Author Archives: ghotchkiss

Canadian Car Buyers Calling BS on Higher Prices

The internet is a wonderful thing.

graph120In the last 5 years, and particularly in the last few months, the Canadian dollar has rocketed in value against the US greenback. It doesn’t seem that long ago that a Canadian dollar was worth about 60 cents American. Now, we’re pushing the $1.08 range, and there seems to be no end in site. In the last 120 days alone, our dollar has gained over 16 cents against it’s American counterpart.

Now, as you might imagine, this has a number of implications for Canadians. It’s good for cross border shopping, but terrible for exporters. One area that wasn’t so good was car buying. When the values of our respective dollars were flipped, we could understand why we had to pay 10 to 15 thousand more for the average vehicle. It was a simple exchange rate calculation. But why did the price gap remain when our dollar started to rise?

Just today, I went to Toyota’s Canadian website (toyota.ca) to see what a fully loaded Prius would cost, delivered and ready to drive. The price tag came to just over $41,000. The exact same vehicle, just across the border in Spokane, Washington? $28,000. And remember, that’s $41,000 Canadian. If we calculate at current exchange rates, that’s $44, 300. Everytime we buy a vehicle, Canadian’s are getting screwed, in this case, to the tune of over $16,000.

Now, thanks to the transparency of the web (it took me about 4 minutes to figure out the extent to which Toyota was screwing us) Canadians figured out pretty quickly that we were being had, which lead to a flurry of cross border shopping. Suddenly, vehicles were flying off the lot, headed north for the border. The manufacturer’s answer? Certainly not to consider a pricing change. No, they forbid US dealers to sell to Canadians. Of course, in today’s world, for every wall you put up, a dozen holes are quickly rammed through it. The auto brokership business is thriving, thank you.

Now, as a Canadian, that makes me furious. There’s no excuse for it. The media have started to pick up on this and there is some pressure on the manufacturers, all of which have remained stonily silent. I suspect that if the reverse were true, and American’s were being fleeced out of $16,000 everytime they buy a vehicle, they’d be a little more responsive. I did hear Buzz Hargrove, spokesman for the Canadian Auto Workers Union, say that this wasn’t about pricing, it was about keeping jobs in Canada by supporting the Canadian auto industry. What? Like the Canadian auto industry is supporting us by giving us clear, fair and transparent pricing? Buzz, you have your head up your ass. This is about not treating customers like a bunch of stupid sheep. It’s about doing the right thing and valuing us. And if you can’t do that, you don’t deserve your jobs. I want Canada to be able to compete in a fair and open market place, not by slipping a fast one past your neighbours.

By the way, this is not just about cars. We’re paying more for pretty much everything. If you’re in Canada, pick up a book and see the Canadian price, relative to the American price. We’re paying about 40% more. A friend of mine actually had some US cash with him and tried convincing the seller to give him the US price if he paid in US cash. It didn’t work.

Now, there’s are somethings that will always be more expensive in Canada. We’re a big country, a lot of areas are fairly remote and we have a different tax structure. I’m not expecting parity with the US. I’m expecting fair pricing. I’m expecting a frictionless marketplace that let’s the customer decide.

What the manufacturer’s, like Toyota, don’t seem to understand is that in today’s world, the customer isn’t ignorant. We know when we’re being screwed. And we don’t like it. Why would you expect us to react differently?

Why Do We Keep Buying from Bad Businesses?

There’s an Italian grocery store in the town I live in. In fact, there are two. Most of our family, including my wife, shops at the one. They very seldom go to the other. Yet, I constantly hear how bad the service is at the store they frequent. I’ve heard hair raising stories (I’m not sure how true they are because I don’t personally shop there) of repackaging outdated products so the best before date didn’t show, rancid cheeses, repackaging produce so the rotten ones were out of sight at the bottom of the package and the owner cruising other grocery stores, buying outdated products from them and then selling them in his own store. And if you happen to take something back and complain, you’re immediately questioned as someone who is trying to scam the store. At best, the store takes a “you should know better, buyer beware” attitude. Now, it’s a generational thing as well. The owner ascribes to the “whatever it takes to get ahead” school of business, where his children, who are gradually getting more involved, seem to be a little less clueless about the importance of happy customers and are trying to change things.

