Free Rise

Last weekend, the wife and I strolled to the Verizon store in the Mission and picked up his-n-hers Motorola Droids, Verizon’s first smart phone with Google’s Android OS.

So far, they’ve been great. Web surfing and Gmail are delightfully fast, and call quality is excellent. (Most importantly, we haven’t resigned ourselves to the black hole that is the AT&T mobile network.) iPhone and BlackBerry owners have known this for years, but it’s a remarkable experience to walk around with a pocket-sized computer far more powerful than the tower case that sat under your desk just a few years ago.

As I was surfing the web this morning, I spotted this ad on the Knowledge@Wharton ad. And I was kind of blown away.

Within a standard 300 x 250 display unit (what we called an “L-REC” at Yahoo!) is a feed of punchy editorial links about the Droid. Scroll down, and you’ll see what looks like dozens if not hundreds of posts from news sites, magazines, and blogs. Topics include:

• Positive reviews of the Droid
• Upbeat news about the Droid launch
• Top apps for Android devices
• Downbeat news about the iPhone, including viruses and developer disaffection with the Apple App Store
• Information about the Droid Eris, HTC’s lighter version

All the links click to the original articles, with a toolbar to Tweet or see more.

The display ad hits on a number of strong points:

• It’s targeted
• It’s interactive
• It gives me a choice of compelling content to click
• It lives on beyond the click
• It encourages me to share
• It includes links to add this Droid feed to Facebook or Twitter

What could be better about it? A few things. If I weren’t already interested in the Droid, I wouldn’t be drawn to it, or bother to scroll. I also suspect this ad wouldn’t test well on a site where people weren’t coming to engage in the act of reading. I can also only see two headlines on the first screen, and the gray-on-black scrollbar could be more obvious.

But in general, it’s great to see such a compelling and innovative ad that so precisely built for an audience and an experience. More, please!

“The web is not TV.”

It sounds obvious enough, and yet how many video ads do you see online that appear to be shoveled directly from cable? The 15-second video spot has become the de facto standard.

Of course, this will change. In their formative years, television ads were basically radio ads with visible narrators. It wasn’t until viewers and marketers became comfortable with the new format that commercials became more like little movies.

Today, some brands with reputations for innovation are exploiting the interactive and creative possibilities of online advertising, especially video advertising. But those still seem to be the exceptions.

My friend Phil O’Neill, director of analytics for VideoEgg, had such a perspective in an essay he scribed for MarketingWeek UK, titled “The Golden Rules of Online Video Advert Design.” His golden rules boil down to three design principles.

1. The web is not the same as TV: Ads should be rich, interactive, and “push-pull.”
2. Clarity is key: If the UI is confusing, users won’t bother.
3. Creative content, creative delivery: If it’s not compelling, users won’t stick around and won’t remember it.

These seem obvious. So why, in these adolescent years of web video, are they so often ignored? Think about that next time you see (or place) a 15-second pre-roll.

Today is a big day for those who struggle to read.

Intel is launching a product called Reader, a new gadget that photographs text in the wild — anything from a cookbook to an interpretive sign at an art museum — and reads it to the user via a pleasant voice sim. It’s hard to believe that nobody’s ever thought to mass-market this kind of product before, given the millions of people around the world who must live and cope with learning, reading, or sight disabilities.

My good friend Ben Foss led the team that brought this to market. He himself is dyslexic and has dedicated his career to helping others who struggle with our text-dependent information economy. Most of us have a hard time imagining how difficult our lives would become if disabilities made it tough to read. Ben writes on Intel’s Healthcare blog:

It is important to remember that a central experience of a disability, and especially a learning disability, is loneliness.  It was a lonely feeling to have to leave class in third grade, and head to a special room to sound out words while the other kids had reading groups. And adults feel lonely as they worry that people might find out they do not have any books at home and that they cannot read the text off a power point slide in a meeting.

(Full disclosure now: Besides being long-time friends with Ben, I’m also recently a director of a separate not-for-profit entity that holds conditional rights to the Reader technology.)

Here’s Ben demoing the Reader. It’s really remarkable what it can do. Big congratulations to the team at Intel who, via this small technological miracle, will help create the difference between dependence and independence for million — tens of millions — of people around the world.

Back when I worked on My Yahoo!, one of my projects was to create ad quality standards. Users were generally displeased with seeing an LREC (the standard “large rectangle” ad you see on so many sites) where they used to see their own content, so we had to be sensitive to what users were experiencing in that spot on the screen.

