Sunday, June 30, 2013

Are we talking about a start up bubble enough?



I actually came to this epiphany today in the company of friends. Sure I have read countless articles in the first half of this year that talk about the start up bubble (and emphasis of start ups in tech by the way) and I'm sure many would say that they know atleast a handful of people in their immediate network who have/has started a start up or atleast worked for one at some point in their career. I digress - but are we talking about this phenomenon enough? I attended a few business school graduations this year and the number of students going into financial services and/or consulting had dropped off significantly. Further have come from an investment banking background myself right out of college where the analyst class was in the 250 - 275 range, it is shopping to know now that the class may be 80 people!! On the other hand perhaps people at the presumable graduate level are turning to start ups because the cost of graduate school – the “I want my own enterprise so what do I need this $200K degree for” sort of people. I think it will be interesting to watch over the next few years the areas of our society that would lead us to believe that we are in a start up bubble or atleast headed for one. The areas that are tangential to the core start up statistics will be most interesting to watch. Just food for thought…

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Rich-media ads perform better on mobile social sites

From this week’s class, we all know that many companies are moving from standard banner ads to rich media ads. Rich media ads perform better on mobile social sites compared to the non-social sites by mobile phones.

According to Celtra's study based on 32 mobile rich-media campaigns, such rich-media social ads had:
-16 times higher ad completion rates
- 2 times the engagement time
- 3 times higher video play rates
- 4 times higher share rates than rich-media ads displayed on non-social mobile sites.

Celtra Co-Founder and Chief Product Officer Matevz Klanjsek said:
When it comes to engagement with mobile rich-media ads, social media networks definitely have the upper hand. This is largely due to the native nature of their advertising products, where ad experiences organically become a part of the conversation.

The fact is that social networks boost mobile rich media. However, this research doesn’t mean that social media is always a better choice for mobile advertising. 

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Saturday, June 29, 2013

Company websites

Since I rarely look at Facebook or Twitter, I have long been annoyed by companies whose ads suggest visiting their Facebook page or following them on Twitter. I understand there are reasons why companies would prefer these over directing people to their own website, but I never felt any compelling reason to "like" or "follow" a company. So I was glad to find a Wired article discussing how companies are once again spending more time focusing on their own websites.

In this weekend's class we discussed how companies are moving on from standard banner ads, which users got very good at ignoring, to rich media that is more engaging and can really make a company stand out. I think this article shows that something similar may be happening with the social networks. By taking the data they get from the social networks and reorganizing it in a manner that fits in with their site, companies can add to the static company and product information they usually present. They can also be more creative in how they engage with customers since they are not as restricted by the social networks.

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Continuing on the privacy (or lack thereof) theme from last week's post -- today I want to talk more about commercial spying.  Firstly, is what im referring to spying at all?  Is the process by which companies engage data management companies to embed tiny "data trackers" into your computers after visiting certain -- virtually all, websites spying? How does your opinion change when the data is then used to track where you go, what you look for and how frequently you visit?  As we all know, the problem, or solution, is cookies. But despite the rather generic name, multiple platforms have numerous names for such a "technological development".  In Chrome it's called incognito mode, in safarie it's called private browsing-- whatever the name (although I give more credit to google for creative naming) the feature itself is widely used....
The cookies are transmitting data back into companies who then sell it in a cat and mouse game designed to bombard you with ads they know you at least have some interest in. Sometimes cookies can be good....they allow CNN.com to remember you like the Asian addition and weather.com to know its NYC weather your interested in.   Problem is, you don't know when -- and worse who is collecting this info and whether its being used for simple recognition purposes or more ominously, to build a complete profile of you -- ideally to be sold to a direct marketer looking to sell to you.  I think the tracking of ones web presence needs to be taken very seriously and people should have more awareness of what data is being collected and what it's being used for.  In the meantime, it's incognito mode for me...


