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Monthly Archives: April 2009

How to manage social media on a small scale

One of the major appeals of social media marketing is the ease with which few can reach many at almost no cost. But for many small companies, this can be a fear rather than a blessing. Social media might expand your client base, but it does little to improve productivity to the same degree.  While having more business than you can handle is certainly better than not, it is possible overload can harm your business and brand. So how can you make sure social media is working only how you want?

Be honest about what you want

The focus of any social media campaign should increasing user value, but that doesn’t mean you ignore your own needs.  If you provide luxury services, be forward about it (and include some price examples so passersby know what they’re getting into).   If you only serve local clients, say so. Make sure you know what you want and base your marketing on that.

Niche versus mainstream

Don’t focus on Facebook if your demographics are only a tiny percent of the population.  Find niche social networks, forums, and blogs to network with that will help build your small but more valuable community.  You can always broaden your reach if you find your current strategy too limited, but it’s much harder to put the internet genie back its bandwidth bottle; even worse would be harming your brand because service suffers under the overload.

Control communication channels

I hate when a company only gives me a generic email (like blog@prodigeek.com, but I’m the only one, so you know I read it). But deciding the right communication method could be the difference between hours of sorting and a few moments of weeding.  If overloads of emails and phone calls really concern you, a contact form can help soften the pressure.  You can ask demographic questions to help sort through inquires. And best of all, contact forms will deter more casual inquirers.  A great benefit of Twitter or Facebook messaging is you can see many of the sender’s demographics, but turning those into your main communication channel is more effort than its worth.

Change your promotion methods / lower costs

Some of the highest costs related to marketing can be printing and mailing.  Moving more of your marketing online, like your catalog, can save tons in printing and add more value by being searchable and more interactive (don’t just turn it into a PDF).  Plus, email is free. Free. How’s that for cost-per-prospect?

Remember how I said social media won’t improve productivity? That might be technically true, but the internet can make you more efficient. Depending on your products and services, more and more can be done with technology, helping filter the amount of hands on time required, allowing you to increase your business without significant growth or sacrificing service.  From email to e-commerce platforms (like eBay or Amazon, the easiest) are great ways to sell products, for example.  Finding the best platforms and strategist, of course, means finding the best value for your users.

Ubiquitous broadband spreading: What about the U.S.?

First, Australia announces $31 billion to build a massive fiber optic network across the country, aiming to give 90 percent of its citizens 100 megabits of speed by 2018.  The UK is much more conservative spending $366 million for universal broadband of 2 megabits by 2012. Even Estonia is devoting $374 million for 100 megabit broadband by 2015.

In the midst of an economic crisis, these countries are throwing around heaps of money, to spread the internet to all corners.  Maybe they recognize the value having a connected populous can be, like telephone and power lines were almost a century ago.

Unfortunately, the U.S. still treats broadband like an afterthought rather than a priority. President Obama has stated national broadband is important, but the longer we wait, the farther ahead other countries get building up their infrastructure, taking away the technological advantages the U.S. has in the increasingly competitive world.

What’s worse, is easy fixes are ignored in place of bad policy and even worse corporate irresponsibility.  Time Warner Cable pulled back on plans to implement metered price plans for broadband, and now is pulling back on plans to increase capability – something that would improve value and thus increase their subscriptions.

Further, Time Warner Cable, again, is lobbying Wilson, North Carolina to block municipal broadband.  Time Warner Cable is trying to pass a bill banning municipal broadband, similar to the bills its and other ISPs have passed in more than a dozen states.  Why municipal broadband has to be banned isn’t clear since in a free market economy, competition is considered healthy.  The town just wants to offer its citizens what Time Warner refuses to provide.

Prize model used for good and evil

I’m a big fan of prizes as a way to incentivize research and development.  Not only is money a big reward, but there’s also prestige, something not found with your basic paycheck.  From the X-Prize to Netflix’s recommendation software, prizes are proving to be a growing model.  I didn’t expect, however, spammers to use a prize model to improve CAPTCHA cracking software.

CAPTCHAs are those random letters you often have to type on online forms.  These prevent automatic bots from overloading systems.  But for every CAPTCHA created, someone eventually cracks its, leading to a constant arms race between spammers and security professionals.

Spammers are reportedly offering rewards up to $500,000 to anyone who can develop a way to crack reCAPTCHA, one of the leading CAPTCHA systems (used by Facebook and Craigslist).  Luis von Ahn, the co-creator of CAPTCHAs, said “If [the spammers] are really able to write a program to read distorted text, great – they have solved an AI problem.”  New Scientist notes this technology could be revolutionary optical character recognition software.

