Marketspace Advisor

Fashion / Beauty 2.0

I came across a pretty interesting site today called SeenON! which aims to be "the definitive source for products seen on screen.”  The site is owned and operated by NBC Universal through a partnership with DeliveryAgent.com, which specializes in “shopping enabled entertainment” (i.e., selling products related to entertainment content).   

The site offers a good illustration of how many Web 2.0 sites are providing new and better ways to source, filter, and monetize content.          

Regardless of whether it succeeds or not, sites like SeenOn! (Glam.com is another example) offer a preview of how verticals such as fashion and beauty are likely to evolve – this includes:

·         Using lightweight production of specialized content through aggregation, user-generated content, and blogs      

·         Offering better ways to filter and sort content through social intelligence (e.g., tagging and voting), behavioral targeting, and customizable filters

·         Enabling active user participation and social interaction

·         Enabling commerce through affiliate links

What's New in Financial Services Marketing?

I recently had the chance to attend the The New York City Advertising Club's (www.theadvertisingclub.org) lunch seminar on the topic of ‘What’s New in Financial Services Marketing?'

The event featured a lively discussion of new advertising forms, the difficulties of reaching audiences, and the challenge of making messages relevant and interesting! The context was financial services, but many of the points made had wider relevance too.

The panel was top-notch and appropriate for the discussions at hand: Nick Utton (Chief Marketing Officer, E*Trade), Laurine Garrity (Chief Marketing Officer, TD Ameritrade), Nancy Friedman (VP Advertising, Visa), Guinero Floro (Head of Advertising, Brand and Media, Ameriprise Financial Services) and Brad Jakeman (MD Global Advertising, Citibank).

Overall, the speakers felt that while consumer marketing of financial services had come a long way and was now as effective as it’d ever been, serious questions still remained about what was really working, and how the increasingly complex and changing consumer and technological landscapes should be best tackled.

Here are some of the themes that came through:

Google testing video AdSense Ads

Last Monday Google announced on Inside AdWords blog the possibility for advertisers to show video ads on Google's AdSense content network.

What will the impact of this announcement be?

1) Many fear that more rich media ads will negatively impact the user experience. However, as JenSense noted, the video ads are not intrusive given that they “will not start playing on their own, but the ad unit will show a static video screenshot instead. It will require user action to start the videos, and users will also be able to pause, adjust the volume and click to a customer site”. I personally find it quite distracting and annoying when video ads (or any type of rich media ad) start playing without my consent, so I welcome the fact that the video ad will only be an image, and that I will retain control of whether to play it or not.

2) This format will provide another distribution channel for TV and video ads fueling growth of this ad media. Companies can potentially use it to test the appeal of their ads before broadcasting them on TV (although it is believed that while it is easy to repurpose TV Ads, it's not a good idea).

3) Smaller-budget advertisers will have the opportunity to enter the once-expensive video advertising market. For example, as described in Inside AdSense blog “..an owner of a small bed and breakfast in Lake Tahoe can put a video tour of his beautiful chalet right next to an article that talks about skiing the epic slopes of Squaw Valley”.

4) The growth of video ads will probably encourage new experiments with this format and I am expecting ad agencies to become quite sophisticated at this (for example, adding an interactive Flash layer to streaming video, a practice called “hot spotting”).

Will this new format really take off? From an advertiser’s and publisher’s perspectives, a lot will depend on how video ad fee will be determined (i.e..: whether the fee will be paid once the user hits ‘play’ or once the user actually goes to the advertiser’s website). But most importantly, it will depend on whether users will be attracted by this form of advertising. From a user’s perspective, the benefit of a video ad is that it can provide more information, in a more engaging way, and without forcing the user to leave the original site. For this reason, I think Google video ads will be better accepted by consumers and clicked more than display-ads or simple sponsored links. Whether or not users will then decide to visit the advertiser’s site will depend on the relevance of the product and the appealing of the ad.

The first video ads will appear this week. Will you play them?

IPTV and the Future of TV Advertising

A couple of weeks ago I attended a seminar organized by the IAB UK in which experts from three companies (Alex Cameron from DigitalTX; Tony Hart from PacketVision and Clare Wells from Mizu) talked about IPTV and the future of advertising. After a quick buffet lunch (and I have to admit that the variety and quality of  UK food is superior to that I have found usually offered at US events), the three speakers talked about the following topics:

- What are the key differences between IPTV and Internet Television?
- How receptive consumers will be to the emergence of these new forms of content delivery?
- What are the implications for the advertising community, and what are the current sponsorship/advertising models?

Many people are confused by what the term means. So let’s try to bring some clarification first.

