Author Archives: ghotchkiss

Embrace Your Inner “Screw-Up”

First published January 19, 2012 in Mediapost’s Search Insider

Humans hate making mistakes. But the fact is, making mistakes is an essential part of being human. Somehow, we have to learn to live on the edge of this paradox. For digital marketers, our entire industry is balanced on this particular precarious precipice.

There are a few rules of thumb to “screwing up” successfully:

You Can Only Learn from Others if You’re in the Middle of the Pack

If you’re a digital marketer, you’ve decided to travel at the head of the herd. Congratulations. But here’s the thing. You’ve volunteered to make mistakes. The mark is on your forehead and it’s your job to poke the bushes and test the waters, flushing out danger for others to take heed of.

Humans have a long history of leveraging the principle of safety in numbers. But in that dynamic, some have to live on the edge and let others learn from their mistakes. The advantage of that position is that you’re also the first to take advantage of the unchartered wins that come from conquering new challenges. The risks are greater, but so are the rewards. If this balance doesn’t appeal to you, move back to center and follow the leaders. Just realize it’s a lot more crowded there, and there might not be enough perks to go around.

The More Unstable the Environment, The More Important it is to Make Mistakes

You don’t need the safety of a herd in safe and stable environments. We call it civilization. It’s on the frontier, where things get precarious, that you need safety in numbers. Ironically, it’s on the frontier where the herd thins out and you often have to go it alone. That really leaves you no choice. There is no beaten path to follow. You’re going to have to be the one that forges it. And that means you’re going to make mistakes. Get used to it. Embrace it. Take solace in the fact that while taking action may cause mistakes, not taking action pretty much guarantees you’ll end up as somebody’s lunch.

If You Can’t Get Comfortable, Get Courageous

I often tell aspiring digital marketers that this is not a comfortable career. If you want security, become an accountant. But if you want a challenge, you’ve found the right niche. Digital marketing takes courage. It means trusting your gut and betting on long shots. It means embracing opportunities without a mound of evidence to rely on. To succeed in this business, first you need passion — but courage runs a close second.

Mistakes = Learning

I don’t know where making mistakes got such a bad rap from, but I shudder to think where humanity would be without them (read Ralph Heath’s excellent book, “Celebrating Failure”). You can’t learn without making mistakes. You can’t gain ground without occasionally falling down. I’ve spent the majority of my life as an entrepreneur, which pretty much means the regular making of mistakes, so perhaps I’ve become used to it.  But I honestly don’t know why screwing up has been stigmatized to the extent it has.

Learn to “Do It Wrong Quickly”

My friend Mike Moran wrote a book a few years ago calling “Do it Wrong Quickly,” which uncovers one of the essential elements of successfully screwing up: to build learning into the process. Understand that failure is an essential part of the equation (especially in digital marketing), and go in using it as an opportunity to learn quickly, adjust and iterate your way to success. By going in anticipating failure, you won’t be surprised when it happens and can quickly move beyond failure to learning and adapting.

Realize You Don’t Have to Be Perfect — You Just Have to be Better than the Other Guy

Finally, this is a game of percentages. If you bump up the level of activity, you’ll make more mistakes, but you’ll also win more battles. You’ll “fail forward” — and soon you’ll be looking at the competition in your rearview mirror.

As We May Remember

First published January 12, 2012 in Mediapost’s Search Insider

In his famous Atlantic Monthly essay “As We May Think,” published in July 1945, Vannevar Bush forecast a mechanized extension to our memory that he called a “memex”:

Consider a future device for individual use, which is a sort of mechanized private file and library. It needs a name, and to coin one at random, “memex” will do. A memex is a device in which an individual stores all his books, records, and communications, and which is mechanized so that it may be consulted with exceeding speed and flexibility. It is an enlarged intimate supplement to his memory.

Last week, I asked you to ponder what our memories might become now that Google puts vast heaps of information just one click away. And ponder you did:

I have to ask, WHY do you state, “This throws a massive technological wrench into the machinery of our own memories,” inferring something negative??? Might this be a totally LIBERATING situation? – Rick Short, Indium Corporation

Perhaps, much like using dictionaries in grade school helped us to learn and remember new information, Google is doing the same? Each time we “google” and learn something new aren’t we actually adding to our knowledge base in some way? – Lester Bryant III

Finally, I ran across this. Our old friend Daniel Wegner (transactive memory) and colleagues Betsy Sparrow and Jenny Liu from Columbia University actually did research on this very topic this past year. It appears from the study that our brains are already adapting to having Internet search as a memory crutch. Participants were less likely to remember information they looked up online when they knew they could access it again at any time. Also, if they looked up information that they knew they could remember, they were less likely to remember where they found it. But if the information was determined to be difficult to remember, the participants were more likely to remember where they found it, so they could navigate there again.

