is a statistics service offered by Google that allows webmasters and marketers to see detailed statistics about their web page. But during my research I discovered some funny videos in this regard.  It was a laugh I felt I desperately needed knowing what I know now.  I embedded one of them here for your pleasure.

Enjoy!

Week 5: Big Data and Marketing Research here I come...

I just read the headlines of the materials in this module.  Awesome! 

I can't wait to delve into the video titled "Brief History of the Internet".  I hear something like that and the first thought that comes to mind is, I wonder if that invidual finished it -- finished the internet.  Ha!  But nonetheless it sounds intriguing. 

Also, I am looking forward to reading more about Big Data.  My IT buddies from my past life have been talking nonstop about big data for about the past 12 months.  I'm curious what all the fuss is about.

And finally, I cannot wait to checkout the report on which of the world's most valuable brands are the most engaged.  Time to get crackin'...

Business Model Canvas: WMS Gaming

I chose to model my own company, WMS Gaming, for this Business Model Canvas assignment.

WMS Gaming is one of the four largest slot machine vendors across the globe.  They design and manufacture the Electronic Gaming Machine cabinets (EGMs), and are recognized as the innovator in the gaming industry when it comes to the game content, which they also design, produce, and test in-house.  The game studios produce video reel AND mechanical reel content for slot machines, as well as game content for video lottery terminals (VLTs), for sale and distribution across the legalized gaming industry worldwide. Additionally, WMS recently launched a competitive poker platform. 




Business Model Canvas:  WMS Gaming

    

WMS Gaming, not to be confused with the online division Williams Interactive, sells and leases gaming machines and game content to casino operators, route distributors, and government lotteries worldwide. They operate in a B2B fashion, though the creative teams pay very careful attention to slot player segments, and research their preferences and behaviors.  The company uses account executives to directly sell to casino operators and government lotteries, as well as uses route distributors in various markets, primarily international markets. 

Revenues are generated directly from cabinet and game sales, but a little more than half of the overall revenue comes from the leasing of premium games like Wizard of Oz, The Lord of the Rings, amongst many other titles. Costs are primarily related to the manufacturing costs of the EGMs, brand licenses, and R&D spend on the creative talent.  WMS has the highest percent of revenue spend on R&D in the industry, but they pride themselves on that and believe in this investment as they continue to seek being the industry leader in innovative game content.  They have recently brought such innovations as Community Gaming, Adaptive Gaming, and motion chairs to the casino industry.

WMS does necessarily require leading-edge performance and state of the art graphics, but they regularly seek that capability for the extra curb appeal and entertainment value it provides players. The real value, though, is derived in the overall experience that the creative team produces, particularly the math model and game mechanics, which are geared at certain player segments and niches. WMS protects these ideas with intellectual property patents.

The competitors focus more on their systems businesses, in which WMS essentially does not compete, or licensing branded content, or being a low cost, copycat content provider, respectively.  One in particular is primarily focused on being the overall market share leader.  Hence, WMS' competitive advantage is with their innovative content, intellectual property, and creative game designs targeted at certain player segments.

Week 4 - Post 2

Well as suspected, I am really enjoying learning about the particular business models that have evolved in this digital age.  But before I go any further with the options "interesting readings", I thought it best to pause and summarize a few sound bites about the "required reading" materials.

I like in particular how the Business Models on the Web article succinctly stated many of the typical categories.  It is almost too simplistic, but they capture the essence of the models well.  And I loved the video on the Dollar Shave Club YouTube channel. The use of video to not only tell a funny and edgy story, but to be the primary marketing conduit for selling the product, was absolutely fantastic.  And the whole debate about "bricks versus clicks" and anecdotes about Warby Parker and Hointer were, in a word, very enlightening.  But what stood out most to me was the professor's Breeze presentation about the various business models and Zynga in particular.

Professor Talbott's summary about the revenue model was spot on, but there really is more to the story... 

