Monthly Archives: April 2012

Why Facebook should sell ads outside of Facebook

Back in January I noted Facebook has a frequency problem — the basic fact that every Like happens only once, and one touch is not enough to spur consumers to action. In advertising, frequency is the number of times you reach a person with a message, and in study after study a frequency of 3 to 4 ad impressions per week is required to break through resistance to get people to respond. This typically maximizes the “response rate curve,” as shown above. So the basic problem with Facebook “Likes,” the one click of a human saying she digs your product, is that it is only one real impression. What happens next?

Which brings me to the solution — Facebook should sell retargeted advertising outside its Facebook ecosystem. This wouldn’t be hard to do; Facebook would simply tag the computer of any user who “Likes” something with a cookie, and then via partnerships with ad networks or direct bids into ad exchanges, Facebook would enable the serving of downstream ads against that user.

This would provide an incredibly powerful new ad format, combining social media engagement (one Like) with multiple followup contacts (banner ads served across the Internet to maximize frequency) to drive real response (which is not a silly “Like,” but rather when someone actually buys your product).

But it would mean Facebook would have to admit users do things outside the Facebook ecosystem.

The downside is this would remove the perceived brand imperative that you must build response mechanisms inside Facebook, just as 10 years ago you had to have keywords inside AOL. Sad. Because Facebook serving retargeted ads outside of Facebook would work beautifully. What do you say, Facebook, want to give integrated advertising a try?

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

The design that may keep the web alive

Is the web dying? And if so, will something else replace it?

Pew has a new report out that goes beyond the usual “99% of Americans use mobile phone” surveys to interview experts in digital media about whether the web is going away. For years now, you see, prognosticators such as Josh Bernoff and Chris Anderson have suggested the 1990s web browser interface is being killed by one-touch apps and a splintered gadget ecosystem.

Back in March 2010, I wrote in Businessweek that yes, Apple, Amazon and Google were deliberately selling iPads, Kindles and Droid phones that won’t talk to each other, so they can ensnare their users in content sales. I noted:

A battle looms, and it’s not about selling new gadgets — it’s about using devices to lock you into a content ecosystem. In an ironic evolution of the World Wide Web that once promised consistent access to all of the globe’s information, corporate giants are now striving to wall off sections of content and charge you for access.

So back to Pew’s report. There is huge evidence the “appification” trend will continue; by 2016 there will be 10 billion mobile Internet devices on the planet, 1.4 per human, and Apple and Google mobile audiences have downloaded 35 billion apps to date. Most damning toward the old web, Pew notes that by 2015 sales of smartphones and tablets will outpace those of computers by 4 to 1. It sounds like the web must fade, and that Steve Jobs was right when he compared computers to old dusty pickup trucks, once favored but now replaced by shiny new tablet wheels.


Something else is going on, something that may keep the web alive. If you’ve played with Google+ or Twitter recently, you’re seeing fluid interfaces that must make Microsoft’s software dev teams uncomfortable. Web page designs are morphing into app-like ease. Apple’s latest operating system captures swooping trackpad gestures that merge computers with tablet UX. Microsoft is launching a new OS that combines old Windows folder hierarchies with tablet touch features.

Software and web windows and one-touch apps are becoming all the same thing.

Paul Gardner-Stephen, a telecommunications fellow at Flinders University, told Pew that “HTML5 and other technologies will continue to blur the line between web and app, until the average end user would have difficulty assessing the meaning of this question.” William Schrader, founder of PSINet, said something even smarter — that apps eventually will recognize screen size and slide into large or small formats accordingly.

But the biggest idea for a web that survives came from Harvard professor Susan Crawford, who noted “apps are like cable channels — closed, proprietary, and cleaned up experiences … I don’t want the world of the web to end like this.” Consumers may rebel when they realize they can’t play Flash video on Apple mobile devices because Apple wants to sell them videos its own way.

We can already see signs that the closed app world is reopening. Amazon offers a free Kindle app on Apple iPads, and Apple accepts the app because the utility of allowing the huge Amazon giant in outweighs the dissatisfaction of grumpy tablet consumers blocked from buying readable books.

Apps may be forced to open up, because open systems create better experiences for consumers, and that stimulates demand.

If you step back, today’s closed system designs are pretty gnarly. Twitter redesigns itself constantly, and it’s a mess. (Great, this week you type your tweets into the left side of the layout!) Every app unfolds with different visual standards. Dan Lyons, the brilliant mind behind Fake Steve Jobs, once wrote in a post called “Does nobody care that Facebook looks like ass?” that “I look at Facebook and I feel the way I imagine I.M. Pei must feel when he looks at some giant public housing project. You just sit there going, Why? Why do this? Why make it so ugly when just for a tiny bit more effort you could make it, if not beautiful, at least not horrific?”