While I’m not trying to encourage more spammers (I already hate CAPTCHA which, if Google has its way, could get even more complicated), the prize model itself is still a great idea I hope to see more of in many different areas.

Customers can be wrong: The market is always right

A few weeks ago I wrote about how companies need to understand the difference between customers being willing to pay and companies saying they should pay.  This is basic economics, and it’s the reason many industries, like newspapers and music, are struggling.

But let’s think of this another way.  There’s been a popular marketing saying that the customer’s always right.  This is a great gimmick, but not necessarily true.  Instead, let’s think in terms of the market.  The market, otherwise considered large groups of customers, are always right.

Think of it this way. If one customer gives you a bad review, you can probably ignore it. If two customers give you a bad review, maybe pay some attention, but no need for immediate action. If three customers give you a bad review, there’s something you need to fix.

When large groups of customers make the same decision, they are the market acting. In a free market economy, the market always decides what works and what doesn’t. This is not a moral statement. It is economics.  If people do not buy your product, it is because the market does not want it. There are many reasons why that might be, but the market as spoken and nothing except accommodating the market with help sell your product.

This is where the disconnect happens.  Music and movie companies blame file-sharing services for stealing their content and costing them money.  But file-sharing sites are the market showing customers want to consume entertainment differently.  Saying it’s immoral or illegal does nothing to change the market’s mind because you cannot change the market’s mind.  The market is never wrong. Companies succeed when they listen to and serve the market.

Slate’s Farhad Manjoo laments the near impossibility of an online movie rental service with real selection because of all the complex licensing required.  So instead of going to Hollywood’s own service, people go to file-sharing services because they serve the market demand for on demand, free entertainment with massive selection.

Many products floundered until the right combination of features, price, and demand met for the product to actually serve the market.  Michael Masnick points to netbooks as a perfect example of a product that floundered for years until companies found the right combination of specs and lower price to build a substantial marketplace.

Markets can change the other way, making products and business models obsolete.  The entertainment and newspaper industries are just examples of wide spread changes in these business models.  Once, single songs and news articles were easily commoditized because of limited distribution channels. But with uncontrollable distribution, the market has more control over how they can consume these products. It the cat’s out of the bag version of economics. No amount of legislation or educational campaigns will return the market back to the sweet days of the 1980s when people would pay because that is what the market would do.

The customers, as a group, are never to blame for a product not working because they just didn’t get it, like Time Warner’s metered broadband.  The market decided they don’t like this service. It could be possible to launch successful metered broadband. Doubtful, but possible with the right combination.  Time Warner’s plan had no market. End of story. It’s not a flawed PR campaign – the market did not like your product.

When launching your next product, always consider how your product serves a market need.  You always want to increase consumer value, not your own value. You increase your own, and your company’s, value only after you’ve increase the consumer’s value.  Scolding the market for just not getting you is not an effective business strategy.

If Twitter is mainstream, then what’s niche?

The mainstream media has been buzzing about this new and exciting web tool called Twitter.  Because Oprah now uses it.  Twitter, over the past few weeks/months, has been crossing the infamous chasm that separates early adopters with everyone else.  After Oprah promoted the three-year old company on her show, and sending out her first tweet, traffic spiked 43 percent.  Oprah, Ashton Kutcher, and CNN competed for the first million followers on Twitter.  Celebrities and brands have replaced the Twitter innovators like Robert Scoble and iJustine who helped evangelize the application and build the massive following it has now.

Social media bloggers are pondering what happens next for Twitter (beyond that nagging how are they going to make money question).  Will Oprah follow other people and engage in true two-conversations? Or will Twitter become just another broadcast marking tool.  I offer links to these questions and tackle one of my own: where do geeks go next?

I ask this because I consider Twitter a niche tool.  It has limited functionality and because of that is very hard to use effectively/creatively.  Twitter has obviously grown from being just another way to tell people what sandwich you’re eating – it’s a unique, rapid-fire communication platform thriving on texts and one-liners.  And this is, at least posed, to become popular with soccer moms and every brand with an email account (neither of which is bad, this is not a moral judgment).

To me, this says more about how tech savvy the mainstream is, than how useful Twitter is or how protective geeks are of their turf (we are).  Twitter is far more niche than Facebook or LinkedIn are, and if software like this can cross the chasm, how much more niche does niche get?

This is a credit to the rapid transition people are making into the digital world.  My mother is now asking me if she should join Facebook (no) and my 50+ year old friends want me to help set them up on Twitter. Definitions of what is part of the geek niche need to be redefined.  Geeks need to be a lot geekier to be geeks, it seems.