But my wife keeps buying there. Why?

The competition doesn’t seem to have the same problems, or at least, not to the same extent. My wife never shops there. Again, I ask, why?

Well, according to my wife and the few other family members I asked, it comes down to three things. Convenience, price and some twisted sense of obligation to the family that runs the offending store. I suspect the last one has a lot to do with Italian culture, so may not be applicable in all circumstances. (Incidentally, they used to know the family that ran the other store but stopped patronizing it when they sold to store to owners they didn’t know).  But the other two, price and convenience, are, I suspect, more universal motivations.

I’ve seen it myself. I hate shopping at Walmart. Most people I know hate shopping at Walmart. It’s too big, too messy, too loud and the service generally sucks. But I shop there. Why? Because of price and convenience. It saves me a stop somewhere else, because it has a little of everything. And the prices are generally lower than the competition’s.

Seth Godin himself, the king of the Purple Cow and remarkable products, regularly blogs about bad experiences he’s had with businesses he’d rather not frequent. Bad airlines, bad theme parks, bad hotels. And I use Seth as an example purposefully. There’s probably no one on the planet more active in exposing bad business, but even he’s still giving them his money, and then bitching about it after. Why? I suspect convenience and price are the culprits.

Now, sometimes, there’s literally no alternative. One of the worst airline experiences I ever had was on United. Try as I might, I just couldn’t find another flight from Chicago to Toronto that got me there anywhere close to the times I needed, so I had to suck it up and fly United. And sure enough, United delivered the experience I was expecting. In fact, they exceeded my expectations, but not in a good way.

We keep crowing about the new control consumers wield. But with that control comes responsibility. We complain about bad advertising and bad businesses, but we continue to patronize them. We absolve ourselves of any blame for the twisted, greedy, profit crazed culture we’ve spawned over the past century. But it wouldn’t be this way if we simply stopped buying from bad businesses. Ultimately, we’re to blame. We might have to pony up 10% more on occasion, or go a little out of our way so we don’t have to worry about getting two rotten tomatoes at the bottom of the package or a bag of rancid pasta. One of the beautiful things about our free market economy is that if people stop buying, companies go out of business. If you’re bitching about a business, remember, it’s you that’s keeping them in business.

Gord’s Weekly Rants: Agency Cluelessness, Measuring Engagement & Selective Perception

I’ve been a little grumpy this week. And you can tell from the two columns I wrote.

First, in MediaPost, I took on big agencies and the continued cluelessness I see around search:

Will Agencies Get Search: Don’t Hold Your Breath

It seems like anytime I have a conversation with anyone who knows search and its effectiveness, we always come back to the same question: “Why don’t more ad agencies and brand advertisers get search?”

Then I decided to take a swipe at the ARF’s ill fated attempt to create a one size all metric around engagement. In this column for Search Engine Land, I dove fairly deep into how we psychologically perceive and cognitize ads. If selective perception, schemas and priming are your bag, check it out.

Taking On ARF, Engagement, Interruptive Advertising… And Whatever Else You’ve Got!

In 2005, The Advertising Research Foundation (ARF), through their MI4 Initiative, decided to embark on the Quixotic quest of defining engagement. The impetus was finding a more appropriate and applicable metric that could stretch across the rapidly expanding number of channels that were exploding through digital delivery. So, the good folks at ARF assembled a bunch of agency people, various publishers and yes, even a few search marketers, to try to thrash out a definition for a standard metric that could apply equally to video, print, digital display, audio and text. I watched the proceedings from the sideline with skepticism.

It’s sounds trite to say there’s a revolution happening in marketing. Everybody, including CMO’s for the big brands and big agency flacks are saying the same thing. Almost everyone is talking the talk. But almost no one is walking the walk. I guess it’s a lot easier to say than to do. And I think that’s the sticking point. More and more, marketing is about delivering on every customer experience opportunity. And that’s not a marketing function. That’s the very DNA of a company. Agencies can’t do that for you. It requires a CEO that tends to get obsessive and dictatorial about the core purpose of the company (Disney and family entertainment, Jobs and design, Neeleman and a better flying experience, Brin, Page and User defined relevancy).