The beautiful thing about our capacity to remember things is that it’s highly elastic. It’s not restricted to one type of information. It will naturally adapt to new challenges and requirements. As many rightly commented on last week’s column, the advent of Google may introduce an entirely new application of memory — one that unleashes our capabilities rather than restricts them. Let me give you an example.

If I had written last week’s column in 1987, before the age of Internet Search, I would have been very hesitant to use the references I did: the Transactive Memory Hypothesis of Daniel Wegner, and the scene from “Annie Hall.”  That’s because I couldn’t remember them that well. I knew (or thought I knew) what the general gist was, but I had to search them out to reacquaint myself with the specific details of each. I used Google in both cases, but I was already pretty sure that Wikipedia would have a good overview of transactive memory and that Youtube would have the clip in question. Sure enough, both those destinations topped the results that Google brought back. So, my search for transactive memory utilized my own transactive memorizations. The same was true, by the way, for my reference to Vannevar Bush at the opening of this column.

By knowing what type of information I was likely to find, and where I was likely to find it, I could check the references to ensure they were relevant and summarize what I quickly researched in order to make my point. All I had to do was remember high-level summations of concepts, rather than the level of detail required to use them in a meaningful manner.

One of my favorite concepts is the idea of consilience – literally, the “jumping together” of knowledge. I believe one of the greatest gifts of the digitization of information is the driving of consilience. We can now “graze” across multiple disciplines without having to dive too deep in any one, and pull together something useful — and occasionally amazing. Deep dives are now possible “on demand.” Might our memories adapt to become consilience orchestrators, able to quickly sift through the sum of our experience and gather together relevant scraps of memory to form the framework of new thoughts and approaches?

I hope so, because I find this potential quite amazing.

Is Google Replacing Memory?

First published on January 5, 2012 in Mediapost’s Search Insider

“How old is Tony Bennett anyway?”

We were sitting in a condo on a ski hill with friends, counting down to the new year, when the ageless Mr. Bennett appeared on TV. One of us wondered aloud about just how many new years he has personally ushered in.

In days gone by, the question would have just hung there. It would probably have  filled up a few minutes of conversation. If someone felt strongly about the topic, it might even have started an argument. But, at the end of it all, there would be no definitive answer — just opinions.

This was the way of the world. We were restricted to the knowledge we could each jam in our noggin. And if our opinion conflicted with another’s, all we could do is argue.

In “Annie Hall, “ Woody Allen set up the scenario perfectly. He and Diane Keaton are in a movie line. Behind them, an intellectual blowhard is in mid-stream pontification on everything from Fellini’s movie-making to the media theories of Marshall McLuhan. Finally, Allen can take it no more and asks the camera “What do you do with a guy like this?” The “guy” takes exception and explains to Allen that he teaches a course on McLuhan at Columbia. But Allen has the last laugh — literally. He pulls the real Marshall McLuhan out from behind an in-lobby display, and McLuhan proceeds to intellectually eviscerate the Columbia professor.

“If only life was actually like this,” Allen sighs to the camera.

Well, now, some 35 years later, it may be. While we may not have Marshall McLuhan in our back pocket, we do have Google. And for many questions, Google is the final arbitrator. Opinions quickly give way to facts (or, at least, information presented as fact online.) No longer do we have to wonder how old Tony Bennett really is. Now, we can quickly check the answer.

If you stop to think about this, it has massive implications.

In 1985, Daniel Wegner proposed something along these lines when he introduced the hypothetical concept of transactive memory. An extension of “group mind,” transactive memory posits a type of meta-memory, where our own capacity to remember things is enhanced in a group by knowing whom in that group knows more than we do about any given topic.

In its simplest form, transactive memory is my knowing that my wife tends to remember birthdays and anniversaries — but I remember when to pay our utility bills. It’s not that I can’t remember birthdays and my wife can’t remember to pay bills, it’s just that we don’t have to go to the extra effort if we know our partner has it covered.