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Digital data and Consumer Privacy



 
 
Blog# 5:
 
In a recent interview, head of Microsoft’s applications for HongKong  shared his opinion about data privacy of users.  Every free app that is made available to the consumer is collecting valuable information that can be used to track a user or sold to companies and marketers. The investment into creating the app is well returned in following the user and arriving at a comprehensive digital persona that can be used to find the appropriate buyers. 
While most people are aware that the photos they post are stored, they do not realize that meta-data about the camera brand/type, lens, and geolocation can also be stored as a part of user’s history. Similarly, he says, when he signs up for an app that says it’s tracking “vibration information,” he would never guess it was extrapolating transportation data like whether he was in a bike or car.
Technology companies need to increase transparency on how they communicate information about collection and use of data. To that end software developers need to play a greater role in privacy protection, creating tools that allow users to visualize and easily reconfigure their company’s data policies.
 
 

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Content targeting

Key concepts from content targeting in advertisement market place can be easily applied to online services provided such as consumer banking, credit cards or health care management portals. Companies have vast data sets to perform real-time modeling and predict customer propensity to consume certain services. In financial services, customer profile data can be mined to predict future products are like to buy. Traditionally, content was targeted to broad segments of customers. Using content targeting solutions, content can be targeted to individual customers rather than complete segments. Also, targeting solutions constantly evolve and improves relevancy to maximize accuracy. Once customers enters the sales funnel, relevant content drives customer through the sales page and brings incremental revenues. 

Companies that have strong online presence such as Amazon, Walmart, and others continuously invest in building such services to leverage long tail. However, there are potential roadblocks to building such features. First, certain industries are heavily regulated and it's huge deal to sharing customer profile with external vendors, who provide niche services to develop and deploy content targeting solutions. Secondly, big corporate houses have multiple lines of businesses, making it difficult to bring everyone on the same table for one solution. Thirdly, if companies were to develop solutions in-house, it would take longer to implement due to long internal bureaucratic process, increasing time to market for any new product. However, once developed, content targeting solutions can provide tremendous lift in conversion rates.

To start building such a system, the first and foremost step is to find out what customers need to do what they want to do. It almost requires data collections about customers that can help determine correlation with customers' behavior. Once we determine the attributes, user experience/Editorial team needs to develop creative messaging that can resonate with targeted customers. Content targeting solutions such as Test&target can deliver content based on demographics, location, behavior and other factors. So, let's begin!! 

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Adobe acquires ‘conversational marketing’ company Neolane for $600M



Neolane based in Paris, has a platform that provides easier integration and implementation of campaigns across the Web, email, social, mobile, call center, direct mail, and point of sale. Neolane will become one of the solutions in the Adobe Marketing Cloud, along with its Analytics, Target, Social, Experience Manager, and Media Optimizer offerings.
Digital Marketing firms are now hot and are becoming acquisition targets. It remains to be seen if they can truly add value as expected.

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Digital Marketing in the Developing World

The recent growth trajectory of India’s economy has created a huge middle class of over 500 million people with increasing levels of disposable income and created an ever-growing segment of small-and-medium enterprises (SMEs) that provide a range of services which did not exist even a decade ago. Needless to say, the competition is highly intense. However, firms are doing very little to differentiate their products and services from their competition and as a result price wars are a routine occurrence.

There is a huge opportunity in India (and in other developing countries) as a vast majority of the small and medium-sized firms in the developing world have limited to no digital marketing strategy. These firms still rely on archaic traditional marketing methods to acquire customers and the intensity of the competition is cutting deeply into the margins of such firms.

I spoke with a very savvy young entrepreneur who runs a chain of home goods stores in Chennai, a city of 12 million people in India. This business has revenues of around $3.5 million is considered to be a medium-size enterprise in India. He expects his sales volume to triple in the next three to four years. When I queried him about his marketing strategy, he said that his firm does not have a marketing strategy. Further, he revealed to me that he does not even have a website and that he does not see the need for one. But I pressed on and told him about Groupon, Gilt City and LivingSocial. He was fascinated by the business concept and began to see the potential of digital marketing. I also spoke with several other businesses of similar size which did not even have a website. This trend is not unique to India and several other firms that I have spoken to in other developing countries are in the same state.