Through my research, I’m finding that an intellectual level, everybody gets that something fundamental is happening here. There are thousand of signatories of the Cluetrain Manifesto, published in 2000, 7 years ago. Every one of them says, “Right on, absolutely, you guys rock!” (I paraphrase). How come, then, I still see some many crappy customer experiences, advertising seems less authentic, more intrusive and louder than ever, and clueless corporations with questionable ethics and continuing control fantasies. Because, it’s one thing to be a silent revolutionary who’s read the subversive manifesto and smirkingly nods their head in agreement. But how do you do something about it? Unless you have X-O level support, you’re doomed to failure.

Example, one of the signatories: – “I’m on the train! Now, can you send this to my CEO?” Holly Harrington, Web Developer, Intel

What’s needed is a true revolution where some corporate monarchs are toppled and the rebels take control. We need more corporate juntas. But those just don’t happen, do they? Because when your Corporation X, with umpteen billions in annual revenue, who’s going to have the guts to say, “Hey, we’re doing it all wrong and we have to change everything” and to do that in full knowledge that it will decimate earnings for at least 5 years. No, we’re not going to see the change for the big corporations. American Airlines or United is never going to say, “God, flying on our planes suck”. It’s going to come from the JetBlues, the Googles and the next generation who get the fact that it’s all about giving people something to talk about.

Will Agencies Get Search? Don’t Hold Your Breath

First published November 1, 2007 in Mediapost’s Search Insider

It seems like anytime I have a conversation with anyone who knows search and its effectiveness, we always come back to the same question: “Why don’t more ad agencies and brand advertisers get search?”

Just this week, I was having this conversation. Twice, in fact. One of my pet peeves is an arbitrary allocation of budget to search, with no regard for the objectives of a cross-channel campaign. “We’ll take this pile and give it to television. We’ll take this slightly smaller pile and give it to print. Here’s a small pile for online, and, oh, make sure you take a little bit of that and set it aside for search, because everyone’s telling us we should be doing search.” I guess I shouldn’t be complaining. At least there’s now a little bit left over for search, which is a vast improvement from where we were just a few years ago.

But what this approach does is force your search campaign to be managed to budget, rather than to overall objectives. So we see more restrictive targeting, movement down the tail into longer and more specific key phrases, day parting and flighting, geo targeting and other ways to slice and dice the campaign to get the best quality clicks from the budget available.

Now, there’s nothing wrong with this. It’s called campaign optimization. But it’s often done to keep within an arbitrary budget cap that has no logical reason to exist. I’ve said it before and I’ll say it again. Search dollars should be the first ones in, not the last. Take as much search inventory as you can get. Judge your costs per acquisition not against your top performing keywords, but against your other channels, both online and offline. If even the marginal search traffic is generating a lower CPA, beg, borrow and steal as much budget as you can and top up search. Only then should you move from “pull” (prospects holding up their hands to purchase through search) to “push” (trying to persuade latent prospects to purchase). Only put restrictions on your search campaign if you’re absolutely certain that another channel can exceed its effectiveness.

The Classic Brand Building Gambit

Sure, you say, but what about ‘branding”? That’s TV’s domain. Well, I disagree. I think there’s no better branding opportunity than deep engagement with a Web site from a qualified prospect. Again, this is someone well down the funnel who is considering his or her purchase options. And search drives these opportunities. Sure, TV, print and other channels can build brands, but I challenge anyone to prove to me that they build brands as cost-effectively as search driving Web site engagement. I’ve yet to see a study that shows that. I’ve seen several that show search blowing away other channels, including the CPG study I wrote about last week. Brand-build with prospects that are ready to buy first, then build with the “maybe, someday” crowd with what’s left over.

So, why is it such a struggle to get search on the horizon of big agencies and advertisers? I’ve come to the conclusion that search is being held back by four things:

Search is small. Advertisers and agencies like to think big. They like big, bold ideas. Killer campaigns. Knock-your-socks-off creative. Search is none of those things. Search is thousands of micro-niche campaigns. Search is granular and gritty. Search is turning a whole bunch of dials and pulling a lot of levers, to squeeze out new customers a few at a time. You can’t “unveil” a new search campaign, like snatching a sheet off a sculpture. Launching a search campaign is more like putting a million grains of sand into a bucket, one spoonful at a time. That’s not a concept that “brilliant” advertising minds can get fired up about.

