Marketing @ MindSay

The meaning of "new media" is about giving up traditional broadcasting media and enabling interactive, inter-personal communication in a world that is turning into an intimate global village.

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[+] Social networks become a new channel for branding

 

In the earlier stage of online advertising, website operators would ask advertisers to pay for 1.3 million exposures. Soon the CPC (cost per click) model became popular, and website operators started to tell advertisers to pay for 1.3 million clicks.

 

In the case of traditional advertising, it is aimed to produce an impression of the brand on you by repetitive exposures, so that you'll remember to buy this product when you do shopping in a store. In the earlier stage of the Internet, online advertising followed this thinking, and advertisers were told that the branding effect existed even if users did not click on the advertisements. Although it does not sound very persuasive, it still sells to big brand advertisers having huge budgets.

 

In spite of the growing popularity of CPC model, which has taken a good share of the market of medium and small advertisers, advertisements sold on the basis of exposures still can pull the money out of big advertisers' pockets.

 

Now we are entering the era of Web 2.0, yet major brand advertisers and website operators still stick to the old-fashioned concepts and 1.0 mindset. In fact, online marketing has entered the era of "pay for 1.3 million users' in-depth participation."

 

The point here is "inter-personal communication," which is exactly the strength and spirit of Web 2.0. Simply put, traditional advertising is about "I play and you watch," while Web 2.0 advertising is about "I tell you, you tell her/him, and the brand quickly spreads in the social networks."

 

[+] The Pepsi case

 

Here I'm going to share with you a recent case, which is classic in Web 2.0 marketing. The event in this case lasted for one month, attracting 1.3 million users to register, 120 million votes in total, and 6.8 bulletin board messages posted by users.

 

This event was the annual online event of Pepsi, which was called "Your Picture Appear on a Can." That is, contestants submitted their pictures and got selected by consumer votes. Those who garnered the highest votes can put their pictures on the Pepsi can.

 

The competition was divided into two stages. At the first stage, Pepsi together with five participating websites held tryouts respectively. One participating website, 51.com, attracted as many as 1.3 million users, which was more than twice as many as the total of the other four websites, to join the competition.

 

Such contrast was largely because that 51.com is completely a Web 2.0 website, which is characterized by real-time interaction. Therefore we need to look at the difference between this particular website and other traditional blogs websites.

 

First of all, 51.com is a kind of Social Networking Service, including blogs, photo albums and online communities. Users write their online diaries while reading others', and they can set up their own "friend list."

 

[+] How brands spread in a Web 2.0 website?

 

Not like traditional blog websites, 51.com does not emphasize on content. For many blog websites, the first page after logging in is the user's own article, but for 51.com, the first page tells you who have visited, who on your friend's list are online or have posted a new article.

 

This increases user interaction on 51.com. The system will inform you about who visits your article shortly. If you link to a visitor's blog and leave a comment, the system will inform that visitor about your visit, which may trigger another visit to your blog. This is how spontaneous personal interaction begins.

 

Because of such real-time interactivity strengthened by immediate system alerts about your friends' activities, users of 51.com almost get hooked on the website. This makes 51.com a robust platform for "inter-personal communication." An online campaign can spread very quickly on this platform.

 

In this Pepsi campaign, 51.com first pushed the news of this campaign through various channels to draw people in. For everyone signed up for the competition, there would be an article with a big picture "Vote Me for Pepsi Star" automatically produced by the system on the front page of the contestant's blog.

 

The posting of this new blog article would trigger a notification to those on the blogger's friends list. When these people came to visit, they would learn about Pepsi's new event. Some of them might become contestants and thus set off another round of notification....

 

[+] Interaction and alliances among social networks amplify the effects of communication

 

As such, the spread of inter-personal communication takes place in 51.com with a terrifying speed. Here we see the manifestation of "Six Degree of Separation," which is a popular theory normally associated to social networking, particularly for a business purpose.

