Wednesday, October 31, 2007

Enterprise marketing and Web 2.0

I came across this little gem of a print add on the back of the latest Economist magazine (pretty much the only off-line publication I read these days). It's a comparison of Oracle and SAP numbers for last quarter (despite the fine print saying that the numbers are actually from two different quarters). Oracle is obviously doing something better than SAP. That something is 'applications growth' - which sounds like its applications grow better (maybe they're fitter?).

It's complete drivel of course. It's a comparison of growth rates with no indication of market share for context so you have no idea who is actually performing better. It's a hell of a lot harder to grow if you are the dominant player.

What's really interesting though is the strategy behind it. This is a 'Leadership' strategy. Oracle is trying to convince potential customers of their leadership: that they are a viable choice; that they are beating out the competition; that they are doing this consistently. It's all about being the biggest, best, cutting edge, most innovative, etc, etc.

This strategy is repeated for almost every large enterprise software company and many banks, consultancies and financial institutions. There are slight variations on it of course: Royal Bank of Scotland talks about 'making it happen' rather than 'words'; EDS 'gets things done'. But by and large, it's all the same positioning. The term 'Thought Leadership' is a byproduct - the notion that in certain industries, you should be looking for companies with 'thought leaders' (people who push the intellectual boundaries of their discipline).

But how does this strategy play out in a Web 2.0 world where collaboration, collective intelligence, factual scrutiny, two-way conversations and openness are the new rules? Does Web 2.0 level the intellectual playing field? I think it does. You're just as likely to find consultants and industry 'thought leaders' blogging these days. And their facts being questioned. Which is a good thing. Too many of these pundits lived in rarefied air for too long. Writing undisputed and unchecked white papers. The white paper is like the anti-blog - a typically biased opinion piece filled with selective and dubious facts enshrined for all eternity as a pdf with no way of commenting on or questioning the numbers or argument.

Which brings us back to the print ad at the top of this post. One of the most unabashed, arrogant attempts to position a company as a leader I think I have ever seen. And it's like the white paper - unaccountable because it's not a conversation. Unaccountable to its statement, to its facts, to its implications. If the bar for this ad had been 'would I put this in a blog post and let people comment on it', it would never have seen the light of day.

I don't think the notion of being a 'leader' or 'thought leader' is incompatible with the 2.0 world, but the substance of strategy is very different to what it was 20 years ago. Companies like Oracle haven't grasped this if this ad is anything to go by. Enterprise software in general I think is going to struggle.

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Monday, October 29, 2007

Marketing speak, and how to avoid it

Something strange happens when you pull together a bunch of information about a product or service and sit down to try and write it up in a way that would pique the interest of a reader.

For some reason, you have this urge to over persuade. A simple 'this product does x, allowing you to do y and it will cost you z', becomes 'this revolutionary product x eliminates every barrier to y imaginable allowing you to do y at any time, anywhere in the world and costing you only z!'.

I was amazed at myself after re-reading some marketing material I had written that it sounded like this. And it wasn't even intentional (I wasn't trying to be too persuasive)!

Marketing speak creeps into our heads because that's all we hear. It's a vicious cycle. The more we hear it, the more we think it works, the more we use it. Here is a sample from a leading Business Intelligence company - this is posted on their website (company named removed to protect the innocent).

XXX is the first and only business intelligence (BI) platform to deliver a complete set of market-leading, end-to-end BI capabilities: best-in-class enterprise performance management (EPM), dashboards and visualization, reporting, query and analysis, and enterprise information management (EIM). XXX introduces significant innovations that deliver BI in new ways to a broad set of users.
It's 'complete, end-to-end, best-in-class, innovative, new and broadly useful'! As well as introducing us to THREE acronyms in one paragraph!

I was thinking how to reconstruct this to make it less vomit inducing and I came up with:
XXX is a business intelligence platform that delivers a complete set of enterprise tools - dashboards and visualizations, reporting, query and analysis, performance and information management. We deliver a best-in-class solution that's innovative and accessible to a broad set of users.
It's more understated, less direct and certainly less 'loud'. The copy that carries a quiet confidence? Maybe I am over thinking this a bit...

Then again, the original probably sells more stake knives. Someone is making a killing from stake knives. I'd love to know who that is.

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Wednesday, October 24, 2007

Update: Radiohead album sales

So since the Gigwise announcement that Radiohead had sold around 1.2 million downloads, the band's manager, Bryce Edge, has called that figure 'exaggerated' - despite that number appearing on a few widely read and influential blogs. However, in the same article he did say that the average price ($8) that was reported in the press was about right.

A survey done by an industry newsletter and reported here in the Times, indicates that the average price of $8 is about right, but that a third of people who downloaded the album paid nothing for it. That seems strange.

