Generation MySpace Is Getting Fed Up

BW's Spencer Ante and Catherine Holahan are the most recent media experts to observe what we pointed out back in December, and that advertising performance (clicks, purchases etc) is a fraction of what advertisers hoped, and that ad revenue projections for social networking sites are proving grossly over optimistic.

It doesn't take a social scientist to know that the value of a social networking site is predicated exclusively on the loyalty of its members--and obviously its that loyalty which inspires the aggregate traffic counts for the platform.

Facebook has quite the track record for introducing innovative ideas, but at the same time, they've imposed these innovations without asking the most important people if they would support it--and they've never invited them to participate in the enterprise value that these members created for its founder. And on more than one occasion, the members rioted , causing Facebook to lose face and retreat. God forbid they should actually conduct member surveys before introducing major releases.

In the case of advertising, this weeks BW article shouldn't come as a surprise to anyone i.e. the that social networking sites are proving to be grossly overrated insofar as a vehicle for advertisers, or as the next gold mine for those looking to make billions in advertising revenue.

We already know that the return on investment i.e. CPM based banners has been diminishing more rapidly than the value of subprime mortgage debt. That's why pay for performance (i.e. PPC and CPC applications are the bread and butter to Google's bottom line. But with that said, the actual # of clicks vs. impressions will always remain insignificant. But Google's Adsense program is exactly the type of application that should be introduced to social networking sites.

Why an advertiser would think that advertising on a social network site would be a panacea merely demonstrates how little most advertisers know about peer-to-peer marketing---and the BW article points that out.

Members on a social network go the site to communicate with other members, not to be inundanted with 3rd banner ads.. They don't click those ads when they're actually surfing the net, so they aren't about to click them within what is supposed to be a 'protected comfort zone'.

Yes, marketers know that products are best promoted via influencers--and a social networking site is by definition, a hotbed of influencers. But unless the member is doing the influencing, any third party advertising strategy is not only going to fail--its going to backfire--and negatively impact the loyalty of its members. Simple logic that any VC should understand before plucking down the next five cents of investor capital.

Facebook claims that allowing its members to advertise products of their own choosing on their own profiles wil make the page 'too cluttered'. Instead, Facebook is imposing what ads display where, including scrolling across member profile pages. That's the equivalent of inserting billboards on the side of my house, without asking my permission, and the fact that I'm not even being offered a piece of the ad revenue is almost incomprehensible.

My 22 year old is a senior in college--and I've polled her, along with two dozen of her peeps. They're all ready to graduate, and to leave Facebook behind them, for the simple reasons noted herein. With that said, if there is going to be ads on the platform, it only makes sense that individual members could select "My Favorite Stuff" and be allowed to maintain their own proprietary 'billboards'--and share in the revenue accordingly.

Out of the mouths of babes.

Have you been Phished? Has Your Identity Been Stolen?

Identity thefts due to on-line phishing continues to be a massive problem. Despite both low tech and high tech security strategies introduced by online payment vendors, credit card companies and banks, there still remain 'holes' that attackers can penetrate. These are often referred to as "Man-In-The Middle (MITM) and "Man-In-The Browser" attacks.

Consumers can't really protect against many of these types of incidences-hackers have a variety of ways to perpetrate your PC and lift your info--the most common of course is sending you an email that appears to be from your bank, from PayPal or from Amazon. Even the most experienced computer industry execs have been tricked into clicking on those links and supplying 'correct billing info".

We've just heard about KeyID, a new company that has come up with a very interesting solution that banks and credit card companies can integrate into their systems and otherwise add a completely new level of protection for their customers... We'll keep you updated as we hear more about KeyID !

Marketing and the Presidential Campaign

For those following my musings, you'll know that I have a tendency to be acerbic--but I try to stay away from political opining--and leave that to Bill Maher and Rupert Murdoch's Bill OReilly--as I don't need to risk potential consulting clients to be offended by my personal political viewpoints.

With that said, the current Presidential campaign, and particularly Mike Huckabee's comments today suggesting that his God supercedes the US Constitution has ignited my need to opine.

Have we gone so far off the path of common reason that more than 100 responsible, educated people would even consider voting for someone that suggests that religous beliefs should supercede the US Constitution. When and if the US Govt gives me back the right to vote, the odds of my voting Republican are pretty close to zilch, but if I had to choose, Ron Paul would be my fav.
I chuckled when I saw Huckabee's "Christmas" ad--but today's salvo compelled me to reach for Alka-Seltzer.. Is this guy a total lunatic?