 

At the first stage of the Pepsi star competition, there were also other participating blog service providers. Yet they did not take the advantage of real-time interaction; instead, they relied on the traditional method of one-way broadcasting, which is much less effective in spreading the message and drawing in more users.

 

Most interestingly, there were quite a few voluntary activities going on among the user communities of 51.com, which was beyond expectation. Here are some examples:

 

1) Those who did not join the competition tried to canvass for their friends who were contestants on their blogs. This helped increase exposure of the event.

 

2) Users of 51.com can start their own groups. Some group owners can be very powerful, as the size of these groups can reach some tens of thousands under good management. Group owners could ask members to vote and canvass for them.

 

3) Groups can form alliances. For example, First Alliance of 51.com has as many as 2 million members. Each group within the alliance could select its own candidate to compete for representing the entire alliance, with the support of its 2 million members, to compete in the Pepsi contest.

 

[+] Web 2.0 marketing is about inter-personal communication

 

Many people argued that such competition was nothing more than beauty contest. However, to everybody's surprise, the winner of 51.com tryout was a monk nicknamed "silly hermit." In fact, his picture has been on the Pepsi can before you read this article.

 

Yet it is not that surprising. Firstly, 51.com with 80 million registered users of various kinds is a small society of itself. Moreover, users' voluntary concerted action as shown in the above-mentioned example can be applied in many aspects.

 

For those participated in this event through joining the competition or voting or canvassing for contestants, together their friends within six degrees of separation, the brand of Pepsi will remain imprinted in their mind for a long time. What Pepsi got in this campaign was 1.3 million heavily engaged users, which had much greater effect than 1.3 million banner clicks.

 

Did you notice that the model of Web 2.0 marketing is basic inter-personal communication! Inter-personal communication works very slowly in the real world, so we need mass media such as television to do mass communication.

 

Yet, because of the birth of Web 2.0, the cost for inter-personal communication has dropped substantially and the efficiency has increased. Therefore we see a very paradoxical thing that marketing communication will go back to the basic model of inter-personal communication from traditional "broadcasting" media of mass communication.

 

These days we hear a lot of "new media" things from the media and people in the industries. What this term really means is about giving up traditional broadcasting media and enabling interactive, inter-personal communication in a world that is turning into an intimate global village. ( 2007/08/05 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : From Idea to Business (2) How to Estimate Your Income and Cost?
Next : The Next Step for Web 2.0 (1) The Dawn of Emotion Economics

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- Today in History

The Spirit of Web 2.0 New Media Lies in "Inter-personal Communication" - 2007/08/05

The Good Old Days of ECommerce - 2005/08/08

In the future, a number of advertising models, including the traditional online advertising, keyword advertising and commission-based advertising, will coexist on the Internet.

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[+] Who on earth are viewing and clicking online ads?

 

Advertising, which, in a sense, is a joint game of the media and ad clients intending to fool consumers around, seems increasingly unable to adapt to the current time. With the rise of the interactive media led by the Internet, the say has been returned to consumers. As a result, raising the eyeballs of consumers is increasingly turning into a mission impossible.

 

Each time I give a lecture about online marketing, I always make a survey about the audience and ask those who have clicked any online ad within the past half year to raise their hand. There always have been very few hands raised in a large classroom. That explains why the ad click rate on portals' home page is lower than 0.1%.

 

Think about yourself: have you ever clicked any online ad within the past half year? Or, have you paid any serious attention to any online ad at any part of a web page, even though you never clicked it? Ask those around you the same questions.

 

If neither you, nor I, nor he, nor she is viewing ads, who on earth is? With my observation, I am able to provide a simple answer: "those who do view online ads are a strange group of people." Whenever I make such a conclusion, the audience would smile understandingly.

 

Yes, such people are born to view online ads. They have a gene inside their body to drive them to notice and click ads on web pages. Besides, advertising professionals view ads too, mostly out of job habits, instead of personal liking. Others just do not view ads, and there is no reason for that.