Search is measurable. You can measure the hell out of search. You can hold everyone accountable. You can demand to know who screwed up the campaign because your ROI dropped 10 points. That can cause a lot of red faces round the ol’ agency conference table.

Search is hard. Because search is granular, search is hard. It takes a lot of work to squeeze out an impressive bottom line. And the harder you work, the more impressive that bottom line will be. You’ll never hit a search home run with one inspired brainstorm. There is no golden concept. You just keep plugging away, tweaking keywords and pulling in prospects. Agencies and big advertisers are looking for that single perfect run down the mountain, with fresh powder and the sun shining. Search is more like cross-country skiing up the mountain.

Search is utilitarian. Search is constantly accused of not being sexy. That drives me nuts. The irony is that in pigeonholing search as being boring and utilitarian, all these brilliant advertising minds are missing the biggest idea of all: search works because it’s the customer driving the process, not the advertiser. All you have to do is a half decent job of meeting them halfway. Some say it’s that lack of control that scares the bejeebers out of agencies and brand marketers. To be fair, I don’t think that’s always true. I just think that search just doesn’t get the juices going in the average marketer. It may not be that they’re scared; it may just be that they’re bored.

And for all these reasons, I don’t think big agencies will ever truly get search. It’s too much of a cultural mismatch for them. They’ll bring search in-house, but they’ll silo it off, in a back room, far from the playground which is really where everyone wants to be, cranking out killer creative for the next TV campaign.

It’s just too bad that those TV ads won’t work very well. At least, not when you compare them to search.

 

The Other Long Tail of Search

smallcoverIn 2006 Wired Editor Chris Anderson released The Long Tail, and suddenly we were finding long tails in everything. The swoop of the power law distribution curve was burned on our consciousness, and search was no exception. Suddenly, the hot new strategy was to move into the long tail of search, those thousands of key phrases that individually may only bring a handful of visitors, but in aggregate, can bring more than the head phrases. At Enquiro, we were no exception. But lately, I haven’t heard as much about long tail campaigns. And I think it’s because our thinking was a little flawed.

One of the key elements of a long tail marketplace is that there can’t be a scarcity bottleneck. Shelf space has to be unlimited, production, distribution, etc. The economics of supporting a long tail have to make sense. There has to be little to no overhead in making a vast selection available to the market. The ideal example is digital entertainment. Once an MP3 is encoded, the only overhead for the distributor is a couple of megabytes of storage capacity.

That’s just not true in search management. It takes time to set up a campaign for a keyword. It takes time to organically optimize for it. There’s significant campaign management overhead associated with search. From a resource perspective, search marketing is expensive, and as anyone who’s tried to recruit a search marketer can tell you, there is no abundance mentality at play here. Sure there’s thousands of keyphrases that may potentially bring one or two visitors a month, and if you add them up, it would be hundreds of thousands of potential leads, but we just can’t move from the head to the tail because we don’t have the time.

Engines tried to open up the bottle neck by offering broad match, but results from broad match campaigns are dramatically less than spectacular. In many cases, we needed to go back to the more granular control that comes with exact match to keep performance levels where we needed them to be.

But in perusing some of our spreadsheets from past studies, and with Anderson’s Long Tail curve fresh in my mind, I found another long tail in search. In several studies, we’ve tracked click throughs by position. Look what happens when you take the most popular click through position, the number one organic spot, and then work down by position:

clickthrough tail

As you can see, we have another long tail. Now, due to the scale of the graph, it looks like the tail goes to zero. This isn’t the case, but by the time we get to the second page of results, we tend to hit percentages that are fractions of 1%. As long tails go, this is skinnier than most, showing the power of position on the first page of results.

