Media predictions for the far-forward future

woman hologram

Put down your smartphone app and think far, far ahead. Media prognosticators rarely do this, perhaps because advertising clients and digi-journalists gain more from toying with the latest Twitter group chat update than they do by conceptualizing the state of media 100 years from now … but a far-forward forecast could be worth the effort.

So let’s play the prediction game.

Before we start, here is our inspiration: the brilliant book “The Next 100 Years,” in which George Friedman examines the macro trends of history in attempt to predict world events through the coming century. It’s an amazing feat, reeking of intellectual arrogance, to try to foresee 100 years of future events … until the reader discovers that Friedman has a solid methodology.

Friedman bases far-forecasts on geopolitics — the combination of national resources, locations on the globe, culture, and economics — which has ongoing patterns that make shocking events, such as World War II or the terrorist attacks of 9/11, predictable. Individual players on the planet, even presidents or kings, typically have far less power than we imagine, and must play upon a chess board that is already set. The future, it seems, can be predicted, if you really examine the macro trends. For instance, looking backward, Friedman argues:

  • It was inevitable Europe would become a global power in the 1800s, because it needed supplies from Asia, and after Turkey cut supply routes over land Europe sought a route west to India by sea and thus learned to manage the oceans — controlling global commerce.
  • It was inevitable that the United States would win the cold war over Russia in the late 1900s, because allies to the United States could “sell in” to its vast consumer demand set, making U.S. friends rich, while Russian allies might get weapons but end up impoverished. 

And, looking forward, he suggests:

  • The United States will remain the leading world power in the 21st century, because it controls the world’s oceans, due to its fortuitous placement between both the Pacific and Atlantic oceans, thus controlling trade.
  • There will undoubtably be another horrible global war in the 21st century, given the tensions between the rich and poor and the continued belief of humans in their personal nation states.
  • And this war, like all others, will eventually end, and generate new technology systems from the wartime investment that lead to sources of clean power and communications we today can barely imagine, such as microwave energy beamed down from outer space — the most efficient way to capture energy from the battery in the center of our solar system, the sun.

Oceans, human antagonism, and sunlight are all constants, and they will define our future.

So what is the real far-future of media?

Here are our predictions: (1) Environment monitoring, driven by sensors around us; (2) virtual visual overlays that are constantly on, created by the inevitable shrinking of screens until they fit in your contacts; (3) ambient personalization, as you control what you see everywhere; and (4) societal upheaval as we relearn how to interact with other humans in a virtual world.

1. Sensors everywhere — Behind all the Nielsen updates on multiscreen use or Pew reports on social media fads, the truth is information flows only two ways — to us or from us. While media writers remain fascinated with toys, the biggest trend in information flow is the spread of connected sensors in all devices. The iPhone 6 has six sensors built into it — including proximity, motion sensor/accelerometer, ambient light, moisture, compass, and a gyroscope — coupled with GPS features that pinpoint the phone’s location. The Disney Research lab has created a Touche interface that can turn the surface of any object, such as a table or couch, into an input sensor by monitoring vibrations created by human contact. Philips has launched “design probes” that explore tattoos with sensors that disappear based on touch, and clothing that changes color based on your mood.

With sensors everywhere, you will be tracked. Tracking will require control, so humans will use that to personalize their environments (a benefit) while suppressing unwanted third-party oversight (a cost).

When you walk into a room in 2070, the room will know who you are.

2. Screens everywhere — Concurrently, the spread of screens is obvious. At SXSW Interactive last spring, the head of the Consumer Electronics Association, Gary Shapiro, said that within 10 years consumers will buy wall TVs — or whatever we will call high-resolution digital screens that fill an entire wall. Apple has a patent for holographic wall screens that project 3D images to both eyes of each user in the room, without them wearing googles, by monitoring the location of their heads. And Microsoft has just launched a HoloLens goggle prototype that overlays 3D images on reality with a wider field of vision than the (recently aborted) Google Glass. As big TVs grow into walls, little visual screens will also shrink into contacts.

With screens everywhere, you will see whatever image you wish to pull up.

3. A personalized universe — The great media prediction for the next 100 years is that humans will be able to retreat into completely personalized bubbles of vision, overlaying data about others in their contact lens, porting their images into virtual meeting rooms thousands of miles away, and pulling entertainment into the real world around them. Because if everything (from couch to table) senses you, things will recognize your preferences, creating demand for automated content that overlays your reality to meet your unique needs.

From a content creation perspective, this will unlock a gold mine of opportunity for film (hologram) producers, game designers, social media entrants, work/office productivity software, pornographers (always the earliest refiners of visual technology), religions (where belief systems could now be “seen” as reality), and yes, marketers (who will find a way to support this content with some form of advertising over there on the side). This information rush will become fuel for economic growth, with visual services an entire new platform for monetization.

4. Societal unrest — These media trends are our predictions, not Friedman’s, but he has a point that may refine ours: Every evolution in society comes with unintended consequences. The vast rise of visual screens and the concurrent measurement of human personal preferences on every surface device may unearth new social dynamics we cannot anticipate. Will people become more gregarious as they seamlessly are able to beam their avatars into the world? Or will humans retreat into dream bubbles, like those poor enclosed battery souls in the Neo Matrix, asleep in cocoons while they envision a fantasy of greatness?

We cannot predict that. But one thing is certain: The far-forward future contains much more than an iPhone.

