Is This News or Ads?

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I’ve always thought that I know pretty well how to navigate media. That I can immediately tell if a piece of content is an advertisement. After all, understanding the difference between ads and journalism is a crucial part of media literacy, right?

Then I read Wired’s story “How BuzzFeed mastered social sharing to become a media giant for a new era“.

BuzzFeed is a quickly growing media company that started in 2006 with a focus on viral content (pictures of cute cats, LOL). Since then they’ve gathered a funding of $46m, grown to a media giant and plan to take on serious journalism or so-called hard news.

We will stay away from anything that requires adopting a legacy business model… We are building the defining news and entertainment company for the social, mobile age.

BuzzFeed’s business model is advertising. Here’s the catch: on BuzzFeed I no longer know if I’m looking at an ad or not. That’s by design. The Guardian reports:

That advertorial – advertising content that looks like editorial – is actually the source of BuzzFeed’s financial progress, according to Peretti.

One of the following is a paid-for advertisment that had a very good 6,1% click-through rate:

At a glance, I’d say they look pretty similar.

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Conclusion: native advertisement or advertorials are going to replace banner ads.

Customer Centricity is Rare

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Customer centricity vs product centricityTrue customer centricity is still rare. This is news to me because these days you’re supposed to be customer centric. I hear many entrepreneurs describe their business as customer centric. Their product is customizable and totally flexible; they know their would-be customers thoroughly; their product utilizes big data to adapt to users’ needs; and so on…

More often than not they are product centric. Examples:

  • I like to surf and ride a motorcycle (not at the same time). I can attach my GoPro to a surf board or my helmet. But GoPro is not customer centric, it’s a superior product.
  • My broadband went dead after a power failure. I called my provider and they quickly decided to send me a new ADSL box. No hassle, happy customer. But this is not customer centricity, it’s operational excellence.

Both cases are good customer service, but it’s the same for every customer. Customer centricity requires a step further. You need to know your customer, the lifetime value of each customer, when and what to offer to the customer to add the most value, etc. If you’re customer centric, you don’t offer the same product/service for any two customers. Instead you proactively tailor your offering to cater individual customer’s needs.

The most well-known examples of customer centricity come from retail. See How Target Figured Out A Teen Girl Was Pregnant Before Her Father Did:

… Which means that the key is to reach them earlier, before any other retailers know a baby is on the way. Specifically, the marketers said they wanted to send specially designed ads to women in their second trimester, which is…

Another case is how Tesco manages to maintain high growth and ward off competitors like Walmart. In a story by Businessweek:

Tesco’s big advantage over major international rivals, which also include Germany’s Aldi and Lidl, is its unrivaled ability to manage vast reams of data and translate that knowledge into sales. While data crunching may sound dull, it has given Tesco two major advantages: an unmatched ability to operate multiple retail formats—ranging in size from convenience stores to hypermarkets—and the market knowledge to offer what many analysts say is the best and broadest range of house brands from any retailer.

Now that’s customer centricity.

Why would you want to be customer centric?

Because the world has changed. The power has shifted from producers to customers. Consider:

  1. Product development is much faster. Earlier it took a lot of effort to create a new product. Now technology enables anyone the create a product even if the scale would be very small. Think Kickstarter.
  2. Information flows much faster. It used to be impossible or very expensive to reach a big audience. Now anyone can publish a video, article, or create a social media campaign.
  3. Global delivery knows no borders. You just couldn’t order goods from other countries. Now anyone can go to Amazon or Alibaba.com and order anything, delivered anywhere.

There used to be a barrier of entry. Even if someone could develop a similar product, there was no way they could market it to your customers. And even if they found a way to market the similar product, there was no way they could get it delivered. Not so anymore.

Nowadays customer centricity is the way to maintain your competitive advantage.

How I Learned Better Writing from Oikotie.fi

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Would that be a good one?
Last Sunday I leisurely browsed through home-for-sale classified ads. Soon I noticed that the house descriptions fall in one of three categories:

  1. Short, focus on facts. Boring and not memorable.
  2. Vivid, descriptive language with focus on feelings. Unconvincing, pushy, and makes you want to come up with negative counter-arguments.
  3. Facts with adjectives including pros and cons. Balanced, credible, sticks in mind.