If Wegner’s hypothesis is correct (and it certainly passes my own smell test) then transactive memory has been around for a long time. In fact, many believe that the acquisition of language, which allowed for the development of transactive memory and other aids to survival in our ancestral tribes, was probably responsible for the “Great Leap Forward” in our own evolution.

But with ubiquitous access to online knowledge, transactive memory takes on a whole new spin. Now, not only don’t we have to remember as much as we used to, we don’t even have to remember who else might have the answer. For much of what we need to know, it’s as simple as searching for it on our smartphone.  Our search engine of choice does the heavy lifting for us.

This throws a massive technological wrench into the machinery of our own memories. Much of what it was originally intended for may no longer be required.  And this begs the question, “If we no longer have to remember stuff we can just look up online, what will we use our memory for?”

Something to ponder at the beginning of a new year.

Oh, and in case you’re wondering, Anthony Dominick Benedetto was born Aug. 3, 1926, making him 85.

Look at the Big Picture in 2012

First published December 29, 2011 in Mediapost’s Search Insider

Another year’s pretty much in the can. And because I’m working on idle this week, trying to catch my breath with my family before plunging headlong into 2012, search marketing falls somewhere behind the recent releases on Netflix and trying out the new Wii game on the list of things preoccupying my mind. So, don’t expect any salient and timely search news from me!

When I look back on what has preoccupied me over the last 12 months, I will say that much of it has been spent “stepping back” and trying to look at the bigger picture. As online interactions have taken a bigger and bigger chunk of our lives (you’ll notice that both of the recreational options I mentioned have online components woven into them), trying to understand how our actions play out against a broader online backdrop has been the thing I think about most often.

We digital marketers tend to take that “bigger picture” and break it into pieces, trying to make sense of it by focusing on one small piece. Digital marketing lends itself to this minute focal depth because of the richness of each piece. Even the smallest chunk of an online interaction has a lot to explore, with a corresponding mound of data to analyze. We could spend hours drilling into how people use Linked In, or Twitter, or Google+ or Facebook.  We could dig into the depths of the Panda update or how local results show up on Bing and never come up for air.

But think back to what, at one time, was another holiday season pastime. Some of us remember when we used to get a jigsaw puzzle for Christmas. You’d dump out all 5,000 of those little photographic morsels and then begin to piece it together into a coherent image of something (usually a landscape involving a barn or a covered bridge). Success came not only from examining each piece, but also in using the image on the boxtop to help understand how each piece fit into the bigger picture. Without understanding what that bigger picture was supposed to look like, you could examine each piece until the cows came home (again, often a topic for jigsaw art).

So, much of my 2011 was spent trying to understand what the picture on the top of the puzzle box was supposed to look like. What would ultimately tie all the pieces together?  In physics terms, I guess you could say I’m been looking for the Unified Field Theory of online marketing. And you know what I realized? You won’t find it by focusing on technology, no matter how cool it is. Foursquare marketing or search retargeting or hyperlocal optimization are all just pieces of a much bigger puzzle. The real picture emerges when you look at how people navigate the events of their lives and the decisions they must make. It’s there where the big picture emerges.

A few weeks ago I was speaking to a group of marketers about the emerging role of mobile.  This was no group of digital slouches. They knew their mobile stuff. They had tested various campaign approaches and honed their tactics. But the results were uneven. Some were hits, but more were misses. They knew a lot about the pieces, but didn’t have the boxtop picture to guide them.

My message (for those who know me) was not a surprising one: understand how to leverage mobile by first understanding how people use mobile to do they things they intend to do.  Don’t jump on a QR code campaign simply because you read somewhere that QR codes are a red-hot marketing tool. First see if QR codes fit into the big picture in any possible way. If you do that, you might find that QR codes are a puzzle piece that actually belongs in another box.

After delivering my sermon about the importance of understanding their respective big pictures, I asked my favorite question: “How many of you have done any substantial qualitative research with your customers in the past year?” Not one hand went up. This was a group of puzzle assemblers working without any boxtop picture to guide them.