But now let’s combine the two long tails. If you take the head being a #1 organic ranking for your most popular phrase, and work down from there, the results get quite dramatic. For the sake of this example, I’ll move down one position for each keyword. Here’s a table showing the numbers:

Keyword Volume Position X Click Through % Clicks
#1 46500 Org 1 26.35 12252
#2 38450 Org 2 13.05 5017
#3 32500 Org 3 10.2 3315
#4 23400 Spon 1 8.75 2047
#5 15750 Org 4 5.35 842
#6 12450 Spon 2 4.125 513
#7 8750 Org 5 3.875 339
#8 5250 Org 6 2.875 150
#9 4325 Side 1 2.5 108
#10 2750 Org 7 1.875 51

Now, let’s plot that on a graph:

clickthrough tail2

Given that search is a resource hog in terms of manpower, I argue that we’d be far better working our way up the tail rather than down it. And by moving up the tail, I mean the click through by position tail. By moving up the page, even a position or two, with relatively popular keywords, you can leverage the compounding effect of the two curves and dramatically improve your campaign performance.

Ask Beginning to Break Through

For quite some time, I’ve been wondering if my user “Spidey-Sense” was wonky. From everything I saw about the Ask 3-D interface, it should have been gaining marketshare. Also, for all my preaching about build a better user experience and you’ll reap the rewards, Ask’s reaping appeared to be a little on the grim side, lingering at about 3.5% of the market. But finally, according to a recent post by Bill Tancer over at Hitwise, my instincts seem to be back on track. Take a look at this graph:

ask

Ask is finally making a move. And their “share of search” has moved up from 3.49% of executed searches in August to 4.32% of searches in October, a bump of 23.7%. That’s huge. Bill wonders if it has anything to do with the ads Ask is running. I suspect it has a lot more to do with a great interface and some user generated buzz that’s beginning to catch some ears. Michael Ferguson and his team did exactly what they needed to do, shake things up by thinking about what users want.

Ask’s strategy has always been to be your first second choice. They don’t ever expect to knock Google out of the lead, but what they want to do is be the place you turn when you find Google just isn’t cutting it. So their move to 3D made a lot of sense. For certain types of searches, notably entertainment or discovery searches, users want something more than Google’s spartan, click and get out interface. They want a stickier, richer, more visual appearance. They want Ask 3D. We found the interface tested pretty well in our recent Search:2010 Eye Tracking study for entertainment based searches.

In fact, Marissa Mayer at Google paid Michael and his team the ultimate compliment when she mentioned the likelihood of Google moving to more of a portal, encyclopedia type format sometime in the future. So..that would make Google more like..Ask!

I will be watching with interest Ask’s marketshare numbers over the next 6 months. Again according to Hitwise, the jump regains all the marketshare they’ve lost in the last year, and puts them a lot closer to the current number 3, Microsoft, who is sitting just 3 and a half points ahead at 7.83%. Microsoft has been on a continuous slide for the past year, dropping 3 full points. Yahoo seems perpetually stuck between 22 and 23%. Google has captured most of the fallout, adding those 3 points to their marketshare numbers. But Google’s .5% drop in the last month seems to have gone directly to Ask, showing that the “First Second Choice” strategy might be paying off. Like Jim Lanzone said to me once, “Our goal is to take our 20 million users, who are currently using us twice a month, and bump that up to four times a month. That doubles our market share,” At the time Lanzone made the comment, Ask was sitting with about 2.5% marketshare. If you look at the table below, Ask has just about hit their goal.

 

Percentage of U.S. Searches Among Leading Search Engine Providers
Domain

Sept-07

Aug-07

Sept-06
http://www.google.com

63.55%

63.98%

60.93%
search.yahoo.com

22.55%

22.87%

22.29%
search.msn.com

7.83%*

7.98%*

10.87%*
http://www.ask.com

4.32%

3.49%

4.28%
Note: Data is based on four week rolling periods (ending 9/29/07, 9/01/07; 9/30/2006) from the Hitwise sample of 10 million US Internet users.

* – includes executed searches on Live.com and MSN Search.
Source: Hitwise

But I don’t think Ask is going to stop there. Within 6 months, you’re going to be reading stories all over the web about how Ask bumped Microsoft out of the #3 spot. It will be David vs Goliath, or in this case, Barry (Diller) vs Bill (Gates). Ask is on a roll, and thanks to Bill Tancer’s revisiting of the numbers, I have regained enough confidence to say, “mark my words”.

