Category Archives: The New Marketplace

Logging in from China – Part IV

I’ll soon be on NW 08 back home (well, technically, Seattle, but close enough). Beijing proved to be less frantic that I expected. It was certainly intense by North American standards, but it almost peaceful compared to the chaos of Xiamen.

This is definitely a city that’s preparing to welcome the world. That becomes apparent even upon landing. Two huge new terminals are being built at the airport. These are massive buildings that run forever along the existing runway.

My visit to Beijing was limited to what could be seen in one day. Chris (Sherman) and I had planned to spend a rather full day seeing as much as we could. We got to the hotel in the evening and both agreed that we weren’t prepared to hit the town quite yet. We opted instead for the hotel’s own uninspiring but adequate buffet. The consolation was that included unlimited, serve yourself draught beer. Now, this is an idea that should be adopted by the west!

Our hotel was the Prime, about a 20 minute walk from Tiananmen Square and Forbidden City. The western chain hotels in the area were more than twice the price and the Prime was rated fairly well in TripAdvisor, so I thought it should be adequate for a couple of nights. It was no Sheraton. Even when I cranked the air conditioning to full, the barest whisper of air could be felt coming out of the crate. The air in the room was about a dead as the Ming dynasty. The place was inundated with German tourists and the service was decidedly indifferent, after the almost fawning approach I found at the Sheraton in Xiamen. It wasn’t a disaster, but this is probably the first time that I found a TripAdvisor rating perhaps a little too high. I’ll try to remember to post a comment to this effect.

Early the next morning, after a picturesque sunrise that unfortunately was made more colorful due to the thick layer of smog perpetually hanging over Beijing, we negotiated with a taxi to take us to the Great Wall at Badaling and then back into the city to drop us off at the Forbidden city. We got to the Great Wall in good time and missed the worst of the crowds. Word of advice. Don’t go to this location of the Great Wall in the middle of the day. You’ll be fighting crowds the whole way.

From the parking lot, we had two choices. We could go explore the Wall to the east or west. On the west side, the Wall climbed at a near vertical angle up the Jungdo pass high to the mountain above. On the other side, the Wall climbed at a much more leisurely angle up the other side of the pass. Chris and I are two middle aged guys that are letting youth go reluctantly, so of course we chose the more vertical of the two options. Beside, we reasoned, the view at the top will be better.

First, let me say the Wall was amazing. As we climbed, the views were spectacular in every direction, with terraced mountain sides towering over the river and temples below, with small lookout towers and temples dotting the mountain side above us. But this is no westernized tourist experience. This is slogging up uneven stone steps, some a few inches in height, some over a foot, sometimes with no handrails, squeezing past picture takers and those that just need to catch their breath. In each watchtower, there were treacherously narrow steps leading to the top lookout. In some cases, the steps were so warn you had to precariously try to find a foothold on either side. This would never be open to the public in the west, the liability exposure would just be too great.

We made it to the top, after climbing up well over a 1000 feet, step by step, and were rewarded with a spectacular view. Another group reached the top at about the same time and we asked one of the group if they could take a picture of Chris and I. They in turn asked us to take a picture of them. They asked where we were from and what we did. Every time I’m asked what I do, I never know exactly what to answer. Search engine marketer is too obscure for most people’s frame of reference. So when Chris mentioned he was a search marketing consultant, I expected the typical glazed over response and polite nod, indicating the person was thinking, “I don’t know what the hell that is and I really don’t want to know.” Therefore, I was surprised when the group grinned and one of them said, “Do you know who this group is?” We had climbed up the wall with a group of Google engineers from Mountain View, who were in China for a joint workshop with a bunch of their Chinese counterparts. What the hell are the chances?

After the Great Wall and a quick visit to the temples at the foot of the pass, we met up again with our taxi driver and headed back into Beijing to the Forbidden City. The immense scale of the place defies imagination. The palace is in full restoration mode for the Olympics, and the difference between the weathered and grime encrusted non restored buildings and the freshly restored ones were amazing. Two of the bigger palaces were completely shrouded in scaffolding, so we couldn’t see them. Just as well, because the day and the previous climb was starting to catch up with both of us by this point anyway. We exited into Tiananmen square, were suitably impressed by the vast expanse of the space and the monolithic architecture of the surrounding public buildings(why is it that the more repressive the regime, the less imaginative their architecture?) and then decided to try to find our way back to the hotel.

Our hotel was on Wangfujing Road, which Chris assured me just one year ago was a major thoroughfare. Today, it’s being transformed into a pedestrian mall. This served as an example of how Beijing, and China at large, is being transformed for 2008. There was an army of workers, basically ripping up the old road top and replacing it with tiles. There was almost no equipment in sight, other than the odd ancient air compressor and portable generator wheezing away. The work had been done by pick axe, shovel and sweat. You throw enough people at a project and it’s amazing what can get done. The coincidence of the historic tie to the Great Wall and the amazing work that went into it two thousand years ago was not lost on us.

After our own “long march” we made it back to the hotel and both collapsed for a couple of hours. Then, we rendezvoused and headed to out to dinner at Quanjude Roast Duck Restaurant, the home of the original Peking Duck. This restaurant is famous in Beijing and is on the “must stop” list of many visiting celebrities and dignitaries. We fit into neither of these categories and so were ushered to the fourth floor, which I suspect was reserved for all the westerners who don’t know what they’re doing. We ordered the Masterwork, a full duck, along with some accompanying soup, rice and greens.