After filtering the classifieds based on the fixed form data and stats (including price), the description is pretty much the only means for differentiation. So. How do you write in a way that differentiates and sticks?

Type 3 is the best by far.

See for yourself:

Type 1:

Muuttovalmis perheasunto. Keittiössä on Domuksen kaapit ja uudet kodinkoneet. Tilava kylpyhuone/wc. Huoneisto sijaitsee 6. kerroksessa, josta avarat näkymät. Hissi. Sopii myös liikuntarajoitteisille.

—Ok, ihan kiva.

Type 2:

Toimivaksi todettu perheasunto kaikkien Lauttasaaren palvelujen välittömässä läheisyydessä. Hissillä esteetön kulku ostoskeskukseen. Kaksi lasitettua parveketta, joista vehreät näkymät etelään. Autoillekin löytyy paikat yhtiön autohallista.

—Toimiva kenelle? Kuka on todennut… Ja varmaan on vehreät näkymät talvella.

Type 3:

Heti vapaa läpitalon huoneisto hissillisen talon 3 -kerroksessa. Hyvin hoidettu taloyhtiön jossa mm. putki- ja sähkösaneeraus on tehty. Vehreät näkymät, olohuoneesta, parvekkeelta ja makuuhuoneista merinäköala kattojen yli. Kylpyhuone ja keittiö hyvässä kunnossa, muilta osin asunto kaipaa kunnostusta. Pihan puolelta kulku hissiin ilman portaita. Tervetuloa tutustumaan paikan päälle!

—Hmmm voisi käydä katsomassa…

Learning to be a better copywriter. I already revised a business document based on this amazing insight.

Compete to Be Different

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I like to compete. When we’re cycling with a friend, it turns out to be a competition of who’s first up the hill. When we are shooting hoops, we always count the score. It’s fun, makes the game more interesting, and provides a solid measure for development. We are competing to be better.

But when it comes to business, this idea resonates strongly with me: Don’t compete to be better, compete to be different.

We’ve seen so many times that competing to be better just makes everyone similar. Think about cars. Jeep used to be rugged, Volvo used to be safe, Audi used to be sporty. Now every car is rugged and safe with great performance and modest mileage.

All airlines are the same. All bottled water is similar. Every PC or printer is the same.

Different - Escape the Competitive HerdTherefore, I was expecting a lot when I got my hands on a book titled Different: Escaping the Competitive Herd by Youngme Moon, a professor at the Harvard Business School. She writes about how markets evolve, why that leads to similarity, and how to stand out of the herd.

Typically, companies try to make their product better, and they do this by:

  • Augmentation by addition (more features!). Mobile phones used to be for calling…
  • Augmentation by multiplication (wider selection!). Coca cola light, classic, zero, vanilla, cherry, zero caffeine free, etc…

Customers expect the products to get better and the selection to get wider. What was great last year is not nearly good enough this year. Or that’s the belief that businesses have. This augmentation treadmill leads to over-serving and inflated set of benefits. I think Horace Dediu has written about similar idea in his analysis about how the iPhone is able to maintain its price: “In the case of the iPhone the tenacious retention of its ASP indicates that the point of over-service has not been reached.”

Prof. Moon goes on to introduce Idea Brands. They are brands (businesses), who are more interested in separation that comparison. There are three categories of idea brands:

  1. Reverse brands.
  2. Breakaway brands.
  3. Hostile brands.

Reverse brands switch gears to reverse and actually remove benefits even if clients expect and want the benefits. Reverse brands’ products are stripped down, but not in the way the low-cost businesses operate. K-mart or Ryanair are not reverse brands. Reverse brands trim and eliminate features but at the same time introduce some other form of extravagance or splendour. Prof. Moon uses early Google as an example: back then Google removed all popular portal features and focused on search only. It was fast, efficient and clean – totally unlike Yahoo or AOL or Altavista at the time.