The strictest interpretation of the term IPTV (Internet Protocol Television) indicates that IPTV is simply television content delivered to the consumer via internet technology. However this definition fails to clarify the complexity of the technology and to distinguish between what is normally called "Internet TV" and IPTV. Internet TV is the viewing of video content via the open network of the www on a PC; while IPTV is more accurately the delivery of programming over a closed network to a TV set-top box. From a consumer point of view the key difference is that with Internet TV consumers will have far greater access and control over what they watch - while for subscribers to IPTV the access to content, as extensive as it could be, will be determined by the service provider.

However there is not complete agreement on the definition and distinction between the two as many view IPTV as another name for Internet TV, and base the distinction on the difference between fee-based and free IPTV (where free IPTV becomes a synonymous of Internet TV)

Where there is more consensus is on the growth of this new media. According to the IPTV Global Forecast report from MRG, the number of global IPTV subscribers will grow from 4.3 million in 2005 to 36.8 million in 2009, a compound annual growth rate of 72%; production companies like Disney and NBC are experimenting with this channel, and network companies are investing in infrastructure to support its evolution and diffusion. The question is how fast will it grow?

Let's apply our "Marketspace Technology Relevance Filter" (MRTF) criteria to IPTV:

1. Coverage in mainstream business publications
2. Number of mainstream users (not vendors) quoted
3. Level of new infrastructure required for deployment
4. Level of behavioral change required for adoption

1 & 2. IPTV is a well covered phenomenon; every day or so there are news and articles on IPTV or on Internet TV; however there aren’t a lot of mainstream users quoted. Most of the news and articles cite experts and vendors.

3. Required infrastructure: My understanding is that there is actually some new infrastructure required, at least in terms of upgrade to the current systems; in particular IPTV is expensive to scale (think about what it takes to serve/ encrypt/ transmit). In addition the technology still needs to be perfected (quality of video is still not equal to TV broadcast); but these issues are expected to be solved in the short term

4. There is no change in the behavior required: watching TV is a well established behavior! And we can all learn (probably very fast) the functionalities of interactive TV.

So far so good. According to these criteria, IPTV will take off soon. However, as Alex Cameron pointed out during his presentation, adoption of IPTV will not happen overnight and will not bring a dramatic revolution; in particular, the rate of adoption will not be as high as it has been for other innovations, like cell phones or ipods. The reason: the value proposition to the consumers is not that compelling and people will not rush to substitute their current cable or satellite TV and top boxes to subscribe to IPTV.

Let's review some of the key barriers to fast adoption:

- Content: there is a limit to the amount of quality content currently available on IPTV services. The main reason is the yet unresolved problem of content rights and control retention. However this is expected to resolve in the near future.

- Consumer expectations: Unlike other innovation, like cell phones, for example, where consumer expectation was low at the beginning, IPTV needs to compete with the same quality of cable and satellite TV. This is what consumers are used to. Any glitches in the purchase and usage process (from video quality to installation and repair) would have a dramatic impact on consumers.

- Perception of benefits: The benefits are there, but not quite as compelling to motivate people to immediately jump on this new platform. Let's review some of the most important benefits:

    1. Time shifted TV: ability to watch a program when I want it, not when it is decided by the network. Time shifted media consumption is becoming more and more the preferred way to consume music, news, videos (see article Non Linear Television). However, PPV to some extent, VOD and TiVo are already giving control over watching time. So what IPTV offers here is not unique, although it is very much valued by consumers.

2. Interactivity: consumers will be able to interact with program content and advertising, and, through hotspotting, click on objects and get more information on a product seen on TV (e.g.: clicking on the Prada shoes of one of Desperate Wives characters will bring you information on the product and the possibility to purchase it). This is quite a new and unique benefit, but probably not enough in itself to urge people to immediately switch to IPTV.

3. Convergence: It will be possible to seamlessly consume media across multiple platforms – PC, TV and mobile. Consumers will also be able to access a plethora of services that go beyond video signals

4. Personalization of the viewing experience: Ability to customize programs based on the consumer preference and to create your own channel to watch programs whenever you want.

Given that the benefits are not that unique, the price of IPTV subscription will probably be the main driver or barrier to widespread adoption of the service. In addition, IPTV service providers must focus carefully on the marketing and associated end user education to accelerate adoption.

