Archive for March, 2006

The truth behind Web 2.0

Ross Levinsohn of Fox Interactive reveals what's really behind the Web 2.0 mini bubble…

"I'm intrigued by some of these start-ups in the Web 2.0 space. They don't cost an arm and a leg, but they have no business model," Ross Levinsohn, president of Fox Interactive Media, told a Bank of America investor conference. Reuters.com story

As I've said before, so many of these new Web 2.0 companies are launching with great products but no means to produce revenue. Many say they will be ad supported in the future, but how far can that really get you? Their only sustainable hope is to get bought out, but then I can't really call that sustainable can I?

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Google Survey request VS. MSN Adcenter Survey request

I received 2 requests by email to participate in surveys today. One from Google regarding a beta service and the other from MSN regarding Adcenter. See if you can determine which survey request is more compelling and which I will take time out of my day to complete.

First Google's:

Hello Brandon,

We hope you're enjoying the XXXX Google XXXXXXXXXX. As part of the next phase of this test, we'd like to invite you to participate in our phone survey regarding XXXXXXXXXXXX. By participating in this survey, you'll help us continue to enhance this product for you. In addition, we'll give you a $100 AdWords credit in exchange for your time.

Survey details:

– We're conducting phone surveys from XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
– This 30-minute survey will address XXXXXXXXXXXXXXXXXXXXXXX.
– You'll receive a $100 credit in your AdWords account within three days of completing the survey.

To participate in this survey and claim your $100 AdWords credit, please respond to this message with a date and time when we may call you. If you have any questions, please feel free to respond to this email.

Now MSN's:

Brandon,

Microsoft really appreciates your company’s participation in the pilot phase of the roll out for their new pay-for-performance advertising product, adCenter. As a critical part of this pilot process, Microsoft has engaged our firm, Sacerdote & Co., Inc. to gain feedback from early users, customers like you, on their current pilot experiences and future requirements.

The feedback process is a very short 2-part written survey covering satisfaction and technology. Afterwards, we will want to have a telephone discussion with you about a few of your responses to the written survey, in order to better understand your opinions on the strengths and weaknesses of the current offering and what Microsoft needs to do to make it a compelling offer.

Please return the written surveys to us at XXXXXXX or fax it to XXXXXXXX. After we receive your written surveys, one of our associates will contact you by telephone.
If you have any questions, please call XXXXXXXX at Sacerdote & Co., Inc.

Please direct Microsoft-related questions to XXXXX at Microsoft. Thank you so much for your time. Your feedback is a critical part of Microsoft’s product development.

So let's see… One offers $100 and the other offers… nothing. Hmmm 

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Google Finance goes live

Google launched Google Finance. I really like the way the graph operates. Mousing over a point in history highlights the day you are on and dynamically refreshes a snapshot of the days metrics.

If you scroll the graph to the past, the news section also scrolls to show relevant news. clicking on a news story scrolls the graph to the point where the release occurred and highlights the day's trading.

If you mouseover the names of the management, a window blows out to show more details and a photo of that person. To not be so Google oriented, I linked to Costco's (COST) financials rather than Google's. 🙂
Google Finance: Costco Wholesale Corp.

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My database marketing indoctrination

When I took a job at Community Coffee as Consumer Direct Manager, my marketing experience was almost completely in the online world. I could run PPC, Organic SEO and affiliate marketing as good, or better than most, but I had a unique challenge. Community Coffee’s B2C division was about 50 years old, and at least half of those customers had no email address. The order management system didn’t even have a customer field for their email address. I knew I had to learn the catalog industry quickly. How was it that I could keep getting those 4-color catalogs from companies I had little history with? How can Gevalia possibly afford to send me so many letters with rich offers of free coffeemakers, plush bathrobes or mugs just to join their coffee club?

Well, there’s nothing I love more than a new challenge, so I embarked on a mission to figure out the mystery. Like a true ‘net guy, I researched online and I bought many books about “database marketing.” One of my favorite books is from someone I’ll call “the godfather of database marketing.” Those in the industry may or may not scoff at that, but Arthur M. Hughes became my godfather and mentor for the upcoming years. The book is called Strategic Database Marketing and the experience I received from the book was incredible.

Who knew there was such a database marketing gospel full of completely virgin vernacular: RFM, LTV, deciles, regressions, Nths, Quintiles and so much more. I realized that I was an acquisition expert, but I had no idea how to retain and remarket effectively to my existing customer base. I was both excited and overwhelmed. Where do I start? The answer for me and for most of you who are still stuck on the word Quintile is to start simple with RFM and LTV.