 

[+] Keyword advertising: the model that charges by results

 

The keyword advertising is the hope for online ads whose click rate is as low as 0.1%. This adverting model, which is Google's source of revenue, is one of the most important inventions in the history of the Internet. By linking ads with key words used by searching activities of Internet users, it raises the click rate to 5% and even higher.

 

The reason for the low click rate of traditional online ads is the irrelevance between the contents of ads and the web pages that the user is viewing. Channel-specific advertising (for example, ads for 3C commodities on a technology channel) might help to lock on the wanted users, but it is far less accurate than the keyword advertising.

 

The tide of the keyword advertising explains that the result is what ad clients really want. Brand building is very important, but whether it has to depend on, or even mainly on the Internet is another question. The building of a brand is not the accumulation of many ads displayed.

 

Companies which can directly satisfy that demand will win the favor of Internet users and ad clients. However, this does not mean that traditional online advertising models will disappear. They will manage to maintain a certain market share, but will not be able to stop the aggressive attacks of the keyword advertising.

 

According to Online Advertising Revenue Report 2005 released by the Interactive Advertising Bureau (IAB), the revenue achieved by the keyword advertising of search engines accounted for 40% of the industrial total, slight above the number of 39% in the previous year and indicating a stable trend.

 

[+] Turning to the channels: to pay in accordance with actual results

 

The most distinct feature of the keyword advertising is its click-based charging model. How much to pay for each click and where your ad will be put on the web page depends on the price you offer in an open bidding process. The higher your price is, the better the position will be.

 

This, however, is not exactly what ad clients want. They have never given up the idea of "pay in accordance with the number of deals resulting from the ad". Those who click the keyword ads and are led to the websites of an ad client might not do what the ad client wants them to do, such as buying products, registering as a member, and etc.

 

With the blood of innovation, Google is planning to cater for that call and start its trials. You might have already noticed that the banner or text ads of the FireFox browser or Google's Picasa (picture management software) are already available on many websites.

 

Ad clients are charged only when the software is downloaded and installed by users (who can use the service free of charge, as Google will pay the website owner). No charge for ad playing, or ad clicks-only for download and software installation.

 

That model can be further extended to allow charging only for products sold, or members registered or newsletter subscribed to. This is inevitably going to drive the focus of the online advertising to move from the media identity featured with exposure to the channel identity featured with real deals.

 

[+] Traditional online advertising is not going to be replaced completely.

 

This advertising model might not be suitable for some commodities, just like the keyword ads model is not suitable for every product. What can be predicted is the ad price for each deal will be higher than that for each exposure time or each click in traditional models.

 

As a matter of fact, there is a normal correlation between the click rate and the conversion rate (the number of clicks divided by the number of deals achieved). Both the ad client and the ad seller have something to gain. The key is whether the ad client is from an industry lucrative enough to pay the higher deal-based ad charges.

 

In the future, a number of advertising models, including the traditional online advertising, keyword advertising and deal-based advertising will coexist on the Internet. There's not such a thing as the best advertising model in the world, only the most suitable model for oneself. Anyhow, more options are not a bad thing for ad clients. ( 2006/07/23 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : New Era of Online Advertising (1) from Media to Channels
Next : New Era of Online Advertising (3) toward Decentralization

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- Today in History

New Landscape in China's Telecom Market (7) The Pricing of 3G Value-added Services - 2008/07/27

New Landscape in China's Telecom Market (6) Insight into 3G Price War in Taiwan - 2008/07/20

From Idea to Business (2) How to Estimate Your Income and Cost? - 2007/07/22

New Era of Online Advertising (2) from Exposure to Deal - 2006/07/23

Ultimate Mobile Device (5) Universal User Experience - 2005/07/24

Have you ever found yourself on the internet clicking away only to realize you don’t remember where you’ve visited?  Internet Marketers are learning how to deal with the challenge of getting traffic and keeping it!  The first thing business owners are doing is to recognize where traffic is coming from.  If you’ve ever wanted to stay at the top of your game, knowing where your clientele come from is often to most effective way to do so. 