Why Google beats Facebook in mobile conversions

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Adweek seemed surprised this week to report two findings — a whopping share of Facebook and Google ads are now being served on mobile, and yet for some reason, both lag behind desktop ads in conversion rates (the % of people who click on an ad who end up completing the desired action, such as filling out a lead form). So let’s break this down:

1. First, both Google and Facebook have much lower conversion rates on mobile than on desktops. Marin Software monitored $6 billion in ads, or about 3 billion ad clicks, and found that while Facebook received 63% of all ad clicks on smartphones and tablets, only 34% of its conversions happened there. Google did a little better, with 39% of all paid search clicks being on mobile and 31% of all purchases made there.

2. Should mobile marketers panic? Well, no. Duh. Mobile devices have small screens and awkward touch keypads, so conversion will be lower, of course. Have you ever tried filling out a web lead form or typing in credit card information on an iPhone? So the overall trend will be for consumers to explore ad information, if interested, on mobile, but then convert on desktops (or even by telephone or physical store) later. This explains why Facebook mobile ads have only a 0.3% conversion rate vs. its desktop ads converting on average at 1.1%.

3. Now, within this race, why did Google still outperform Facebook on mobile conversions? Modality. Google search ads are triggered by consumers who instigate a search for a particular product, so they are already leaning toward conversion. If you punch in “airline tickets to Florida” on your iPhone, odds are you may be thinking of making a travel purchase. Facebook ads, instead, are pushed out to target consumers who have expressed no immediate interest in buying the product — so even if they click, their mode may be one of cursory exploration vs. immediate consumption.

All of this is to say that mobile ads can work very well in reaching audiences with information about a product; marketers should also take heart that most conversions happen subsequently across different channels. 100% of television ads, for instance, have conversions elsewhere — web, phone, retail store visit — because no one buys anything by clicking on a TV ad. (You can’t.) Imagine the histrionic Adweek headline: “U.S. marketers spend $70 billion annually on TV with a 0% response rate! Why aren’t there conversions?” Um, yeah.

Break out the regression analysis

The real solution to cross-channel mobile is to use multichannel measurement, evaluating the responses from a cumulative mix of digital or traditional advertising media. (We do this for clients with a mix of software and statistical regression analysis*; it’s quite fun.) The real story may be those early ads on Facebook spark interest that bring people in to Google search later, just as a TV campaign can build lift across physical stores. All ads are connected. The data trails between them are complex, but can be measured.

So keep making mobile impressions, marketers. Your spouse didn’t marry you after your first impression. This is not to say that first impressions don’t count.

* If you are new to stats, “regression analysis” sounds complicated but the concept is simple: It models relationships between variables, such as X television schedule and Y Google searches, to find with relative certainty how they are connected. (Imagine you go out partying and the next morning have a wicked headache. If you model this with enough parties over a year,  you could say with relative certainty: partying in fact does cause headaches.) Regression analysis is useful in evaluating how different, unconnected media tactics — and outside events, such as major winter storms or competitor behavior — work together to influence responses to ad campaigns. Without this type of analysis, you might make a mistake of shutting off one media channel, such as TV, which in reality could be driving thousands of customers in elsewhere in your marketing ecosystem.

 

Why marketers know if you’ve been naughty or nice

santa watching

There is a story about a jolly old elf who tracks your behavioral data carefully, spies on you even when you’re sleeping, and runs algorithms to assess whether your actions are more positive or negative than social norms. Based on his calculation, the elf will reward you with financial gain in the form of material goods or will deduct from your status by tricking you with what looks like material goods but in reality turns out to be lumps of coal. The system is extensive, including a database of every youth in the world, and is updated annually. If you don’t like this surveillance, good luck: The elf’s privacy policy is unpublished, the observational data cannot be accessed by individuals, and your only recourse to correct misinformation is to send handwritten postal mail to the elf’s address at the North Pole.

Perhaps these childhood stories are why people often freak out about data. The legends of people recording others’ actions, especially those of children, as a form of behavioral modification have been with us for millennium. In Bavaria, the Santa myth is actually split into two figures, a Saint Nicholas who rewards good children with gifts and a devilish, horned Krampus who punishes bad children. Japan has a similar tradition, with an Namahage figure played by men wearing huge, ugly masks, who knock on doors and warn children not to misbehave. Religion is filled with data tracking, starting with God watching Adam and Eve’s naughty apple-biting in Eden, moving on to the widespread but vague idea that somehow all of your actions in your lifetime are being observed for a final post-death judgment. In our deepest beliefs, we perceive there is a connection between what we do, how others record it, and how we will be rewarded.

Which brings us to marketing surveillance 

If you collect enough data to form a baseline for comparing people, you end up with a “database” — and this idea has been around for at least 400 years.  In America in the 1600s, clergy tracked births, marriages and deaths; officials called “tythingmen” would also enter homes to inspect families for observed moral behavior. The first consumer database in the United States was set up in Massachusetts in 1629 to track property ownership. As data expanded, intrusions did too. In the early 1700s, U.S. postal mail was opened regularly to spy on message content.