The duck emerged on a cart and was brought to our table, accompanied by a skilled carver who soon masterfully sliced off every scrap of meat, leaving nothing but a picked clean carcass. The thinly sliced duck was given to us, accompanied by thin pancakes (almost resembling a tortilla) and condiments. We were given a quick lesson on how to wrap the duck into small little bundles. Our instructor used chopsticks and made it look much too easy. After the first attempt we both gave up and used our hands. This is probably why we were sent to the fourth floor, reserved for the “Peking Duck” challenged. Saves embarrassing yourself in front of the locals. Despite the awkward preparation, the food was amazing, washed down with the ubiquitous and very cheap Chinese beer. A cultural experience and a great dinner, for less than $50 US for the two of us. A bargain!

After dinner, we hit Wangfujing Road again for the walk back to the hotel, just a few blocks away. Our construction crew was still hard at it, at 11 at night. In fact, the pace in the street was more frenetic that it had been that afternoon when we were there.

The visit to Beijing was a perfect end cap to an unforgettable trip. I won’t bore you anymore with how amazed/dumbfounded/assaulted I was with China. It was important to be here. It’s important for anyone from the West to make their way here. It’s the emerging Yin to the western Yang and will form a very powerful counterpart to the historic western world dominance. I will never understand the market, the people or the culture, nor should I. It’s not really for me to understand. I was glad to experience it, even just for a week. In chatting with Chris over our decimated duck, as little as I know, I’m probably still ahead of 99% of other westerners. You can’t get a sense of China unless you’re here. There’s no way you can do this at arm’s length. It’s an immersive experience.

I know I’ll be back. And it’s not the romantic return I envision to Europe, where the culture beckons on a very emotional level. It’s an inevitability. The market is too important, the tide is irresistible. No matter what you choose to do or where you choose to do it, to be successful, your path and China must inevitability cross. And on my return, I’ll have all the mixed feelings I currently do about the country and its people.

Logging in from China – Part III

“How did you like China?”

Knowing I have less than 48 hours left in the country, I’m just beginning to prepare my answer to the inevitable question. But there is no easy answer. You see, you can’t “like” China. Like implies a relatively calm and detached, non-committal response, a distant discernment that you have some control over. You can experience China or survive China. You can be amazed by, immersed in, assaulted or befuddled by China. You can be bemused, disgusted or delighted by China. Often, you can experience all of these things at the same time. China is a tidal wave, a sensory explosion, a cultural monsoon. You don’t just “like” it. You live it, and try to figure out the impact afterwards.

I knew participating in SES China would be interesting. It proved to be more than I ever imagined. One of my favorite things was meeting Deb and Jim Fallows, two US ex-pats who are making Shanghai home for two years. Jim is a noted author and journalist for The Atlantic. Deb works with the PEW Internet Project. Together they decided to dive into the incredibly deep pool that is China and try to provide some perspective for their US audience. I naively asked how they were finding the experience. Each, independently, gave the same answer. “Some days I don’t think I’ll make it through to lunch, and some days I think two years won’t be nearly long enough”. Check out Deb’s one week journal she wrote for Slate and Jim’s website. It will give you a tiny glimpse of China, through worldly but still western eyes.

There’s a lot here to digest. Part of me (admittedly a very small part of me) is intrigued by taking the dive myself and following in the Fallow’s footsteps. There is an incredible market emerging, and one feels that you have to try to get your bearings relative to it or you may be missing something of tremendous importance. But I fear that once you started down this path, it would be all consuming. I’m not sure I’d emerge intact. Most of me wants to run for home and try to digest all that I’ve heard, seen and experienced.

One of the stats I quoted in my presentation was that China is now the second largest internet market in the world, at 150 million users, just slightly behind the US at 154 million. But that represents 68% market penetration for the US, and slightly more than 10% for China. I was here presenting the results of an eye tracking study we did on Chinese users interacting with Baidu.com and Google.cn. The results were puzzling, but I found that permanent puzzlement is the norm here, at least as far as westerners go. By the standards we would apply to North American engines, Google offered a significantly better user experience, but Baidu’s market share is 62%, compared to Google’s 20%. And the trends are not moving in Google’s favor. China has chosen Baidu, even though Google may be the more logical choice. Logic is only one of the factors at play here, and it’s a relatively minor one at that. Searching in China is a totally different experience than it is in the US. We use search as a tool. China uses it as a window to the online world. They spend more time on the search results page. Way more time. The average time on a search results page in North America before a click is less than 10 seconds. The average time we saw on Google China was 30 seconds, and on Baidu, almost a full minute. In North America, we tend to very quickly scan a few results, looking for signs of relevance. In China, the entire listing is scanned, and in Baidu’s case, the entire page is scanned. I interpreted this as a less successful user experience. One person who came up to me after the presentation offered another interpretation: this was how the Chinese spend their time online. In North America, information is something to be begrudgingly waded through. In China, information is treasured. We tend to scan and discard the irrelevant quickly. The Chinese like to savor information, to digest it more slowly, to take the time to judge the relevance for themselves. Remember, in the west, we have a lot more trust (sometimes that trust may be misguided, ironically the topic of one of Jim Fallow’s books) in our information sources. The Chinese have learned differently through experience.

