Marketspace Advisor

Marketspace Mashups

I'm sure few people missed Google's announcement last week that profit was up seven-fold, news that left Wall Street analysts agog and sent the stock up 11%.  The basic investment case is simple:

• advertising online is still only a very small fraction of global ad spending, but it is growing at 5 times the rate of overall ad spending
• Google dominates online advertising

One argument marshalled by Google skeptics is that someone's bound to come along with a better search engine, and that when they do, switching costs are low for users, and advertisers will quickly follow.

So Google is moving as fast as possible to raise those entry barriers, even as it continues to work on improving its search technology.  One of the ways to raise those barriers is to distribute itself widely and deeply into many other people's websites and desktops.  One way it has done this is to make freely available certain tools and API's that people can use to build useful solutions of their own, whether on their own personal computers or on their servers.  An increasingly well-known example is the free distribution of the Google Maps API.

This initiative is part of a broader phenomenon many call "Web 2.0", which involves linking disparate "web services" to create interesting and useful applications.  This approach was written up recently in the New York Times, which marks an important milestone for the trend in our own "Marketspace Technology Relevance Filter" (MRTF) test.  In programming circles, the trend is known as "AJAX", which stands for Asynchronous Javascript And XML.

The universe of AJAX-based solutions out there is booming and morphing quickly, since it allows people to contribute and consume valuable information in very efficient ways.  Further accelerating the trend is the ease of developing these solutions, which makes it possible to deploy them for smaller groups with tighter affinities, where viral marketing is much more powerful. Also, AJAX-based applications provide ways for people and organizations with unique data sets to monetize them (through advertising, for example) in heretofore impossible ways.  And where business cases appear, investment inevitably follows.

Since we believe in being hands-on to better understand these trends, we've been fiddling a bit with these tools in our spare time.  Here's one of our efforts (IE doesn't like something in my Javascript, but this page loads fine in the Mozilla Firefox browser if you have that).  Obviously this is a modest experiment, but it only took an hour to deploy.

Inevitably and even more interestingly, new services like Ning (mentioned in the NYT article linked above) make it possible for amateur- and non-programmers to build a wide variety of interesting applications using a wide variety of "web services" APIs.  Here, for example, is a restaurant review application prototype using the Google Maps API that took 15 minutes to deploy, starting with pre-existing models.

Applying the MRTF, which says to marketers that a new idea will be relevant five years off minus a year for each of four factors (mentioned in mainstream media, major organizations using it, no major change in customer/ user behavior required, and no major new infrastructure required), this is very real within the next year and a tool that marketers should understand and innovate with right now.

(Special thanks to my colleagues Chris Collins and Micah Halsey for pointing me to the NYT article and the Programmable Web Matrix links.)

Karaoke Blackmail

We're closely tracking the evolution -- and convergence -- of different media, with hands-on experiments like this one. Shot with a Treo 650, January 2005 vintage, via the Audioblog service through to this post. Once cell phones can capture HD video and the mikes get better, sky's the limit on blackmail prices. (Sound mercifully edited out.)

Best Face Forward in Asia

A nice, short review by Hermawan Kartajaya ("Asia's leading marketing strategist") of Jeffrey's recent talk in Singapore.  Thank you!

Son et Lumiere

Jeffrey holds forth at Experian's Vision Conference at the Wild Horse Pass Resort in Phoenix yesterday. 

While bankruptcy law changes appear to have been digested in the normal course of business, detecting and responding to identity theft and other fraud remains on the front burner.  Though these challenges get tougher as the amount of information on the web about each of us continues to increase,  it's clear vendors are investing heavily and creatively to keep up with new services.  It will be interesting to see how pricing for these services evolves -- how much will be charged directly to consumers, versus how much is subsidized for them by financial intermediaries, even merchant alliances, and maybe even governments through laws capping liability.  Of equal interest and greater relevance to marketers -- what changes can be made to interfaces, either alone or in combination with data and solutions from vendors like Experian, to detect fraud even sooner?