And then marketers figured out they could make money from all of this information. Database marketing started in the 1940s, first driven by direct-mail marketers (who needed target lists of consumers to mail things to and then calculations to see what worked), later by credit-card companies and banks (who rapidly learned that not all consumers have the same credit risk), and then in the 1990s by Internet marketers who realized they could measure a treasure trove of consumers’ online behavior. While the basic approaches are the same — identify potential customers, differentiate by their value to you and what they need from you, continue to gather more information through interactions, and then customize your response — the cycle time of data marketing increased. Direct mail list updates used to take months; if you purchased a pair of boots at a store in December, it might be March before another company’s boot catalog showed up in your mail. But the Internet enabled a cycle time of identification, differentiation, interaction and customization within days, hours, and now even seconds. Visit zappos.com, look at shoes, don’t buy them, and you’ll see ads for similar shoes on other web sites within seconds. The prevalence of such digital “retargeting” has gotten so rapid that many consumers are beginning to freak out.

The systems are growing ever-more sophisticated. Digital media vendor Rocket Fuel has begun testing device fingerprinting to track consumers by their individual mobile phones; in a recent campaign for Brooks running shoes, it identified the mobile devices of everyone standing along the running route of the New York City marathon, and then later served ads to those devices for running equipment long after the crowds had dispersed to Baltimore, California or even foreign nations. Digital marketers can pick up the IP address of a home’s Wi-Fi connection, and then retarget multiple devices — based on a trigger of one person’s behavior — across the many iPhones, tablets and computers residing in a household. Creative-based retargeting is another digital approach in which banner ads or online videos can be retargeted based on a single ad appearing on any web page, whether or not a consumer clicks on it; for marketers, this provides the advantage of being able to “lift” a publisher’s audience, such as a reader of WSJ.com, and chase that individual around the web later with a pretty good idea of their demographic profile based on the original reading material.

Consumers are rebelling, so what is the balance?

Not everyone is happy about this. Early in 2014, a survey by Truste, a global data management company, found that 74% of Internet users had increasing worries about the use of online data. While only 38% expressed worry about government surveillance, 58% said they had concerns about business use of their personal information. Beyond simple consumer annoyance, the growing use of online data may actually be harming marketing results. 83% of survey respondents said they were less likely to click on an online ad due to privacy concerns. In a deeply ironic circle, the data collection sophistication used to make online marketing work better may actually be depressing response rates.

Smart marketers are recognizing this and beginning to tone down the creep-factor of retargeting, using tactics such as impression caps, dayparting, ad creative versioning, and opt-out options to allow Internet users more breathing room before they are inundated with braying offers.

Data tracking will not ago away, because it is how all of us assess the outside world to calibrate our actions. Marketing in particular is all about treating different customers differently, as the great Don Peppers once wrote — after all, if you have unique needs, you should receive messaging about products or ideas that appeal to your interests, and marketers who play this right will gain greater results from their advertising investments. Just as parents and Santa Claus watch over children to assess behavior, other people will always be watching you too. The practice isn’t creepy in and of itself; what has gotten scary is the instant cycle time it takes someone else to pass their judgment. For our clients, we recommend looking beyond just response and conversion rates to also assess the real end customer experience. You’re trying to share information that benefits the customer, so pace yourselves, people. Everyone likes an elf who brings presents, but we all get nervous if he’s watching us too much.

Understanding multiple device use: Meshing, shifting and stacking

woman smartphone 2

A young woman plops on the couch, turns on the TV, and as her favorite reality show casts a blue glow across the living room … she also boots up her smartphone to check on her friends in Facebook and … also swipes open her iPad to play Words with Friends.

All at the same time.

Marketers who want to reach a consumer on all devices concurrently often struggle with understanding how these touchpoints interconnect. The biggest challenge is consumers often use all these devices for different things. While TV is on for video entertainment, mobile devices are used more often for playing games or participating in social media.

Behind this is the fast-growing trend of, yes, people using mobile gadgets plus TV at exactly the same time. BI Intelligence just reported that 45% of all smartphone use by U.S. consumers age 16-44 is done with the TV on, as well as 37% of laptop use and 55% of tablet use. If mobile is ascendent, TV seems to be its constant companion.

To address this puzzle, we’ve searched for frameworks on how people actually use different screens at the same time — and found the best from Monique Leech, an analyst at global research firm Millward Brown. With a hat tip to Leech, here’s our own interpretation of her findings: there are three core ways people use multiple devices and each requires a unique marketing strategy.

Meshing: ‘Hey look, tennis is on ESPN. Let’s read tennis.com too!’

“Meshing” is when people use two or more devices to watch directly related content. For instance, when Jane Smith was watching the Super Bowl on TV a few years ago, she was surprised by a blackout in the stadium lights, and turned to Twitter on her handset to chat about it. Oreo famously leaped on this moment by tweeting “You can still dunk in the dark,” and Jane would have laughed. Marketers who want to leverage “meshing” behavior can either target integrated advertising content, such as a buy on a weekend sports event and a concurrent media buy on ESPN.com, or deploy “real-time marketing” responses on social media during major awards shows or sports events.

Alas, meshing is only part of the story, and typically not the dominant form of concurrent media use. Putting an ad on Tennis.com to match a pro tennis tournament on TV at the same time may not always be the best approach. The next behavior, “stacking,” explains why.

Stacking: ‘Hey look, Walking Dead is on TV. But let’s chat on Facebook too!’

“Stacking” behavior is different, and more common, in which, say, James Smith is watching “The Walking Dead” on television while simultaneously chatting with buddies on Facebook via his iPhone. Stacking means adding different content from one device to unrelated content on another media device, all at the same time. Numerous studies show this is the dominant form of concurrent device usage. Salesforce.com recently monitored 470 consumers for a month and found they spent an average of 3.3 hours on smartphones per day with the top activities being emailing, searching the Internet, or social networking. Tablet behavior was similar, with social networking and reading at top. What’s most interesting is so few reported watching TV-related content simultaneously on mobile gadgets, it didn’t make the list.