We certainly would not have approved this:

(Click on it to see its gory detail.)

This is the Old Spice campaign currently running on Yahoo! sports. The LREC (which is animated) shows what is supposed to be a very hairy armpit crusted with chunks of antiperspirant residue. (One of the chunks falls and crushes a car, for some reason.) This campaign fails for two very obvious reasons:

1. The LREC: This may say more about me than the ad, but when I saw the LREC, my first thought wasn’t “armpit.”
2. The “takeover” portion: Anyone who enjoys seeing their browser’s vertical borders covered in crusty armpit hair, raise your hands.

I have a pretty strong stomach, but I am repulsed. Is it just me? Or is this an ad standards FAIL?

When I first went to work for Wells Fargo, one of the things that was hard to get used to was what they called their branches: “stores.” In hindsight, it made a lot of sense. Retail banks are called as such for a reason, after all. Most people think of branches as places to transact, but they’re very much retail environments, where brands are established (and refreshed), customers are profiled, and products are sold.

Around the turn of the millennium, the branch looked doom. Online banks with no physical locations were growing fast, and the traditional banks were building out their online capabilities.

Then traditional banks changed tack and doubled-down on meatspace. Major players built thousands of new branches to attract deposits, and some even radically redefined branches entirely. Umpqua’s wi-fi lounges (pictured above) and WaMu’s Occasio were particularly innovative. (Sadly, WaMu’s new Chase overlords are doing away with Occasio.) Commerce Bank grew super-fast with the simple innovation of extending their hours to times that were more convenient for working people.

But now Bank of America is retrenching, shuttering 10% of its branches. Does this mean the end of the store strategy?

Yes and no.

Yes: Retail (consumer and small business) customers are becoming ever more comfortable with online services. As they spend more time interacting with banks online, banks are finding more ways to market and sell through online channels.

No: America is over-retailed in general, and banks are no exception. BofA probably had too many branches to begin with. Other big banks that built out (or acquired) branch networks during the housing boom are probably now looking at their cost structure and finding many unprofitable locations. Shuttering may occur, but people will still want a physical location to transact checks, cash, and the other tangible forms of money that still power our everyday economy.

We can only hope that more of these banks will follow the Umpqua and Commerce models and create a branch experience that its customers don’t hate. Whoever does that will win deposits, and today, that matters more than anything.

Social media is no longer buzzing like a honeybee or a power line. Rather, Social media is roaring, like a chainsaw.

Social media is not just the newest new form of direct marketing. It’s rapidly becoming the primary way that people –- your customers –- seek recommendations and chat with each other about their purchases.
In this environment, every forward-thinking business is already trying to figure out its social media strategy. But the social media ecosystem is so fluid that trial-and-error will only reveal temporary solutions.  And trial-and-error is, by itself, not really a strategy.

So what questions should businesses, especially small, local ones, be asking themselves about social media?

1. Do I need a social media strategy? The answer to this question is a universal “yes,” even if your strategy ends up being “do nothing.” But it’s hard to imagine a small business that couldn’t be served by the fastest emerging method of person-to-person communication on earth.

2. What type of interaction would best serve my current business goals? Social media is about multi-party communication. It connects a business with its customers, but more importantly it can connect a business’s customers with each other. To form an effective social media strategy, a business needs to figure out who needs to be interacting with whom, and how that interaction should be taking place.
Some examples:

• A restaurant that seeks to increase patronage from its regular customers would want a platform to promote its daily specials and perhaps promotions (“free wine Wednesdays”).
• An emergency plumber which gets its main business from immediate problems would want a platform where its current and prospective customers could quickly reach them.
• An auto repair shop which faces lots of competition and customer skepticism would want a platform where past customers could attest to the shop’s honesty and reliability.
• A web-based business would want a platform that could drive traffic to its site and encourage its customers to promote the business to others.

3. Which platforms would best serve those communication needs? Obviously, “Get me on Twitter and Facebook” is not a social media strategy. But once you’ve decided who you’re targeting and what you want to accomplish, you need to pick your platforms: Facebook, MySpace, Twitter, YouTube, Yelp, Ning, Yola, and other sites each serve some purposes better than others.

