PR and Advertising in Web 2.0

Public Relations and advertising are two fields that are also irreparably changed by the advent of the new Web 2.0, especially social media. First, social media offers a closer public relations vehicle than ever before. Companies can speak directly on major issues to stakeholders, and can get their message across without it filtering through the media. In the days before the internet and social media, a publicist would have to draft a press release, hold a press conference, and release the information to the media. Then the public would wait until the 10:00 news to see what the press release was about. Now the PR newstream is instantaneous on the web.

This also creates an issue because people can also deselect or ignore the message, similar to advertisements. The article "why advertising is failing on the internet" calls out how the internet allows the public to control more of the message and content. We can close the window, ignore banner ads, and choose our own content. This is very different than the traditional TV, Radio, Movie advertising that is a push focus, with a captive audience.

Google is one of the few internet companies that have cracked this code, according to Eric Schmidt on the Charlie Rose show, and the article "Googlenomics." Google has developed an auction/AdWord system to sell advertising space to the highest bidder. To the bidder go the spoils - thousands and millions of people who are directed to your ad because they are actually LOOKING for the product or service you sell. Amazon.com is also stepping into this arena with additional product recommendations and personalized recommendations on your Amazon homepage. Both Google and Amazon have figured out the key: Advertise where people are interested......or trapped.

In the article "Camtasia: Video Game Advertising", numerous examples of captive advertising are shared. Players are glued to the video game screens, and ads for car companies, retailers, and computers are blasted across the screen on billboards and signs. In the new, Web 2.0 world, this may be the only way for major manufacturers to push messages to the masses.

Consumer product companies have jumped on the targeted advertising bandwagon on Google, Amazon, as well as video games. CPG companies need to stay at the forefront of this new PR and Advertising revolution, to ensure their brands stay top of mind for new tech-savvy consumers.

Web 2.0: The next generation of Market Research

The internet has made the world of market research smaller and faster. As smart phones and internet usage on the go proliferate, advertisers gain more and more information from users.("Critical Components of a Successful Web Analytics Strategy" & "Advertisers Get a Trove of Clues in Smartphone,"). Also, the increased use of social media lets advertisers know a multitude of information about consumers, and the impact that trend setters have on product sales and recommendations.

The readings this week detailed how much information advertisers and corporations an gather from smart phones and internet usage, and how brands can interact on so many more levels with consumers. This is very interesting, as someone who works in a CPG company, I see opportunity to better meet consumer needs. I know there will always be competing interests between privacy and tracking, however the shotgun advertising approach on TV and Radio today is seen as boring and not useful. This is because the offers are not tailored specifically to our needs.

As an example, I have noticed that when I look at a table on Overstock.com, and I spend a good amount of time on the website visiting the table three or more times, when I move on to Google or People, the table follows me. Then, when the table is on sale, I see the item pop up on Overstock advertising on other sites I am visiting. Special sale? Let me go back and buy that table.

In CPG, I definitely see how tapping into this trove of data can improve ROI and increase conversion. The key is knowing the customers' interests, gauging their mindset, and finding the right channel to reach them.  In the article "The Worlds Most Valuable Brands, Who's Most Engaged?", Starbuck's best practices include understanding how each channel provides a different dimension of engagement. Starbucks wants to reach out to consumers as they are within a certain radius of a Starbucks store, not while they are many blocks away and not interested in coffee. Any marketing or awareness dollars spent on the wrong consumer or the right consumer at the wrong time are a waste of money and effort. Finding the right person for your brand, at the right time is key to conversion and driving purchases.

The timing is right for CPG companies to stand up and take notice. Most CPG companies today have low-involvement levels on the Web, and have presences in very limited channels. This current situation is dangerous because many people believe that by 2020, the mobile device will become the internet device of the future. Smart Phone adoption will be well over 60%, and this means the advertisers that are engaged and have tapped into this information will be lightyears ahead of other companies.

My recommendation to CPG companies would be to jump in now, start engaging with consumers on a number of fronts and channels, find your niche target market, and collect the data to understand this market better than ever before. This is connecting and marketing in the Web 2.0 world.

Internet Business Models and the Future of Twitter

Gil's question about Twitter's business model got me thinking.....how do internet companies & sites monetize their benefits? In other words, how do they make money? What is the business model?

This is a very timely discussion because this morning, as I was driving in to work, I was listening to NPR. I heard the news about Skype being purchased by Microsoft for $8.8 Billion Dollars. And apparently some investors are living large, because a group of investors had purchased Skype a few years ago for about $2 Billion. I have used the free video phone service a few times, and the thought struck me - how does Skype make money? Why did Microsoft spend a fortune acquiring Skype?

The answer to the first question I have to assume is international calls, so a version of the Freemium business model (Mashable.com reading). Basic calls are free, but international or possibly calls over a certain time limit cost extra. However, just because Skype hasn't found additional ways to monetize gains, doesn't mean Microsoft won't. Maybe I will have to watch a 30 second commercial before I Skype with my grandmother next time! The answer to the second question I have to assume has something to do with strategic defense. Microsoft purchased a viable internet brand to combat against Google's stronghold.