Breakaway brands position their product according to different, unexpected standards. They frame themselves differently. Examples include the Simpsons: it was a cartoon but totally different from any cartoons seen before. The Simpsons provided cultular criticism and complex jokes. Another example is the Swiss watch maker Swatch. Swatch didn’t have anything to do with the Swiss clock making traditions (i.e. long lasting, valuable, handcrafted time pieces). Instead Swatch positioned themselves as a fashion business. They had a huge selection, constantly renewing, and they were quick to introduce new models.

Hostile brands don’t compromise for anyone. They emphasize even their flaws and try to make a statement in doing so. They draw a line and know that only some will step over – but those who do, will be loyal customers. Birkenstock is ugly but stands for comfort. Many drinks try to play the hostile brand card: Devil Springs Vodka – not for celebrating your sister’s birthday. When Mini Cooper launched in the US in 2002 they didn’t try to convince us that the car is bigger than it looks or that it’s spacious enough. Instead they said this is a really small car – but not a boring car at all. Hostile brands know that traction requires friction.

Differentiation is not a form of competition but escape from the competition altogether.

Oh, about the book. I’d say it scores 3.5/5. The ideas are very interesting but not too strongly discussed. Evidence was too often just anecdotal and conversational. And there was too much talk about “my students, who did this ‘n that”.

Wasting Money on AdWords Mobile

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Mobile Search Drives Valuable Outcomes?

Google is rolling out AdWords enhanced campaigns. Starting on July 22nd, all legacy campaigns begin to get automatically upgraded. Enhanced campaigns raise focus on mobile: it gets easier to customize, target and bid for mobile users.

I learned about enhanced campaigns the hard way.

When setting up a new campaign last week, I accepted the default setting. The new campaign was enhanced, i.e. the ads are displayed to mobile users, using the same bid as for desktop and tablets. The result was:

  • A lot of impressions with an ok CTR.
  • A lot of clicks in a short time absorbing the daily budget.
  • No conversions and a huge bounce rate.

Why? I started digging into the stats and found out that the majority of the clicks were from mobile users. If I disregarded mobile users, the stats were actually pretty good. The problem was that just by accepting the defaults, I ended up bidding way too much for clicks on mobile.

My immediate action was to modify the bid strategy so that for mobile we bid much less. It’s easy to do, but also easy to miss if you accept the defaults.

So, problem solved? Maybe AdWords mobile would be an opportunity? Based on a study by Google/Nielsen released in March 2013, mobile ads drive multi-channel conversions and trigger follow-up actions.

I have yet to hear about AdWords mobile success stories. So far I’ve heard only bad experiences from advertisers. Mobile increases inventory, the CPC is cheap, but: the conversion rates are way lower than desktop – in every industry. This is bound to change, I assume.

The above mentioned study states that Mobile search drives valuable outcomes for businesses. At the time being, it’s valueble for one business: Google.

The Increasing Profitability of Google AdSense

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Coin TossGoogle Adwords offers no more quick win to small-time advertisers. The pioneers of online marketing have already moved on from Adwords, while the masses and big brands are getting onboard. In Adwords, the keywords are much more expensive and there’s a lot more competition all around.

This trend was well presented by Andy Brice on his blog post The declining profitability of Google Adwords. Andy says:

Less, more expensive clicks = less profit. I can either pay more and more per click to maintain the same number of sales. Or I can continue to pay the same per click and get less and less clicks. Either way, my profit goes down.

The positive flipside is that AdSense publishers get better bang for the buck. The inventory for ads is finite. When the average click price goes up, it means that publishers start getting fair price for their ad inventory.

I think this is very good news.

Publishers can monetize their remnant inventory efficiently, and do not cannibalize their direct sales by allowing AdSense. Hey, maybe there’s even a chance for a profitable media business… The quality of ads is getting better because of the increased competition among advertisers. The website visitors are going to enjoy better targeted, well-crafted ads and landing pages than before.

A quick look at Google’s financials seems to support this observation. The network revenues increased by 20% in 2012. Out of this $12.5 billion about 70% goes out to the publishers (the cost item is Traffic Acquisition Cost, TAC).