 

Using Analytics

 

Google Analytics is an awesome piece of code that the Jeff Paul system recommends you install on your website.  Being a budding a business owner, you’ll want to take advantage of the many features google offers you for free.  Google will build pages for you based off of simple templates, it can offer spread sheets and calendars that you can use to help update your page indefinately.  Analytics will help you identify where your traffic is coming from.  Using Analytics can help tell you:

 

• How much traffic do you get? Per day?  Per week?
• Where does your traffic come from?  Email?  Search engine? A post you left in a discussion board?

Analytics can help you pinpoint specifically which marketing strategies are working best for you.  This will prove invaluable as you attempt to pinpoint a marketing strategy that is both cost efficient and effective. 

 

Analytics will even tell you how much time users have spent browsing your site.  From here you can use media and articles to help bolster a virtual stampede of traffic. 

 

If all of this seems overwhelming, don’t fret.  The Jeff Paul system all star coaches are well versed in using Analytics to help determine the best methods to bring traffic to your site.  Don’t click away without having considered the incredible money making potential of bringing your business to the internet. 

With a pricing strategy fully in compliance with high-tech marketing theories, iPod proves to be a classic case!

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[+] iPod, the product for the "Mac fundamentalists"

 

On October 23, 2001, Apple launched its first iPod. Thanks to the Microdrive technology, the product was able to offer a memory as large as 5GB, 20 times larger than that of MP3 players based on the flash memory available at that time. Despite its much larger physical size, iPod got popular among the consumers with its brilliant industrial design.

 

Back at the time, iPod could be used on Mac computers only. Most of its early adopters were addicts of Apple computers. Despite its high MSRP (Manufacturer's Suggested Retail Price) - as high as USD 399 - iPod became a must-have gadget for the Apple fans.

 

It was a stage when high-tech products had the highest "brand premiums", i.e., the largest difference between the market price and the production cost, as loyal supports tend to be willing to pay additional money for the brand they love. In addition, this group, called "early adopters" in marketing theories, is less price-sensitive.

 

Of course, the Microdrive technology could lead to higher costs at that time. In addition, with the small manufacturing scale in the initial stage, manufacturing costs tend to be high, so are the retail prices. However, companies with strong brands could find a consumer group willing to pay that much, or even more.

 

If you are the product manager of iPod, after the market success of the first iPod, would you introduce new models with fewer functions and smaller memories (hence lower prices), or continue to introduce products with extended functions and higher prices?

 

[+] Continue to focus on early adopters

 

On March 20 of 2002, less than half a year after the introduction of the first iPod, the second one was introduced, with a memory as large as 10GB (capable of storing about 2,000 songs) and ad hoc features such as phonebook, which allowed the user to input phonebook data through software.

 

The launch of this USD 499 new model did not drive down the price of the earlier one, which stuck tight at USD 399. In other words, Apple was not introducing the new model to replace the earlier one, but to drive up its gross margin and increase its revenue with "function premiums".

 

Who would care about a phonebook in a music player? Few people would. Nevertheless, such people are willing to pay more. With the differentiation of its products, Apple continued to take money from those who were willing to pay more among its early adopters.

 

On June 17, 2002, the 20GB model was introduced at a price of USD 499. This time, the prices of the two earlier models were reduced: the 10GB one down to USD 399 and the 5GB one to USD 299. Besides, this was the result of the drop in manufacturing costs. On the other hand, it also implied the company's intention to expand sales through price cuts.

 

With a new user interface, the new 20GB model could be used in Windows environment. In other words, having satisfied the demands of the Mac fundamentalist market, Apple was trying to expand its influence to the PC market, starting from the early adopters, too.

 

Now that the product was already compatible with Windows, the company made a big change in its marketing channel strategy too. iPods, which so far had been available only at an Apple Store, began to be sold in chain stores such as Circuit City. Indeed, expanding the channel had become the most important task for the company's goal toward higher sales.