If a third of people paid nothing for the album, then the remaining two thirds would have to have an average price of around $12. This seems high. If you assume that few people are going to put down the actual price of a CD ($14 or higher), then the vast vast majority of people (who put down something more than $0) must have been plunking down $12-$14 on it.

I say no way. That would make for a very skewed price distribution. And in my experience, these things tend to follow more predictable patterns.

I guess we are only going to know once Radiohead releases their sales data. Which I hope they will. And, I hope they will release it to one of the public data sites such as Swivel - would be great PR for both of them (not that Radiohead really needs more PR).

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Monday, October 22, 2007

Springboks win the Rugby World Cup

Congratulations to the South African national Rugby team (the Springboks) on capturing the 2007 Rugby World Cup. A well deserved triumph.

Watching the game, it was difficult to say that England put up a good match, but that doesn't take anything away from the Boks. They played well and did what it took to win.

I am going to go out on a limb here and predict a New Zealand win in 2011. No team can perform so consistently bad in one tournament. We are due!

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Thursday, October 18, 2007

The problem with nutrition information

We recently took a kind of photography trip to Vermont to see the Fall leaves in 'bloom'. My wife is an avid photographer so this is the sort of stuff she lives for. I, on the other hand, am partially red-green color blind. Fall leaves look various shades of unusual green to me. My wife assures me I am missing out on a lot.

On the drive up to Vermont we took one of the toll roads north. A toll road in America is an interesting phenomenon. It is usually slightly better than your average non-toll road and along its stretch are various places to stop and rest. All these rest areas look exactly the same (and are unusually symmetrical in construction - I once walked out the opposite entrance and thought our car had been stolen as the front and back parking lots looked identical). And they all contain the same types of fast food outlets.

We don't typically eat a lot of fast food but we hadn't indulged in a while and were in a hurry. So we rolled up to the nearest McD's and ordered our usual. After getting it and sitting down I noticed, for the first time, the nutritional information on the box. Below is a picture of the Quarter Pounder's info:

My first instinct was to throw up. I realized this stuff was bad for you, but not quite that bad. And I now understand why these companies were so keen to keep this information off the box.

In studying it more though, it struck me that the display of nutritional information is woefully inadequate if you know nothing about nutrition. For instance, the only information that gives you any context is the Percent of Daily Value (PDV). But what if you had heard that saturated fat was an important component of your diet and you needed to make sure you hit your daily quota? You'd be loving this meal. It's a one stop saturated fat mecca. Cholesterol only 30%! Great, I have only two other meals in the day and 70% to play with! And on top of that, it is low in carbs and low in sugar. And wow, 30% of my calcium! I can forget that glass of milk in the morning now as well.

Of course, this is all wrong. This is one of the most unhealthy meals you can have. But from this nutritional information, that's not easy to conclude unless you already know a bit about health and food.

Information without the proper context is useless. The extent to which you give it context can be more or less complicated, but it needs to be there.

The UK has recently implemented a 'traffic-light' labeling method for food products sold in stores. I think this sort of thing is a move in the right direction. It at least tells you the relative 'goodness' of high or low values of certain ingredients.

A better system would be one more tailored to your own health needs. People with a high risk of heart disease for instance, should have a different set of saturated fat criteria. Women who are pregnant should have alternative priorities. Likewise people with liver problems or even people just looking to lose a bit of weight. How such a system would work is a harder question.

But whatever is implemented, the good old Quarter Pounder should probably have a skull and cross bones beside it - 'a real and imminent chance of death if consumed in excess'.

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Tuesday, October 16, 2007

Breaking Radiohead album sales news!

Gigwise has an article on some breaking news about the Radiohead album sales experiment. This is pretty preliminary and has net been backed up by any official word, but it looks like the album sold for an average 4 pounds (about $8USD) and they have moved approximately 1.2 million copies.

4 pounds is pretty close to the $8-$9 I predicted in the post below - so maybe I have a future in forecasting after all!

The comments on the Gigwise article aren't all that kind to the story, so this could still change (it seems Gigwise will post anything to get a bit of traffic).

Will be interesting to watch as more results come out.

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Wednesday, October 10, 2007

The problem with Raidioheads's latest experiment

I downloaded the latest Radiohead album today. It's not bad. Very mellow. I think I definitely got my money's worth.

What did I pay for it? $10 USD. Why? Because an album in the US costs about $14 and I thought I would pay a little less as I know there is not a lot of overhead on the product. And therein lies the problem with this experiment. A problem that you encounter any time you let a consumer make a price decision - they try to put it in context.