Website owners got $1.47 billion more in 2012 than the year before!

Only Few Finnish Startups Born Global

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How many Finnish online products are targeting European markets? More specifically, consumer oriented online products?

If I’m not wrong, there are very few. Overall, the number and scale of B2C product businesses in Finland is much less than in the neighboring countries. Among these few are some that are “born global”. As a rule, their target market is the USA, not any of the European markets.

I’ve been trying to find successful Finnish B2C online products whose target market is Germany, Spain, France, or Russia. There are many good reasons to target the EU markets, in addition to the 370+ million people online. The Western European countries are big, there’s much less competition than in the USA, the culture is similar to Finland’s, and the time difference is manageable.

East is even more interesting. Russia is the biggest European market in terms of unique users, the growth rate is rather healthy (~9% per year), and it’s just across the border for us.

Households with Internet access, by region

Households with Internet access, by region

I can name a number of Swedish B2C online product businesses that are expanding to the European markets. But in Finland, there are only five??

  • Holvi is the first to come to mind. Their product is super interesting and I think they are going to take advantage of the new EU-wide banking regulation in their mission to make banking better for us.
  • Web of Trust has exciting partnership in Russia with Mail.ru. Russia is already a big market for them and visibility through Mail.ru and others sound good.
  • Ostohyvitys.fi is focused on domestic audience but they have at least a russian version as well. Let’s see what comes out of that.
  • Scoopshot is in English on the web, but their mobile app is translated to e.g. Swedish and Russian. In Sweden they have strong(?) co-operation with Metro: Scoopshot.se.
  • And of course, our Nimenhuuto has Mojakomanda.ru, Kadermanager.de, and Yaentrainement.fr.

Can you suggest additions to the list?

Maybe Finland just is a B2B country. There are many interesting B2B online products that look to break in Europe, such as Enreach, Cabforce, Muuvit, Analyse2, Happy-or-not, …

 

Online Business Requires Fast Page Load

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The most underrated feature affecting user experience is speed. Fast page load must be a priority, along with great concept design.

We’ve all heard the classic case: Amazon generated 1% more sales for every 100ms they shaved off the page load time (the original slide deck by Greg Linden). That was almost a decade ago, but users’ preference for speed has only increased. NY Times:

People will visit a Web site less often if it is slower than a close competitor by more than 250ms.

A typical modern web page loading html, css and javascript takes roughly 4-8 seconds to fully load. Thus, we are talking about making the page 3-5% faster. While 250 milliseconds sounds very little to me, 5% sounds much more significant.

Walmart utilized Real User Monitoring (RUM) analysis to their site and found out that there’s a strong correlation with:

  • High conversion rates and fast pages
  • High bounce rate and slow pages

Their conclusion seems to verify the 100ms less = 1% more rule.

Making a site fast is not trivial. It’s a science in itself and requires a lot of effort. In addition to the technical challenges there’s the psychological side. Perceived speed is more important than actual speed.

Too often the 250ms is not considered important by concept designers and start-ups building web-based businesses. It should be top prio. Fast page loads mean business!

There are plenty of tools for figuring out how to improve your page speed. For example, this one by Google is very good (especially so because it shows that we’ve done the right things at Nimenhuuto.com): https://developers.google.com/speed/pagespeed/insights

Who’s the Best to Sell Your Online Ad Space in Finland?

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Many online publishers in Finland have asked me who’d be the best partner for selling their ad inventory. It’s a crucial question. The right media sales partner can multiply the value of your ad space, and help you in developing an offering that adds value to both the big brand advertisers and your audience.

Here’s a list of the most prominent independent players in Finland. N.B. the descriptions are my opinions, not the companies’ official statements.

Verkossa Media logo

Verkossa Media are the biggest with their ~50 publishers, including sites like Rantapallo, Afterdawn, and Kotikokki. In the past, Verkossa Media have done a great job in direct, site-specific campaign sales. They have changed in the past year or two, and it seems their focus is transferring from site-specific campaigns to their ad network. Usually this means more bulk, less tailoring (and thus less added value). On the other hand, for small sites it may be good to be part of a packet in order to appeal to advertisers. Verkossa Media’s revenue in the latest fiscal year was 7,5 MEUR.