If you want to sum up my past year and fit it into one final paragraph for 2011, it’s this: Understand your customers! Spend a good part of 2012 digging deep into their decision process and their online paths. Make it personal. Stalk if necessary. Ask questions that start with “why.” Observe. Make notes. Broaden your online reading list to include blogs like Science Daily, Futurity, Neuroscience Marketing and Homo Consumericus. At some point, the bigger picture will begin to emerge. And I bet it will be much more interesting than a landscape with a barn and some cows in it.

In Search of Simplicity

First published December 21, 2011 in Mediapost’s Search Insider

“Simplicity is the ultimate sophistication.”

This quote, from Leonardo da Vinci, was on the original brochure for the Apple II. Throughout his life, Steve Jobs didn’t stray far from this principle. In fact, he was obnoxiously obsessive about it.

When Steve returned to Apple after his 12-year hiatus, he embraced simplicity with a vengeance. While Apple was wondering in the wilderness, they somehow managed to amass no fewer than a dozen different variations of their various computers. All were crappy (and I speak as a former owner of several of them) but at least there were a lot of different varieties of crap to choose from.

One of my favorite passages from Walt Isaacson’s book describes how Jobs quickly pruned the unwieldy product portfolio back down to size: “After a few weeks Jobs finally had enough. ‘Stop!’ he shouted at one big product strategy session. ‘This is crazy.’ He grabbed a magic marker, padded to a whiteboard, and drew a horizontal and vertical line to make a four-squared chart. ‘Here’s what we need,’ he continued. Atop the two columns he wrote ‘Consumer’ and ‘Pro’; he labeled the two rows ‘Desktop’ and ‘Portable.’ Their job, he said, was to make four great products, one for each quadrant.”

The upshot is this. It’s not worth doing something unless you know you can do it really well.  Which brings me to Google.

Google has always embraced the grass roots-definition of innovation. The principle is this: get a bunch of really smart people, let them dream up really smart things, and then figure out a way to monetize it. Google carries it even further. They have recently been on a shopping spree for other companies who are also dreaming up smart things. In theory, it sounds great. There’s only one problem: It lacks simplicity. And, by extension, it lacks focus.

Now, if you refer back to a column I wrote earlier (“Amazon = Evolution, Google = Intelligent Design”) it seems that I’m dancing on both sides of an argument. I don’t see it that way. My point in that column was that you can choose to provide platforms that enable widespread innovation, but it’s difficult to try to own that process entirely within one organization. Platforms enable innovation to play out over a larger stage.

Now, you might say (and I would say the same, being a rabid Darwinist) that nature also lacks simplicity. Evolution certainly didn’t happen through any top-down directive to be number one or number two at anything. Evolution is the biggest ongoing trial and error experiment ever conducted. Google’s approach seems to have much in common with nature in this regard.

But in fact, nature imposes the ultimate simplicity at a later stage, and it does so with relentless cruelty: successful variations survive, and unsuccessful ones die. As mercurial as Jobs was, he doesn’t hold a candle to the whims of ol’ Ma Nature.

In today’s marketplace, there seems to be an urge to try new things just because we can. The barrier to entry is lower than ever, thanks to technology. So we rush opportunity on multiple fronts, hoping one will pay off for us. Companies like Google encourage this by actively enabling their team to dabble in whatever strikes their fancy. I’m not saying this is wrong, but at some point, focus has to be brought into the equation. You need to simplify, prioritize and focus to turn out “insanely great” products. You need not only to be innovative; you also need to be a ruthless pruner of less-than-great ideas. And the culture that fosters collaborative innovation generally has a difficult time arbitrating what survives and what doesn’t. This creates confusion and mixed priorities. It saps away simplicity.

Google’s approach is to extend beta periods indefinitely, hoping that this will weed out the winners from the losers. Eventually, loser products (and there have been many) die under their own inertia. But in the meantime, this extended life-support system drains corporate resources. How many real winners have come out of Google Labs? What is the success rate of Google’s approach to innovation? What would have happened if Google Search weren’t as wildly profitable as it’s been? Would Google still be around?

Can Websites Make Us Forgetful?

First published December 15, 2011 in Mediapost’s Search Insider

Ever open the door to the fridge and then forget what you were looking for?

Or ever head to your bedroom and then, upon entering it, forget why you went there in the first place?