For web companies, this should be exciting news (though watching how Twitter traffic grows over the next weeks will affect my confidence in the following statements).  Twitter’s ability to appeal to a broad audience of users shows a society more willing to experiment with new tools, even if their uses are not so obvious.  I’m not saying this can be easily replicated – maybe Twitter is a fluke.  Instead, the next time you’re developing a product you fear might be too geeky, think about Oprah and your mother using Twitter.  Suddenly, your definition of geek, and the demographics for your product, are suddenly much, much wider.

The future is now, with holodecks

I have two dreams in life – fly a starship and play in a holodeck.  The best part is, if the holodeck gets invented first, who needs the starship. A company called Eon Reality has developed at pretty early holodeck-like environment.  The Eon ICube is basically a high-tech PC with 3-6 wall-sized monitors projecting everything from fully immersive 3D environments to the coolest spreadsheets you’ve ever seen.  The user wears glasses and various peripherals for force feedback and a wireless want for control (you can only walk so far, the walls don’t move).  What kind of games/software do you want to play first in the ICube? Just give me my starship…

[Via GameSetWatch]

Dominos: Using social media to damage and fix a brand

Domino's Pizza, LLC
Image via Wikipedia

Two Domino’s Pizza employees posted a video of themselves spitting on food, putting cheese up their noses,, and violating several health codes while preparing people’s food.  The video, posted on YouTube, became a sensation with more than one million views, spreading discussion to blogs and Twitter.  The New York Times today even profiled the threat social media plays for Domino’s and other companies.

I’ll still buy from Domino’s. Hopefully this is an example of two really bad actors and not reflective on the company. But this is a huge PR nightmare where even if Domino’s isn’t directly at fault (legally or morally, that we know of), it is still responsible to remedy this tragedy, making amends to the public for what it’s employees did.

Social media was used to damage Domino’s brand. Domino’s can use social media to repair the damage.

First, admit fault. With a press conference posted to YouTube and news outlets. Admit employees were not properly supervised, incentivized, and educated, and then outline how all these things will be fixed for the future.  Also publically compliment the rest of the Domino’s sales staff. We know Domino’s hiring is not the most rigorous, so oversight is important.

To repair its brand, Domino’s would best be served by opening up it’s serving practices to the world – through YouTube. I don’t mean hidden cameras showing you don’t trust your employees (that will only invite more trouble). Instead, show how much you value your employees by encouraging each store to make it’s own YouTube video about their favorite pizza creation.  So every Domino’s outlet will have the chance to create a special pizza, which customers can buy, and see online how the staff came up with and made that pizza.  This shows Domino’s trusts its employees to serve its customers’ best interests, and it gives something special to customers in the form of unique and special pizzas, customized for their location.  Domino’s can collect all these videos onto a YouTube channel and even make a U.S. map with links to the videos of locations closest to you.

The lesson to learn – social media can be a dangerous weapon in the wrong hands. But in the right hands, social media can be used for just as much good.  Embracing open communication builds and rebuilds brands.

Maureen Dowd, you’ve let me down

Shockingly, I read newspaper…content. Like most Wednesdays and Sundays, I enjoy Maureen Dowd’s dry wit and political commentary. She’s brilliant and kept me sane during much of the election (except for when she wrote her column in French and Latin). But today, Dowd’s column took aim against a true evil, Google, for destroying newspapers.

Dowd, in skillful style, made no question about Google’s culpability. She just compared Google to Big Brother and said while Google’s C.E.O. Eric Schmidt isn’t Dick Cheney, he isn’t far off.  He hates your privacy, but he hates newspapers more.

Dowd is a columnist, and I love her for her opinions.  But this column ignored the basic economics and facts of newspapers’ relationship with Google.  She makes it sound like Google it’s just taking content, posting it, and then laughing as newspapers suffer. She writes “Google is in a battle royal over whether it has the right to profit so profligately from newspaper content at a time when journalism is in such jeopardy…[Schmidt] declines to pony up money, noting that newspapers could opt out of giving their content to Google free and adding, ‘We actually like making our own money for obviously good capitalist reasons.’”

But Google does not take newspaper content or post it (with the exception of Associated Press content which it explicitly pays for), Google just links to the content.  Google, in fact, only added ads to its News search the beginning of this year. Before that, Google made no money directly from news search. But either way, Google just links to news articles.  It helps people find the news articles they want.  Google sends thousands if not millions of people to newspapers through these links.

But Dowd, instead of realizing how much Google increases the value of her content, tries to paint them as just a step behind Dick Cheney in taking over the world.