Now, back to Twitter. The WSJ article "the Economics of Giving it All Away" and a "taxonomy of internet commerce" allude to the fact that giving consumers more value and more product can be a bust for companies. Chris Anderson called the internet the "land of the free," and this doesn't seem to be subsiding. Twitter is one of the fastest growing internet companies, and Twitter uses very minimal advertising. In fact, Evan Williams on YouTube had a difficult time sharing his plans to increase revenue.

My recommendation would be for Twitter to offer a Freemium model or a Targeted Advertising Model, similar to Facebook. First, a Freemium model, where for a small amount per month, people can join Club Twitter. Here, they can post photos, in Tweets as an added service, receive special targeted deals from retailers (who also pay to access them), and access other Club only members. The key would be to get celebrities and political figures to join the Club Twitter. Then, others would want to join to be a part of the exclusive group. The benefit of this business model is that it doesn't involve direct, kitschy advertising on the home page - nor does it disclose too much information to advertisers.

The Targeted Advertising model, as discussed in Hal Varian's article on the 14 business models, is simple and one of the most basic business models on the internet today. However, this model can often be overlooked unless targeted & designed correctly. Google has come under some hot water for advertisements on searches that do not relate to the product for sale. Also, Facebook has been slammed in the press for invading users privacy by giving too much information to advertisers.

In conclusion, Twitter, as well as Skype, have an uphill battle to begin to extract revenue from their current operation. My recommendation to both companies would be a Freemium model to capitalize on different type of users within both sites. The more involved, cutting-edge users will pay for the service and cover the rest of the users.

Microsoft will have to find a quick way to build upon Skype's business model to accelerate the revenue stream, and compete against Google. What a challenge.....yet, what a brand.

Thoughts on Social Media and Microsegmentation

This is the second post of the week, and is a follow up to my post on the Long Tail.

Evan Williams, the co-founder of Twitter, created a way for people to microblog, in an easy and fast way. A user doesn't have to spend time developing a blog, posting entries frequently and on a timely basis, nor do they have to have a goal or a topic to post something. Twitter allows people to instantly share ideas in a quick and simple way, in 140 characters or less. The irony with Twitter is that the constrained nature of the site and of the Tweets (text only, set characters) is what makes it so popular and endearing. It is easy to use, easy to follow, and is all about the message. Constrained = easier adoption, unique experience. Facebook and Google are constantly adding functionality and more "bells and whistles."

Twitter is a simple and easy way for people to connect with anyone, anywhere. Celebrities and political figures can connect directly with fans, people can follow people without permission, people become citizen journalists and can broadcast real time news, like pictures and information on the Tsunami, to anyone in the world - this is the new blogging - at its finest.

Twitter is a great example of how social media is leading to micro-segmentation. In the book Pandemonium, in Chapter 3, on the topic of the social web, the author describes segmentation through the lens of Old and New Marketing. In old marketing, segmentation was based solely on demographic or psychographic segments. In New Marketing, using the social web, there is micro-segmentation based on people's actions at a certain point in time. Twitter is a perfect example of New Marketing, because there is no way to classify twitter users or the follower/tweet relationship into segments.

Micro-segmentation is key to marketers because for the first time it allows companies to reach consumers on a more intimate basis....and with a better ROI. Marketing is not a nuisance if it relates to something that people want at the right time. In the article, "Seize the Occassion" by Rozanski, Bollman, and Lipman, the authors outlined 7 different usage segments.  These segments correspond with how a person consumes the internet, and the segments identify differences in length of time, number of pages viewed, and number of sites visited. By tapping into the usage occasion segmentation, marketers can target their messages and content to consumers at the right time.

For example, if someone is in the "Information Please" stage, a marketer of a new bicycle can provide articles, information, or a Q&A section on different websites to connect with this individual. Then, through a strategically placed link or advertisement on community sites, marketers can try to convert this person after they have received the information they were looking for. The goal of this occassionalization is to market to people when they are the most open and susceptible to your message and marketing goals.


Understanding how social media has created microsegmentation, and then how to market effectively in this environment is important for CPG companies. Occassion based segmentation is the new way to get marketing messages out to internet consumers, and it is a far under utilized tool for most CPG companies.

(also read and used information from James Surowiecki's lecture on "When Social Media Became News.")

The Long Tail and the Impact of Web 2.0

So I am just now getting into the articles and readings for this week, and I have to comment on Gil and Frank's discussion on Chris Anderson's book "the Long Tail". This is a very interesting concept, and I can see this concept come to life. For example, within a CPG company, if there are 100 different products within a key brand. About 80% of the brand's sales are done in the top 20 items. With traditional retail outlets (Walmart, Costco, CVS, etc), the successful sales of these top items, or the pressure that these items are the top items to carry means the retailers will tailor distribution to match these top products. However, e-retailers like Amazon or drugstore.com may carry 60 of the top 100 items in this brand because they are less impacted by shelf space or inventory holding costs than traditional retail. By carrying this expanded distribution or wide assortment, consumers are able to choose between more items, and can find the right item to meet their individual needs.