Me too. And it turns out we’re not alone. New research from the University of Notre Dame’s Gabriel Radvansky indicates this sudden “threshold” amnesia is actually pretty common. Walking from one room to another triggers an “event boundary” in the mind, which seems to act as a cue for the brain to file away short-term memories and move on to the next task at hand. If your tasks causes you to cross one of these event boundaries and you don’t keep your working memory actively engaged through deliberate focusing of attention, it could be difficult to remember what it was that motivated you in the first place.

Ever since I’ve read the original article, I’ve wondered if the same thing applies to navigating websites. If we click a link to move from one page to another, I am pretty sure the brain could well send out a “flush” signal that clears the slate of working memory.  I think we cross these event boundaries all the time online.

Let’s unpack this idea a bit, because if my suspicions prove to be correct, it opens up some very pertinent points when we think of online experiences.  Working memory is directed by active attention. It is held in place by a top-down directive from the brain. So, as long as we’re focused on memorizing a discrete bit of information (for example, a phone number) we’ll be able to keep it in our working memory. But when we shift our attention to something else, the working memory slate is wiped clean. The spotlight of attention determines what is retained in working memory and what is discarded.

Radvansky’s research indicates that moving from one room to another may act as a subconscious environmental cue that the things retained in working memory (i.e. our intent for going to the new room in the first place) can be flushed if we’re not consciously focusing our attention on it. It’s a sort of mental “palate cleansing” to ready the brain for new challenges. Radvansky discovered that it wasn’t distance or time that caused things to be forgotten. It was passing through a doorway. Others could travel exactly the same distance but remain in the same room and not forget what their original intention was. But as soon as a doorway was introduced, the rate of forgetting increased significantly.

Interestingly, one of the variations of Radvansky’s research used virtual environments, and the results were the same. So, if a virtual representation of a doorway triggered a boundary, would moving from one page of a website to another?

I think there are some distinctions here to keep in mind. If you go to a page with intent and you’re following navigational links to get closer to that intent, it’s probably pretty safe to assume that there is some “top-down” focus on that intent. As long as you keep following the “intent” path, you should be able to keep it in focus as you move from page to page. But what if you get distracted by a link on a page and follow that? In that case, your attention has switched and moving to another page may trigger the same “event boundary” dump of working memory. In that case, you may have to retrace your steps to pick up the original thread of intent.

I just finished benchmarking the user experience across several different sites for a client and found that consistent navigation is pretty rare in many sites, especially B2B ones.  If you did happen to forget your original intent as you navigated a few clicks deep in a website, backtracking could prove to be a challenge.

I also suspect that’s why a consistent look and feel as you move from page to page could be important. It may serve to lessen the “event boundary” effect, because there are similarities in the environment.

In any case, Dr. Radvansky’s research opens the door (couldn’t resist) to some very interesting speculations. I do know that in the 10 B2B websites I visited during the benchmarking exercise, the experience ranged from mildly frustrating to excruciatingly painful.

In the worst of these cases, a little amnesia might actually be a blessing.

Is There a Search Marketer in the House?

First published December 8, 2011 in Mediapost’s Search Insider

Once, just once, I’d love to hear an announcement come over the PA system in some public venue: “Ladies and gentlemen, your attention please. Is there a search marketer in the house?”

Let me explain. Recently, a friend of mine was at a soccer tournament with our school team. One of the other parents had a sudden heart attack. My friend, who is in the medical field, swung into action and applied CPR. When the first response unit took over, one of the attendants told my friend that he had saved the parent’s life.

Longtime readers will know I’ve had a long-running identity crisis about my choice of career. This recent incident led me to wonder if there will ever come a time when my knowledge and experience will be considered critical. Will I ever save a life?

It doesn’t even have to be that dramatic. If you’re a mechanic and see a stranded motorist on the side of the road, chances are you can help. All I could do is pull over, gaze in confusion under the hood, kick a tire and explain why you should really optimize your landing pages to get the most from your search marketing campaign.

My father-in-law, who has been a carpenter all his life, can walk into most any home and fix the drawer that sticks, or put up a set of shelves. That same father-in-law can’t help a sharp and panicked intake of breathe every time he sees me pick up a power tool. My wife has acquired the same habit. Neither can explain exactly what I do, and they’ve both known me for a quarter century.

Even an accountant will constantly be asked for tax advice, a lawyer about a particularly sticky divorce, or a veterinarian about Pookie’s unfortunate habit of passing noxious gas when company’s over (and yes, Pookie is a dog). Each of these careers contributes something to the greater good of mankind. But a search marketer? We’re just not in hot demand to make the world a better place.