Sure--I'm an east coast, quasi liberal. Harry Truman was my Dad's favorite President. But I can be a switch hitter--as I truly believe that party affiliation is less important than the personal perspectives of the top gun with his finger on the button.

I will always believe that Jack Kennedy was an inspiration for his and generations yet to come, that Ronald Reagan was a lousy screen actor, but smart enough to surround himself with very smart people; that Gerald Ford might have tripped on stairs--but he was a true American hero--that Jimmy Carter was the second worst President of the last 30 years--George W winning the trophy for that title--and that Obama should have changed his name if he wanted to be a serious consideration.

My fav would be Mike Bloomberg (notwithstanding his being a meglomaniac of sorts)--but alas, this country isn't ready to elect a Jewish person to the highest office--and its becoming ever more doubtful that we're mature enough to elect a woman or a person of color.

Lesson to be learned--any worthwhile contender for the highest political office necessarily needs to be politically astute--and his/her "message" will have to be re-engineered/tweaked to appeal to the targeted audience. The risk in overtweaking--or posturing a message that is so obviously designed to 'sell' one particular audience, and then changing it the next day to appeal to another audience is one that few people can afford to take. And right now, none of the candidates have demonstrated the ability to manage that kind of risk. There's a guy named Putin looking for a job--his posture is more appealing than Huckabee's. Mike-time for you to bow out and leave it to Mitch and John to duke it out. Sorry Rudy-you were never a realistic choice, and I'm a New Yorker that lost 10 good friends in the WTC on 9-11.

Cornel Bucks Privacy Concern-Stands Out in Outing Troubled Students

Let's give a round of applause to Cornell University--and their innovative approach to making sure that troubled (and potentially suicidal students) are under constant watch--and when even the slightest hints of danger are displayed, parents are the first to be called. This is a philosphy that every single school in teh country should be taking--as opposed to nambsy pamsy fear of violation of privacy laws---and in fact--universities that incorporate programs similar to Cornell's should be receiving federal grants--and those that don't should be losing their federal grants .

There. I said it... Ron Paul---are you listening?

Buffet To Start Bond Insurer--Marketing Coup By Branding Genius

Warren Buffet only gets better with age.. And the stock price for Berkshire is miles higher than any other company--not only because it trades at $135,000 per share--but because Warren is uniquely masterful at identifying opportunities and leveraging the power of brand integrity.

Seizing the moment-Buffet is launching a municipal bond insurer--in a time when every other competitor is on the ropes as a result of investments in mortgage debt---he's starting with a totally clean slate, an over capitalized balance sheet, and the integrity of the Berkshire brand. Our bet is that in two years, this new company will be bigger than Ambac and MBIA combined.

Are Your Clients Happy-A Positive PR Agent Story

Todd Brabender--PR Pitcher of the Year Scores a front page WSJ profile of himself--with examples of how he succeeds for clients where most others fail. His rate of $2500/mo is likely to going to increase thanks to his own profile, it reads like he's someone that should be considered.

That tells me that not every PR agent should be pooh-poohed.

Paying For PR-But Only When It Works?

If you missed the Dec 17 WSJ Small Business section, or don't have an online subscription, below is a snapshot of the challenges faced by Cynthia McKay, CEO of Le Gourmet Gift Baskets.
After expensive and unsatisfying experiences dealing with retainer-based PR firms that were expected to generate buzz with media outlets, Cynthia ultimately opted for an agency that only charges for actual media mentions. Its an interesting approach--paying only for performance. McKay says that this model has generated great coverage, which in turn has sparked a big increase in sales.

We always like to believe that you get what you for, and unfortunately, too many think that a PR firm that imposes a hefty retainer falls into that category.

Our advice: If you have the passion for your product, and you're comfortable putting on a sales hat--try the old adage :"If you want to do something right , do it yourself." There are certainly some exceptions..as noted in the above anecdote from the front page of WSJ Dec 19 edition... (Hey Rupert---hope you don't mind that I keep on referencing your publication!)

The Situation: After years of trying different public-relations approaches with mixed success, Le Gourmet Gift Basket settled on a pay-per-placement program.

How It Works: CEO Cynthia McKay paid a PR agent an initial fee of $1,000. After that, she pays only when her firm gets a mention in a media outlet.

What It Lacks: Pay-per-placement firms usually just pitch a story and don't offer other services like strategy development.

Facebook: Hubris Leads to Egg on Face

Last week we posted a note sent to Facebook's head of advertising encouraging her to embrace a program that allows its community to share in the ad revenue that their eyeyballs are otherwise responsible for. The simple application would include a small box on the students' (or now everyone else allowed to be a member) home page with a "my favorite stuff"--and display links to advertisers that they want to endorse. It could work in a similar manner as the Commission Junction platform.