The JetBlue Brand Index and Putting Some Skin in the Branding Game

Amy_C_-_2_144_188_c1Amy Curtis McIntyre, the founding CMO of JetBlue, and a guest speaker at last week’s Google B to B Summit in New York, unveiled a new barometer to measure the appeal of your brand. I called it the JetBlue Index in the title of the post, but to give credit where credit is due, it should be called the Curtis-McIntyre Index. Basically, this is how it works:

“If people steal your shit, your brand is in good shape”

Amy was talking about some of the things they introduced through her time with JetBlue, like inflight yoga cards and other promotional materials, and how they had to keep ordering new ones because people kept stealing them. After getting a few complaints from other top execs, she said, “Let me get this right. We produce these things to get people’s attention. People like them so much they actually steal them. And you’re telling me this is a bad thing? Give me the damn phone. I’ll order as much of this shit as people can jam in their purse.” (I probably paraphrased, but I think I got the intent right).

Advertising is all about connecting your internal message with an external audience. If you do it well, it might catch some attention. If you do it extraordinarily well, people might talk about it. If you hit it out of the park, people actually want to keep it. JetBlue hit a home run. It means people felt so strongly about the brand and the message resonated so strongly with them, they had to take it. This is the ultimate challenge. Build a brand message that people use as an indentity badge. Give them something with your brand on it that people can hold up and say, “see, this is me. This is what I’m about.”

So, taking that to the next step, as part of the BrandSense Survey conducted by Martin Lindstrom and Millward Brown, they actually asked people the brand they were most likely to get tattooed on them. This is the ultimate alignment with brand, a permanent brand badge. It’s literally putting some skin in the game.

Here were the top “tattoo” brands

Tattoo Brands – Millward Brown Brand Sense Survey

Brand

Percent

Harley Davidson

18.9

Disney

14.8

Coca-Cola

7.7

Google

6.6

Pepsi

6.1

Rolex

5.6

Nike

4.6

Adidas

3.1

Absolut Vodka

2.6

Nintendo

1.5

Okay, Harley I can understand. Even Disney. But Google? I guess it just shows how important search is to our lives. But more importantly, each of these brands says something about the people that choose to become brand advocates. They’re like personality short hand. If I have a Harley tattoo, you probably know more about me just by knowing that. Likewise with Rolex or Absolut Vodka. Personally, I wouldn’t be going out of my way to spend quality time with any of these individuals, but at least they warned my by tattooing a sign saying “I’m a dickhead” where I can see it, saving me the trouble and time of finding out for myself.

I had a friend in college who used to say he could know everything he needed to know about a person just by knowing what their favorite Beatle was (he was a John Lennon himself). Much as we all like to think we’re complex and multi-dimensional, it’s surprising how such big parts of our personalities fall so easily into common “buckets”. The first time I did a Myers-Briggs test I was a little spooked out by the whole process.

So..I asked myself. Is there a brand I feel that strongly about? Not really, but then, I’m a very complex individual. I might need two tattoos.

Face to Facebook

The one thing that’s interesting about Facebook is that it’s really a framework in search of a purpose. What’s not interesting about Facebook is that Microsoft just bought a tiny sliver of it for 240 million dollars.

The problem with the world today is that we all try to jump on an online bandwagon without really seeing where it’s going. As the usage numbers stack up, we pile on, determined to hang on for the ride, whereever the destination might be. It remains to be seen if Facebook can avoid the fate of the online community platform. There’s a lot of headstones in this particular cemetary, including Orkut, Friendster and MySpace (sure, MySpace is still breathing, but barely). I’ve been in a few meetings recently where everybody is talking about how to tap into social networking. I think the thing that’s missing is that social networking isn’t a killer app. It’s human behavior, and that comes with some challenges. Humans are unpredictable.

Here’s one way we’re unpredictable. The same group that made Friendster a hot online community, Orkut the next big thing and MySpace the next Google moves from community to community, lighting a fire and then moving on, leaving nothing but a burned out shell. These are the online “nomads” who are always pushing the envelope. Green fields are their motivation, but once main street gets a little civilized (i.e. boring) they pick up stakes and move on. When the dollars chase the next hot online community, this is the gang they’re chasing. Good luck!