In my fantasy, after the aforementioned announcement, I raise my hand and confidently stride forward: “I’m a trained search marketer. What’s the problem?”

“Thank God you’re here,” says the announcer, pointing to an obviously troubled man staring at a laptop. “This gentlemen here is extremely upset.”

Beaming with quiet confidence, I gently sit down beside the man and say, “Sir, I’ve been a search marketer for almost 20 years. How can I help you?”

Through his tears, I can see a small twinkle in his eye that indicates that he’s dared to hope again. “I don’t understand it. I just can’t get this damned site to rank.”

“Well, here’s your problem — your title tags aren’t optimized. And your incoming links have no anchor text. I can fix that.”

As I take the laptop from his trembling hands, a single person in the circle of onlookers who have been drawn by the scene starts clapping. Slowing, it spreads around the circle. In minutes, uproarious cheering and clapping surround me. Outwardly, I respond with gracious humility, but inside, I’m high-fiving myself and saying, “Yah..who’s da man? I’m da man!”

Maybe there should be a medal for search marketing bravery.

The Challenge of Social

First published December 1, 2011 in Mediapost’s Search Insider

Every quarter, I fill out an online survey about digital marketing trends. One question always shows up: “Are you looking at social as a replacement for search in your online marketing strategy?” I always answer no, and to myself, comment that it’s a stupid question asked by someone who obviously doesn’t know much about online marketing. But now I wonder  — is it really such a stupid question? Aren’t many experienced marketers asking themselves exactly the same question?

The Social Graph (or Network, or whatever you want to call it) should be the single biggest opportunity in marketing history. But marketers are stubbing their toes by the millions in trying to step over the threshold into the golden glow of the online social party. It seems it’s incredibly difficult to figure out.

Search, on the other hand, was easily pigeonholed as a direct-marketing channel. Search was so easy to “get” for marketers that Google turned it into a self-serve model and became the fastest growing company in history as a result.

For marketers, I suspect, the very ease of search has caused it to be considered a limited opportunity. Social, on the other hand, seems virtually limitless. It expands into hundreds and thousands of fascinating, if somewhat cloudy, opportunities to connect with customers. As I said, in theory, social seems like a marketer’s dream come true. But in practice, it’s an unwieldy animal to wrestle to the ground.

Here’s just one example of the challenges inherent in mapping the online social landscape.  Pitney Bowes felt there was tremendous potential in social to foster deeper engagements with its customers, building long-term loyalty. But rather than jump headlong into it, Pitney Bowes decided to test its assumptions through a survey of those customers first. The result? Social may not be all it’s cracked up to be:

“These findings will give decision-makers pause for thought,” the report (from the survey) stated. “Businesses can be forgiven for getting swept away by the hype of surrounding social media and wanting to invest in such activity as soon as possible. … But results show that those businesses tempted to lead with such techniques will quickly find themselves out of step with customer thinking.”

So why is social so awkward to leverage effectively? I suspect it’s because the exact same things that make social so promising also make it incredibly unwieldy to manage.  It’s part of our lives, which means we’re engaged, but what we’re engaged with is rarely what an advertiser wants to talk to us about.

Marketers get caught up in the concept of participation rates and usage. Facebook has one of the highest reaches of any online property, second only to Google. Alexa estimates that almost half of the total Internet user population (about 49%) uses Google regularly. Facebook is just behind at 43%. But if we look at time spent on site, Facebook comes it an about 25 minutes a day, compared to 13 minutes a day for Google. If we were using engagement as an indicator of marketing potential, this would have us salivating like a St. Bernard over a fresh bowl of kibble.

But the reason I don’t trust engagement as a metric is that it doesn’t consider intent. And intent is the key difference between social and search. The reason search excels in marketing is that it’s all about intent, and what’s even better, it’s about identified intent, neatly labeled by the search query. In the history of marketing, it’s never been easier than this to intercept a motivated buyer.

I don’t mean to minimize the value of a well-managed search campaign, but compared to other channels, it’s pretty difficult to completely flop on a search campaign. The same is not true for social. To illustrate, let’s step back and look at this from another point of view, one that removes some of the hyperbole that surrounds online social.