I had the pleasure of hearing a presentation from Zynga's former COO a few months ago.  Their revenues are clearly based on game sales, but typically Zynga earns far more on the game down the road and not at launch.  That is contrary to say something like EA's John Madden NFL 25, which will earn the crux of its revenue when it hits shelves in August. 

Dissimilar to EA games, Zynga launches their games initially with as minimal an investment as possible, and then ramps up their studios to create additional content for that game. The reason is that they know their players are casual gamers and will finish the game or typically get bored with it more quickly, and therefore players need a compelling reason to keep spending on it.  And that is the ticket -- these players spend their money on "virtual goods" provided within the game.  In fact, the virtual goods sold garnered Zynga nearly $1B in revenue in 2011, which was about 95% of their total. Now that is a powerful model.

For example, Zynga's hit FarmVille had several new services added post-launch.  And as those revenues grew, so did their studio in order to make more such content.  All of the points in the graphic on the left are expansions of FarmVille that enabled the sale of "virtual goods" and bolstered revenues for the company. Point being, it is not just about the game content and initial sale for Zynga, but rather about the additional sales it can garner within the game.  Zynga is acting as a virtual merchant by selling additional content.

Additionally, what has really helped Zynga's model explode over the last few years is the growing number of mobile internet users and the widespread use of tablets.  Smartphone audiences have been projected to reach 151M users and tablets to reach 106M users by the middle to end of 2013. And 14% of smartphone gamers (i.e. Zynga's demographic) spend about $25 per year on virtual goods.  And over 10% of them are spending over $100 in the same period!

There is a lot of money in the online gaming space, there is no question.  And I look forward to business models yet to come knowing that...especially when we consider the legalization of online wagering, as already being done in Delaware, New Jersey, and Nevada.  Wow!

Week 4 - Post 1

I will start by wholly admitting that this week has been nothing short of difficult.  I have started and stopped the assignment and materials for this week a few times, which is entirely unusual.  But between running four studios, conducting video shoots for The Price Is Right in LA this week, and having two sick kids under two years of age at home all the while,it has been nothing short a challenging week.  But I don't let any of that stop me!

This week I have been absolutely looking forward to learning more about business models particularly in this web 2.0 era.  Of most interest is the article about mobile devices changing the traditional brick and mortar retail, as well as the business models of news websites.  And I am particularly keen on reading more about from Business Model Generation, as that book got off to a very compelling start in my opinion...

Week 3 - Post 2

This week's material was different in scope than I had expected.  To me the topics were widespread.  But I have been trying to identify the common denominator amongst all of the materials that I read, watched, and listened to thi week.  What stands out as the common thread woven through all of them is connectedness.

The article The Origins of Social Media mentioned a lot of various examples, but underpinning all of it was this sense of "connectedness" amongst the online communities.  The term "blog swarm" that they mention is a great example of such connectedness, and how users can rally around a notion or a cause and impart their will, at least to a degree.  And the article The Seven Segment System for Online Marketing mentions seven usage characteristics of online users, but again underpinning this is how to connect with the consumer. Even the Death of Segmentation article is about connectedness with the consumer, as it makes the point about segmentation must now be geared to the individual.  Again all of this material related to new ways of connecting with the consumer.

So now I ask myself, why is this important?

It is important, in short, because we are living in the dawning of a new age. The DIGITAL AGE.  People nowadays are immersing themselves in digital worlds...virtual worlds...and that is how they are relating to others in the "real world".  And the traditional media outlets that marketers once used are being consumed less as people move towards other channels such as Facebook, Twitter, LinkedIn, web TV, etc. This piece I find most intriguing, so I explored it further.

I came across a recent series by Boston's NPR news station, WBUR, about how the use of digital devices is changing our lives.  The first installment resonated most with me, because it discusses how personal relationships are being affected by this digital age. Therein it cites a survey by Time Inc. done in April 2012 that indicates "half of all Americans say they prefer to communicate digitally than talk in person."

That statistic is bewildering! 

It is no wonder marketers are having to change their tactics. It would seem that individuals themselves are having to change their tactics 1-on-1 with each other!  So given all of this, marketers have to educate (and perhaps reeducate) themselves on how to best utilize these communication channels and social media outlets in order to "connect" to their consumers. 