Here’s the second way we’re unpredictable. Even if we’re not all online “nomads”, we have a tiny little sliver of us that’s curious. We have to check out the new hot online neighbourhood. Think of it as visiting a show home. We want to look at the furniture, oooh and aaah over the decorating, but we have no intention of actually moving there. The online translation would be registering to become a member, visiting once or twice, and then never visiting again. So here, we have a compounding effect. The nomads visit  and start creating buzz (everyone loves the nomads, because they’re just so leading edge). Then the tire kickers (that’s the rest of us poor schmucks) visit for a look. Suddenly you have a hockey stick registration chart that everyone drools over. You’ve got the traffic, now you just have to monetize it! Investment and acquisition offers pour in. Life is good. Two Porsches in every driveway. But then the nomads move on to the next green field (Rule One of Online Communities, There’s always another Green Field), the tire kickers don’t come back (they’re checking out the show home in the new hot community) and the hockey stick breaks in half.

And here’s the third way we’re unpredictable. We like to pick communities that make sense to us, that do something for us, that make us feel at home. We’ll choose the community, the community won’t choose us. This manifests itself in a number of ways. Every brand is trying to create an online community around their brand. I don’t want to belong to a brand based community. Most people I know don’t. Certainly not if the brand is something like potato chips or underarm deodorant. Maybe some one some where has enough time in their day to squander some of it on www.nevergetcaughtoffguard.com (I kid you not, a viral game put out by the good folks at Right Guard) but it sure the hell ain’t me. Harley riders frequent an online community, but in true Harley fashion, they took over the joint and basically kicked the landlords out. No, we create communities where it makes sense. Netflix is a community. Amazon is a community. TripAdvisor is a community. eBay is a community. They’re communities because they give us a chance to connect with other that share our interests while we’re doing something that’s important to us. The community aspect just evolves out of our desire to see what other people think about the things we’re interested in.

And there lies Facebook’s challenge. Being a cool community isn’t enough. Being a hot community isn’t enough. And communities online are rather amorphous. As I said above, communities can form in the click of a mouse online. We don’t need a lot of infrastructure to start connecting. And we don’t tend to stick in one place long. But..and this is a big one…if Facebook can create an open ecosystem where developers create functionality within the community rather than outside it, it has a chance. It won’t be the fact that it’s a community that keeps Facebook alive. It will be that it attracted enough functional critical mass to one place. It’s heading in the right direction, but we’ll see if it gets there soon enough.

Search and the Digital CPG Shelf

First published October 25, 2007 in Mediapost’s Search Insider

Last April, James Lamberti from comScore, Randy Peterson from Procter and Gamble and I (representing SEMPO) grabbed a relatively quiet corner at the New York Hilton to talk about a potential research project. Here was our wish list:

–    A study that tied together online activity to offline purchase behavior
–    A study that identified the impact of search in a category not typically one that would be identified with search marketing
–    A study that would attempt to quantify the leveraged impact of search with brand advocates

Search and CPG: Are You Kidding?

As you can see, these were pretty lofty targets to shoot for. Choosing the product category was done at that table. What is the last category you would think of as generating significant search activity? Consumer packaged goods. After all, aren’t these either replenishment purchases, where we keep buying the same brand over and over, or a non-considered purchase, where we’re not really concerned with doing much research? Why would we need to turn to a search engine to figure out which toothpaste to buy, or which would be the right chips for Sunday’s ball game? We reasoned that CPG had the “Sinatra” Factor going for it: If search can make it here, it can make it anywhere.

To be honest, we really didn’t know what to expect, but comScore, together with a lot of help from Yahoo and Procter and Gamble, managed to come up with a workable study design. SEMPO jumped on board as a co-sponsor and we put the study out in the field. This week, with numbers crunched and charts drawn, the results were released in a study labeled The Digital Shelf. After several months of holding our collective breaths, we were about to see if people had already locked CPG brands into their brains, eliminating the need to search for product information.

Apparently not.

People went online for CPG information — in fact, to a significantly higher degree than even our most optimistic predictions.  Over a 3-month period, comScore recorded over 150 million visits to CPG websites in four categories: Food Products, Personal Care Products, Baby Products and Household Products. Those are numbers no marketer should ignore. But even more significantly, search drove significant portions of that traffic, from 23% of all visits in Household Products to 60% in Baby Products.