Let’s say you’ve just decided to sell your 2007 Honda Civic. As you’re backing out of your driveway, your neighbor flags you down and asks you how you like your Honda, and if you know where she could buy a good used one? From your perspective, this aligning of the planets seems too good to be true, but it’s similar to what happens on a search engine millions of time every day. It’s the power of alignment with purchase intent.

But let’s take a different tack. Let’s imagine that as you drive down the street, you see that one of your neighbors is having a party. In front of their house, there are at least 12 cars parked, including four Hondas. “A-hah, “ you say, “a perfect gathering of potential Honda buyers, with at least 33% of them showing a preference for Hondas” (note: if this is what your internal dialogue actually sounds like, you should consider an extended leave from work). You ring the doorbell and begin to work the crowd. The only problem is, no one came to the party to buy a Honda. Not to mention the obvious question on everyone’s mind: “Who the hell invited you?”

If your goal is to unload your Honda, I know what scenario I’d be betting on. It almost seems ludicrous that we’re even considering Scenario B as a substitute for Scenario A. Yet, every three months, I get that survey asking me if I’m thinking about it.

I know — it doesn’t make any sense to me, either.

Walmart vs. Amazon: A Regime Shift in Motion

First published November 17, 2011 in Mediapost’s Search Insider

Financial analysts are not predicting a rosy short-term future for Amazon’s stock price.  Recent blunders with the rollout of new Kindle devices and earnings under increasing pressure have these analysts predicting a shorting of Amazon stock. In all likelihood, Amazon’s share price will tumble.

So why is Walmart so worried about Amazon?

A recent article indicates that Walmart is preparing for what could be the “retail battle of the decade.” When you match the two up on numbers alone, it seems like the “mismatch of the decade.”  Walmart is 10 times the size of Amazon in overall sales. It’s the largest retailer on the planet, by a huge margin. Amazon doesn’t even crack the top 10. In fact, Amazon sits at #44 on the list of global retailers.

But let’s flip the numbers. When it comes to online sales, Amazon outsells Walmart 10 to 1, and its topline growth is 44% while Walmart’s per location sales growth is trapped in the low single digits (if there is growth at all). So, if online retail is a game changer, and if this signals a “regime shift” in the retail landscape, then Walmart is right to worry. In fact, they should be petrified.

The article steps through Walmart’s strategy for ramping up e-commerce, but one line in particular raises a huge red flag: “Walmart would love Amazon’s top-line growth, but isn’t about to settle for its profits.”

Walmart has built its empire on incredibly precise supply chain management, obsessing over the details of physical fulfillment. Company strategists hope to use this to their advantage in their war on Amazon. Fair enough. But when it comes to the tough calls required to fully embrace digital (and they will come), Walmart will be hampered by the need to protect an existing model that relies on bricks and mortar. This mixed set of priorities will virtually ensure Walmart will move slower than Amazon, who has no option but to excel when it comes to e-com. This is a classic “regime shift” scenario, and history is not on Walmart’s side. The fact that its e-com head office is pretty far removed, philosophically and physically, from the head office in Bentonville, Ark. speaks to the challenges that Walmart has ahead of it.

It’s Amazon’s move into CPG that has raised the ire of the giant from Bentonville. Soap, diapers and other consumer staples are the essentials that drive Walmart’s revenues, and these are areas that Amazon is aggressively expanding into. But it’s not just consumer packaged goods that Amazon has set its sights on; it’s also going after the industrial and B2B market. In fact, Amazon is attacking the established marketplace on all fronts, with the full intention of smashing the current model and replacing it with one that takes full advantage of online efficiencies. In short, if we remember the stages of a Kondratieff wave, Amazon is building the foundations of the reconstruction phase.

Amazon’s plans go far beyond the Kindle sales and struggles with profit margins currently beleaguering its stock price. This is a massive long-term play, and one that I would be hesitant to bet against. The act of shopping is about to change forever. In my previous column on this topic, many commented that for some things, the ability to touch and feel a product is essential. That may be true, but there are many, many more things where we could care less about the need for physical evaluation. Also, this divide between online and physical shopping tends to be a shifting one. Things we couldn’t imagine buying sight unseen just a few years ago are now purchased online without a second thought.

I’m not sure what lies ahead for retail in general, or the battle between Walmart and Amazon specifically. But I do know the retail landscape of the future will bear little resemblance to the one we know today. And I also know that the battlefield will be littered with causalities. It’s not beyond reason (or historical evidence) to suspect that the world’s biggest retailer may well be one of them.