Newspapers as a whole need to stop looking for people to blame (Techdirt has the excellent point that Craigslist deserves just as much if not more blame for “stealing” all those classified ads it doesn’t charge for).  Dowd is just another newspaper veteran looking to protect newspapers without asking if there’s a better way.  Just because you’ve always done it one way, doesn’t mean business can’t evolve.  Look at how newspapers used to do business – they lost money. Weird.

There’s more to business than profit

This, I did not expect. I’ve been following the crisis of the newspaper industry closely and have many suggestions, which I’ve discussed here.  A new suggestion has come to my attention from a 1918 Atlantic Monthly article claiming the death of newspapers. As history shows, this was a little premature.

Oswald Villard found daily newspapers had rising costs and rarely, if ever, any profit.  He writes:

It is a fact, too, that there are few other fields of enterprise in which so many unprofitable enterprises are maintained. There is one penny daily in New York which has not paid a cent to its owners in twenty years; during that time its income has met its expenses only once. Another of our New York dailies loses between four and five hundred thousand dollars a year, if well-founded report is correct, but the deficit is cheerfully met each year. It may be safely stated that scarcely half of our New York morning and evening newspapers return an adequate profit.

That $500,000 loss compared to $7 million in today’s dollars (according to Slate), which pales in comparison to the $85 million the Boston Globe expects to lose this year alone. But Villard highlights the unique business model many newspapers used to support.  He claims owners were willing to accept losses in their newspapers because of the prestige of owning one.  Slate puts it: “A newspaper owner gets a place at every table, access to all the top politicians’ ears, and the power to impose his worldview on his readers—or, at least, the illusion of such influence.”

Few businessmen are willing to make such expensive vanity purchases (Slate makes some notable exceptions, like Rupert Murdoch’s New York Post or Mortimer Zuckerman’s New York Daily News).  Of course, stock markets, quarterly reporters, and multi-billion dollar sales turned the newspaper business into a profit boon for the 80s and 90s with few expecting the bubble to burst.

For naysayers predicting the demise of democracy should newspapers all disappear (unlikely), the vanity business model represents only one of many, many options to develop news and other businesses. I doubt this trend will take the business world by storm, but the history lesson is worth noting – business isn’t always about money. There’s power and influence too. I’ve been a proponent of the value of self-promotion (like this blog), but maybe even multi-billion dollar corporations have a place in a vanity portfolio.

The economic difference between should and will

I often get into arguments about why I don’t think piracy is wrong, but actually helpful to businesses.  The crux of many arguments, from newspapers to music to software, revolves around how people should be paid for their work rather than will people pay for that work.  This is a serious disconnect that explains much of the frustration many feel regarding new business models and free content.

Content creators argue they should be paid for their work. If they aren’t paid for their work, no one will make music, movies, investigative journalism, or video games. We’ll live in a silent, non-fun, corrupt world of animals on skateboards.

But this is not the economic reality.  In capitalism, people can try to make money, but there is no right to it.  600,000 small businesses are started each year and more than 50 percent will fail within the first five years.  No one should have to support these businesses. It’s up to each business to find a market need and fill that need.  While making money is obviously the goal, it is a side effect of effectively meeting a market need.

The content industry (I’m including newspapers and software) certainly filled important market needs – entertainment, productivity products, information and education, etc.  But they got used to a business model based on little competition and monopolies on distribution. The market has changed, but the market need is still there.  People will always want all these products.  But without the monopoly on distribution, consumers have more choice to market products.  More competition drives prices down, and this means for the content industry, the price of content is zero.  The value is still high, but there’s so much of it, you can’t price it higher.  It doesn’t matter if you should be paid for your content.  No one will pay you because another company will fill the market need at the lower price.  This is why you have to treat piracy like a competitor, not a threat, because it’s the market demanding change.

When a company says people should pay, it’s claiming a right and entitlement to compensation.  Obviously, if someone works hard, it’s good to be rewarded, but often hard work comes with the risk you won’t be properly compensated. That is business. It’s competition. It’s healthy for the economy overall.  If companies are guaranteed money, they don’t have to try as hard to earn consumer’s money by creating valuable products that feed market needs.

This is why Google chairman and CEO Eric Schmidt was so right when he told newspaper executives they shouldn’t piss off consumers.  Consumers decide how they want to consume news, not news executives.  If consumers won’t pay for newspapers, then newspapers will go out of business.  Nothing can change that.  You might think they should or even have to pay, but the economic reality is, they won’t.  Even if piracy is stealing, it’s the economic reality. It’s what the market wants. Nothing can change that.  The successful businesses of the future will learn how to capitalize on this market demand and find new, innovative ways to make money.  Everyone else will get left behind.