Thursday, January 22, 2009

Business Will Change

As some of you already know, I have been working on a book. So far I have written first drafts of twelve chapters and second or third drafts of a few. The book is the result of reflecting on the fifteen years I have now spent participating in the evolution of the Web, and more specifically is inspired by the consulting work I am currently doing. In this work I am trying to help businesses understand the fundamental shift that is underway right now in the very notion of production, brought about by the rapid adoption of social technologies.

Many people have written about The Power of the Network (David Cushman) or to be more academic, The Wealth of Networks (Yochai Benkler). And marketers have been warned about what happens when there is a Groundswell (Charlene Li and Josh Bernoff) or what to do when Here Comes Everbody (Clay Shirky). And these all have been terrific inspirations for my thinking.

But this book is a little bit different from these others. As I write in the introduction
"I wrote this book for every business person struggling to make sense of the changes that are sweeping through our world today."
That is, this is a book that seeks to help explain what is happening in every day language and what to do about it as an individual business person.

Embracing the same concepts that I am writing about in the book, I have launched today a website on which I will be publishing drafts of every chapter, open to comment (and hopefully improvement!) by anyone who chooses to stop by. The site is:

To start with I have posted just three pieces:

Introduction -- How Collective Intelligence Will Change The Way We Do Business

Chapter One -- Adapting to Change: How We are evolving into a new species

Chapter Two -- The Precursors of Change

In a week or so I will load a few more chapters on and so on, hopefully settling into a regularly weekly update cycle. I hope this idea of writing a book in public captures your interest and that you join in and tell me what I am getting right and wrong!

Wednesday, January 21, 2009

When is Advertising Not Spam

Please step in and disagree with me. But personally I am really starting to feel an emotion when I see advertising that I feel when I see SPAM in my email inbox which is to say -- anger, frustration, and in some cases a sense of befuddlement... why is that brand wasting their money cluttering up my media experience? So I have been trying very hard to come up with a model that explains when advertising "works" and when it doesn't.

In the broadest sense, SPAM email messages are:
unwanted messages from unknown senders
which can also be a good description for advertising. Most of the time advertisements are by definition unwanted -- they are clutter or they are blockades between me and what I want to see or do -- whether in my real (magazine, TV) or virtual (web) environment.

But there are certain circumstances in which an advertiser can overcome either the "unwanted" aspect of their message or the "unknown" aspect of themselves as a sender. Here are some of the ways an advertiser can overcome the "unwanted" message problem:

  • INFORMATIONAL - provide (or link to) valuable information -- I may not have realized I wanted the information, but having it makes me feel better.

  • ENTERTAINING - make me laugh, or at least smile, or have a sense of wonder -- I'll likely forgive the intrusion

  • CONTEXTUAL - get the context and timing right -- such as an ad in search results -- you guess correctly that I am actually seeking the information

The unknown sender problem is a bit more complex and an understanding of this challenge can emerge from again comparing with email. Think about emails you receive from people and how you would evaluate their appropriateness based on the content of the email and the relationship you have to the person sending the message. Messages might be more beneficial (a party invite) or more costly (a solicitation for money, a request for an introduction) and you will evaluate these in the context of the social strength of the relationship. A message from a "best friend" might always be welcome, even if it contains a quite costly request. Whereas the most beneficial message from a stranger would likely be unwelcome (if not also distrusted).

The same calculation is true of brands -- you might know of a brand, like McDonald's, but hold it in low regard. Thus as solicitation to purchase cheap burgers might seem very unwelcome. But if you really enjoyed eating at McDonald's the same solicitation would perhaps be quite welcome.

An interesting option is presented by Retargeter to which I was recently introduced by Auren Hoffman of Rapleaf (more on Auren's really interesting business in a later post). Mechanically what Retargeter does is tag a visitor to your website so that later on, when that visitor is on a page with advertising on which Retargeter has bought the ad space, an ad for your company can be shown to that visitor. In this way you are showing an ad specifically to people who (by visiting your site) have expressed an interest in your company.

This can of course be taken to an extreme and I have not yet connected to Retargeter to ask how a company can limit the number of ads shown to any one person or the length of time after a site visit during which an ad might be shown. But by showing ads to a person who has proactively visited your site, you are almost certainly connecting in the short run with someone who has a strong interest in your brand.

This may seem counter-intuitive. Shouldn't a company spend money to raise awareness with people who DON'T know the company? Why spend money advertising to someone who has already visited your site? Actually for many kinds of businesses a company needs to build up awareness and be top of mind to ultimately lead a customer from an expression of interest to a purchase decision. Advertising to people who already have some awareness of your business can remind them of an option under consideration and thus shorten a sales cycle or raise your brand over a competitor.