 So then I ask myself, "Well now what?"  

Well, the culmination of what I have learned this week can be summarized quite concisely.  Companies that focus on connecting to consumers via these various social media channels, and engaging with those individuals, and all the while maintaining authenticity and transperency, will have greater success with respect to improving their brand and increasing awareness thereof. 

Week 3 - Post 1

After reviewing the schedule for this week, I have to say I'm excited to learn more about this notion of segementation in this digital age. 

It resonates with me, because my team and I have recently invested a great deal of time and money in trying to segment our slot machine players.  We first viewed them by their level of spend and frequency of visits, but then explored their behaviors, motivations, wants and needs using several attributes.  There is a lot of macro level information available online, like this article for example that says the most common player is a 55-60 year old woman with an annual income of greater than $55k. But we wanted to take it further, since we make the games. Our intent is to understand the types of games certain types of players want and why. 

A Lens for Slot Player Segmentation

However, I get the impression from the title of this particular module, Micorsegmentation, and the article titled "The Death of Segmentation" that I'm going to become quickly enlightened on how this digital age is allowing and maybe forcing companies to look at their customers at an even more granular level. 

Week 3 - Post 1

After reviewing the schedule for this week, I have to say I'm excited to learn more about this notion of segementation in this digital age. 

It resonates with me, because my team and I have recently invested a great deal of time and money in trying to segment our slot machine players.  We first viewed them by their level of spend and frequency of visits, but then explored their behaviors, motivations, wants and needs using several attributes.  There is a lot of macro level information available online, like this article for example that says the most common player is a 55-60 year old woman with an annual income of greater than $55k. But we wanted to take it further, since we make the games. Our intent is to understand the types of games certain types of players want and why. 

A Lens for Slot Player Segmentation

However, I get the impression from the title of this particular module, Micorsegmentation, and the article titled "The Death of Segmentation" that I'm going to become quickly enlightened on how this digital age is allowing and maybe forcing companies to look at their customers at an even more granular level. 

Week 2 - Post 3

After reviewing the other suggested readings and videos, I cannot help but come back to the couple of pages from chapter 1 of the book Groundswell.  The book defines its title as "a social trend in which people use technologies to get the things they need from each other, rather than from traditional institutions..." 

It is truly remarkable how any one individual can summon support from the masses using even the most simple media outlets; and I find this phenomenon absolutely compelling.  But what is concerning to me is that somebody's mere opinion of a poor experience could be taken as gospel and ruin a company's reputation.  That part is beyond intriguing -- it is alarming!

This groundswell movement is not just a matter branding for a company, or an opportunity for advertising, or a community for additional retail sales, or a forum for increased trade volumes, but it could very well be a conduit for calamity depending on the voice that is being heard. 

Just think about it.  Imagine you are a small business owner who has invested your life savings into your company, and provided years of dedicated and faithful service to your customers.  But then one day in one particular moment you slightly upset one particular patron or passerby who then posted a few sound bites about the experience.  And then others in that person's user community discovered that piece of content and proliferated it further.  Perhaps it then made the local, regional or national news.  That could be game over for everything you have worked tirelessly for and stood for in your business. 

As much as do like the prospect of "groundswell" and how the book positively portrays it, the flipside could absolutely be calamitous.  And as the couple of pages in chapter 1 suggest, one person cannot reverse the proliferation of the masses.  It would be as Grant Robertson says, "That's like trying to take pee out of the swimming pool."

Week 2 - Post 2

I just finished reading the online article "Build your startup without building code" that I was looking forward to this week.  In a word, I am disappointed. 

After reading the title of the article I was excited at the prospect of what it would contain.  I could only imagine what I would glean.  That the content would really show me how to startup a website without needing to know how to code.  How tremendous! 

I work in a software development environment and I know how difficult any coding can be, let alone web design and implementation for a startup company.  But then I read the article...