 

[+] Continue to cater for the early adopters while trying to infiltrate into the early mass market

 

From April 28 to September 8 2003, two other models with even larger memories were introduced and prices of earlier products were adjusted accordingly (and the 5GB model was stopped manufacturing). However, the price range was nailed down between USD 499 and USD 299 firmly for about one year. See the following table for changes in memories and prices.

 

 

Increase in memory was now no longer an effective tool to draw more money out of the pockets of the early adopter. More efforts should be made on peripheral products. With the support of a number of manufacturers, the company developed its sports armbands, large speakers, FM radios, pen recorders and digital cameras. In addition, Apple also cooperated with BMW to develop a number of applications.

 

The strategy during this stage was to support the price with added values. The profit margin of peripheral products could often be well above that of the core products. Despite their high prices, the peripheral products were hot pursued by the early adopters. With this strategy, Apple continued to drive up its sales and maintain the retail prices of its iPod products.

 

Yet, it was time to access the mass market. On January 6, 2004, iPod mini was launched. With a memory of 4GB, the product sold at USD 249 (the first iPod sold for less than USD 299), and offered 5 color outer cases. It could be imagined that highly price-sensitive mass consumers were attracted immediately.

 

On June 19, 2004, the 40GB model fell into the USD 399 line for the first time, an interim setback in the early adopter market. Yet on October 26, iPod Photo was launched, driving the prices back to USD 499, and even USD 599 (for the 60GB model).

 

Through that means, Apple kept digging deeper into the early adopter market with additional applications. While continuously introducing high-end products (iPod Photo allows photo storage and display) to hold the gross margin and price line, Apple was also beginning to march into the mass market with products with fewer features and lower prices.

 

[+] Break through! The horn for the march into the mass market: iPod shuffle

 

When it was launched 3 years ago, iPod sold at USD 399, aiming at the early adopters in the following chart, who could afford it, were willing to pay and, with their brand loyalty, would buy more follow-on products. At that time, most MP3 players are sold at about USD 99 with 128MB flash memories to store only about 50 songs.

 

 

Back in 2001, when the 128MB MP3 player was the mainstream product in the market, those people were willing to pay more for an iPod with a memory 40 times larger. Nevertheless, Apple was clear that it was time to enter the mass market. So on January 11, 2005, the USD 99 iPod Shuffle was launched.

 

Thanks to the high reputation that iPod had earned over the past 3 years, many consumers who were stopped by the high price were now ready to buy. Many eCommerce websites offered services for purchasing in advance. The products were sold out before they even arrived in retail channels.

 

The root of the iPod's success is its product design and brand appeal. With product and pricing strategies fully in compliance with high-tech marketing theories, it proves to be an admirable classic case. ( 2005/04/10 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : Media, Community, and Blog (5) The Power of Media
Next : Brief Study at Portable Multimedia Player (PMP)

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- Today in History

The Mist of 3G in China (3) Low-End Customers Are King - 2007/04/15

Predictions on China Internet Market (7) Web 2.0 Economy - 2006/04/16

How to Sell an Apple: A Classic Case of High-tech Marketing - 2005/04/10

3G Time Comes (5) Content - Killer App of Video Phone - 2003/04/13

Are they business elites, computer addicts or common people? The sales channel varies.

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[+] Early adopters and late majorities

 

When the color handset first appeared in the market dominated then by black-and-white models, its price was awfully expensive. Of course, the volume of sale was low because few people could afford it. Today, black-and-white handsets are almost driven completely out of the market. With a few hundred dollars, you could select from a wide array of color models.

 

Handsets that enable the Internet accessing were expensive too at first. Today, it has become a built-in function of all handsets, no matter they are high, middle or low end. When it was first introduced to the market, a handset with a 3-mega-pixel built-in digital camera sold at a price beyond the reach of most people. Today, as models with millions of pixels are available, the 3-mega-pixel camera has become the built-in function of low-end products.