In this case, the context most people will use is the standard $14 for a CD (I think it is about the same in pounds in the UK). This is an effective ceiling for most people - why would you pay more? We've been trained to believe that even the best albums in the world are $14. And, of course, the worst ones are worth that as well. Given this, the average price of a new album where you let the customer decide has to be less than the $14 context - you are always going to hedge slightly by paying less just in case the quality is indeed poor.

And if the album is great? You got a bargain. And I agree with Joseph Jaffe that Radiohead should have a follow-up option for people who want either their money back or to pay more - they might be surprised at the results.

I'm prepared to put my forecasting reputation on the line here (which is not much as I don't really have one) and say that the average selling price of the Radiohead album experiment will be $8-$9. If 5 million people download it, not a bad return.

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Monday, October 8, 2007

Rugby World Cup Disaster

Ok, since I posted about the Rugby World Cup's tournament structure, it feels appropriate to inform everyone (not following the competition) that New Zealand lost in the quarter finals to France.

While this fact is of minor importance to most people - maybe enough to elicit the odd raised eyebrow or semi-interested nod of the head - it's a soul shattering, life ending, world concluding disaster for most New Zealanders. Rugby is a akin to a religion in New Zealand.

So how do you take a loss like this? What can we do to console ourselves? After much soul searching, I've decided to take a leaf from the book of the New York Yankees - the self proclaimed 'winningest team in history' - when you need to feel good about yourself, pull out the record!

Winning Percentage

That's right, the numbers don't lie. The New Zealand All Blacks are the 'winningest' team in the long and rich history of the sport. That 's an impressive record. And one I think we can feel proud of.

It's that history of winning that will sustain us in these dark times.

(ok, that last line is a little melodramatic)

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Friday, October 5, 2007

The value of 'free'

Interesting and thought provoking piece on the BBC website today. It talks about the value of 'free' - is the increasing prevalence of free goods undermining their cultural significance? Radiohead's latest album release is cited as an example - they are giving away their album as a digital download on their website. Not entirely free, but the consumer can name the price.

Some of the article's premise is based on this quote from Julian Baggini, a philosopher (and fellow blogspot blogger):

"When we pay for something we are showing commitment in a very practical way. We put something of ourselves - in this case money - into whatever it is we want. And by paying for it, we are proving to ourselves that we value it."

I take issue with this - paying for something only involves a commitment if the price we paid comes close to exceeding the utility we expected. When this happens, we justify the expense with, often delusional, utility increasing valuations - the $200 I spent on my new bedside lamp was worth it because of the amazing light enhancing design that helps me read without straining my eyes! When in fact the $20 lamp probably does the same thing. We add value to the valueless when it costs us a lot due to our dislike of cognitive dissonance. Psychology 101. And of course the utility I add to my valueless lamp is in direct proportion to how I value money! Basic Economics 101.

So in our modern world, where mass consumerism has driven down the prices of cultural goods (e.g. music and books) to such a degree that they are essentially very cheap (bordering on free), what we pay for them needs little justification - $14 for a CD is not something you are going to lose sleep over. If they are free, even less sleep is forgone.

My point here is that there is essentially little difference between free and really cheap for these goods You have to get to a much higher price bracket before you start to add pseudo value and show commitment to justify a purchase.

What's wrong with Baggini's analysis then, is that price is just a poor proxy for value in this case. A better one would be some combination of time and attention - because that is what cultural goods really cost us. And time and attention, in this day and age, is of increasing value.

If you accept this, then 'free' cultural goods aren't in danger of devaluing culture because we're spending scarcer resources than money on them - our limited attention spans and decreasing free time. A thousand years ago the reverse was true - wealth was scarce and attention was abundant.

The irony is that the challenge for producers is to turn that attention and time back into money. I am sure the record industry longs for those heady days of feudalism!

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Thursday, October 4, 2007

Good design helps small businesses

We've been searching for an Accountant for our business for a while and didn't really get many good leads from recommendations. Accountants are a funny lot, many seem to ignore the fact that they are in the client servicing industry as much as the financial industry.

And if you search the web for local accountants, many of the sites look like they were built by used car dealers - tacky, hyped-up, and kind of sleazy. So I was really happy to find M.H Financial Group, in the depths of New Jersey.

Michael and his team decided to take a different tactic to small business marketing. Instead of doing everything on the cheap, actually invested in a very nice, professional web presence that leaves a strong impression of the type of company they are. An impression strengthened when you walk into their business and see the new carpets, mahogany desks, leather chairs, great lay-out and comfortable atmosphere.

Of course, as Michael himself pointed out, none of that matters if his services are bad (which they are not). But it matters greatly when a customer is deciding. All of this gets him and his firm on a very short list. Getting on that short list is the hardest thing for a small service business to do.

This is the power of branding, and it works, no matter how small you are.

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