The View Above the “Weeds”

First published November 10, 2011 in Mediapost’s Search Insider

Yesterday was not a good day.

It was a day that made me wish I had never gone into this business — a day that made me long for a warm beach and a mai tai. I don’t have these days very often, but yesterday, oh boy, I had it in spades!

I’ve been doing search (yesterday, I used a different, less polite noun) for a long time.  And I have to be honest, some days it feels like a thousand leeches are sucking the blood out of me. Given that, it was impossible to muster up much enthusiasm for the roll out of Google+ Business Pages or the raging controversy of Facebook’s “LikeGate.” Really? Are those the most important things to litter our inboxes with?

On days like yesterday, when I get caught in the weeds of digital marketing (where the blood-sucking leeches tend to hang out) I sometimes lose sight of why I got into this in the first place. This is a revolution. What’s more, it’s a revolution of epic, perhaps unprecedented, proportions. In macro-economic terms, this is what they call a long-wave transition or a Kondratieff wave (named after the Russian economist who first identified it). These cycles, which typically last more than 50 years, see the deconstruction of the current market infrastructure and the reconstruction of a market built on entirely new foundations. They are caused by change factors so massively disruptive, often in the form of technological innovations or global social events (for example, a World War), that it takes decades for their impact to be absorbed and responded to.

The digital revolution is perhaps the biggest Kondratieff wave in history. One could tentatively peg the start of the transition in the early to mid ‘90s with the introduction of the Internet. If this is the case, we’re less than 20 years into the wave, still in the deconstruction phase. To me, that feels about right. If history repeats itself, which it has a tendency of doing; we have yet to get to the messiest part of the transition.

These waves tend to precipitate what’s called a “regime shift.” Here is how the regime shift works. Companies started in the old market paradigm eventually reach a stagnation point. In our particular case, think of the multinational conglomerates built around market necessities such as mass distribution, physical locations, supply-chain logistics, large-scale manufacturing, top-down management and centralized R&D. In this market, bigger was not only better, it was essential to truly succeed. Our Fortune 500 reads like a who’s who of this type of company.  But eventually, the market becomes fully serviced, or even saturated, with the established market contenders, and growth is restricted.

Then, a disruptive change happens and a new opportunity for growth is identified. At first, the full import of the disruption is not fully realized. Speculation and a flood of investment capital can create a market frenzy early in the wave, looking for quick wins from the new opportunities. Think dot-com boom

The issue here is that the full impact of the disruptive change has to be absorbed by society — and that doesn’t happen in a year, or even 10 years. It takes decades for us to integrate it into our lives and social fabric. And so, the early wave market boom inevitably gives way to a collapse. Think dot-com bust.

As the wave progresses, the “regime shift” starts to play out. Established players are still heavily invested in the existing market structure, and although they may realize the potential of the new market, they simply can’t move fast enough to capitalize on it. Case in point, when industrial America became electrified in the late 1800s and early 1900s, the existing regime had factories built around steam power.  Steam-powered factories had a central steam engine that drove all the equipment in the factory through a complex maze of drive shafts and belts. The factories were dirty, dangerous and inefficient. New factories powered by electricity were cleaner, brighter, safer and much more efficient. But even with the obvious benefits of electricity, established manufacturers tried to retrofit their existing factories by jury-rigging electrical motors onto equipment designed to run by steam. They simply had too much invested in the current market infrastructure to shut the doors and walk away. New companies weren’t burdened by this baggage and built factories from scratch to take advantage of electricity. The result? Within a few decades, the old manufacturers had to close their doors, outmaneuvered by newer, more nimble and more efficient competitors.

When I plot our current situation against the timelines of past waves, I believe that given how massive this wave is, it could take longer than 50 years to play out. And, if that’s the case, there is still a lot of deconstruction of the previous marketplace to happen. The good news is, the building of the new market is a period of huge growth and opportunity. There is still a ton of life left in this wave, and we haven’t even realized its full benefits yet.

On days like yesterday, when my to-do list and inbox conspire to burn out what little sanity I have left, I have to step back and realize why I did this. Somehow, way back then, I knew this was going to be important. And yesterday, I had to remind myself just how massively important it is.