AOL is betting on an acquisition as a play to drive hits through free media. AOL paid $315 million for the Huffington Post, this represents a huge payday for Arianna Huffington, who owns a significant stake in the Post.
The Huffington Post is yet another in a long list of specialist websites that AOL has acquired recently. Huffington is by far the largest and could serve to bring a very large audience of news readers to AOL.
Arianna Huffington explains the merger this way, "By combining HuffPost with AOL’s network of sites, thriving video initiative, local focus, and international reach, we know we’ll be creating a company that can have an enormous impact, reaching a global audience on every imaginable platform."
So the real question is, will AOL truly leverage this and its other recent acquisitions into a viable patchwork of online content? Or will it simply write off yet another huge loss a year or two from now?
Tuesday, February 15, 2011
Monday, February 7, 2011
Social Media ROI
How do you calculate ROI for marketing dollars invested in social media? The author explains the process like this:
1. Describe the possible investment
2. Sketch out the rationalze
3. Develop a marketing/sales funnel
4. Hypothesize how the initiative might work through the tunnel, resulting in an estimated range of dollars produced.
5. Share ROI information with decision makers
6. As the initiative progresses, assess how well the step 4 hypotheses is supported by reality
The alternative to this approach is to use the "gut feel" method used by as many as two thirds of top managers. What I find interesting is that this six step "process" is doing little more than applying a process to the "gut feel" method, with a single exception. Step 6 calls for a reality check to ensure that ROI is what was expected so the initiative can be quelled if not working.
The single best take-away from this article is the point that now is the time that marketing departments should be experimenting with the different forms of social media to build meaningful metrics that may be used in the future to determine what should be invested in social media.
1. Describe the possible investment
2. Sketch out the rationalze
3. Develop a marketing/sales funnel
4. Hypothesize how the initiative might work through the tunnel, resulting in an estimated range of dollars produced.
5. Share ROI information with decision makers
6. As the initiative progresses, assess how well the step 4 hypotheses is supported by reality
The alternative to this approach is to use the "gut feel" method used by as many as two thirds of top managers. What I find interesting is that this six step "process" is doing little more than applying a process to the "gut feel" method, with a single exception. Step 6 calls for a reality check to ensure that ROI is what was expected so the initiative can be quelled if not working.
The single best take-away from this article is the point that now is the time that marketing departments should be experimenting with the different forms of social media to build meaningful metrics that may be used in the future to determine what should be invested in social media.
Transparent Marketing
I thought it interesting to write a little piece on Domino's Pizza and their somewhat recent (early 2010) transparent marketing campaign. Domino's realized in early 2010 that their pizza tastes like garbage, had for a while and they were seemingly the last to know.
Domino's posted a loss of $67 million in 1991. By 1996, through sweeping changes, Domino's was back on track with earnings over $50 million on revenues of $2.8 billion. For the next decade or so Domino's slowly lost market share to Pizza Hut and Papa John's.
So in early 2010 Domino's took on a transparent marketing strategy to tell everyone how bad their pizza is and how they're working to make it better.
This is a good example of shifting your marketing away from purely an advertising strategy to more of a marketing and public relations strategy.
Domino's posted a loss of $67 million in 1991. By 1996, through sweeping changes, Domino's was back on track with earnings over $50 million on revenues of $2.8 billion. For the next decade or so Domino's slowly lost market share to Pizza Hut and Papa John's.
So in early 2010 Domino's took on a transparent marketing strategy to tell everyone how bad their pizza is and how they're working to make it better.
This is a good example of shifting your marketing away from purely an advertising strategy to more of a marketing and public relations strategy.
Tuesday, February 1, 2011
Cashing in on the Long Tail
I currently work for a Tech company. I started five years ago almost to the day. Our offerings at the time were largely ruled by network management for our client base. Typically we spent several hours a week onsite at the client to manage all things related to their technology needs. Our revenues at the time were largely driven by our engineers billing hours to the clients. This is a tried and true model that has endured for years for many professional services organizations.