Many thanks to our hosts!

Is The Singularity Near?

I've just picked up Ray Kurzweil's new book, "The Singularity Is Near".  In 500 pages, Kurzweil describes a future in which humans and machines converge, the mechanisms by which this will happen, and the implications of this trend. 

I'll summarize what I learn that's relevant for marketing in a subsequent post.  The title prompted me to think about a different, emerging singularity of internet, telecommunications, and television.

Let's review some of the bidding:

1. The internet, telcom services, and television are brought into many of our homes by the same transport, cable.
2. These transports are increasingly digital.
3. Bandwidth is growing steadily.  I recently rebooted my cable modem and now get 6 Mbps down.
4. Integration is now happening higher in the stack:  for example, the new Slingbox device lets you see what you're getting on your TV on your PC, and VoIP service like Vonage allow you to manage my telecommunications very flexibly and easily through the Web.
5. This convergence is not lost on major players:  AOL and CNN have both recently made video content freely accessible on their sites; eBay recently bought Skype.
6. Digital cable services support interactive displays, enabling direct response using a TV.
7. New display monitors often support both TV and PC inputs.

These and other developments raise the risks and potential returns for both the entrepreneurs and investors in plays in these converging spaces, as well as for the  marketers who currently divide their advertising and promotional dollars between the spaces.  For both sides, what would really be useful is a "convergence roadmap" that tracks the maturity, adoption, and evolving economics of different plays, along with what I'll call "possibility thresholds" -- points at which "if 'x', 'y', and 'z' are in place (related to maturity, adoption, or economics), then 'a' is not only possible, but probable".  Also useful would be projections of competitive responses, at the sector level at least (e.g., cable v. telco, pipe owner v. content owner, software v. hardware, server v. switch, and other combinations thereof).   More to come as we learn.

The stakes are very big here, as noted in earlier posts.  For example, global TV ad spending is $160 billion, despite being one of the least measurable channels for brand-building and promotion.  How does the size and shape of this pie change in a world where a) content production is democratized by lower cost technologies, b)distribution is democratized by proliferation of channels, and c)reception and response can be tracked to individuals?

In case you missed it, the Wall Street Journal had a very interesting article yesterday on Apple's new deal with Disney for distribution of prime time shows like "Lost" for $2/ episode.  The ABC local affiliates are not very happy about this.  An opening salvo in a complex and fast-approaching war with many fronts.

How Big Is Your Call Center's Phone Bill?

The book "Call Center Benchmarking", from Purdue University's Center for Customer-Driven Quality, notes that telecommunications costs historically average 25% of total call center costs, while IT and telephone systems can run 15-25%.  VoIP makes possible radical changes in the former cost category.  Now, the advent of the open-source Asterisk PBX pushes the cost envelope in the latter category.  According to Brian Capouch, a leader in the Asterisk project, TCO for Asterisk-based implementations can run 15-20% of traditional PBX-based costs.  Integrators using Asterisk have scaled it to call centers as large as 5-10k seats/ reps.  Some have even pushed as far as merging it with SugarCRM, the open-source CRM platform that is also gaining traction.  Brian was recently interviewed on IT Conversations; if you pay the phone bill at your company this is worth listening to.  More interesting:  changing economics of call center technology changes the economics of the human vs. self-service tradeoff...

Resident Pundit

Jeffrey featured in October's Optimize

Avatars Humanize E-Service

The optimization of ‘machine v. human’ capabilities in different interfaces has been a central focus of our research. For example, call center reps can do their jobs more effectively if they are leveraged by sophisticated customer information databases. Adding a human element to automated channels can also be good, such as voice response systems that are easier to navigate and yield happier users. In fact, effective automated interfaces are becoming more and more human.

Enter the digital “avatar,” an animated representation of a human being that looks, moves, and sounds like a real person. In addition to exploring the practicality of this approach in a client setting, we have been experimenting on our own with avatars to get a feel for their capabilities.