Also, in North America our interactions with the search results page are linear, logical and efficient. We zero in on what we’re looking for quickly. The Chinese tend to pick up the information in a pattern that would seem haphazard to us. Eyes dart around the page, scanning here and there. This didn’t make sense to me until I went to China. Now, in the appropriate cultural context, it makes perfect sense. Deb Fallows told me there’s a phrase in China, renao, that, loosely translated, means “hot and noisy”. That’s how the Chinese like it. Explosions of stimuli, amounting to what we in the West would consider an assault on our senses. When you translate this to a search experience, it’s a frenetic scanning of the page. Sure, Baidu’s page is loaded with affiliate spam and pay for placement links. Sure you have to dig deeper and take twice as long to find what you’re looking for. But that’s okay, because time on the internet is valued highly here. Maybe, just maybe, Google is too efficient for its own good in this market. We’ll be publishing the full study soon (mid June is the optimistic date).

This morning, I had my own taste of “hot and noisy”. Chris Sherman and I were to catch the ferry over the Gulangyu, an island highly touted as the favored tourist attraction here (this is a link to a virtual tour that you, like I, will have to be satisfied with for now). But with limited time available (our flight to Beijing was leaving at 1:30 pm) we decided to instead just randomly wander the streets in the vicinity. It proved to be a good choice. The ferry terminal was on the main drag, and on the opposite side was the inevitable stretch of newly erected high rises. Throw in a McDonalds and Pizza Hut for good measure. But just a block further in, we found the real Xiamen. We found ourselves in the middle of a traditional Chinese street market that stretched for blocks. There was not another westerner in sight, as we walked past stall after stall. If it walked, crawled, slithered, hopped, swam or grew anywhere in the vicinity, it could be found here. My wife, Jill, is deathly afraid of frogs. As we were wandering, I saw frogs for sale by the bag. The thing was, they were still alive, packaged in netted bags about the size of a small shopping bag. There were probably 12 or so large frogs in each bag. There was food of every description, live and dead, including a rather large carcass of some kind that was being energetically hacked to bits by a petite woman with a huge cleaver. And there was no refrigeration in sight. Eel and squid lay right next to cookies and biscuits. While it was a sight to see, it did nothing to whet my appetite.

Now, I’m on the plane to Beijing. From everything I’ve been told, my immersion into China has been extraordinarily gentle to this point. Xiamen is, according to one guide book, “the softest of landings into China”. Beijing represents “hot and noisy” at it’s most frenetic. I’m preparing myself. I’ve got somewhere around 40 hours left before I board the plane back home. I’m both treasuring the time left and dreading it. I can sympathize completely with Deb and Jim Fallows. I’m not sure I’ll make it to dinner tonight, but I also hate to leave.

“How did I like China?”

That’s like saying “how do you like being alive?”.  It’s just too big a concept to be adequately covered by such a small question.

Logging in from China – Part II

My first experience in Mainland China was an awe inspiring cab ride from Xiamen airport to my hotel, and I mean awe in it’s archaic sense: the power to inspire dread. It’s not that I hadn’t been warned. But I had exactly one option to get from point a to point b, and that option was an impossibly dilapitated vehicle, painted a brilliant shade of mauve, with matching seat covers, that loudly proclaimed to the world that it was a taxi, in big block letters 2 feet high painted on it’s hood. i admired it’s positive affirmation of it’s profession, even if it looked a little under qualified for the job.

I climbed in, gave the driver my printed sheet of directions (thanks to my friend Pavan Lee at Microsoft. Pavan, your translations have already saved my butt a number of times) and before I had a chance to settle back in my mauve chariot, we had screamed away from the taxi stand and had entered the melee that is Xiamen traffic.

This experience had been described to me, but the description did no justice to the reality. I know my attempt will likewise fall far short, but I’ll give it a shot anyway. First, it was night and pouring rain, so visibility was minimal. There were roads, lane markers and traffic lights, but other than to lend justification to the job of some traffic control bureacrat somewhere, they seemed to serve no other purpose. The traffic lights were a complete puzzle to me, with blinking red, green and blue lights spread in random patterns, with no indicators of what they might mean. The cab weaved back and forth across the entire width of the road, often running down the lane marker itself, cutting in front of vehicles, then being cut off in turn, always accompanied by blast of horn. Bikes appeared out of nowhere, often carrying two passengers and assorted baggage, all wrapped in plastic in a futile attempt to stay dry. And the bikes came from every direction, then took off in every direction. It seems that riding a bike in China makes you invincible, because these riders were obviously not concerned for their safety. It was one gigantic game of chicken, involving everyone in Xiamen, and the loser would be the first to back down. It’s probably a blessing that my senses were dulled from the flight in, otherwise I would have been cowering on the floor. But apparently, it could have been worse. I was chatting with Chris Sherman, and on his ride in from the airport, he got caught in a traffic jam that was irritating the hell of out everyone, and they were making their displeasure known. Obviously, something was obstructing traffic ahead, and drivers were hitting new heights of aggressiveness, trying to get past the blockage. Finally, Chris’s taxi pulled even with the obstruction and he got a chance to see what it was. It was an old man, who had the unmitigated gall to get in the way of a car, which hit him and left him sitting injured in the middle of the road, bleeding profusely from his head. No one was offering assistance to the old man, who just sat and rocked back and forth, holding his head. The biggest concern of all drivers was navigating past the unplanned delay.

I recount this experience, because with some time to reflect on it, I realize my cab ride (hopefully not Chris’s) was somehow symbolic of China itself. It’s an ancient vehicle, going at breakneck pace to an undetermined but vitally important destination, with no apparent plan or directions to guide it. It doesn’t so much matter where you end up, as long as you get there quickly.