4. How should I craft my presence on those platforms? The WSJ reported recently on a Twitter campaign by web site builder Moonfruit which increased its homepage traffic 13-fold and paying customers by 20%. The cost? Ten MacBook Pros. Since the contest ended, MoonFruit has lost more than 1/4 of their new followers, but now they’ve built a list of 34,000 followers to engage. It’s never been so easy to build a list that large, but now MoonFruit has the challenge of maintaining these subscribers’ interest, or they’ll tune out. Which leads to…

5. How much time can I commit to maintain my social presence? Unlike building a website, creating a blog, social network page, or Twitter feed takes ongoing effort. To keep your business from being sucked into the social media black hole, you have to maintain the presence with new interaction (or “feed the beast”). Each social platform requires a minimum frequency of interaction to be effective. Figure out who will own your business’s interactions, and how they’ll commit to keeping the brand alive online.

This last point is crucial. Creating and abandoning a social media platform is like letting dust collect on your store shelves.  Thus, if you’re not serious about interacting with your customers online, you should find another method of marketing your business. And good luck finding one that’s more effective.

Is Twitter really for old people? Do most kids really prefer watching pirated DVDs to going to movies, and do they really mostly talk to their friends over their XBox 360s?

My friends who happen to be marketing types have been asking themselves these questions this week, as the Internet went all a-titter about the recent thoughts of Matthew Robson, a 15-year-old boy with a summer internship at Morgan Stanley in London. The venerable investment house for some reason decided to publish Robson’s anecdotal report How Teenagers Consume Media as “research.” (How many of us have relied on the summer intern to tell us what the kids are up to?)

OMG! Everyone is on Facebook, nobody listens to the radio, Twitter is pointless, and banner ads are teh sux. Quick, everyone revise your youth marketing plans!

Oh wait. What about the 99.9% of British teens who aren’t friends with Matthew Robson? (And what about the 65% of Twitter users under 25?)

In this context, it’s worth reading (or revisiting) danah boyd’s remarkable “The Not-So-Hidden Politics of Class Online,” a talk she delivered to the Personal Democracy Forum in New York.

In this talk, Boyd (sorry, the lower-case name drives me bonkers) asserted that Facebook and MySpace drew similar size audiences in America. But when she polled her “primarily American, primarily liberal-leaning, primarily white, and primarily involved professionally in politics” audience, she found that almost all of them used Facebook, but almost none of them used MySpace.

It’s more than obvious that online social networks, like all networks, are class stratified and homophilic. As Facebook opened up beyond college kids, many MySpace users chose to jump ship. But just as many stayed put. So, who bailed? Boyd’s research of young people led to a complicated conclusion:

It wasn’t just anyone who left MySpace to go to Facebook. In fact, if we want to get to the crux of what unfolded, we might as well face an uncomfortable reality… What happened was modern day “white flight.” Whites were more likely to leave or choose Facebook. The educated were more likely to leave or choose Facebook. Those from wealthier backgrounds were more likely to leave or choose Facebook. Those from the suburbs were more likely to leave or choose Facebook. Those who deserted MySpace did so by “choice” but their decision to do so was wrapped up in their connections to others, in their belief that a more peaceful, quiet, less-public space would be more idyllic.

Even within Facebook, the social divisions remain extreme. If Morgan Stanley were to ask me what Facebook users were like, I’d tell them they’re iPhone-using, gourmet-cooking, Democratic-voting, Daily Show-watching, mid-career professionals. What I’d really be reporting are the psychographic profiles of Jewish kids who grew up in Miami in the ‘80s, mid-‘90s Wesleyan alums, and Bay Area MBAs. (My wife, who has lots of friends from her tiny southern hometown, gets a somewhat different picture.) Your experience probably varies. Same deal with Twitter – I’m following 200-odd feeds, and none are of the “My cat is sleeping on my lap” variety. Your experience again probably varies.

The California tech community, which chatters at itself continuously via Facebook, blogs, and Twitter, has an understandably warped view of the pervasiveness of certain tech brands, and the use of technology in general. In our little world, Apple, Twitter, Facebook, Google/GMail/YouTube, Skype, and Firefox dominate. Meanwhile, the hundreds of millions of global citizens on MySpace, Yahoo!, AOL, MSN/Hotmail, and Windows PCs are ignored or disparaged, to say nothing of all those still listening to the radio or reading dead-tree periodicals.