As a Dad with a college senior in house, I posed the idea to my offspring and her peeps, and they all thought it was a good idea--after all, it could be a source of income, however small it might amount to.

Lo and behold, I was unaware of a company called Weblo--which is apparently one of the hundreds of software companies that are taking up Facebook's "open architecture" invitation to introduce their applications to the Facebook community.

Per today's NY TImes- "Chris Kelly, Facebook's chief privacy officer has said Facebook does not allow users to sell ads because Facebook does not want user's profile pages to become cluttered"

That's the wrong response, just like it was the wrong approach to allow Beacon to publicize users activity without getting their permission.

Weblo's CEO has it right : Rocky Mirza says that people should be able to sell space on their pages on Facebook (and a variety of other sites like MySpace and YouTube) because they are the content creators on those sites. Facebook would have no content if not for its users, he said, which makes it different from media organizations, for example, that have content because they pay reporters.

Short Life for Chief Marketing Officers

Latest edition of BusinessWeek merely profiles a job title that's been misinterpeted by too many for too long. David Kiley and Burt Helm's article points out that CMO's have typically been accountable for approving creative ads and managing the agency process, when in fact, its a job that's supposed to connect the tag line to the bottom line.

Now that metrics are the meter, it isn't any surprise that the average CMO is out of a job in 22 months. But..in all fairness, CEO's (and Boards) need to understand that re-engineering, re-branding and revitalizing sales are complex processes.

WSJ Report: How to use video to expand your business in a YouTube world

At the risk of violating WSJ rules re: republishing their content (when Rupert introduces the all FREE access to WSJ online, I'd simply incorporate a link to this great article)--below is a great follow up to an observation we were proud to make last month--how to leverage YouTube and drive traffic and generate SALES for your product

Managing Technology
Lights! Camera! Sales!

How to use video to expand your business in a YouTube world

By RAYMUND FLANDEZ
November 26, 2007; Page R3

Online video has become a daily fix for millions of people. Now entrepreneurs are starting to cash in on that obsession.

Consider Valentina Trevino. The 29-year-old Chicago artist and filmmaker regularly posts videos on YouTube¹, showing how she created a painting and what it means to her -- and musing quirkily on a host of matters. In one clip, she ruminates about the strange connection between the ballerinas in Edgar Degas's art and Britney Spears's custody battles.

The unorthodox formula has brought her a total of 8.2 million views on YouTube -- and, just as important, a host of buyers. At the end of her clips, Ms. Trevino includes a link to eBay, where viewers can buy the featured piece. (See an example.¹¹) So far, she has sold every painting she has offered this way -- 49 at last count -- at prices ranging lately from $500 to $1,000 each. She also sells prints of her work and merchandise bearing the images and her slogan, "Eat Your Cookies." Before she started the YouTube diary, she says, she had to give up painting to pay the bills. Now it brings her a regular income.

A host of small businesses are trying this new twist on Web promotion, sending short films to Google Inc.'s YouTube and other popular video sites, advertising everything from root beer to blenders to bullet-resistant backpacks. For one thing, it's hard to beat the price: It costs nothing to put something on a video-sharing site, unlike buying television time or a regular Internet ad. And the videos let companies use a creative and personal touch that wouldn't work in traditional ads.

"It's so different than the message-driven approach to marketing that most kinds of advertising is," says David Meerman Scott, author of "The New Rules of Marketing and PR." "You don't have to talk about your product per se. You can just have fun with it."

But that leaves some big questions for companies that want to try their hand at videos. How does a small business thrive in a YouTube world? What makes some videos skyrocket in viewership and others bomb? Are there guiding principles that will produce a bankable ad?

Many entrepreneurs say luck or timing had at least something to do with their success. But a closer look at their stories reveals valuable lessons that any small business can apply. Here, then, are some of the most successful small-business videos, and the factors that took them to the top.

BLENDTEC: BE FUNNY

By far, the most common element among successful videos is comedy. Rather than offering airless advertisements or canned commercial messages, these videos deliver laughs as well as pitching a product.

Case in point: Blendtec, a division of K-TEC Inc., of Orem, Utah. In the past year, the high-end blender maker has drawn more than 60 million views for its "Will It Blend?" video series¹². The premise is simple. A laconic host, Blendtec CEO Tom Dickson, uses the company's blenders to grind up everything from credit cards to golf clubs to an iPhone. Cheesy music plays in the background, and cheesy jokes fly freely.

