The Internet Presents Opportunities

The article about why advertising is failing on the internet made some good points about why advertising is suffering with the popularity of the internet. However, the lessons I have learned from this course have shown me that the internet provides new opportunities for advertisers, not just challenges and road blocks. While the traditional form of advertising may be going by the waist side, marketers need to be creative to capture their potential customers’ attention. We have learned for the past six weeks about the various innovations that have been thought up out of necessity that can make online marketing successful. From targeting ads to the auction style platform, there are many new ways that marketers should be looking at their craft.

The author states that marketing is going to fail because consumers don’t trust advertising, they don’t want to view advertising, and they do not need advertising. I would argue that all of those points were true even before the advent of the internet. The last point is truer now than ever before, but the first two points were certainly true before the internet became so popular. I don’t think there was ever a time in recent history when consumers trusted ads or wanted to be marketed to. But the difference is customers now have a platform to voice their feelings, and if they do not like an advertisement others can quickly hear their complaints.

I agree with the premise that there are significant new challenges to advertising, but isn’t that true with every field as the market advances and evolves? The marketers who can be ahead of the curve and utilize the internet to their advantage will succeed and the marketers who cling to old concepts and ways of operating will ultimately fail.  

Does Pinterest have the Facebook magic?

Pinterest is not the new Facebook. Though the article for this week’s reading posed that question, looking at a few important variables shows how vastly different the two sites are. The mission of Pinterest is for customers to share ideas and products that they like on what can be considered their online scrapbooking page. While Pinterest’s mission is to connect people with ideas, Facebook’s mission is to connect people with people.

I understand that the line is blurred and the overall point that Pinterest is the new big up and coming site is important to note. But the main difference between the two is that Facebook basically started the genre of social networking. It existed before, but Facebook elevated the concept to a whole new level. Pinterest is a unique idea that I suspect will continue to grow in popularity and profitability; however it is too soon to tell since Pinterest has about 4 million users versus Facebook's one billion users. Does Pinterest have the ability to completely revolutionize its own online niche? The answer to the question will reveal if Pinterest is truly the new Facebook.

The article on Facebook shows how these websites must evolve over time. I have noticed the sponsored ads on my newsfeed. I remember when Facebook first gained popularity and having ads on our page would seem like an intrusion. I think customers now recognize that the site provides a free service and as such needs to advertise. I do wonder what their algorithm looks like for their ad space. Once I changed my relationship status, I received ads in my newsfeed for all sorts of wedding vendors. When I started looking at local real estate sites, I started seeing ads for Long and Foster showings in my area. While some people may be annoyed by these ads, I am mostly intrigued by how they can figure out what would interest me. While people complain about this development, there is no threat to Facebook that people will stop using their site. There simply is no viable alternative. However, if and when that alternative becomes available, then Facebook will need to be creative and roll out new innovations to the website to keep people engaged.  

Google at its best

If only the world was run by Google. I say that tongue in cheek, but there may be some reality to that statement. They essentially invented the search engine as we know it and changed the way businesses work and how customers shop. They defined what it means to search the web. But reading the article “Secret of Googlenomics: Data-Fueled Recipe Brews Profitability” taught me something new about a company whose service I use every day.

There were several key points that are worth exploring from the article. The first point involves the fact that Google uses the advertisements they get paid for to cultivate market research for themselves. They have devised a system where they are getting paid to get market research that profits their company. The brilliant part of this business model is that there are no losers. It does not hurt the companies that are reaching millions of customers by advertising on Google. It does not hurt the customers who are receiving more targeted, and in theory less annoying, advertisements. And it certainly does not hurt Google itself.

Another point to note was how scientific their approach to develop this technology was. I find that fascinating because marketing studies human behavior and humans, by definition, vary and add a subjective element to this science. But the brilliant minds at Google understood that the vast number of users and hits they were dealing with, which must be well into the billions, has a pattern for a code that can be cracked. They used scientific theories to break the code and invent the type of online auctioning platform they needed to be successful. Their ability to eliminate subjectivity as an obstacle allowed them to succeed with this new technology.

I have to be honest. Even after reading over the article, some parts twice, I still do not fully comprehend how this technology works. I see how it shows itself in my own life by the ads I do see. I understand how their innovative pricing system for the bids allowed bids to increase in their favor. I even understand how they used Game Theory to try and figure out the right code. But there are details of how this system works that are still confusing to me. I think the reason I am having trouble wrapping my mind around this is because Google is inherently user friendly and all online users intimately know the front end of the system. But pulling the curtain back reveals a whole layer of this ingenious innovation that needs to be explored.

While the article states that this technology is not spreading as fast as some would think, I would be surprised if it stays unique to Google for too long. It is such an efficient system, for both Google and the companies that advertise with them, that other companies will be left behind if they don’t adopt it. I don’t believe, however, that Google will let itself be outshone by any other company. If their auction platform becomes the norm, then I look forward to see what new innovation they come up with next that further changes how we use the internet.