It’s easy to get wrapped up in a world where “teenagers do X,” but some of us still remember high school. If Morgan Stanley came calling, I probably couldn’t find a damn thing that even a solid plurality of my classmates were into. My crowd liked the Dolphins, Led Zeppelin, getting good grades, hating George H.W. Bush, and being scared of girls. They were generally affluent enough to have cable TV, but not enough to have new cars. That’s how my report on the American teen would have read.

Fast forward 20 years. Twitter isn’t for everyone. Nor is anything else. Teenagers’ technology habits will evolve as technology itself does, but also as those teenagers go off to college, or the workforce, or the Army, or all the other places they can go. As marketers and citizens, we should never mistake one boy’s friends or our own experiences for those of the world. Or as Boyd puts it:

If you are trying to connect with the public, where you go online matters. If you choose to make Facebook your platform for civic activity, you are implicitly suggesting that a specific class of people is more worth your time and attention than others. Of course, splitting your attention can also be costly and doesn’t necessarily mean that you’ll be reaching everyone anyhow. You’re damned if you do and damned if you don’t. The key to developing a social media strategy is to understand who you’re reaching and who you’re not and make certain that your perspective is accounting for said choices. Understand your biases and work to counter them.

That last line is great advice for life, too.

Last Friday, I spent part of a sunny afternoon on the patio of Delancey’s Crossroads Café, chatting over coffee and tea with Randy Almond, Yola’s VP of Marketing. Yola, which recently rebranded (from Synthasite) and relaunched at this year’s Web 2.0 Expo, has developed a killer drag-and-drop browser-based platform for small businesses to develop their own websites and blogs. I’ve tried it out, and it’s a superior product.

Yola’s still working on positioning itself as a small business specialist, but its potential seems awesome. They currently operate a “freemium” business model, charging nothing for the product and the hosting (which is also free of ads), but cross-selling custom domains and SEM to their users. More importantly, as Yola ramps up its user base, it’ll have the relationships with customers to further cross-sell online services, especially when they want to bring e-commerce or apps to their sites.

As I learned in my years developing small business products at Wells Fargo, SMB’s needs are wildly different from those of consumers or large enterprises. “No-duh,” you’re thinking. But I’ve come to be unsurprised whenever I meet someone struggling to market services to SMB, simply because they don’t understand how their customers operate and why they buy.

A couple months ago, I met with two sales executives at Network Solutions in Virginia. Like Yola, NetSol also positions itself as a SMB-focused service company, a market niche made necessary by losing its domain registration monopoly in the late ’90s. (The reg business, 90% of their revenues just six years ago, is now just 45%.) NetSol successfully figured out that the vast majority of SMBs are very small indeed, and that domain registration is just the first handshake in what can be a broad service relationship. Broading this relationship, however, requires NetSol to cross-sell and service the customer effectively and respectfully. But it took much of this decade for Network Solutions to get the formula right.

Meanwhile, all types of SMBs are trying to figure out how to leverage online tools and platforms to drive customer acquisition. SEM and SEO are king and queen of this realm, but they’re relatively new and utterly confusing to most SMB managers. If Clickable’s research is accurate, it’s unsurprising that only 50% of Google self-service advertisers return the next year. But think of all the opportunity Google has to turn that around by making their platform and corollary services ever more SMB-oriented.

Yelp is another site that’s potentially awesome (or disastrous) for SMB. Just two weeks ago, I got my hair cut at Spargo in downtown SF, based on Yelp’s wildly positive recommendations. When I told my haircutter that Yelp brought me there, she seemed about as surprised as she did when I admitted I’d never had a manicure. Yelp relies on a community of consumers to build support for a business, but also permits a business like Spargo to augment its presence with pictures and even a “June Caveman Special.” (Yelp has unfortunately also taken heat from business owners who claim that buying advertising will get you special treatment, like deleting disputed reviews.)

So what do small businesses want? While a one-person plumbing operation and a 35-employee web services company may seem to have little in common (and any company wishing to serve both should have a segmentation strategy), small business owners have some broad things in common. They want:

• to be respected. Small business owners have neither time nor money to waste. As a Twitter evangelist learned the hard way in a San Francisco Small Business Week event two weeks ago, SMB managers want to understand, decide, and move on. They do not want to be told to “play around with it.” They’ve don’t have the bandwidth to fiddle; they’ve got to make payroll this week.
• to be served NOW. When they have a problem with you, they need a solution. Now. And on their schedule, which is often not regular business hours. Business owners often spend business hours working in the business, and off-hours working on the business.
• numbers. Small businesses have books to balance, and scarce capital to monitor. If they’re not getting a positive ROI on something, they’ll probably bail and focus elsewhere.
• help. Small businesses are burdened with demands — cash flow, health care costs, red tape, complicated tax laws, hiring and keeping the best people, and finding and keeping their customers. They seek value and simplicity to balance this all. Can you improve the bottom line and make things easier? You win.
• to be a part of something. Business owners are the rock pillars of many communities, physical and virtual. They see themselves as the leaders upon whom this great country depends. They are generally pro-market and pro-freedom, but they believe in collective action to improve conditions for everyone. Are you a part of their communities, too?