For marketers, this means you can’t just buy ads on CNN.com to align with viewers watching CNN on TV. Instead, you must explore audience targeting across content platforms at simultaneous times, to reach consumers on Facebook or in a game while they watch a show on television.

Shifting: ‘This content is fun, but I’ll pause now and continue it later.’

The third form of multiple device usage, “shifting,” is one of shifting from one gadget to another while pursuing related content. This could be as direct as watching part of a Netflix movie on a tablet and finishing it on TV, or more nuanced such as researching a trip to Italy on a smartphone and then completing the reservation via a computer browser window.

This “shifting” device behavior poses two challenges for marketers, in targeting and measurement. For targeting, it requires understanding how different media touchpoints may be used in sequence for a consumer to learn about, explore, consider, and then consummate a desired action — and for measurement, it means the combined impact of all these channels must be evaluated not in silos, but by their cumulative lift in results.

Three puzzles, not one

The punchline is each type of behavior poses unique challenges. You can try to intercept consumers who mesh their related content, but be aware they may actually be using different content at the same time. You can also try to reach consumers as they stack different content on different devices, but to do so you’ll need to be more clever in how you coordinate your ad messages. And for consumers who shift across devices pursing related content, you’ll need expert measurement systems to understand this pathway and how to influence it.

After mobile: The looming future of screens everywhere

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Everyone is rushing to mobile and marketers want in. Facebook will clear $8 billion in mobile ad revenue this year, and Google will make $12 billion. Both have more than 1 billion users with access via mobile gadgets. Mobile, for a decade the Great Pumpkin of advertising, always unseen but about to arrive, seems to have finally emerged from Linus’s pumpkin patch.

But what if something bigger is looming behind today’s small-gadget lovefest?

That bigger thing may be digital screens, projecting images from any angle, wall or tabletop. At SXSW Interactive this spring, on a panel where Robert Scoble was still wearing his soon-to-be-discarded Google Glass, Gary Shapiro, chief executive of the Consumer Electronics Association, made a bold pronouncement: In a few years, he said, television screens will be as big as walls. Flat-panels will be everywhere. The corporate big-wigs will no longer be the woman or guy in the corner office with a window view, Shapiro said — instead, they will clamor for an office with a huge wall to install a massive digital screen.

Shapiro should know; his association is charged with researching consumer electronics trends and manufacturers’ product pipelines, so he skates to where the puck is going. First, the price of screen technology is falling. A 40-inch flat-panel TV cost $3,000 in 2003; the tag fell to $1,600 in 2007 and today, the same screen costs $330 at Best Buy. And second, screens are getting larger. This holiday season Vizio is selling an 80-inch TV for $2,499, the same cost of a panel half its size in 2005. Follow the trend line, toss in a bit of Moore’s law accelerating production, and if we can buy a digital screen that is 6-feet-8-inches diagonally wide today, by 2022 we’ll have screens that fill a living room wall.

But there is more here than just bigger TVs. The big story is the proliferation of screens and their corresponding input devices: the technology for making objects glow is spreading fast, and soon turning surfaces into screens may be as easy as painting an object. The image above shows glowing paper recently invented by Rohinni of Austin, Texas. Sony is testing watches made from flexible e-Ink paper. The gym I go to has a television image embedded behind the locker room mirror. And Disney’s research division has tested a Touche system that can turn any physical object — a tabletop or your sofa — into an input sensor that could control screens. Soon, fall asleep on your coach, and when your head hits the pillow your furniture could communicate to your home electronics to turn down the TV volume and dim the lights.

If the idea of paint that turns an object into a display screen seems science fiction, consider Chamtech Enterprises recently invented spray paint that turns surfaces into Wi-Fi antennas.

What this means is advertising communications in the near future will have far more screen options than the TV, PC or mobile gadgets most marketers are so obsessed with today. The myth of TV dying is just that. Mobile is rising fast, yes; Business Insider just published a fascinating report forecasting that mobile advertising dollars will make up more than half all digital marketing spending within four years, and noted that this year for the first time the number of minutes a typical consumer spends per day on mobile has finally eclipsed TV. (Note, television still captures more than 4 hours of viewing per person per day; the mobile devices are additive, not subtractive, in how people take in information as you “stack” your inputs between the big TV screen far away and gadgets nearby in your lap.)

Large screens offer a different experience than mobile, one more conducive to marketing. They tie into the third sphere of human psychological personal space, the distance  of 4 to 12 feet used for millennia as the story-telling field, the news your ancestors received from a campfire, a relaxing lean-back intake that we still enjoy in movie theaters or in front of basement TV sets. Personal space, as we’ve noted before, actually has three spheres of distance; intimate, up to 18 inches away; personal or working, 18 inches to 4 feet, the distance from our eyes to the tools in our hands; and social or news gathering, from 4 to 12 feet away. Mobile gadgets fit into the closest intimate field; laptops and computers and tablets the second working sphere; and large-panel TVs the third social sphere. For marketers, the larger screens in fields 2 and 3 provide much more room for exposition and storytelling, and consumers are more comfortable with unexpected ad intrusions in those social fields since they are not as close as our most intimate space. This core psychology is why ads don’t work well in mobile handsets but still do well in TV and computer browsers.