Pinterest Business Model Canvas

Pinterest presents a fascinating business model, one that illustrating a unique marketing platform that benefits both advertisers and consumers. Pinterest is unlike any other social media platform because it provides a space for companies to potentially advertise their products in such a way that consumers actually do the advertising. Customers who like a product or idea will “pin” it and add it to their board, allowing other Pinterest users to see the goods that they themselves like or would buy. They can connect what they have pinned to various social media outlets. Companies have used to this to their advantage and many company websites now have a link that allows customers to “pin” their product.

There are several critical aspects of the company that must be noted. There are two primary customer segments. The first customer segment involves online shoppers who frequently use the website and drive traffic to the site. They generate buzz for the website and are the users that have propelled Pinterest to become the third most used social media website, only behind Facebook and Twitter. The second customer segment are the marketers, companies that ideally would be willing to pay to have their products displayed on the wildly popular site. The site needs both the customers and the marketers to be financially successful.

The data suggests that Pinterest has enormous potential to make money. They have not yet saturated the very large market of online shoppers, and more companies want to become involved with the site as Pinterest’s popularity increases. Companies benefit because Pinterest allows them to track when customers "pin" their products. This provides a wealth of market research that may be impossible to get otherwise. As long as Pinterest can maintain their image that it is customer run, instead of run by companies who advertise on the site, then they have the potential to make significant profit through advertising.

Though it is a website based platform, companies advertising how to “pin” their products on their own websites and in advertising materials, which means there are several channels for this company to reach customers. This dynamic relationship between Pinterest and other companies will help maintain its success.

Link to Google Doc spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0AgGIN6YV3DEodEhtaTNvRkwxM0JHeUZJbGVmNHBHYVE&usp=sharing

References:

http://smallbiz.theupsstore.com/blog/small-business-blog/2013/03/05/pinning-for-success-5-ideas

http://theemergingdesigner.com/understanding-the-new-pinterest-analytics-feature-for-business-accounts/

http://www.e-marketingassociates.com/pinterest-for-business-innovative-ways-to-use-pinterest-to-drive-brand-awareness/

http://adage.com/article/digitalnext/pinterest-social-search/241683/

Engaging the Customer is Key

This week I read the required articles (except for the article Big Data and You: People Still Matter because it would not load) and the required video. In addition I read the following articles:
- Advertisers Get a Trove of Clues in Smartphones
- The Kimberly Clark Video
- The World Most Valuable Brands. Who is Most Engaged
- The Future of the Internet (I did not read the entire report but skimmed the main findings)
- The history of the internet video by Frank Acito

While these suggested readings did mirror many of the main points presented from the required readings, these readings added an additional layer of complexity to this issue. The New York Times article about mining information from smartphones made me question my original opinion, which I wrote about in an earlier blog, about the ethics of using our information to market to us. Not all customers are created equal, and the article pointed that out when it used the example that someone who had previously spent less money would get less of an appealing deal or advertisement than someone who has spent more money. While I understand the theory that a company should appeal to customers who have a history of bringing good business, I do think this practice misses the opportunity to cultivate loyalty among people who have the resources to provide good business for the companies, yet have not been properly engaged on the products or services. Not focusing on these customers who may have great potential, or rather not even being able to differentiate which customers have potential and which ones don’t, seems like a wasted opportunity.

The point in the Kimberly Clark video that stuck with me was when he spoke about the video the company made to attract moms to spend more time shopping in the baby section of Safeway. Everything about how they reorganized that section of the store was catered towards busy parents who have specific needs. While the other articles start to make this data mining seem a bit removed from the actual customer as an individual, this video reminded me that it is always about the customer and making changes that engages them. Once they are engaged they are more likely to make purchases and maintain loyalty. The article The World Most Valuable Brands- Who is Most Engaged made that similar point. That article mentions Starbucks as the gold standard of customer engagement. They recognized early on that customers will be passionate about a company when they feel like they have skin in the game. If customer suggestions can turn into new products or specialized gift cards, as they did in the Starbucks example, then customers are more likely to keep shopping there. While collecting large amounts of data can seem overwhelming, it is important to remember that the goal should always be customer engagement. Ideas that engage, whether they come from billions of data points or from one on one conversations, are the key to success.

 

 

Sorting through all the data

I have several thoughts on the article Demystifying Big Data and the YouTube video about the history of the internet. In regards to the article about big data, the task of actually using this data to make analysis and the challenges that task presents was made quite clear. The numbers we use when talking about the data points, which are measured in the millions and even the billions, are so large it is difficult to think of a logical way to parse through all these data points. The fact that there is a discrepancy in how retailers plan to focus their big data initiatives and how they actually expect to deploy their first big data projects is interesting. It points to the fact that there may not be one right answer and in a universe of numbers and hard facts, analyzing this data and figuring out how to use it may be more subjective in nature. Even the five step plan for how to develop a big data game plan is riddled with points that are subjective to the manager or business leader who is making the plan.  I wonder how this whole process can become more objective. And if that is possible, my next question would be- do we even want it to be totally objective in nature? Marketing is a science and an art, and would taking the subjectivity out of these big data points make marketing lose its art form?