I’ve been struggling to put into words my impressions of this place. This is a culture of immense complexity and contradiction that defies the attempts of the western mind to define it. My brain is a linear thing, that tends to value unambiguity and clarity. In China, my brain is on overload. Everywhere I turn, there is contradiction and schizophrenic bipolarity. There is an explosion of stimuli and activity, of signals that are often diametrically opposed, of monumental ambition and dense cultural (and governmental) restriction.

Here are just a few of the contradictions I’ve noted in the last 48 hours.

Inside my hotel, which is a beautiful 5 star Sheraton, all glass, polished wood and gleaming tile, the service is deferential and gracious to the point of near embarassement. I walked out of the fitness club yesterday and suddenly the girl at the front desk bolted upright and started running after me. I thought I must have forgotten to do something or had left something behind. I stopped as she shot past me and lunged for the elevator button. She was just sending me on my way back to my room. But should I step foot out the front door, and not pay complete attention on the busy street in front of the hotel, I would be run over without a second thought. There is no consideration for pedestrians here.

Just down the street from my hotel is a huge shopping complex, complete with a WalMart’s, McDonald’s and Pizza Hut. Western brands like Levi’s, LaCoste and Esprit are prominently displayed. It’s a temple built to consumerism at it’s extreme, with prices comparable to what I would find back in Canada. In Canada, the average yearly salary is probably around $45,000. In China, in the cities it’s about $1000 and in the country, $300. The gap between the rich and the poor in China is widening every day.

From my hotel, I can’t access sites like Wikipedia, yet Xiamen is a hot bed of domain registration and unabashed online entrepreneurialism that definitely crosses into some pretty grey territory.

Monolithic structures are being erected everywhere, as the government continues a full scale campaign to scrub China’s dirty underbelly and erect a new, gleaming showpiece of affluence and modernism. But the showpieces are being built to cater to an peculiarly eastern view of western ideals, big, glitzy and screamingly commercial. It’s as if somebody Feng Shuied (Feng Shui is officially illegal here, by the way) Las Vegas. And in the process, many reminders of one of the world’s oldest civilizations are being erased.

That’s just a few. Literally, cultural contradictions are everywhere here. But perhaps it’s not a problem. China has lived with complexity for thousands of years. For the Chinese, it’s business as usual. It’s only the western mind that tries to impose clarity where none may be required. China is a vast, dense and vibrant organism, a society of immense ambition and near unlimited resource. For now, they picture the affluent west as the ideal to be obtained at all costs, but in a peculiarly skewed eastern way. But I sense that as China stirs and finds it’s global potential, it will rewrite the definition of success, eliminating the Anglo-American bias that marked the last two centuries.

There are a number of challenges that China has to face. I can’t help feeling that this culture is straddling the tracks, caught between two rushing locomotives that surely must collide. The results will either be catastrophic, or cataclysmic. One thing is for sure. Now that this dragon has been unleashed, there’s no turning back. The world will be a different place.

Google’s Perfect Marketplace

In my recent conversation with Michael Ferguson, he brought up the book Net Worth and the concept of infomediaries. I hadn’t read the book (an oversight I’m correcting) but I did a little quick online research. First, here was Michael’s comments:

There’s a book that came out in early 1999 called Net Worth, which you might want to read. I almost want to revisit it myself now. It’s a Harvard Business School book that Marc Singer and John Hagel came out with. It talked about infomediaries and it imagined this future where there’d be these trusted brands and companies. They were thinking along the lines of American Express or some other concurrent banking entity at the time, but these infomediaries would have outside vendors come to them and they would entrust all their information, as much as they wanted to, they could control that, both online and offline.  You were talking in your latest blog post about understanding in the consideration phase where somebody is and presenting, potentially, websites that they hadn’t seen yet or ones that they might like at that point in the car purchase behavior. But the way that they were imagining it was that there would be a credit card that might show that someone had been taking trips from the San Francisco Bay area to the Tahoe region at a certain time of year and had maybe met with real estate agents up there and things like that. But these infomediaries, on top of not just web history but even offline stuff, would be a broker for all that information and there would be this nice marketplace where someone could come and say, “I want to pay $250 to talk to this person right now with this specific message”. So it seems that Google is doing a lot of that, especially with the DoubleClick acquisition. But I’m just wondering about the other side of it, keeping the end user aware of and empowered over that information and where it’s at. So Net Worth is a neat book to check out because the way they were describing it, the end user, even to the broker, would seep out exactly what they wanted to seep out at any given time. It wouldn’t be this passive recording device thing that’s silently taping. My experience so far of using the Google Toolbar that’s allowing the collection of history, is that it’s ambiguous to me about how much of my behavior is getting taken up by that system and used.

So, as Michael says, Google seems to be positioning themselves to be this infomediary. Think about the nexus that’s forming between personalization and Google’s acquisition of every available marketing channel. Google is creating the perfect customer acquisition marketplace. And what’s their typical pricing model? Yes, auction based pricing.

So let’s walk down this path a little. Let’s assume that Google is successful in pushing a high degree of personalization on a significant portion of the population. If you capture all the search history and web history, you have a great data set to predict, with a high degree of accuracy, a consumer’s needs at any given time. The math behind this is not that intimidating for the brain trust that Google has assembled.