George Wright, Blendtec's director of marketing, says the series got started with a simple observation. He realized that Mr. Dickson tested his blenders by putting 2x2 boards inside and letting them rip. (See a video.¹³)

Retail sales of the blenders have shot up 500% since the company started the series last year. This year, total sales are projected to top $40 million. And the series has brought Blendtec tremendous name recognition. When employees demonstrate the products at big-box retailers, people come out and say, " 'That's the blender that can blend marbles!' " says Mr. Wright. "Before that, [employees] were having to introduce the company."

The videos have also brought some new opportunities. Earlier this year, Novell Inc., a Waltham, Mass., provider of open-source software and services, paid Blendtec about $5,000 to do a "Will It Blend?" video for a company event. In the movie, a number of items got blended: a Microsoft Vista CD, razor blades, a stuffed animal, a flash drive and a Red Bull beverage.

"We thought this would be something fun for our customer base," says Russ Dastrup, Novell's corporate videographer. The message? "Novell Technology allows you to blend a variety of operating systems and applications into a seamless network," Mr. Dastrup says.

MJ SAFETY SOLUTIONS: TAP INTO CURRENT EVENTS

At first glance, "My Child's Pack" breaks all the rules of online video. It isn't funny or entertaining -- in fact, it's downright somber. But it has gotten nearly 25,000 hits on YouTube since early August because of its timely message.

GOING VIRAL A Valentina Trevino work in progress; MJ Safety Solutions' backpack

The video begins with a startling statistic: "328 school shooting incidents with injury or death in North America since Columbine." It segues into photographs and news clips of the Columbine and Virginia Tech shootings. Then comes the pitch: a bullet-resistant backpack from MJ Safety Solutions LLC, of Danvers, Mass. (See the video.¹⁴)

Co-founder Joe Curran, a carpenter for a construction company, says the company has sold 1,000 backpacks, at $175 each, since the video was released. He says the company has also received hundreds of thank-you letters from concerned parents, and a local police officer has started buying the backpacks for his grandchildren.

The seed for MJ Safety was planted in 1999, in the wake of the Columbine shootings. Mr. Curran and the other founder, Mike Pelonzi, started talking about their own kids and how ineffective their school policy would be in the event of a shooting. They decided that there was a need for "products out there to protect children in that situation," says Mr. Pelonzi.

This summer, when the backpack was finally ready for release, the Boston Herald planned to publish an article about it. The co-founders knew that a visual demonstration would help, so they cribbed together a short video with the help of family and employees. Toward the end of the clip, Mr. Curran's 13-year-old daughter, Amanda, gamely smiles as she holds up the backpack to shield her head and chest.

The Boston Herald provided a link to the YouTube video, and the groundswell started. "In reality, we're just concerned dads," Mr. Curran says. "We're not business marketing geniuses. It just happened that way."

ALL NATURAL MAINE ROOT: FIND A PARTNER

Most small businesses don't have the resources for an in-house video-production staff. So, finding a partner such as an advertising agency can help get a video campaign off the ground or spiff up a lackluster idea.

But there are a couple of caveats. This option may end up costing thousands of dollars -- a significant payout for most entrepreneurs, and a lot more than most companies spend on promotional videos. It's also crucial for companies to shop around for the right partner. The videos will turn out better if the ad agency understands the small business well and plays to its strengths.

For instance, back in 2005 All Natural Maine Root LLC, an organic-soda maker in Scarborough, Maine, was looking to boost sales but had scant resources for a marketing campaign. It found a good partner in Door Number 3 Inc. of Austin, Texas. The ad agency liked the product and clicked with the company's founders, Mark and Matt Seiler. And the agency saw the chance to do a campaign that would showcase its own creative abilities.

That led Door Number 3 to give the soda makers a big break on price. Maine Root paid about $20,000 for the campaign, but the campaign could have easily cost between $75,000 and $150,000, says Mary Pat Mueller, president of Door Number 3.

The two companies decided the best approach to the videos was comedy. "The key to a successful viral video campaign is to make people laugh," Ms. Mueller says. "That way, they'll want to pass it on -- and, that way, they'll look like the hero and the deliverer of the entertainment."

The concept also fit the Seiler brothers' personalities. "Their sense of humor is their brand," Ms. Mueller says. "If you meet them at tastings, they're outgoing, they're always joking."