I am very interested to hear of other examples of advertising that is not spam. My inclination right now is to strongly recommend against spending money on advertising and instead for companies to focus on creating meaningful connections with their markets. But I also accept that there are circumstances in which advertising "works." Defining those circumstances will become an important tool for companies to understand how to allocate marketing dollars between this one-way messaging and the more labor intensive (though usually more rewarding) two-way communication.

Sunday, January 18, 2009

No Comment

One might wonder why an organization would choose to use a blog as a communication tool if, as in the case of Federated Media's Blog, the organization doesn't allow comments. To be clear, at the bottom of each post there is a form for submitting comments. But one glance at the home page shows that submitted comments do not move from moderation to publication.

Sure, lots of blogs out there have no comments -- my blog in fact has very few. The number of people who choose to comment after all is relatively small by comparison to the total number of readers, and there has to be something to say. John Battelle was, for example, kind enough to comment on my blog when I published a compliment of his Web 2.0 Summit. But what else would anyone have to say to that post?

On the other hand, if you claim, as John has in his "Change and Opportunity" post about a 10% staff reduction at Federated Media, that your company has
...completely reinvented the concept of what "marketing" could be.
you might expect a few people to want to comment. And if you are going to claim that you
...helped define the practice of what we call "conversational marketing."
then you probably owe the market a real conversation. But maybe this blog post shows exactly what is wrong with the definition John has been using for "conversational marketing" -- too much marketing and no conversations.

Totally Transparent Layoffs

Tony Hsieh has certainly set the bar for transparency quite high in his blog post about Zappos layoffs back in November. Crain Communications' Workforce Management magazine wrote about that act of courage, "Social Media Begins Forcing the Totally Transparent Layoff." In this article author Ed Frauenheim quotes Libby Sartain, former head of human resources for Yahoo, saying
“People tweet, people blog, people text,” Sartain said. “You are going to have a completely transparent workplace at all times. You can’t really spin it.”
The blog post that Tony did has pages of comments from engaged customers, past employees, and industry observers. One past employee writes
Tony Hsieh and Alfred Lin are some of the insightful, kind, and compassionate corporate executives that I have ever had the privileged of working under.
Now that is a company people will want to work for, even if it (like all companies) will sometimes have to layoff employees.

The Case for Transparency

Done right, transparency can be a powerful tool for a company to communicate its core values and, even in a difficult time, build a positive impression of the company in the larger marketplace. So what was wrong with John's blog post? Let's start with the title - it wasn't about respecting the people who were being shown the door, it wasn't about telling the marketplace that Federated treats its employees, even in bad times, with honor and respect. It was instead a marketing pitch for Federated. From the title of the post -- "Change and Opportunity" -- and on throughout the post John writes about FM and not about the people who are now without work.

Secondly the post didn't communicate to customers, in this case the sites which Federated represents, what will happen to them. Will it take longer to get a report? Will fewer ads be sold? Will some sites be cut? An important customer, Michael Arrington, claims he read about the changes on their blog. Certainly in both communicating to employees and to customers a blog post does not replace private communications (in which FM was undoubtedly also engaged). But transparent communications can help bridge the communications gap and make sure that the company's point of view is made clear.

And transparency has the additional benefit of speaking to the much larger audience of potential customers and potential employees to tell the company's story and show what the company stands for and believes in, demonstrating how it treats its stakeholders through good times and bad.

Advertising vs. Conversations

For me the most interesting aspect of this story is the one which appears to have been the most mangled in the way in which it was communicated (and reported). Paid Content reported the news with the headline "Federated Media Shifts Away From Display Ads" which is probably not the lede that John was hoping for. According to Chas Edwards, quoted in this article, Federated had over $39 million in revenues in 2008. One would guess that most of this is from "dumb display advertising" as Edwards calls it, hoping perhaps that his dumb advertisers don't notice how dumb he thinks they are for giving him their money.

But I think Federated Media does have a great opportunity to lead the industry in a fundamental change and that John Battelle could be a great spokesperson for doing marketing in an entirely different way. As Joseph Pine tells us in his latest book, what we really crave is authenticity from the companies with whom we do business. In my view "conversational marketing" is about being transparent and being authentic - having a real, open, interactive conversation with others in the marketplace, treating them as peers.

But if FM is going to be a leader, they will have to start by being a good example themselves.