Then, let’s factor in Semantic Web functionality. Now, through a series of useful apps, Google takes that personalization data and further adds user value by letting them interact with information. It’s Google’s recent announcement of Universal Search, taken to a new and much more functional level. They’ve already warned us that Universal Search is just the beginning. Google powers the web as our personal assistant, so that for any given life or consumer event, Google is determining our intent, either implicitly or explicitly, and providing us with commercial recommendations. In this case, it’s not really advertising, it’s a helpful recommendation.

Finally, through the Google web of properties, both online and offline, you have the opportunity to present these “commercial recommendations” through a number of reinforced touchpoints. The odds of connecting with an engagement consumer and eliciting the desired conversion are almost 100%.

It’s a perfect marketplace, the ideal match between a prospect and a solution.

So now you have the perfect marketplace, complete with a Google console that lets you target the consumer you want in the way you want. Let’s add one more piece of the puzzle, the pricing model. Auction based pricing has worked pretty well for Google in the past. Why should this be any different. There will of course be a quality scoring component to this. Google is way too obsessive about user experience to just open the bidding to anyone. But let’s say that the Google quality scoring mechanism goes deeper than it does right now, determining exactly the best vendor fits with the determined need and intent of the consumer. Let’s say that Google narrows the list down to the top 10, and then from their database of potential advertisers, who have all indicated what they’re willing to pay for an almost guaranteed customer with an already predetermined ROI (remember, we know with a high degree of accuracy what it is that the prospect is likely to buy), they present the advertiser (or perhaps a few options, as we all like to see options) with the combination of the highest bid price and the highest degree of consumer intent relevancy. Once the bid is accepted, a packaged and personalized message goes out to the prospect through the appropriate channels.

Think for a moment what this does to the entire world of advertising. Hmm…some pretty hefty food for thought.

Connecting the Dots with a Global Marketplace

First published May 3, 2007 in Mediapost’s Search Insider

Late last week I got to spend a couple of very enjoyable days in the desert heat of Tucson together with the sales team of ThomasNet.com. I was the guest speaker at their national sales conference. This week, likely as you read this, I’ll be in New York for the SEMPO Planning Retreat, and in another day or so, I’ll be on a plane to Florida for the Search Insider Summit. I get back for one week, briefly acclimatize myself and then it’s off to China for Search Engine Strategies. The point of rattling off my travel itinerary, other than gloating about the frequent flier miles I’m racking up? All this hopscotching around the globe can be tied together with one common theme. It was topic of my talk in Tucson. While preparing for it, I found some interesting details that speak of a groundswell of change that will impact every industry.

What Web Site? I Don’t Need No Stinking Web Site!

One of the challenges faced by ThomasNet, or for that matter, any online property that is targeting industrial manufacturers, is in convincing some of the advertisers of the need for establishing a Web presence. These are traditional and, very often, conservative businesses that have been around for decades, and they cast a jaundiced eye at anything too new, too trendy or anything that even vaguely smacks of “geekiness.” In many cases, they’ve been turning out steel widgets and doodads that have a very specific niche market. They know their customers, and their customers know them. So why would they need a Web site? Why would they need to advertise on a search engine? And why do they have to worry about a global marketplace? All the reasons can be summed up in two words: things change.

Agents of Change

In 1990, the travel industry was a relatively stable place. Travelers went to the local travel agents and the travel agents acted as the channel for the information from various airlines, cruise lines, hotel chains and vacation companies to the consumer. They served a vital part of the value chain in the industry. And with something as highly personalized and variable as travel, it was hard to imagine how these travel experts could ever be disintermediated.

Even when the Internet started to gain traction and the first online agencies popped up in the mid-’90s, travel agent’ place seemed relatively secure, because of many of the same reasons we currently hear from manufacturers: They knew their customers, their customers knew them and the exchange of information back and forth between the two parties proved the value of this relationship.

In 1995, the number of single-office travel agencies peaked at almost 22,000, according to the Airlines Reporting Corporation. And then things changed. The online travel agents upped the ante. They demystified travel and opened up control of information to anyone who had Internet access. Airlines and hotels readjusted their booking channels to be able to go first to online agencies, and ultimately, direct to savvy travelers. Online communities formed that allowed travelers to connect with others who’d been there, seen it and done it, getting firsthand advice of where to stay and how to get there. And by 2004, the number of single-office travel agencies had been cut in half. Less than 10 years and an industry was decimated. Things change quickly!

Look East for the Future

In 1999 Intel Chairman Andy Grove said, “In five years, all companies will be Internet companies, or they won’t be companies at all.” Grove may have been a touch optimistic in his timing (imagine, someone over-hyping the Internet in 1999), but I don’t believe that takes away from the importance of his message. One of the mistakes that travel agents made, and the mistake that many small manufacturers are making again, is to assume that just because they’re not interested in a global market, all other competitors are likewise uninterested in their market.

The balance of power in the manufacturing world is dramatically swinging eastward. Another sobering fact that I came up with in the preparation for my presentation was the fact that in the U.S., there are currently about 14 million jobs in manufacturing. In all G-7 countries combined (U.S., Canada, the UK, France, Italy, Germany and Japan), there are about 53 million manufacturing jobs. In China alone, there are almost 110 million jobs in manufacturing. A manufacturing powerhouse the likes of which we’ve never seen before is gearing up in Asia. And those Asian companies are desperately eager to learn how to use the Internet to connect with new markets right here, in our backyard. To add to what Andy Grove said, not only will all companies be Internet companies, we’ll also have to become global companies. At the very least, we’ll have to be acutely aware of our global competition.