My observations make be believe that that there is going to be a huge opportunity for digital marketing in the developing world in the near future.  These countries have a huge market place and millions of small entrepreneurs who fight hard for business. I feel that market forces would force SMEs in the developing world to adapt digital marketing as it is a strategy, which could prove to be an important source of differentiation for such firms and offer them a competitive edge in this highly fragmented business landscape. 

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Social Media and Fighting Crime in India

During a recent visit to my hometown Chennai in India, I met with Ambedkar, a highly respected Inspector of Police in my hometown of Chennai, India. Chennai is a sprawling metropolitan city in India with a population of over 12 million squeezed into an area that is less than half the size of New York City. Ambedkar also happens to a good friend of mine from my law school in India.

Ambedkar has harnessed the power of social media to keep his constituents informed about the progress that the police department makes on important cases and other matters of public safety. He does this by updating his Facebook account multiple times everyday. Besides informing the public, he also uses his social media platform to engage and interact with population in the police precincts he oversees.


While this may not sound like a big deal in the American context, it is indeed a very novel approach of engaging the public for crime-fighting activities in India or for that matter anywhere in the developing world. Typically, the people in India are distrusting of the police and do not interact with the police in any meaningful way. This makes crime-prevention/detection harder as people are not forthcoming with information that can at times be crucial to solve a case. The police department has not been effective with its PR and often the good work done by the department goes unnoticed. What is impressive about Ambedkar is how he has leveraged his Facebook account to build a strong rapport with his community, given them an opportunity to interact and engage with the police department and humanized the whole department. As a result, he has built a strong network of trusting and admiring citizens who have been providing him with highly useful and relevant information that aid the crime prevention activities of his department. Besides, Ambedkar has successfully built his personal brand and he set himself up for continued growth.  Ambedkar’s story is a testimony to the multi-dimensional utility of social media channels from staring revolutions to everyday crime fighting.

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Growth in Digital Marketing

Companies are significantly increasing their spending budget in digital marketing.  Digital marketing budget is growing twice as fast as their overall marketing budget.  This indicates a shift in trends for marketing budgets.  While the traditional channels of marketing are important the companies are trying leverage new digital technologies and the internet to reach out to more younger customers and customers who are technology savvy.

One of the major characteristics of digital marketing is its data driven nature, in addition to interactivity and live client response through the internet.  Companies are spending significant amount of money to acquire clients through the search engines, social media, and other forms of online marketing tools. This resulted in significant revenue growth for the companies and created an opportunities for them to reach to a global client base that previously was not cost effective to reach.

Email as a marketing tool has shown to be effective while inexpensive if it is used properly.  Other tools such as audio and video are also integrated into this new way of marketing.  The growth potential in digital marketing is significant and there are many entrepreneurial opportunities in this area.
   

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Adobe Purchases Digital Marketing Firm for 600 Million!



Adobe is trying to stay competitive by filling in the gaps on their digital marketing strategy with the purchase of Neolane for 600 million. The deal closes in July and has been cited as a way for Adobe to to fill a "glaring hole" in its product lineup. Why the hefty spend on a company with $58M annual revenues to date? This acquisition will surely keep up with other competitors that are leading the next generation in digital. Salesforce purchased Exact Target for 2.5 billion and Eloqua, another digital marketing firm was acquired by Oracle in December.  The deal is expected to close in July making this a positive win for a company that is in need of multiple strategies to meet new market demands. See Brad Rencher, Senior vice president and general manager of digital marketing, explain the acquisition below:

"This is a critical addition to our complete set of analytics, targeting, social, content management and media optimization solutions. Neolane will integrate with our solutions to empower cross-channel and highly personalized campaign management across the web, email, social, mobile, point of sale, direct mail, call center and other emerging channels.
The combination of Adobe and Neolane will give customers richer customer profiles, greater activation of social and mobile data, better definition of highly valuable customer segments, and more sophisticated automation and execution platforms. Many customers already rely on both Adobe and Neolane and will benefit from further integration between the Adobe Marketing Cloud and Neolane’s cross-channel capabilities."