In early 2008 we acquired a company that specialized in an offering called Managed Services (MSP). This was the start of our shift to cloud offerings and our first venture into a business model that was capable of venturing down the long tail. Today we are primarily and MSP as well as managing a Data Center that enables us to offer Cloud services to companies of all sizes from one and two person shops up to hundreds of simultaneous users.
I consider the small 1-5 person companies in the long tail for a tech company of our size. After reading The Long Tail I would like to see us expand our current offerings to include cloud based services that individuals could use. If we were to offer something like cloud based data backup or smartphone integration services to individuals this would move us into a much larger market. Automation of this entire process so that software could handles the entire purchase, setup and billing would enable complete electronic delivery and lower per unit cost to near zero.
In early 2008 we acquired a company that specialized in an offering called Managed Services (MSP). This was the start of our shift to cloud offerings and our first venture into a business model that was capable of venturing down the long tail. Today we are primarily and MSP as well as managing a Data Center that enables us to offer Cloud services to companies of all sizes from one and two person shops up to hundreds of simultaneous users.
I consider the small 1-5 person companies in the long tail for a tech company of our size. After reading The Long Tail I would like to see us expand our current offerings to include cloud based services that individuals could use. If we were to offer something like cloud based data backup or smartphone integration services to individuals this would move us into a much larger market. Automation of this entire process so that software could handles the entire purchase, setup and billing would enable complete electronic delivery and lower per unit cost to near zero.
Monday, January 31, 2011
A Longer look at The Long Tail
The Long Tail speaks at length of the death of the hit. No more will the hit movie, DVD, CD or single reap such huge reward as we've grown accustomed to. Chris Anderson cites the best all-time one week sales of NSYNC's No Strings Attached in March of 2000 as the last of the big hits. Anderson does good to not shut the door on hits entirely. We all have examples of mega-movies and singles that pulled in huge box office scores. Avatar (2009) and The Dark Knight (2008) come to mind immediately. Avatar did over $300 million in one week, while The Dark Knight pulled in over $600 million just in the United States.
So the hit is not dead just wounded and may never recover. We've seen the effects of the Long Tail first and foremost in music. Peer to peer networks which enabled easy file sharing started it off. Napster did its part and the music industry was changed forever. Considering that only a very small fraction of music ever makes it onto store shelves it's not surprising that presenting consumers with more variety would produce this effect. Variety enables consumers to stray away from the hits in a brick and mortar store to sounds that reflect their taste more closely. As Anderson says, "..suddenly the hit gives way to the micro hit...top 40 now becomes top 40,000 or 400,000..)
For media products, this move makes perfect sense even today. With the internet freely (so to speak) available and electronic storage costs so low any product that can be delivered electronically can also be stocked regardless of expected sales. Anderson explains that there are three levels of retailers or "Three steps to infinite variety." Physical stores such as Tower Records, which sees a profit cut-off point for items which do not move a minimum of units. Hybrid retailers such as Amazon offer both worlds by leveraging physical warehouse storage space, fast shipping as will as electronic storage and delivery wherever possible.
Pure digital retailers like Rhapsody are able to take full advantage of the head and tail through non-existent additional overhead costs for carrying products (music in this case) quite a ways down the tail. Large retailers are beginning to understand the power of this concept and are moving towards a hybrid approach. For Example Target and Walmart now offer a much larger variety of products on their websites than you find in their stores.
Another excellent concept that Anderson writes about is the Long Tail theory in shaping company or product image. The typical consumer will no longer simply wander into their nearest Sears to buy a new washer and dryer. They first Google it. The top hits that Google returns to them will more than likely help shape their purchase decision. The example that Anderson uses speaks of "Dell Hell." We can still see the effects of a single person's blog shaping the public image of computer retail giant, Dell. In the words of Anderson,"The ants have megaphones."
Anita Elberse offers an opposing viewpoint in her Harvard Business review article, Should you invest in the Long Tail? Elberse cites sales information from Rhapsody and Quickflix to say that the tail continues to grow longer and flatter. This leads to the conclusion that marketing and sales teams everywhere should not shift focus away from the "Hit" to the "Long Tail". While I agree that all focus should not drift away from the mainstream, it still stands to reason that we should remain aware of the long tail and work to exploit it. There is no denying that the bulk of sales for many companies that are quite a way down the tail are still in the head. With that said though, Rhapsody cannot ignore the tail that accounts for 20-25% of sales.