White Rabbit logo

White Rabbit have a history of representing “youth/street culture” publishers. They’ve been working with many pop, music and indie sites, and represented Spotify when it was all new and just started in Finland. Now White Rabbit’s media list includes sites like Findance, GrooveFM, Kuvake.net and Stardoll. White Rabbit is forward-looking and is among the forerunners in utilizing Rich Media formats. From my point of view seems that they’d benefit from having a more coherent set of bigger publishers. White Rabbit’s revenue in 2010 was 1,6 MEUR.

Klikkicom logo

Klikkicom are an all-round digital marketing implementation house. A few years ago, around 2006, Klikkicom did media sales for many publishers and had a strong vertical in e.g. sports. Since then they’ve expanded to SEO and SEM, along with analytics and various social media promotion products. The expansion caused a shift in focus and their performance as a media sales partner suffered – at least for new sites. This may be changing, though: Klikkicom were VC-backed and was acquired by Edita this year. In 2011, Klikkicom’s revenue was 6,9 MEUR.

Saarsalo logo

Saarsalo is a smaller, fresh player from Tampere with a background in printed media. Saarsalo’s largest accounts are Otavamedia’s brands (e.g. Suomen Kuvalehti, NettiX) and A-lehdet (including Apu and Urheilulehti). While it’s early to say much about their performance in online space, I’ve been told they’re on the right track. Saarsalo’s revenue in 2011 was 0,36 MEUR.

Diamonds and Pearls logo

Diamonds and Pearls is the latest addition to the list. D&P were founded in August 2012 by Sami Kelkka, a long-time CEO of Verkossa Media. D&P say their strategy is to pick only a handful of publishers and work in close partnership with each. The target is to create branded publishers and media products that help both in expanding your audience and attracting advertisers. Interesting approach! D&P’s media list includes sites like Hellapoliisi and Iltapulu.

********

Selecting the best partner for your media is an important decision. Definition of the “best” of course depends on multiple factors that are different in each case, so take out your PEST and SWOT diagrams and see where the strategy ladder ends up. :) At Nimenhuuto.com we selected White Rabbit.

btw, the revenue numbers are not directly comparable. Some companies on the list report only their commission while others report the full value and then pay publisher’s share later, etc.

btw2, please feel free to post a comment if you think there’s someone worth mentioning missing from the list.

Startup Marketing: Lean or Fat

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How to go to new markets with a startup product and minimal marketing budget? Here are a few notes based on what I found on the web.

What is your market type? Steve Blank writes well about market type as a part of his Customer Development Manifesto. Does your product enable people to do something they couldn’t do before? Or is your product a faster, better or cheaper way to do something people are already doing? Marketing tactics for one type of market fail in others.

Market type is a choice you need to make. I thought of it like this: mobile phones were an existing market in 2007 when Apple released iPhone. But instead of competing on who had the fastest processor, biggest memory and most megapixels they created a new, apps-focused market. It proved to be a good choice.

New market is the typical type for any online startup. But it’s a difficult market type. Matthew Mamet puts it well

Creating a category, placing your product in that category, generating demand where there is no existing demand . . . all while building a product that will (hopefully) satisfy the demand. All with the Investors, and Board, and competitors breathing down the back your necks. Not easy stuff.

What if you already have a product? That is, you already cover one market (one country) and want to expand to other country? This still happens. ;) The Internet is not a single marketplace where you succeed by offering a product only in english and without localizations. Michael Moore-Jones points out that the Lean Startup methods may not be the right path to take:

The point is that if you’re not venture capital backed, you’d better be in lower right corner of the matrix. Otherwise you’ll miss the opportunity and the incumbents will win. Michael writes:

… a local Groupon clone that I saw here in Wellington began using lean startup methods, even though they were entering a new market with an existing product. They didn’t need to learn a thing about their market – they just needed to get to the market first. Nevertheless, they spent frugally and spent a lot of time testing aspects of the website. Missed opportunity and an epic failure – stupid.