Walled gardens and poor UX designs are inefficient. Inefficiency is the signal for competitors to do something new to gain business. So in the deepest of ironies, the profit motive will keep the web open and alive. Something new will emerge, and it will look a bit like the old web and somewhat like a polished app. It will fluidly fill screens of all sizes. And it will be beautiful, because the ugly competitive forces of our world demand it.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Image: Linda Cronin

The false dichotomy of engagement vs. broadcast (or why Pepsi sales are down)

To understand why Pepsi has now fallen behind both Coke and Diet Coke in sales for the first time in decades, let’s examine the tradeoffs between two communication choices: inbound customer engagement and outbound advertising messaging.

We’ve explained the Information Ecosystem before, a simple model showing how information flows (inbound or outbound) to any group (of a few or many). Spend 10 seconds examining the model above and intuitively you’ll see that communicators — advertisers, marketers, organizations, husbands and wives, parents and children — have four tactics at hand. You can broadcast outbound to many; pull research in from many; personalize outbound messages to a few, or engage in inbound communication from a few. Four paths, four tactics, all with their own value given your objective and audience composition.

The biggest mistake marketers make is falling in love with only one tactic. In the 1950s, broadcast was king, in a world where only outbound advertising at scale was possible and communicating with small groups or individuals was too costly. In the 1990s, some companies embraced 1to1 personalization as the future of all communications, eschewing broadcast advertising empowered by new databases that could record preferences of individual customers. Today, in 2012, many companies buy in to social media gurus who shout engagement is the new panacea.

But is engagement really at odds with broadcast messaging? Of course not. Both play a different role on the same field:

The colored circles on the Information Ecosystem above show the debate that often occurs in marketing boardrooms. We must do one or the other, the arguments go. Some see a world where consumers still watch 5 hours of TV a day and commute in cars for 2 hours, so mass-media advertising must work. Others see the shift to Internet, laptops, text, smartphones, apps, social networks and tablets, and think digital-based engagement and word of mouth propagation are the solution.

The truth is, for most companies, both points of view are right — because the dynamics coexist with each other.

When to pick engagement or broadcast

Engagement is a valid tactic if a few members of your audience (say, consumers) have higher value to you or influence over their peers. This variance was called by Don Peppers in the 1990s a “customer value skew,” and the steeper this skew, or range in difference among customers, the more sense it makes to treat different customers differently.

In financial services and airline bookings, where some customers bring much more money to the table than others, engagement makes sense; but for commodity products, or services that appeal to broad swaths of consumers, engagement is a tactic best reserved for emergency situations, a “Motrin Moms” meltdown where a company must be ready to swoop in if negative attacks scale rapidly. If your customers are really different amongst themselves, or have potential to be wildly influential, engage away; if not, downplay this tactic.

On the other extreme, broadcast push such as advertising is best for companies trying to send a message out to masses of customers who all may need relatively the same thing. This doesn’t mean everyone will want your product; but it does mean that even if you are targeting 5% of the population, the needs within that group are similar enough that outbound broadcast can stimulate demand. Education, awareness, interest, consideration are all dynamics driven by advertising to the masses, and the seeds for downstream word of mouth. Like a spotlight, you can target the outbound communications to small groups and do so with efficiency; but there is nothing wrong with pushing messages out to the masses since it is one of four valid communication pathways in the overall Information Ecosystem. The Super Bowl and Academy Awards got lots of chatter among consumers in 2012, and the starting point for both was a major television broadcast.

The lesson of Pepsi

Finding the balance is difficult. In 2011, PepsiCo slashed outbound ad spending on its Pepsi brand in half, down to $20.1 million, focusing more on social media engagement. In March of 2012, news broke that the Pepsi brand had fallen from No. 2 to No. 3 in sales behind Diet Coke — a huge black eye for Pepsi, this being the first time in two decades it trails two Coke brands. Now Pepsi has said it will boost 2012 ad spending up by 30%. “We need television to make the big, bold statement,” Massimo d’Amore, chief of Pepsi Beverages Americas, told the Wall Street Journal.

This is not to say Pepsi’s move toward social-media engagement was wrong; but it did err in overweighting engagement and gutting broadcast for what is, at core, a commodity product in a highly competitive category. Pepsi failed in its judgment because it did not evaluate its customer base value skew accurately — most customers have similar value to Pepsi (we can only drink so much a year) and a similar need (we’re thirsty), and few have influence over their peers’ beverage consumption habits. For a carbonated soda pop, treating different customers differently makes little sense.

The tactics of engagement and broadcast are not opposed to each other, and can fit in the same organizational marketing plan easily, provided the role of each is understood to manage customers in the appropriate manner. There is no ROI on being invisible in a marketplace that needs education; there is also danger in not responding to the small groups of influencers or customers with the highest value, so engagement may be required as well.

Do you need to tell everyone about a new thing? Or is there a steep customer variance in your target base that, if managed, could turn the tide of your business? Answer those two questions, and you’ll have an initial cut at how to invest communication resources.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.