Take the long view, and mobile and its social halo could be a passing fad with a finite shelf life. Consumers have been mesmerized by such communication glitter before — telegrams, CB radio, long-distance telephone calls (remember them?), Second Life — only to see such manias fade. We already have glimmers that certain aspects of mobile may be declining, as tablet sales growth has stalled within only a few years of the iPad launch. Social networking, the communications bubble of the past five years, was recently dismissed by a Forrester report as a lousy form of marketing now being displaced by plain old banner advertising on Facebook and Twitter. Smartphones have turned into Star Trek communicators that do everything. But at some point, people may look up and see a new world of larger, proliferating screens.

When digital screen technology becomes so cheap that any object can be transformed into a glowing video image, the world of communications and advertising will unfold into a realm of infinite possibility. The challenge for marketers then may not be how to intercept consumers, but rather, how not to interrupt them too much.

What the Uber-BuzzFeed fight tells us about location data

Uber hero shot

Why is your location more necessarily a secret than your financial records, past purchases, or the name of whom you married? We don’t freak out when a direct-mail catalog arrives for winter jackets three weeks after we bought a similar coat in a store, somehow cool with one retail chain selling our buying habits to another, but if a company tries to follow where we are in space and time, we go ballistic. To understand this paradoxical conundrum, let’s visit the current fistfight erupting between ride-sharing service Uber and tech’s leading journalist gossip site BuzzFeed.

How Uber works

If ever a flashy tech upstart seemed ripe for a backlash, it was Uber. Uber’s business model is brilliant: it has upended the taxi and limo business with a clever app that creates a multi-sided market between people who seek a car service and drivers willing to pick them up. If you need a ride, click on the Uber mobile app and you can select luxury cars in your area (Uber works with Google Maps location data); if instead you want to make money, buy or lease a nice car and Uber will beam you customers ready to go.

Uber sets prices for fares and extracts a 20% cut, but the cost of the ride is often well below that of car services. Perhaps because Uber launched near the peak of global recession in 2009, and helped riders save money while anyone could use it to bootstrap a job, it’s scaled rapidly to $18 billion in valuation and into 45 countries. Google has invested $258 million. Uber is testing new courier services and may soon compete with FedEx. Business Insider reports Uber is now taking in $1.5 billion a year in revenue. What’s not to like?

Well, first the name — Uber does sound like a douchey private-school kid’s idea of a travel service for rich people. Second, the top execs often act like bad boys in the press — Uber’s CEO cracked a joke to a GQ reporter that the service was so good at picking up women, he calls it Boob-er. And third, Uber’s head of business development recently got in a verbal fight with Silicon Valley reporter Sarah Lacy that has led to claims he planned to spend $1 million to hire opposition research teams to dig into Lacy’s personal life and spread dirt to discredit her.

A reporter got mad, then Scoble did too

We admit, that last claim was a doozy. That fight went like this: Lacy, a sometimes caustic reporter who rose to tech fame after repeatedly interrupting Mark Zuckerberg in a 2008 stage interview at SXSW, wrote a scathing piece calling Uber a bunch of asses for running ads in France promoting sexy, barely clothed women drivers (apparently unaware that sex is the basis for much of the advertising in France). Uber executive Emil Michael, incensed at what he perceived to be unfair journalism, vented about Lacy’s report at an off-the-record dinner event to BuzzFeed’s editor Ben Smith, and, perhaps fueled by a little wine, suggested that he would spend money to get back at Lacy’s reputation. Smith, who said he was unaware that dinner conversation was supposed to be off the record, immediately ran a story portraying Uber’s Michael as plotting dirty tricks against reporters. USA Today reporter Michael Wolff, the guy who got BuzzFeed into the dinner event, was there and believes Michael was just venting after a glass of vino, wrote an objective piece trying to calm everybody down … but nobody listened.

Silicon Valley and Twitter went ballistic in disgust, starting a drive telling people to delete their phone’s Uber apps; and tech guru Robert Scoble then posted on Facebook that Uber’s CEO should now resign.

Within this bouncing ball of scandal was the little-known news that investors in Lacy’s PandoDaily and Smith’s BuzzFeed are also apparently investors in Uber’s main ride-sharing competitor, Lyft. But never mind. Uber, a service designed by allegedly crass Silicon Valley boys to give the tech elite rides in fancy cars, has entered a PR nightmare realm where it is allegedly trying to crush a caustic reporter.

Expect the David Fincher film adaptation to win the Oscar in 2017.

The more interesting Uber location-tracking story

Behind all this back-and-forth over unfair sexism vs. bad reporting, Uber also has been criticized for a data-tracking feature in which its management can “spy” on the location of any rider. This story, also from BuzzFeed, tells of a reporter taking an Uber car to meet an Uber executive, who looked up from his phone when she arrived and said he could tell when she was coming by watching her on a map. (With Uber-esque hyperbole, the tracking feature is called internally “God View.”) “There you are,” he reportedly said. “I was tracking you.” BuzzFeed suggested this was a critical abuse of consumer privacy.

Now this is interesting. What are we to make of an app company based entirely on geo-location data about cars and riders tracking, well, where those riders in cars go?