 

In the market, there are always a group of people that buy products which are the freshest and most expensive. In high-tech marketing theory, they are called early adopters. As those people are less sensitive to the price than common people are, manufacturers could get a fat profit by setting the price high above the cost very much.

 

Leading handset and IT product manufacturers have seen the attractive gross profit and steady market growth of the smart phone. But obviously, the market is still in a stage of early adopters. Once the current stage is over, it will be the end of the high gross profit.

 

We can summarize the development as follows: (1) cater for early adopters and enjoy the high profit margin; (2) the early adopter market is saturated, and the volume of sale appears to be a bottleneck; (3) introduce lower-end model for the mass market, in the hope of increasing the sale to make up for the loss of profit margin.

 

 

There have been historical cases where many products, such as PDA, are unable to break through the second stage. Even with the introduction of low-end models, such products cannot expand their markets, for they are not needed by mass consumers. Will smart phones be able to enter the mass market like the color handset did?

 

[+] Business elites and general consumers

 

The handset you use must have the calendar function, which you might never use, not to mention accessing the Internet with your handset. Let's increase the size of your screen, turn its desktop into Microsoft Windows, its calendar into Outlook and its browser into IE, will you start to use it then?

 

When it first appeared in the market, the smart phone was regarded as a mixture of the handset and PDA. Therefore, it was a wise strategy to focus on the business people, the prime users of PDA, as the target group of the smart phone. With their preference for multiple functions and convenience, those people might want an all-in-one device.

 

General consumers, however, do not have so many expectations for a handset. Many powerful functions that manufacturers brag about, for example, Word editing, are of little value to them. They usually just make phone calls, send short messages, take pictures, download images and ringtones, play games and MP3, seldom else.

 

If the smart phone follows the path of the PDA and ties itself with early adopters among the business people, its good days will end soon. Manufacturers need to focus more on entertainment functions that general consumers need. Therefore, audio/video will be a priority in the future.

 

From their appearance, smart phones could be divided into two categories: the PDA-like and the general handset-like. Currently, most manufacturers are making the former, because early adopters like their large screens and diversified functions (hence the larger size). However, most general consumers prefer the latter.

 

In others words, the smart phone must disguise themselves as the general handset to be able to infiltrate into the mass market. The ultimate reason for mass consumers to accept the smart phone would be the substantial drop in prices, which renders "smartness" as the standard function of every phone. As to those "smart" functions, how many of them will be actually used? Not many.

 

[+] Computer users and handset users

 

Generally, there are two types of smart phone manufacturer: the traditional handset manufacturer and the IT product manufacturer. Both have their own advantages. Consumers, on the other hand, have their own purchase channels. Should smart phones be sold in computer stores or handset stores?

 

Let's return to the start point, and look at the issue from the standpoints of the market stage and consumer identity. We can see that most of the existing early adopters are hardcore computer users and business people who, while being addicted, use computers to process files and contact others.

 

Therefore, IT product manufacturers are selling smart phones through computer distribution channels, which are expected to boost sales at a surprising speed. But very soon, once the early adopter market is saturated, the bottleneck will appear.

 

On the other hand, traditional handset manufacturers are also making multifunctional and large-screened smart phones, but sell them through telecom product distribution channels, which are not conventional to most early adopters. Therefore, the sale of those smart phones is less promising. Should the manufacturers make audio/video-oriented smart phones and "disguise them as general handsets", then it is a right strategy to sell them in the telecom distribution channels.

 

In addition to the desire of manufacturers to achieve continued good sales in a saturated market, the smart phone also bears the expectation from telecom operators to increase the revenue per subscriber, which might turn out to be a factor for change to the development of the smart phone. ( 2005/01/23 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : Smart Phone (1) Let's Begin with the Definition
Next : Smart Phone (3) Attitude of Telecom Operator

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- Today in History

Smart Phone (2) Who is the User? - 2005/01/23