Together, the two firms came up with a premise for the campaign: mock exposés about soda. Root-beer activists pull off a late-night break-in at a corporate root-beer facility to free Maine Root soda bottles from the Director of Fructose Injection. A "Sugarcane Shuffle" rapper riffs about how "I like my root beer all natural / cause sugarcane is all my tongue will allow / All the others just taste like puppy chow / So Maine Root just stand and take a bow...."

Door Number 3 sent the videos to several sites, including YouTube¹⁵, stupidvideos.com¹⁶, ifilm.com¹⁷, purevideo.com¹⁸ and tvlinks.com¹⁹; it also created a dedicated site for the clips, freerangerootbeer.com²⁰. To spread the word, the agency contacted popular root-beer and soda blogs. Major media outlets, such as CNBC and CBS's "Early Show," also picked up on the story.

The results have been dramatic. Before the campaign began last fall, Maine Root averaged about $500,000 a year in retail sales. So far this year, sales have soared to more than $3 million. "Door Number 3 played a huge part in our success," says Mark Seiler, Maine Root's co-founder. "They kind of took a chance on us. And I think it really worked."

MAKE MAGAZINE: BE USEFUL

Entertainment value helps a video succeed. But that isn't the only approach that works. Some small businesses have carved out a lucrative niche by giving viewers information they can use.

Consider Make magazine, a guide for do-it-yourselfers. Published by O'Reilly Media Inc. of Sebastopol, Calif., the magazine produces weekly how-to videos for a host of projects -- everything from making your own catapult to creating a cigar-box banjo.

The clips average about a million views a month on iTunes, Blip.tv²¹ and YouTube. (The most popular: a guide to screen-printing T-shirts.) The videos have also brought in lots of business. For instance, attendance has ballooned at an annual convention sponsored by Make, and the magazine sees dozens of new subscriptions every month. (See some examples.²²)

"How-to videos are one of those things that lasts, that have a shelf life," says Phillip Torrone, senior editor at Make. "It's not like a YouTube video that's a 30-second funny thing. It might be something that they can watch over and over again."

Of course, entertainment value is still important, even if it isn't the main focus of the videos. For instance, Make realized it would need a charismatic host to make the clips lively. Mr. Torrone discovered Bre Pettis, an art teacher from Seattle who had been videoblogging about his students' art projects. Mr. Pettis, Mr. Torrone says, was like Mr. Rogers, Mr. Wizard and Bill Nye "The Science Guy" rolled into one.

Make's publisher, Dale Dougherty, agreed to bring Mr. Pettis on board in early 2006 -- after seeing a video of Mr. Pettis accidentally harpooning his cellphone. "There was a bad-boy kind of thing that I liked about it," Mr. Dougherty says. "It wasn't boring."

Mr. Pettis, jokes Mr. Torrone, "has been voiding the warranty of electronics ever since."

The 35-year-old Mr. Pettis, who now lives in New York, posts a video each Friday. In general, he spends one or two days on research and two days filming. He then takes a day or two to edit the video and write up a PDF with detailed instructions for viewers. "It's what I love to do," says Mr. Pettis. "It's my passion, making things and being creative and supporting others' creativity."

MOE'S SOUTHWEST GRILL: GET YOUR CUSTOMERS INVOLVED

There's one simple way to sidestep all of the complications of creating a video: get customers to do the work. Big companies have famously solicited user-made ads, including McDonald's Corp. and Domino's Pizza Inc. Now small firms are learning the value of the strategy.

Last year, Moe's Southwest Grill of Atlanta started a "Burrito in Every Hand" campaign, encouraging customers to send in 30-second videos about the food. The clips were posted on a Web site, where visitors could vote on them; the company reviewed the 20 highest-rated clips and picked a winner. (See the video.²³) The grand prize: Moe's burritos for life, equal to 2,860 vouchers good at any participating Moe's franchise.

Moe's received about 40 submissions that met the guidelines, and the promotional Web site got 211,000 visitors. "We knew that our customers would really enjoy getting involved," says Sara Riggsby, director of marketing for Moe's, which is now owned by Atlanta-based Focus Brands Inc., the operator of Carvel and Cinnabon shops.

Ms. Riggsby says that the company has seen increased sales since the program ran. And Moe's achieved its goal of building brand awareness among younger customers: The majority of the participants were ages 18 to 25. The company's email marketing database also grew to 200,000.

The winners: four amateur rappers. Michael Squitieri, a 20-year-old acting major at Boston's Emerson College, wrote the script, and his friend Kevin Schwoer, 21, edited and put original music into the video. The group, which goes by the name "Notorious M.O.E. and Nacho Daddy," is now working on a radio commercial for Moe's.