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New digital marketing trends and concepts

There is a start up company which is developing new social media marketing tools for advertisers. Their service/tool is fairly new, or at least not known to many people. They are trying to get leads to their website to sign-up to begin a free trial (hoping they will subscribe for the service) but the new tools are not that intuitive yet. The business idea and the new tools are appealing once you learn what it is, but if you don't, it does not spark interests by the potential customers (i.e. leads vs conversion rate is low).
Sometimes, entrepreneurs create a great technology or implement a innovative ideas, but does not clearly translate the innovations to the potential customers. When promoting new business or marketing ideas, the focus is make sure that the customers are educated first. Only pointing out benefits of the product or service itself may not be sufficient to convince or interest the customers. What is important is "how" it happens. Create a benchmark in the industry and make this new concept or tool "your" service, so people can always associate the new ideas to your company. Generate a buzz words that connects to your service or company. When the buzz words or phrase is search, your company shows up. Furthermore, the more customers are educated, the more potential customers get interested in your service and become a customer, and not waste opportunities for leads to become your customer.

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Video News for the Millenial Generation

I am enjoying work with our start-up, and going to the website to do research. There is something ideal about going to a 1-2 minute clip to get a news update and learning something. This, coupled with long form journalism and reporting, should be the future of media. I look forward to applying what we have learned in class.

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Are your display ads being seen?

Last year approximately $14bn was spent on online display advertising but according to comScore, a company whose mission is to provide analysis to maximize your return on digital marketing, only 46% were actually seen by consumers.  What does "actually seen" mean?  It means that the display ad physically appeared on the screen where it was intended to appear.  In other words, this does not include people simply ignoring the ads.

So what is the cause for 54% of display ads not even having a chance to contribute to customer acquisition?  Technical glitches and poor placement where the ad doesn't load fast enough or the display is outside of viewable window account for some of this.

But Brightroll Inc estimates that close to 30% of display ad impressions are the result of fraud whereby an advertiser will pay for an impression based on fake traffic.  This fake traffic accounts for 10-15% of all display ad revenue.

In response advertisers are fighting back and demanding a clause in contracts with publishers that ensure that the ad is at least "viewable" to consumers and Google is developing solutions to reduce fake web traffic and provide more of a guarantee that display ads aren't being compromised by malicious software.

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NSA Use of Facebook User Data

A recent CNET.com article hit the tape explaining how NSA analyst leverage an outdated web encruption to ascertain various user data from social sites such as Facebook. With relative ease, the NSA is able to tap into fiber optic cables in a "vacuum" like manner thanks to a hole in web data encryption. This provides further light to the ongoing tragedy the Administration is inflicting on the Fourth Amendment to the constitution.

A discovery in a 2007 dissertaion by a professor at Tel Aviv University, Eran Tromer, showed that with under the cost of $1 million, one can build a dedicated hardware system that can break 1024-bit RSA keys. Those same encruption keys is what facebook uses to this day to supposedly protect user communication integrity.

Despite this of course, Facebook remaeins very popular with over a billion users. However, one looks at the recent negative news on facebook of:
  • Stock price underperformance
  • Trend of teens moving away from facebook and to Twitter
  • Recent reports showing average user hours per day are decreasing
One cannot help but think there is a trend emerging among user preference to "just say no" to unfettered infringement on privacy; people are ok with targeted ads for Bic Mac, but do they really want Uncle Sam tracking their every move? Time will teell.

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Huge Facebook (Advertising) Improvement

Notoriously, Facebook has had terrible advertising conversion results compared to search or even other normal websites.  In search, a customer is actively looking to go somewhere else, so an advertisement is perfect.  On normal websites, the customer may just be reading or browsing, so can be easily swayed to change course and click on an advertisement.  However, on Facebook, the user is at his final destination and is engaging with friends, and thus has historically been very unlikely to click an advertisement and leave his facebook page behind.

However, a new study is claiming that is about to change.  Facebook is now bombarding users with targeted advertisements in their newsfeeds.  Often, the ads say "XXX supports" or "likes" a product.  According to THIS ARTICLE, (thanks professor), news feed ads have 49x the click through rate of of Facebook's right side ads and "have a massive 21 times higher click-through rates than standard web retargeting ads"

If true, it will revolutionize Facebook and make it as desirable a place to advertise as the search engines. Currently, advertising on Facebook, because if its poor click through rate, has been much cheaper than other media. If that changes, FB may become the giant everyone thought it would be 2 years ago.