And that brings me to the other destinations on my travel agenda. One of the things the SEMPO board will be discussing this Thursday in New York will be the driving trends in search. Globalization will be near the top of the agenda. Then, a few days later in Florida, at the Search Insider Summit, we’ll be gathering together in the Everglades to talk about emerging issues. Search’s expansion beyond its early consumer-based, direct-response successes into areas like manufacturing and other business-to-business verticals is almost sure to be discussed. Finally, I have to see for myself the economic explosion that’s happening in China. I was a little shameless in wrangling myself an invite to speak at Search Engine Strategies. But it seems that no matter where you go, one thing remains true. All roads lead online, and they all intersect with search at some point.

 

It’s Not about Control – It’s About Connections!

Pete Blackshaw from Nielsen Buzz Metrics wrote an interesting column this week talking about the fact that CMO’s still have control.  He railed against the absolution of responsibility on the part of marketers, using the new buzzwords of consumer empowerment to justify the fact that they can throw more spam at the average user now because, after all, the user is in control.

“First, the overheated rhetoric acts as a deceptive rationalization. Remember the theory of cognitive dissonance, that testy tension emanating from two conflicting thoughts at the same time. I worry all this talk about consumers being in control relieves dissonance. It allows us to absolve ourselves of treating consumers with respect. Hey, if they have control and, hence, the power, what possible harm could our junk mail, spam intrusiveness, and recklessness do?”

Pete touches on a very interesting point that I’ve talked about in the number of columns and post before.  It’s the idea of brand messaging going beyond the carefully manufactured advertising and marketing channels and being baked right into the DNA of the company.  Now, brand messaging is as much about customer experience and customer service as it is about the message we see in the typical 30 second television spot.  It brings up an interesting question about consumer control.  Is it so much about control as it is about the ability to connect with information in a new way?  As Pete rightly points out, marketers still have control over a number of aspects of the relationship.  It’s impossible to have a two-way relationship with one side being in total control.  The fact is that consumers control part of that relationship and marketers control part of that relationship.  The success of the relationship lies in the ability for the two sides to connect in a mutually beneficial way.  It’s not so much the consumers have taken control from marketers as it is that what was typically much more a one-way relationship has evolved into a two-way relationship.

“At the end of the day, we still control the message and the business processes that shape it, but we may need an alterative path to get there. Product quality, customer service, accurate claims, and employee empowerment are all within our control. And these are the input types that really matter, and always have.”

Let’s explore a little bit closer how this has happened.  It really comes down to the number of channels available for messaging to get from the marketer to the consumer.  It used to be that those channels were tightly controlled and there were only a handful of them.  It goes back to the idea of power constructs.  The last hundred years our society has been all about power constructs.  The paths that lead from the manufacturing of products to the consumption of the products were few and were controlled by the powerful.  This was true in virtually any market you could think of.  With consumer packaged goods the ability of those goods to flow from the manufacturer to the consumer is controlled at various points along that channel by a few powerbrokers.  The same has been true in advertising.  The paths from the advertiser to the consumer were generally controlled by a few very powerful corporations.  Look at how the power construct in advertising typically played itself out:

  • At the top we have the advertiser.
  • Below that we have the advertising agency that was responsible for crafting the message.
  • Next you have the media buyer that takes a message created by the advertising agency and determines the channels to reach the target consumer.
  • Below that you have the channels used to reach the consumer, whether they be broadcast TV, newspaper, magazine or radio stations.
  • Finally, at the bottom, you have the consumer themselves.

All the communication in this channel went one way, from the advertiser down through each of the successive layers until it reached the consumer.  There was no corresponding channel to allow communication from the consumer to flow back through all these gates to the advertiser.  In the case where an advertiser did want to get information from an individual consumer, they would employ a market research company to circumvent the entire power structure of communication and go directly to a handful of representative consumers, determine what they were thinking and report back to the advertiser (or perhaps the advertising agency).  Picture a series of locks on a canal, with all the water flowing one way and with each of the gates of the individual locks designed to let water out and not let water back in.  The only way for water to run back was a small pipeline with a pump on it and the switch to that pump was always in the hands of the advertiser.  They chose when they wanted to listen to the consumer and when they chose to ignore the consumer.  The consumer had virtually no power to push their message back to the advertiser.

Now let’s look at what the Internet did.  The Internet took a highly structured, albeit one way, channel and completely blew it apart.  Now water flows freely back and forth between the advertiser and the consumer.  This not so much took control way from the advertiser and gave it to the consumer as it eliminated (or is in the process of eliminating) the existing structure that information flows through.  It democratized connections.  Rather than a man-made channel with restrictive gates and locks that restrict the flow of information from one place to the other, the Internet has turned the landscape into a vast field during a rainstorm.  Water collects in a thousand tiny pools and flows according to the online landscape.  Advertisers can influence where those flows happened as much as consumers can.  The control of flow is now jointly owned by everyone.  Advertisers have not had their power taken away.  They just have to learn how to share it.  They have to live up to the responsibility that goes with a truly two-way relationship.  Because they can no longer control the channel the message goes through, they have to spend more time controlling the very message itself.  They have to make it bulletproof, capable of withstanding the BS test.  And you have to understand that that message can’t be carefully crafted, it has to be lived.  It encompasses everything they do in the day-to-day operation of their business.  It has to include all the touch points that brand has with the outside world.  Because every touch point is a small puddle in that massive field.  If they manage the information correctly it will flow in the desired direction.  If they abdicate their responsibility of meeting the customer halfway in providing a mutually beneficial proposition, then they have to bear the consequences when the flow goes in the direction they don’t want it to.  And if there is enough momentum in the opposite direction, they will get flooded by a tidal wave of consumer dissent.