RFM? Well that stands for Recency, Frequency and Monetary of course. Oh, that’s right, you’re still stuck on the word quintile. Wash that out of your head and focus. The point of RFM is that “People who have bought from you recently are much more likely to respond to a new offer than someone who had made a purchase in the distant past” (Hughes.)
So wouldn’t it make sense to group your customers according to when their last purchase occurred, or Recency? If you were to send a direct mail piece to your customer list, do you think Joe will respond to your offer for 10% off on his next order if he just purchased yesterday? What about Sally who typically purchases every 60 days (her buy cycle) and it’s been 55 days since her last order ? If you group your customers and market to each group, Joe may get a brand building piece or a satisfaction survey, whereas Sally will get a 10% off offer and Tom, who typically has a 30 day buy cycle, and it’s been 60 since he last ordered, will get a richer free shipping offer, or a BOGO (buy one get one free.)

Now that you understand the role of Recency, you can apply the same logic to Frequency, or how many orders each customer has contributed. A customer that has only placed a single order with you will traditionally be worth less than a customer with 2 orders. I’m not saying don’t pursue customers with 1 order, just control your spend as your response rate will be considerably less. So now you can group your customers according to frequency and market to each group differently. For example: customers with 1 order, customers with 2-3 orders, customers with 4-6 orders, customers with 7-10 orders and customers with 11 or more orders.

Customers can also be grouped according to their Monetary contribution, but as Arthur Hughes points out, the monetary segmentation produces less reliable results, and for the most part, I didn’t use this segmentaion in any area other than for customer service so our CSR’s would know if they were speaking to a “good customer.”

Once you have your RFM segmentation complete with a R value, an F value and an M value assigned to each of your customers, it can then be your primary weapon in determining which groups, or “cells” are profitable and which are not. What if you could take a cell and mail to a small sample (yes, an Nth) of the customers in the cell to measure their response rate. If all of the customers within a cell have similar buying characteristics, it would make sense that they would respond similarly to your offer. If your mail test proves that it was an unsuccessful offer, then you’ve saved a lot of money by not mailing to the rest of the customers within the cell. What if your offer is profitable? Well, I’m glad you asked; you then mail to the rest of the cell and reap in the rewards of your brilliant marketing strategy.

Once you build RF or RFM codes for all of your customers, use that power in the online world as well. Target introductory offers to those with few orders and little frequency, or email richer offers to those that are outside their buy cycle. The possibilities for marketing efficiency are endless!
As much as I wanted to drone on about LTV, or Lifetime Value, I’ll have to save that for a later post. You’ve got a lot to read

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Wow, Google buys @Last Software (Sketchup)

This is a great application. Sketchup is by far the easiest to use 3D modeling software on the market, not that I’ve had that much experience with other similar products, but after viewing the tutorial I was able to build a simple house complete with people and pets in under 10 minutes. And it was fun!
Google announced the purchase today and I’m trying to figure out the relationship and how the acquisition will help Google. There’s a plugin for Google Earth available, but that seems relatively minor in the grand scheme.

Any thoughts?

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Googlepages = spam

Google has a web page creator called Googlepages where you can “Create your own web pages, quickly and easily.” Problem is the webpage is built with the URL subdomain being [google username].googlepages.com. Your Google username is your Google account ID and is also your gmail address. So spammers can simply go to http://www.google.com/search?q=site%3A%7E.googlepages.com and extract about 13,000 gmail accounts (as of today).

Thanks to DaveN at DigitalPoint for posting this.

Until Google fixes this, I wouldn’t suggest creating your new webpage at Googlepages.

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Speaking of 2.0 buyouts – Riya

This looks like one of the most promising new applications to be released in a long time. Riya is not yet live and I haven't been able to get into the beta, but when it launches I predict that they will get hammered with users and will be bought out in the second quarter by a company with a photo management application such as Flickr or Google. In fact, I would guess that the reason for the delay of the live version is because they are ramping up the infrastructure to support the user load.
Riya uses facial recognition software and text recognition software to scan your digital photos and automatically assign tags. If I were lucky enough to have access, I could execute a search on my family's digital photos for every photo of my daughter Olivia that has a stop sign in the background. I could even search other people's public photo collections to see if I'm in the background of their family photos! I can't wait until it goes live!
Riya – Photo Search

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