In short, it mentioned some basic concepts over the course of a few sentences and proceeded to plug the names of various web entities for the remainder.  Foolish me -- I expected the article to actually describe what tools would accomplish what facets with perhaps an example of the particular usage, as well as an anecdote or two about another company that was successful in using the technology.  Especially the piece about raising money.  The author makes it sound as if AngelList and Kickstarter are just giving away money to anyone who solicits it.  I highly doubt that....but thanks for another plug.

Summarily, in no way did this article help me inch any closer to starting my own business.  But hey, at least I was able to discover CrowdSpring.  That was pretty cool.

Week 2 - Post 1

We are now starting the second week of the course. 

From reviewing the schedule of classes and assignments, I am particularly looking forward to learning about how to build a startup business on the web...and it sounds like the article will give some tips on how to do this without needing to know how to code.  Cool!  I'm also looking forward to reading a chapter from the "The Social Marketing Playbook" on transitioning marketing to social media.  It seems to me that aside from personal branding, this could be a the heart of the course...but I'm not quite sure yet.

Additionally, my other goals this week are to keep rolling on the 'Twitter as a Branding Tool' project and getting a jump on the team project.

Week 1 - Post 2

I just read the article "Does the internet make you dumber?"  In short, I cannot say that I disagree with the premise. 

With every passing year I feel like the attention span of my colleagues, even myself, gets shorter.  My presumption, based on no scientific evidence, was that it is because the world is increasingly living sound bite by sound bite.  Hence, reading this article has resonated with me. 

Everyday in my office place I see folks walking through the halls while staring at their smart phones, sitting in meetings pouring over the email on their laptop, seemingly only focusing on the discussions at hand for moments at a time, and ultimately making snap decisions before moving on to the next fleeting thought. I have always believed that the more we thrive on tweets, quick posts, text messages, and even short YouTube clips that the more we train our brains to limit our attention span.  Reading the line, "we are at risk of losing as we spend ever more time scanning and skimming online", while scary, seems to be spot on, at least in my own experience.

It makes me think of the old axiom about "quality not quantity", and this new digital age anchored in a multitude of short sound bites and quick clips certainly seems to be lending itself towards a culture of "skimming" that requires little to no sustained focus or critical thinking and could ultimately lead to a deterioration of our cognitive abilities. 

On the other hand, I hope that the tremendous volume of information to which we are exposed more than makes up the difference! 

Week 1 - Post 1

My head is already spinning after just watching the introduction video and upon completing the two required readings. Perhaps the YouTube clip is what made me dizzy. 

I have seen that clip a few times, and yet every time I watch it I experience an uneasy somewhat dreadful feeling.  Being somebody who wants to at the very least be knowledgeable of what is going on around them, I watch a video clip like that and immediately feel that my efforts are futile.  That the only thing certain about the future is exponential change.  Wow! This alone makes it difficult to keep pace. 

Knowing that, I immediately wonder what media will last and which will fail?  In other words, which might be a good use of my time and energy to use and collaborate in, and which will ultimately disappear?  Or should that even matter?  And then I begin to wonder, which are the outlets that would resonate most with me?  And how do I find them in what feels to be a turbulent sea of information? 

It almost kind of reminds me of how I channel surf -- I don't even really know what I'm looking for amidst the hundreds of channels being thrown at me.  But then again, in this digital age, I might be having to go find it rather than remaining passive and just consuming things as they come.  And then finally I wonder if I will need to retrain myself to consume any of the particular technologies.  The thought is admittedly a bit of a turnoff.  So then, what is the point of all of this?

The point is exactly what I opted to take this clinic.  I want to learn more about the rapid pace of change in technology and in particular how successful companies are using it to their competitive advantage.  Rather than shy away from it, I want to tackle it head on and leverage whatever it is that I can.  And this despite the very fact that the volume and change of technology feels overwhelming. 

I plan on reviewing some of the other interesting readings and videos before attempting to put it all together for Week 1, but after completing the aforementioned activities and reviewing the schedule of assignments, this course has already taken me out of my comfort zone.  Consider the wakeup call received!  I definitely look forward to the weeks ahead...