So the hit is not dead just wounded and may never recover. We've seen the effects of the Long Tail first and foremost in music. Peer to peer networks which enabled easy file sharing started it off. Napster did its part and the music industry was changed forever. Considering that only a very small fraction of music ever makes it onto store shelves it's not surprising that presenting consumers with more variety would produce this effect. Variety enables consumers to stray away from the hits in a brick and mortar store to sounds that reflect their taste more closely. As Anderson says, "..suddenly the hit gives way to the micro hit...top 40 now becomes top 40,000 or 400,000..)
For media products, this move makes perfect sense even today. With the internet freely (so to speak) available and electronic storage costs so low any product that can be delivered electronically can also be stocked regardless of expected sales. Anderson explains that there are three levels of retailers or "Three steps to infinite variety." Physical stores such as Tower Records, which sees a profit cut-off point for items which do not move a minimum of units. Hybrid retailers such as Amazon offer both worlds by leveraging physical warehouse storage space, fast shipping as will as electronic storage and delivery wherever possible.
Pure digital retailers like Rhapsody are able to take full advantage of the head and tail through non-existent additional overhead costs for carrying products (music in this case) quite a ways down the tail. Large retailers are beginning to understand the power of this concept and are moving towards a hybrid approach. For Example Target and Walmart now offer a much larger variety of products on their websites than you find in their stores.
Another excellent concept that Anderson writes about is the Long Tail theory in shaping company or product image. The typical consumer will no longer simply wander into their nearest Sears to buy a new washer and dryer. They first Google it. The top hits that Google returns to them will more than likely help shape their purchase decision. The example that Anderson uses speaks of "Dell Hell." We can still see the effects of a single person's blog shaping the public image of computer retail giant, Dell. In the words of Anderson,"The ants have megaphones."
Anita Elberse offers an opposing viewpoint in her Harvard Business review article, Should you invest in the Long Tail? Elberse cites sales information from Rhapsody and Quickflix to say that the tail continues to grow longer and flatter. This leads to the conclusion that marketing and sales teams everywhere should not shift focus away from the "Hit" to the "Long Tail". While I agree that all focus should not drift away from the mainstream, it still stands to reason that we should remain aware of the long tail and work to exploit it. There is no denying that the bulk of sales for many companies that are quite a way down the tail are still in the head. With that said though, Rhapsody cannot ignore the tail that accounts for 20-25% of sales.
Fandotech Blog
A couple of years back my company Fuss & O'Neill Technologies (Fandotech) started a blog. We've tried various initiatives, rewards, etc. to get employees and management to blog. The blog topics are mostly technology related and have generated some traffic. I would like to take this opportunity to get some outside input on our blog, keeping in mind that we've now all read chapters 5 and 15 of Scott's New Rules of Marketing and PR. Please provide feedback as a reply to this post. Is the blog too corporate? Does its content drive readership? What, in your opinion, can we do to make it better?
Thursday, January 27, 2011
Don't Trust Anyone over 50
While consumers over 50 account for half of the population and spend more money than any other age group on products, the 18-34 demographic is still the most coveted by advertisers. This is mostly due to the perception by advertisers that once their product is associated with the Alpha-boomers they are forever doomed to that demographic.
For this reason the viewership for consumers past 50 is not even tracked. It seems that advertisers and companies are giving up a substantial opportunity to attract a large and possibly untapped portion of the market for fear of being pigeon holed and loosing other key demographics. The article mentions that the perception of "old" is changing. Will this be enough to start tracking alpha-boomers viewing habits? Can we market to 55+ demographics without loosing market in other demographics?
For this reason the viewership for consumers past 50 is not even tracked. It seems that advertisers and companies are giving up a substantial opportunity to attract a large and possibly untapped portion of the market for fear of being pigeon holed and loosing other key demographics. The article mentions that the perception of "old" is changing. Will this be enough to start tracking alpha-boomers viewing habits? Can we market to 55+ demographics without loosing market in other demographics?
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