On the other hand, the player with a huge interest in pushing adoption of IPTV are advertisers. In fact IPTV offers a new, more compelling model for advertisers to reach and influence consumers. As Tony Hart explained during his presentation, IPTV offers an opportunity to move from a “linear ad insertion model” (which brings with it many disadvantages, such as ads shown during live TV according to a precise schedule, low effectiveness in which advertisers need to pay for large audience even if they just reach small targets and weak measurement) to an “addressable advertising model” that offers the following advantages:

a) Ads can be placed over time allowing advertisers to easily modify the content of an old video to make it more relevant;

b) It is highly targeted: ads can be placed based on program, time viewed and viewer profile

c) Measurement is very effective, precise and real time

d) It is low cost compared to traditional TV advertising

e) It opens new opportunities to diversify the ad formats, moving away from the standard 30 second spot

In one word, advertisers have the possibility now to move from traditional unspecific, unmeasured, carpet-bombing approach for which they have to pay a premium for the numbers, to a highly targeted, highly measurable, very flexible approach that reaches smaller audiences that form a particular niche and just pay for them.

Ads can be placed when the set-top box boots up, on information screens, as a ‘screensaver’ when the box is idle, as ‘buffer’ when a movie loads or dynamically in the video streams. New, more effective forms of advertising will emerge: interactive, narrative (episodes of an ad can be delivered in sequence to a specific person), telescoping, frequency capping etc.

IPTV will probably rely on advertising to fund its programming; however consumers’ expectations for ads content will increase. The challenge for advertisers will be to carefully develop ads that are highly targeted and relevant as well as entertaining.

To accelerate adoption, service providers will need to find the right price and service bundles, focus on the end-to-end customer experience, invest in infrastructure and educate consumers on the benefits of this new platform. Digital Tech Consulting (DTC), a Dallas-based market research firm, predicts that growth will accelerate dramatically during the next five years, surpassing 20 million by year-end 2010. As of today, first-generation IPTV services are offered by Fastweb in Italy, HomeChoice in the U.K., MaLigne and Free in France, Telefonica in  Spain, Chunghwa Telecom in Taiwan, PCCW Ltd. in Hong Kong and Softbank/Yahoo BB in Japan.

Advertisers have an opportunity to start experimenting now with this new medium so to be fully prepared to take full advantage of it when the market is ready.

When will we record, not skip, TV ads?

It is old news now that advertisers are trying to find new ways to avoid the growing “TiVo-ad skipping” phenomenon, by either substituting the 30-sec TV spot with alternative media (TV spot ad spending, according to TNS Media Intelligent, has declined 10% from 2004 to 2005), or by making it more engaging. CBS might have just found the way. Mark Burnett’s new game "The Gold Rush" (a treasure hunt of 13 armored trucks hidden throughout the country and containing $2 million in gold) will embed clues for viewers in AOL.com, CBS programming as well as ….CBS commercials. So, hold on your TiVo remote control before skipping that ad: it might contain clues to your early retirement.

Will this work for advertisers? It depends. First it will depend on how well the game is developed and how much attention it gets; second, and more importantly, it will depend on how well the commercials with embedded clues will fit the target profile of the people interested in the game. The point is: companies can lure me to watch their commercials – they might even persuade me to record their commercials on my TiVo and view them over and over again – but if I don’t need the product, or if the product is still not appealing, they would still waste their money. Again, it is not just about “reach” and it is not just about “engaging”. It is about engaging consumers with targeted and highly relevant advertisement.

Are your customers becoming your extended workforce?

We’re seeing the line continue to blur between the roles that customers play as “outsiders” being sold to and served by a company and the roles they play as “insiders” generating new content, proactively acting as marketers or sales people, and self-servicing their products and accounts.

Here’s a dramatic example from BusinessWeek’s current cover story: “Residents [of online game Second Life] spend a quarter of the time they're logged in, a total of nearly 23,000 hours a day, creating things that become part of the world, available to everyone else. It would take a paid 4,100-person software team to do all that, says Linden Lab. Assuming those programmers make about $100,000 a year, that would be $410 million worth of free work over a year. Think of it: The company charges customers anywhere from $6 to thousands of dollars a month for the privilege of doing most of the work." 

Since most prognosticators believe that massively multiplayer gaming is in its infancy, the creation of customer-generated value will likely grow exponentially in the coming years in this area alone. 

But customer-created value isn’t only happening in sectors such as gaming or among other “Web 2.0” companies that may be being dismissed by more traditional firms.

In working with a leading financial services client, we learned that many customers preferred to solve their problems themselves, essentially to be their own service rep.  For many service issues, only when self-service channels like the company’s website failed to meet their needs did many customers pick up a phone or visit a branch.  Improving the effectiveness of self service interfaces is therefore eliminating a significant amount of these expensive human-to-human service calls, saving our client tens of millions of dollars per year.  And those 8-digit figure numbers aren’t in a virtual currency; they are real profits in American dollars.

Jeffrey Presents Best Face Forward (AMA Webex)

February 2. 2006

https://amawebcasts.webex.com/amawebcasts/onstage/tool/record/viewrecording1.php?EventID=335744753