Personally, I'm not sure I believe these statistics. Facebook is now inundating users with ads, especially on mobile (If you haven't noticed, there is a newsfeed ad as the second thing in a newsfeed every time you open facebook or the facebook ap).  Considering on mobile, the screen takes 3-5 seconds to refresh and moves around as its refreshing, I'd be many clicks are accidental hits (I know I've done it a few times).

Anyway, it will be interesting to see how monitizable this all is (and how the stock reacts to this news).

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Friday, June 28, 2013

Offline Analytics

One of the reasons that digital advertising is so appealing is our ability to target particular customers and also to measure and understand their behavior. Broadcast media, by contrast, is a fairly imprecise tool. In this respect, the digital word allows better intermediation and increases the extent to which advertisers and publishers can actually measure the response and impact of these advertisements.

Recently, I was introduced to a company called IMRSV, founded by Jason Sosa. They have a fascinating product that essentially embeds a webcam in traditional offline media (billboards, public advertisements, etc) and then uses a number of proprietary detection algorithms to measure and collect data and deliver powerful analytics to the customer dashboard. For example, you can measure exactly how many people have walked by your billboard, how many were men vs women, how long people tended to stand in front of the billboard, and even more nuanced data like where on the board their eyes were looking.

When I read about it, I thought about Minority Report, but it also strikes me as a natural extension of using analytics to drive better decision making in a nontraditional setting.

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Selling Marketing SaaS (software as a service)

The idea of software as a service tends to appeal to brand marketers. Investors like the margins of the software as a service model and strongly encourage startups to adopt the SaaS business model: staffing up with salespeople, going for big enterprise deals, and spending as little as possible on customer service.

In class today, the visiting expert on advertising technology mentioned that in the race to cash in, too many companies are falling short by putting service second. Signs of weakness are popping up in the marketing-software business. Surveys of brand leaders at the world’s largest advertisers echo the same complaints:

·         They don’t have the time to learn new software and keep updated on new features.
·         The software is not keeping up with their specific needs.
·         The tools are not producing noticeable business results.

The reality is that marketers need service before software. For decades, they have relied on an ecosystem of partners, agencies, consultants and specialists to help them do their jobs. 
Good marketers understand customers’ needs and develop products that meet those needs. In order for marketing software companies and their investors to succeed, we must take a chapter from brand marketers’ playbooks and deliver service first, and technology second.

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The Call-To-Action

Advertising today is increasingly ROI focused. Marketing departments have budgets, and every cent needs to be accounted for. This is why the online channel has been such a godsend. There is a high degree of transparency and accountability in the online space. Every action is measurable and there are an array of metrics that can be used to measure the efficacy of online advertisements, and consequently, ad spend and ROI. This is why it is increasingly important to have a distinct call-to-action, a link that allows the consumers to translate their intent to desired action. These actions, also called conversions, can range from filling out an insurance quote, downloading free trial software, or redirecting the end user directly to a point-of-sale.

In my experience, working as a display media planner, I have found first hand how important the call-to-action can be, especially for direct response, results-driven campaigns. Through the creative optimization process, there was always one constant theme: the creatives with more compelling call-to-actions ALWAYS outperformed their less compelling counterparts. Generic call-to-actions like ‘learn more’ or ‘try now’ garnered lukewarm conversion rates, while exciting, inviting and specific call-to-actions like ‘kick start your new fitness regime’ or ‘take your skills to the next level’ (for example) always faired better. The beauty of the online space is that it allows the end user to act on his or her intent immediately, and it is imperative that we take advantage of this.


Recently, there has been a spate of innovations in above-the-line media that allows consumers to translate their intent to action. QR Codes, even with their sluggish adoption rates, allow advertisers to connect end users from physical advertisement mediums to their online conversion points. Even more recently, the ‘Shazaam’ app has begun to fulfill a similar role for television commercials, where consumers can use their mobile phone to link from TV spot to point-of-sale.

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