We pose this question seriously, because if you think about it for a moment, location data is just another point tied to a consumer profile similar to his or her payment history or product purchases or interests. Imagine if a company executive in charge of finance about to meet a business customer looked up that customer’s track record of paying bills on time, to see if he faced another credit risk. Would that be a breach of privacy?

Or, what if you keep a file of your business partners’ interests to remind yourself how to act more personable in your next meeting (“Hey, Jane, great to see you again — how are those golf lessons you told me about?”)? Are you breaking a rule of privacy?

Have you ever snuck a peek at someone’s LinkedIn profile? Is that a bad thing?

Even Steve Jobs apologized about location

Information about human geography just feels different, and when companies play with it, they often get burned. In 2006, Google launched its Street View feature that shows photographs from the road level in its Maps program, and consumers freaked out; one Google photo caught a poor man leaving a strip club, and the rest of the online world wondered, what if that were me? And in 2011, no lesser an entity than Steve Jobs was forced to apologize publicly for an Apple iPhone feature that kept a 12-month history of a user’s locations. Apple said the tracking feature was used to more rapidly pinpoint location than GPS, thus making all those iPhone apps work more quickly, but consumers fretted the data stream could be assessed to learn dark things about anyone’s whereabouts.

The irony about such concerns is location data may eventually become the most useful thing you can give away to get better service, deals, or predictive offers. Sales of tablets, hot just two years ago, are plummeting while smartphones — the smaller devices you carry on your body always — continue to skyrocket. iPhone’s move to larger screens shows that true, single-device mobile functionality is what people wish to have on them, and for future communications to work, those devices will need to track where you are. If you don’t want your mobile screen filled with unwanted messages, location data could provide you with offers tied to your exact location in the mall during holiday shopping — a useful feature, but only if you give that data away. If you don’t want to be stuck in traffic, you have to give an app permission to ping your phone when the highway ahead shuts down in time for you make a quick exit — again, requiring location data be monitored for you to access that powerful utility.

For some reason, information about where we go or where we went just seems more personal. Perhaps giving away the interests that lie within our mind seems abstract and somehow unthreatening, while telling the world where our body resides brings up atavistic fears that our flesh might be destroyed.

But the future of technology is mobile. If we want to catch that ride, we’ll have to give away our location.

Apple Watch isn’t a gadget. It’s a desperate loyalty program.

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The most unremarked thing about Apple’s launch of its new Watch and larger iPhone 6 models is how these devices were required to save Steve Job’s company from the train wreck it approached in sales. Unit sales growth, as measured year over year, was plateauing for both the iPhone and the iPad — creating an enormously dangerous position for Apple as investors began sizing up Google, Samsung and even Microsoft mobile device alternatives. Investors want annual growth — because if you can’t beat 8% or 10% growth year over year, you might as well put your funds in a Vanguard index — and Apple was not delivering.

Yes, both the iPhone and iPad were smash hits, and total sales were inching upward. iPhone sales skyrocketed from 270,000 in the first quarter of shipment (3rd quarter calendar year 2007) to 35.2 million in the April-June period of 2014. But iPhone global unit sales growth, measured as units bought in one year over the prior year, had plummeted from 268% in 2008 to a measly 13% in 2013. iPad sales growth cooled even more rapidly, from 174% in 2011 over year prior to only 13% in 2013 — basically following the same  stall of the iPhone, but in only three years instead of the iPhone’s five.

Did you catch that? iPad sales growth stalled in almost half the time as that of the iPhone, despite the numerous tablet design upgrades. Growth was getting dangerously close to the 10% threshold where you might push your investment over to … anything. Yikes.

The scary thing for Apple is all of this was driven by a basic form fact: glass tablets are  becoming commodities, making the brand that designs them less meaningful. The iPhone had a good head start in the mobile-glass-pane business; the first iPhone model officially went on sale in June 2007, two full years before similar touchscreen Android-based  HTC (Hero) and Samsung (Moment) went to market. That explains why the iPhone held on for so long, because for the first two years no one was there to challenge it. But today, screens are everywhere. Amazon is practically giving away its Fire phone.

So, will the iWatch and larger iPhone 6 screens save Apple from stalling in a glass panel world? If design alone were its strategy, absolutely not. No matter how much we love Jony Ive, his miracles of design tend to fade quickly (Are you still enraptured by the parallax features of the iPhone 5 operating system? Didn’t think so.). So Apple is shifting strategy to one of multi-device and information-platform entanglement. The vectors of desire connecting you to your future Apple Watch (you won’t buy one now, but you know maybe you want one next year), the mobile systems’ new health and home control centers, and the larger units of the iPhone 6 models will accelerate Apple sales of commodity flat touchscreens in the near future. Apple wants you to regret leaving any one shiny piece of its ecosystem, and by combining the pieces together more tightly, your switching costs (what you give up if you leave) go up. The Apple Watch, really, is a simple loyalty strategy.

But only for the near future. The competitive cycle is accelerating. Smart watches can also be emulated, Samsung is good with glass, and Google has an advance on both map locations (required to make wrist devices most useful) and home intelligence systems (having already bought Nest, the innovative thermostat/alarm/home monitoring company).

The tagline for the first Apple iPhone was “this is just the beginning.” We wonder if Apple was referring to its competition.

5 things you can learn from Twitter’s new analytics

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Whether you’re a brand curious about how your tweets are faring or an individual longing to gaze into your social-media navel, Twitter’s opening of its analytics dashboard this week is sure to excite you. Twitter first launched Google-esque analytics to its advertisers and verified users back in July, but now, anyone can go to the dashboard site to see how far and wide your tweets go.