SMB is the engine of America’s economy, responsible for more than 90% of private sector employment. Like America’s population, they’re diversifying rapidly, but some things remain the same. Including this: Your business can’t serve SMB as a side project. It requires understanding, focus, the right products, and unequivocable value.

A few weeks ago, I noted Lufthansa’s inexplicable decision to promote its very expensive business class service by handing out gummy, shrink-wrapped “croissants” with intimidating wholesale-style labels.

This a morning, a street team was standing outside the Montgomery BART station handing out foil packets of something called Propel, as well as stacks of coupons to buy some.

What is Propel? Damned if I know. The street team didn’t provide anything to explain what the product is supposed to be. Here’s all I could tell from the package:

• “Propel Powder Packet”: Okay, it’s a packet of powdered… something.
• “Vitamin Enhanced Water Beverage Mix”: I’m supposed to add it to 16.9 ounces (!) of water and “SHAKE GENTLY”
• It’s made by Gatorade, and contains “natural berry flavors.”

OK, I think I get it. I’m supposed to go buy a bottle of water and then dump this in it. It’s going to make the water taste like berries and deliver vitamins. So this is like Vitamin Water mix? Is it a sports drink? Is it sugary, low-cal? Is it meant to get me through my office work day, or replenish me after a workout?

All of this would be nice to know.

There’s also this issue: San Francisco is a green town. Only one product comes in 16.9-ounce servicings, and that product is now as politically incorrect as baby seal bacon. The $0.99-off coupons may be applied to a purchase of the bottled version of Propel, which looks exactly like bottled water.

Here’s probably what happened: The Propel brand manager budgeted for a street team to get samples and coupons out to active, urban populations. They didn’t really think a lot about the details, besides maybe how and where to maximize the distribution.

Here’s how they should have managed it:

• Educate: They handed me something non-obvious, without explaining what it is, why I would want to use it, or when I would want to use it. Instead of a coupon, they should have introduced the brand and especially the product.
• Entice: What’s motivating me to go through the trouble of mixing this with 16.9 ounces of water? Especially since I don’t know what it is, and if I don’t like it, it essentially ruins the $1.50 bottle of water I ostensibly bought.
• Position: Like most San Franciscans, I’m disgusted by our stupid everyday reliance on bottled water. Cleaner water comes through our taps than what’s contained in plastic (an oil product) and trucked in from municipal sources. Instead of positioning itself as an accessory to my bottled water lifestyle, Propel could position itself as a green alternative to products like Glaceau VitaminWater. After all, you can mix Propel with your filtered tap water, instead of buying “enhanced” water that’s trucked in from elsewhere. This would speak to eco-conscious urban dwellers.

Street teams have value. But so do planning and executing the promotions in ways that appeal to your potential customers. That takes forethought.

Also from yesterday’s FT-sponsored Financial Services Marketing breakfast, Richard Waters dropped these Six nuggets of received wisdom that have been discredited by the financial meltdown.

• Stocks go up 10% a year. So what if you’re going to retire in a few years? Why miss out on more gains by preserving your savings in boring CDs and bonds?
• You can beat the market. Just ignore what Bogle and his adherents have been proving for years. Cramer will get you your returns.
• House prices only go one way. Waters told a story about a fight he and his wife had after a real estate agent in Marin tried to convince them of the truth of this. Fortunately for the Waters’, he won that fight. Millions of others were not so smart (like Suzanne’s hapless clients. What? What?).
• Financial innovation is good for you. Forget about how Orange County went broke investing in these newfangled “derivatives.” Go ahead and bet the whole financial system on incomprehensible instruments. It’s science, people!
• Big banks can’t go bust. They’re way too diversified, right?
• You can’t go wrong giving your life savings to a middle-aged white guy. Especially if he’s named Madoff or Stanford. Interestingly enough, this seems to describe the staff of the FT.