The internet easily allows consumers to meet specific and specialized needs. As the comparison costs go down and assortment increases, the largest section, the majority, becomes smaller as people begin to find exactly what they are looking and move down the curve into the long tail. In the old world, marketers would focus on the top products, where 80% of the consumers are, often using a shotgun approach to catch as many consumers with their message as possible. However, as the long tail grows, there is a way for marketers to target advertising to the specific consumer groups whose needs are met by the products, more of a sniper approach.When marketers target their message to a very specific consumer group, the conversion rate increases, and the audience is much smaller both of which lead to a better return on investment.

In Gil and Frank's discussion on the long tail, I also found it very interesting how rankings, recommendations, and the overall social component of online actually minimizes the long tail. It seems that the internet both increases the importance of the long tail and simultaneously allows instant interaction and recommendations, which decreases the long tail.

Power to the People!

This week's readings and topics are all about the power of the people. My goal at the beginning of the week was to understand 1) the impact of internet communities on our culture, 2) the business opportunity at hand, and 3) why this is happening and why now - because at our local neighborhood community meeting attendance is low.....I work for a major CPG firm, so I will look at this groundswell shift through the lens of opportunities for consumer products.

I just got back from being in a friend's wedding in Jamaica last week, so I really didn't dive in to the reading until today. I will have to be more proactive and space this out, because I have spent the last 2 hours reading articles and watching videos! ("The Dawn of the Human Network", "Web Video", "Why the Groundswell?", video "Star Search").

Back to the topic at hand - Power to the people. First, "Why the Groundswell?" calls out the perfect storm of factors that have lead to this shift. People, Technology, & Economics. People have always organized and wanted to connect - whether to rebel, to share passions, to advance a social movement, etc. Technology has allowed people to organize, from every corner of the globe, in a cheap & easy way (sorry, local neighborhood meeting - you are too inconvenient). Finally, the economics of the internet rewards high traffic sites and blogs, therefore the business opportunity is about becoming a major community connection point in a relevant and authentic way.

The biggest thing that surprised me about the groundswell is how powerful it is or can be. It can take neutralize large organizations like the AACS LA in the Digg.com story, or it can help two college droupouts make $17 million in sales by having other people design their products (threadless.com). CPG companies can take advantage of this business opportunity by first plugging in to how their brands are discussed in these various communities. This means more than just watching your ratings on Amazon.com or other sites (Star Search - NPR video). Those can be "too nice" and don't always accurately represent the feelings on the brand or product.  

Once there is a clear understanding of the current brand reputation, companies can begin to join in on the conversation. The "prosumer" movement has proven that people want to create content and input into products. Ask about new ideas, ask about improvements, get prosumers to create commercials or package designs. Create a web video that becomes viral to get communities talking.

I think a brand that does this very well is Old Spice. This brand was once known as the "old guy" scent, and now is a hip, cool brand thanks to a hilarious campaign that reaches across TV, twitter, facebook, youtube, etc. The brand created a groundswell last summer by simply replying in Youtube videos to some tweets from fans. This immediately drove to a tweeting frenzy by fans, including celebrities who retweeted and the rest is history. You can read more about this at this link (and watch some of the videos). http://thenextweb.com/socialmedia/2010/07/13/shirtless-old-spice-guy-replies-on-twitter-with-hilarious-personalized-videos/

Great campaign....followed the Web Video axiom of keeping it funny too!

So the business opportunity here is to understand that the people have the power, and the internet has maximized that. Jump in and join the discussion - you will better understand your brand, relate to your buyers, and can use their feedback and input to design your next product.

The Internet - Making us dumber or smarter?

I just read the two great articles in the WSJ, written by Nicholas Carr and Clay Shirkey. First, Nicholas Carr hypothesized that the advent of the internet and our use of it has made us "shallower" thinkers. This is because we no longer focus on one thing (like when we are reading), but are constantly multitasking online. He references a number of experiments that show when our attention is split, we retain less information. Therefore we understand less, and are worse critical thinkers and problem solvers.

On the other hand Clay Shirkey counters by claiming the internet is actually making us smarter. He hypothesizes that every medium, at its advent, has always been blamed for making the younger generation "dumber". He showcases examples from books to TV. The advent of each of these mediums has basically improved and updated how we think and reason. Everyone adjusts to the newest medium and then that becomes the norm.

Both authors make valid points, and I am  inclined to agree with both arguments in both articles, because I think they are not mutually exclusive. We may be more apt to multitask and process more ideas and distractions at once, but this isn't necessarily a bad thing. This may be the new way of thinking in the future, especially as Web 2.0 becomes more commonplace. Mark Zuckerburg and Jeff Bezos (in the video a conversation with Amazon.com CEO) both strike me as the type of CEO's that have a very small attention span, multitask, and are "shallow" thinkers, but this has served them well as they started their internet companies. Maybe this is the successful thinking of the future?