For users new to Twitter analytics, the results are surprising:

  • First, a negative: Fewer people are exposed to your tweets than you might think. A Twitter account with about 10,000 followers will, on average, have each tweet seen by only 300 to 500 people. This intuitively makes sense, since obviously not everyone is using Twitter at all hours of the day, and your 9 a.m. missive about coffee is buried in the stream by the time another user logs in an hour later. Still, Twitter reach is less than expected.
  • Second, a positive: “Engagement rates” are through the roof. Twitter defines “engagement” as a user taking any action on your tweet, such as clicking on a link, favoriting it, retweeting it, or replying. While the standard interaction rate on normal banner ads is about 0.07%, Twitter interaction rates hover around 2.5%. This appears to be a decline from a few years ago (in 2011, Twitter boasted on its blog that brand interaction rates were 3-5%), but 2.5% is still amazing — users exposed to your tweet are basically 36 times more likely to take an action than if they saw a digital banner ad.
  • Third, click-through rates are also very high. Using my personal account @benkunz as an example, from Aug. 1-28 I sent out 109 tweets, of which 34 had links. The tweets with links generated a 1.70% click-through rate based on 330 clicks against 19,380 actual impressions. More than two-thirds of my Twitter interactions were clicks, and that CTR is 24 times higher than the average banner ad response rate. The caveat here, of course, is I’m not a brand trying to sell you anything, just a human trying to be interesting, but that response rate bodes well for any brand with an authentic, meaningful content stream on Twitter.
  • Fourth, if you want your tweets shared: News tied to the zeitgeist of Twitter chatter works. In our non-scientific-but-super-insightful study of what tweets have the highest interaction rates, missives related to current events usually have 2x or 3x the average Twitter interaction rate. In the past few weeks, our tweets about Matt Damon doing something innovative with the ice bucket challenge, Starbucks redesigning its stores, or Robin Williams being photographed as a mime in Central Park in 1975 had much higher interaction rates that our supposedly smart asides on life, liberty and the pursuit of advertising. News, on Twitter, sells.
  • Fifth, timing matters. We found the highest interaction rates on Wednesdays, Fridays and Saturdays, and the lowest on Sundays and Mondays. Apparently Twitter users back away from social media on Sundays and are too buried in work on Mondays to spend much time interacting.

Wisely, or perhaps sadly, Twitter only allows you to see analytics on your own  tweets. As of now, you can’t view the Twitter activity of Pepsi or Robert Scoble to parse how big brands or social-media celebrities are faring with their own Twitter messages. But if you want to examine your own tweets to see what makes people respond, the dashboard is an excellent resource.

Of course, the other option is you could continue to just be yourself online and share real, authentic insights and news not worrying about what other people think. Brands and humans, we’ll leave that up to you.

Why can’t advertisers get personalization right?

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Deep near the bottom of today’s NYTimes story on Facebook — “How Facebook Sold You Krill Oil” — a marketing manager for Reckitt Benckiser, a company that sells fish-oil pills, says “Facebook is a fantastic tool for doing personalized marketing at scale.” The NYT case study goes on to explain how the advertiser in question is able to pinpoint-target different female demographics, users of other fish-oil products, and even “lookalike” profiles of individuals with similar interests. The Facebook campaign worked and fish-oil sales went up.

Yet all this is outbound targeting from the marketer’s perspective, similar to really good archers being able to fire arrows into the chests of different consumers with different needs in a crowd. It’s not personalization.

True one-to-one personalization was described by Don Peppers in the 1990s as an iterative process in which consumers are identified, differentiated on both their financial value to a company and need from a company, interacted with, and then given customized services or communications. The most crucial step was to make all of this a feedback loop, a “learning relationship” in which a marketer grows ever more sophisticated about anticipating individual needs over time.

It is this anticipation of needs that creates loyalty, Peppers said, because once a consumer has trained one organization to anticipate her wants, she would face switching costs going somewhere else. The classic example of marketers who actually pull this off are local coffee shops who see you walk in and immediately warm your specific version of coffee and breakfast muffin without you asking. You skip the line, you save 3 minutes, you’re individually recognized, and so you don’t want to go anywhere else. One-to-one personalization, evolved as a learning relationship, becomes almost like a strong marriage — where all the prior history of learning enhances the bond between consumer and brand.

Now, let’s revisit advertising.

Today, I checked my ads for Facebook, and saw this: retargeting ads from a hotel chain I searched two weeks ago; a technology course apparently inspired by an online friend who works in Web services; a tiny chip-wafer thing I can attached to objects around the house to “never lose them again”; and an ad for a local plumber. Personalization score, from 1 to 100: About a 5. At one point, I was interested in the hotel.

Twitter was even worse. I got two ads for a Red Bull music festival; a local Applebee’s ad for a frozen fruit drink; and a promotion for small-business insurance. Personalization score: 3. Maybe, just maybe, we’ll go out tonight to a restaurant, but I don’t like frozen fruit drinks.

All of these ads express a knowledge of my personal needs about as sophisticated as the  direct mail lists that trigger our Pottery Barn catalogs. I am a target with some general color descriptors: So, go ahead, fire your arrow into me.