All in all, it’s a healthier relationship.  One-way relationships tend not to be sustainable in the long term.  But as with any power shift, there’s a pendulum effect that will likely occur here.  As power finds its natural balancing point, it will likely swing too far in the direction of the consumers before it comes back again.

Debating with Myself about whether or not Google can Change Advertising

Ari Rosenberg, a media buying consultant, had an interesting column last week about Google’s plans to enter the cable TV market, just the same as they’ve made inroads in the radio and print markets. Google’s approach in all these markets is consistent. They will apply technology to open up the marketplace, removing the middleman and basically automating the purchase of media. Ari argues that while Google may understand technology, they have a lot to learn about how advertising works. This is a huge, complex question and there are a lot of different shades of gray to the argument. It’s not a simple yes or no argument. But there are some very interesting aspects, both pro and con, there he touches on in his column. So I’d like to present to differing viewpoints, both pro and con, about why or why not Google may actually change how advertising is done.

The Pro Side: Making the Marketplace More Efficient

There is no doubt that there’s a lot of room for efficiency in most media buying markets. There is a layer upon layer of friction in the marketplace, caused by entrenched consultants, reps and buyers and other “filler” between the ultimate buyer and seller. This is where Google can excel. Their theory is that they can remove the friction by using their technology to enable marketplaces where buyers and sellers can connect directly. More than this, they introduce the notion of relevancy. Ultimately, Google wants to achieve their end marketing goal of always showing the right ad to the right person at the right time. They would take the idea of keyword relevancy, pioneered so effectively on the Web, and apply it to other channels. Of course this depends on a more interactive version of print, radio, or cable than we currently see. But as all media converge, Google’s initial inroads into each of these channels will secure them a foothold at the time when relevancy starts to matter.

In this regard, Google is definitely dealing from two areas of strength. They understand technology and have been successful in developing clean, efficient interfaces to help streamline the flow of commerce. There is definitely a change that is needed in the media buying marketplace and Google has the engineering chops to clean it up dramatically. Also, they have a clear and deep understanding of consumer intent, expressed in the consumer’s own terms. And as it begins to matter more in advertising, Google is well-placed to make those consumer initiated connections happen.

The Con Side: Understanding Marketing

In last few years, I’ve had enough interaction with Google to understand that for them, marketing is considered a necessary evil. There’s a lot of “soft”, undefinable aspects to marketing, that can’t be distilled into a simple, clean algorithm. This is thinking that is largely foreign to the Google frame of mind. Google loves mathematical simplicity and definition. Two plus two should always equal four. The question shouldn’t be up for debate. But marketing is not that simple, not that clean, not that black-and-white. There’s a lot of gray in marketing.

Ari makes the point that Google doesn’t understand advertising. This is largely right. Google is an engineering company. It exists to apply technology to solve problems. If you look at the makeup of the Google organization, their own marketing department is a small, under resourced afterthought. Because they didn’t need to use advertising, the philosophy is that really is not necessary for anyone. As Google steps into advertising, think of them as Mr. Spock, reluctantly doing a stint as a Madison Avenue ad exec (now that’s an idea for a sitcom).

The Wild Card: the Consumer

Ultimately, it’s not Google or Madison Avenue that will have the last word in this debate. It’s you and me and 6 billion (and counting) other consumers. There is an old world and the new world in marketing. And the former is rapidly giving way to the latter. The wild card in all this is the changing game of marketing. Sure, Google may not understand the “warm fuzzies” of marketing, those undefinable aspects of brand engagement, but what Google does understand is connecting users with what they’re looking for. And do we really need advertising that hits us at a visceral and an emotional level, when it’s exactly the advertising we’re looking for anyway? It doesn’t have to hammer us over the head with its message, because we’re openly receptive to that message, we’re seeking it. As Google moves into print, cable, and radio it may not be that their lack of understanding of the current reality of marketing that will hold them back for making it successful. It may be the fact that those channels just don’t lend themselves very well to this new idea of consumer empowerment. Consumer empowerment is expressed much more easily over the interactive platform of the Internet. The Internet is the next evolution of marketing. The question will be more if Google can make a significant inroad into these more traditional channels before the channels become integrated within interactive, Web driven platform. Or will there be just too much friction to overcome?

Getting the Brand Point Across, One Touch Point at a Time

First published February 8, 2007 in Mediapost’s Search Insider

One of the great ironies of marketing is that we’re in the communication business, but many of us aren’t that good at it. And I’m not talking about broadcasting to a million people, I’m talking one-to-one, get-your-point-across communication. We tend to hide our real meaning under reams of spun language, taking the core of the message and wrapping it in the cotton batting of “marketspeak.”

We’ve come to believe that to make a brand message successful, you have to create mental pictures that tie the brand to vague and hopefully attractive emotions. But when it comes down to saying why you should buy something, in a way that hits home with a consumer who’s ready to buy, we’re at a loss for words.