The video about the history of the internet gave me a lot of things to think about too. I was surprised to learn about the facts of how the internet came to be, and I was surprised that this information is not more commonly known. I did learn in school that the internet started for defense purposes, as so many of the best inventions do, but I had no clue as to the international scope of the project. In school everyone learned about the invention of the light bulb because that was a pivotal turning point in American history. Why don’t we learn about this equally important contemporary innovation? The fact that the building blocks of the internet were for commercial and scientific purposes in addition to defense purposes gives an already complex system another layer of complexity for me. The early innovators of the internet had forethought to understand the potential with this technology. Today the internet is used for a myriad of purposes, but the fact that they saw how it can be used for civilian needs is incredible considering that the technology was still in its infancy. This makes me question if the technology has reached a point of maturity, or if it will continue to exponentially advance? Will there be a video in 2053 talking about the notions of Twitter and Facebook and how these groundbreaking websites helped usher in the explosion of social media? My guess is that the internet has certainly not reached its peak in potential; however the exponential growth rate will likely have to slow down at some point.

The Numerati: Good or Bad?

The introductory chapter from the The Numerati has left me split on this concept. The author describes The Numerati in a type of cynical tone, implying they are a rich underground group that has the ability to harvest the data from our every move and use that information to market products to us. I would be interested to read his book because this is a concept that affects everyone, whether we recognize it or not.

The question we need to ask ourselves as consumers is whether this is a positive development. I actually see arguments on both sides. On one side of the debate is the argument that we always have the free will to choose if we want a product or not. Of course we can see targeted advertising all day long, but if we do not want the product then we will not be forced to purchase it. For example, when I changed my facebook status after I got engaged, I received a ton of advertisements for wedding related goods. They were a nuisance, but since I was not interested in any of those products I did not buy the services. It was annoying, but it was no more than an annoyance. I still have the independence and free will as a consumer to choose what I dedicate my resources to.

On the other side of the debate is the argument about privacy. If cookies are installed on our computers without us knowing, and if companies are allowed to harvest our information without telling us they are doing so, where do we draw the line? As I was reading the chapter I thought of the current controversy as the NSA leaks have revealed the government has been harvesting our phone records. Whether you support this or not, it does beg the question: how much information will they take from individuals before stopping for privacy reasons? Will this evolve to a point where companies can have information on you that you truly feel uncomfortable with them having?

 While I understand both sides, I currently fall into the first category of people who see the value in using this data, as long as it is only used to a certain point. As the chapter says, “we are being quantified.” No one wants to think of themselves as simply a number, thrown in with billions of other numbers to find a marketing pattern. However, this is the direction marketing has been going for decades and it has allowed customers, conversely, to be treated more as individuals. This, I think, is fascinating. We may just be a number when it comes to the data we provide, but that data allows marketers to target us with products or services we may actually want. While I think there must be a logical limit to this information (for example, as nice as it would be for impartial computers to replace loan offices, being able to recognize subtle human behavior and individual traits is critical), for now it can be used as a positive development for both marketers and consumers.   

Executive Summary- Business Model Canvas

For my project I chose to focus on the American Israel Public Affairs Committee. AIPAC is member funded and does not receive any funding from business or government entities. The headquarters are in DC. But there are regional offices throughout the country and the organizaton has members in all fifty states. The mission is unique in terms of what needs to be listed on the business model canvas because AIPAC does not provide a product or even a service in the regular format. The service that  is provided is being able to empowered the membership base to be active with a cause they care about. While the members cares about politics and the U.S.-Israel relationship, acting as individuals does not leverage that passion. When they are part of this national organization, however, they are able to tap into a network that leverages that passion and being part of this organization allows them to help make sure that critically important support in Congress stays strong.

The analysis from the business model canvas points out that donor management is critical to revenue flow. Members continue to donate to the organization when they see the tangible results their support helps make possible. The organization is only able to really make an impact when it has the resources it needs. Without a passionate membership base, the organization would not be able to accomplish its stated mission. The analysis tabs showed that the organization cannot be profitable if just looking at the numbers alone because it is not able to measure the commitment and dedication of the membership base. The services that take resources to produce, from the educational materials that are sent to members to the lobbyist that are hired to build relationships on Capitol Hill, all takes donor support to be possible. None of those things generate revenue by themselves and if we focus too heavily on those elements without focusing on the foundation, the membership base, then the organization will not be able to grow and focus on the challenges ahead.

Link to Business Model Canvas: https://docs.google.com/spreadsheet/ccc?key=0AgGIN6YV3DEodE1zRUFjUHJWcmp0SzF2UUFpWGZwQUE&usp=sharing