Product-focus creates a personalization failure

The problem that personalization faces is most marketing engines base it from the marketer’s point of view (since the guy with the ad budget is calling the shots). This creates a data collection model centered on a product, which inherently has vast gaps. A home services company will build a CRM system to include lots of information about an individual prospect’s interactions and a customer’s service records, but that data is only germane to the product. Jane Smith may have a forecast lifetime value of $20,000 in utility bills over 10 years … but the data systems don’t recognize that she is a mother with three daughters interested in mountain climbing and kayaking. The utility frankly doesn’t care.

All of this is driven by economics: individual companies want to store and analyze only data related to their product sales; social networks want to release only the data needed to target a product to a customer; and a truly customer-centric personalization campaign would require coordinating millions of potential product offers, likely from competing brands who have little incentive to sell services outside their own scope.

In simple terms, because the varied needs of a customer would require unified data and services that cut across brands, until an ecosystem of brands has an incentive to share data and revenue, personalization will not happen. What this gives us is ads on Facebook for fish-oil pills based on a rudimentary understanding that you are friends with someone who takes vitamins, but no anticipatory personalization that informs you of where to take your wife to dinner on the anniversary of your first college date.

The customer loses out

What would it take for true personalization to arrive? A few companies may come close. Amazon and Walmart, which house millions of product SKUs, have incentive to use data to anticipate your needs and the service offerings to potentially benefit from a vast range in sales. Twitter, which conceivably could parse your real conversations to build better profiles of your mind than simple Facebook stated interests, could truly personalize its #discover newsfeed to create content germane to your interests.

Facebook might do true personalization, if it could somehow depress ad offers that had nothing to do with your interests. Unfortunately, Facebook wants the billions from the unexpected plumber ad or computer technology course offering that sprays you despite your disinterest. Most Facebook ads are priced on a cost per click, rewarding Facebook if a user clicks on the ad, but not worrying about the 99.97% of users exposed who don’t want to respond. The economic model focuses on what advertisers catch, and ignores the adverse impact of what they spill.

Television is in the same boat. The typical U.S. consumer receives 6,600 spots per month, based on 4 hours and 34 minutes of TV viewing per day. You may want 3 of those products, putting your “response rate” in the 0.05% range, about the same as responses to online banner ads. If TV truly personalized ads, it might have to forego 99.95% of its advertising inventory — and lose billions of dollars a year by removing all that unwanted communications bloat.

Truth is, personalization will never arrive until a giant platform is able to match transparent data on individual needs with a vast consortium of products and services that can be personalized in promotions without friction from marketers demanding that their product appear next in line. Marketing would have to become a true marketplace, and product-makers would have to cede their product focus to a willingness to give consumers what they really want — even if that means the brand down the street wins instead of them.

Which is why, tomorrow, you’ll see more unpersonalized ads on Facebook for fish oil. Today’s economic incentives decree that unpersonalized ads are the way to go.

Photo credit: Ruurmo

Mobile pushes young adults to shop at the mall. But why?

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Well, this is interesting. A recent survey found that mobile devices make young adults 2x more likely to buy something at a physical retail store — but only young adults. Why?

In May Gallup asked 1,505 U.S. adults if mobile devices such as smartphones had boosted their in-person retail store shopping. Most adults over age 30 were ambivalent, with about 20% saying they shopped more as a result of iPhones and tablets, a similar 20% saying less, and the remainder saying no change at all.

But young adults were different. 29% of adults 18-29 years old said mobile had increased their in-store shopping, while only 15% said mobile had decreased it. That’s nearly a 2-to-1 edge for mobile pushing youth to the mall, a whopping finding. What gives? Why would mobile communications push young people to stores to buy, while most other adults ignore them?

Here are four possibilities:

1. Younger adults might have less access to credit cards, so mobile necessarily pushes them to physical stores. Gallup floated this idea in explaining its study, but it’s unlikely — since 60% of college seniors now have a credit card vs. the 70% U.S. adult average, the slight difference would not account for the 2x response in youth to mobile influence.

2. Younger adults spend more time at the mall, so mobile is more likely to increase their shopping while there. Hm. Possible. A recent tracking study of malls around the United States found that 34% of visitors were adults age 18-24, while that same demo makes up only 15% of the U.S. population. If young people are already there, mobile would be likely to get them to spend in stores.

3. The primary use of mobile is to enable social behavior, and young adults are more likely to think of shopping as a social experience. Teens, for instance, go shopping 75% of the time with friends, and 64% of adults age 18-24 go to the mall with someone else vs. being alone (vs. 55% among all adults), according to a 2009 Arbitron study. This confluence of mobile-social-shopping behavior among youth and young adults would make mobile communications more likely to drive retail purchases.

4. Youth are more open to mobile or social communications related to commerce. This conjecture is hard to prove, but another recent Gallup study did find that young adults were more open to social media influencing their purchase decisions. 43% of Millennials said social networks spurred their commerce, vs. only 34% of Gen Xers, 26% of Baby Boomers, and 16% of the oldest adult demo that Gallup kindly calls Traditionalists. Social media is not exactly mobile, but it’s close enough we can surmise youth are also more open to mobile messaging that drives shopping.

We suggest the correct answers are 2, 3 and 4 above. Youth go to the mall. Mobile is social. And social influences young adult shopping. This is important news for marketers who are struggling to reach the future generation of shoppers, since humans tend to take their media habits with them as they age.

If you’re wondering why Amazon went to the trouble of launching its own smartphone, or Facebook is so interested in pushing ads into the main mobile Newsfeed, Gallup tells you why.