Talking the Talk, Not Walking the Walk

Evidence of this was so painfully and clearly pointed out in a recent study by the Louws Management Corporation, where 80% of 711 advertising and marketing professionals surveyed said they are strongly aware of their company’s brand positioning, but only one fourth of them “can clearly articulate (their) company’s brand position to… clients, customers or prospective clients.”

Perhaps those of us in search have a unique perspective on this. After all, there’s not a lot of room in the few dozen words typically found in a search listing to expound on the warm fuzzies. You’d better get the point across, and fast, because the typical searcher is only going to “engage” with your listing for a few seconds at best before exercising his control and clicking through to your site, or not. You become a marketer of few words, nailing the “hot buttons” quickly and precisely. In fact, we’ve gone too far the other way, convinced that everyone who is searching is also buying immediately, an assumption that’s at least 85% wrong, according to past research we’ve done.

Brand = Experience

But I think there’s something more fundamental and troubling in these survey results. Jakob Nielsen once said that on the Web, branding is much more about experience than exposure. This is true to a profound level that escapes many marketers. In the new world of empowered buyers, they engage with a brand at a thousand different touch points, and every one of those touch points builds a brand “mosaic” — an image of the brand that the buyers participate in building because the Web has empowered them to do so.  Every single member of the company that consumers connect with also helps build this collective brand picture.

And that’s why the findings of this study are so deeply troubling. If 75% of the people who are the marketing stewards of the brand message can’t express it in simple language, what hope is there for the customer service person, in a contracted call center, who, for one customer at one particular point of time, is the entire brand? In this new reality, where brand is built on the front lines, through real contact with real customers, rather than in carefully controlled messaging that comes through a handful of advertising channels, crystal-clear communication within an organization becomes an imperative.

Cult-Like Marketing

In this new definition of marketing, cult-like cultures, an obsessive focus on corporate purpose and company-wide alignment are the prerequisites for success. Brand messaging has to be more than marketspeak, it has to be a mantra, the cornerstone of a strategy that is communicated to every member of the company repeatedly, clearly and fervently. It has to be a concept so crystal clear, so absolutely unambiguous, that there can be no questioning what it means. Every single member of the company has to have it on the tip of their tongue – and, infinitely more important, embedded deep within their beliefs. That’s the only way it can be consistently spread through the thousands and millions of interactions and conversations that make up the new brand mosaic.

Digital Voyeurism: The New Reality

I remember the first time I went to my local gym and saw a new sign, hastily hand drawn and posted, announcing that cell phones were no longer allowed in the change rooms. It took me a minute or two to get it, but I finally figured it out. Ahh..they come with cameras now.

There are two dimensions to this that I wanted to briefly explore. First of all, with digital cameras everywhere, businesses have to be more careful about the face they show to the public, because it’s likely that if their bad side is showing, there’ll be someone there to snap a picture. Consider the example of one Kohl’s store in Dallas.

kohls5_2A shopper visited the store in the post Christmas season, found a store that looked like a tornado just ripped through it and just happened to have a cell phone with a camera and a fairly well read blog. It gets worse. His post happened to catch the eye of Seth Godin, who has one of the most read blogs on the Web. The result? A PR nightmare for Kohl’s. And this can happen anywhere. The next time a character at Disneyworld alledgedly sucker punches a guest, you can count on a camera being nearby. It’s enough to make your average PR Director retire to a remote Caribbean isle, one without internet connections.

The second implication has to do with personal privacy. If there are pictures snapped of us, and they get posted to the web without our knowing, or our permission, what will the fall out be? They’re there for the whole world to see, through any one of a number of image search engines. Fellow SearchInsider David Berkowitz explores that in his column today:

“The overarching issue, the one that’s most likely to keep me up at night, is, “Do we have to entirely relinquish our right to privacy?” If the answer is yes, then it simplifies the issue. We press forward with every technological innovation, privacy be damned. We accept that everything we say can be recorded, and it’s not just to improve customer service.”

Smile..you’re on Candid Camera!

Over 50% of CMOs aren’t looking for Big Agencies for Online

A new study has reaffirmed something I’m hearing more and more. Big agencies don’t get online.

Sapient, through Evalueserve, surveyed a number of CMO’s, and just over half of them believe that traditional, large ad agencies are “ill-suited to meet online marketing needs”. They believe that there’s too much invested in traditional models, and that agencies can’t think beyond these constraints.

The upshot? Fewer than 10% of those polled seek to partner with large agencies for online marketing. They instead look for partners with roots in technology, a high degree of creativity and traditional print expertise, or, even more common, to use multiple agencies.

It’s not that large agencies don’t have people capable of getting online. In many cases, they do. But they’re trapped in a rigid and bureaucratic structure that sucks the lifeblood out of the bold thinking and initiative essential for online. They spend more time fighting turf wars than they do providing value to clients, and it seems that the clients are getting tired of it.

Increasingly, large agencies are struggling to understand the shifting marketplace. They are fighting the idea of a participatory approach to branding, with a community of consumers at least as important in the process as the actual brand itself. They are far more comfortable with the more traditional, and much more profitable, command and controlled channel form of marketing that has been built over the last several decades. They’re struggling to win in a new game where they don’t know the rules, largely because they haven’t been written yet.

The big agencies are out there shopping right now. They’re looking to buy expertise needed. I wonder how successful this will be. It’s not just the expertise they’re lacking. It’s the environment needed to let their experts do their job. You can buy all the roses you want, but if you lock them in a dark basement, you’re not going to see much blooming.