It’s not just automotive or travel that drive search traffic. We search for recipes, how to get the stains out of carpets, the most eco-friendly disposable diaper and yes, even the nutritional information for potato chips. We search, a lot!

And our searching sets us apart as a consumer segment. Searchers tend to be more interested in product information, comparing against competitors and what they need to make a purchase decision. Non-searchers are more interested in special offers and coupons.

Searchers spend more, about 20% more  — in all the categories in the study. In fact, in the Baby Care Category alone, people searching for information and eventually purchasing could result in almost $12 billion in sales.

Search = Opportunity

But perhaps the most compelling finding was this: People search because they’re comparing alternatives. This means they’re not locked into a brand. They could very well be your competitor’s customer right now. Non-searchers are more likely to go directly to a site because they do have a brand preference. They’re just looking for a bargain on that brand. The study found that 36% of searchers had recently switched their brand, compared to 29% of non-searchers. And, interestingly, searchers are less motivated by price. Only 27% of searchers switched because of price, compared to 38% of non-searchers.

So, the study delivered on our original wish list, and then some. It showed that search is a significant influencing factor in the most unlikely product category of all, the stuff on your pantry shelf or under the sink in your bathroom. In fact, I have yet to see a study done on any product category where search didn’t blow the doors off the competition in its effectiveness in connecting with customers. So perhaps the biggest question left unanswered by the study is this: Why are all those branding dollars still going everywhere but search?

A Cautionary Tale about Friedman’s Flat World

the_world_is_flatI’m just plowing my way through Thomas Friedman’s “The World is Flat”. The “plowing through” comment is no reflection on Mr. Friedman’s writing ability, just on the sheer heft of the book. It’s several hundred pages long. Friedman talks about several dirty little secrets that are holding America back from maintaining it’s lead position in the global market, amongst them an education gap and an ambition gap. I tend to agree. I think North America is becoming complacent and is falling victim to an overwhelming sense of entitlement. I’ve always believe we have a rude awakening coming, and all signs are pointing it being just around the corner. One only has to visit China or India to feel the sheer momentum, driven by ambition and capitalist desire, to be struck by the difference in intensity you feel there and here. The immigrant fueled work ethic that made our society the leader is barely an ember now. Up until recently, that drive was fueled by a flood of top level immigrants from China, Korea, and India, but increasingly, those candidates are choosing to stay home, thanks to the connectiveness of Friedman’s Flat World.

But we also have to realize that we do have some tremendous advantages still in North America, thanks to a highly developed and largely transparent market, relatively free from the friction of bureaucracy or corruption. It’s not perfect, but it’s much better than in some other markets. This point was made clear to us with our recent foray into China.

We won a contract to do an eye tracking study in China, but it meant taking our eye tracking equipment with us. Knowing this could cause undue interest on the part of a Chinese customer official, we did our due diligence and spent several minutes on the phone with our local Chinese consulate to make sure this wouldn’t be an issue. We were assured over and over again that this would be a simple case of taking equipment in and out of the country, just like taking a lap top. “No problem” we were told.

So, we sent off our researcher, who luckily is Chinese and who speaks the language, and anticipated no problems. This, of course, was naive on our part. Sure enough, the customs official in China took one look at the large case with the odd looking monitor inside and threw up a red flag. The monitor was impounded. Jess, our researcher, with the help of the client, quickly got a government clearance form with all the appropriate stamps in place indicating that “one eye tracker” was cleared for entry into China. Jess went back to the customs official with paper in hand. She actually had the case in her hands when the official wanted to take another look at the equipment. “Hold it”, he said, “that’s not an eye tracker, that’s a monitor.” Jess tried to explain that the monitor was an eye tracker. It was too no avail. Tears, long explanations, pointing out a brochure, it was all for naught. Once Communist bureacrats make up their mind, there’s precious little wiggle room.

So, the eye tracker is still impounded. The study if 4 days behind schedule. The client is frustrated. We’re frustrated. And it’s all because of a petty bureaucrat and a serpentine system that no one, certainly not a westerner, can figure out. The world may be flat, but that doesn’t make it any less convoluted and complex. In fact, the flattening just brings the ugly mess inside closer to the surface.