Ross Dawson launches Influence Landscape Framework

This week Ross Dawson launched the beta version of his latest thinking for 2009, The Influence Landscape, at a lunch seminar organised by The Insight Exchange. Ross has a summary of the lunch / launch here.

Ross comments that:

We are also preparing our landmark Future of Influence Summit (evolving out of the Future of Media Summit), due 1 September – details very soon!

Gavin Heaton (aka the Servant of Chaos) also has a report on the launch at My Venture Pad.

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Doritos viral campaign that every advertiser should fear

I attended a social media breakfast this morning held by Bullseye digital sevices agency where Ian Farmer presented on his Social Media Action plan.

At the breakfast I caught up with Ian Lyons of PureProfile and The Cool Hunter who sent me the Doritos Banner Takeover viral video from YouTube. If you haven’t seen it, it is an eye-opener for publishers, advertising-network operators, advertisers and everybody else operating online – or thinking about transitioning their media business onto the interweb and using advertising as the revenue source. Yet another issue to consider. As Ian Lyons said, “here’s the video all publishers need to see”.

The only problem for Doritos, with all the viral traction they’re gaining from the immediate interest in this campaign, their website and download doesn’t seem to be up and running yet at onlythegoodstuff.com. Perhaps the video was leaked and escaped Doritos’ advertising camp too early?

Update: I was just doing some research on this campaign and found a reference in the Twitter Search logs from five months ago by @tbrunelle saying “thestuffyoulike.com offers a Doritos plugin that works as a banner blocker. An advertiser removes other advertisers.” Yet again, there is NO plug-in at www.thestuffyoulike.com – there is, however, a live site with print and outdoor ad samples as well as other basic campaign info, including the video. I will continue to investigate, all the way to Sweden, to get an answer on what is happening here. If anyone else knows, please let us in on the mystery with a comment below. Maybe this is part of the elaborate and fictitious Doritos SNACK STRONG Productions that involves an online game, Crash the Super Bowl campaign, UGC and more.

The Swedish agency is Papercut and notes that it has won several awards for the work already in 2008.

Update II: Well, as you can see from the links above, thestuffyoulike.com has been taken down, Onlythegoodstuff.com still doesn’t exist. However, it is most likely because the video was created by a couple of very talented Swedish students, Carl Frederick Jannerfeldt and Tomas Jonsson. I’m unclear how much or little of the work on the Papercut site is student work or client work, but it’s certainly worth having a look at for ideas and inspiration. Check out the lightart campaign for Maglite.

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The FREE business model, as Chris Anderson explains

Chris Anderson’s discussion of FREE online business models raise many of the same questions that my posts about advertising-driven and subscription-driven media models did after the Future of Media Summit 2008. Read people’s comments on his original post.

This is a key debate taking place worldwide as traditional/print/atom/physical (call it what you like) businesses look to translate their revenue generation model online, as they acknowledge the growing impact of the digital space.

I had a meeting today with a travel agent who has a website. Their site, however, is nothing more than manually controlled brochure ware for events and prices. They didn’t recognise the significance of search engine traffic, the potential for ongoing interaction with clients, or the ability to offer FREE advice and information to new visitors. I could go on. You don’t think about a travel agent being involved in the FREE economy, however, they have built up so much specialised information which they happily pass on to people over the phone, or across the desk on a regular basis that they ARE giving away valuable ‘intellectual property’ without having it clearly packaged-up and branded. This content can easily be ‘wrapped and branded’ as important, FREE product that will assist travelers, particularly in highly-targeted markets. Will this sell travel services? If the information is valuable and engaging, it’s a reflection of the type of service you will provide. And people want to buy valuable and engaging services and products.

Here’s what Chris Anderson has to say about FREE:-

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FREE: the cocktail party version

When you’re writing a book you need to have your elevator pitch down or “What’s the book about?” will become the most dreaded four words you can hear (followed closely by “how’s it going?”).

Obviously the one-sentence version of the answer should be something close to the book’s subtitle. But I haven’t nailed that one down yet, so these days I just say “The economics of zero dollars and zero cents” and hope for the best. Some people glaze over and move on at that point, but for those who stop, intrigued, and ask me to explain, here’s what I say:

We all know free–it’s a trick that marketers use. But free is changing. When you think about it, there are two economies, one of atoms and one of bits. In the atoms economy, which is to say most of the stuff around us, things tend to get more expensive over time. But in the bits economy, which is the online world, things get cheaper. The atoms economy is inflationary, while the bits economy is deflationary.

The 20th Century was primarily an atoms economy. The 21st Century will be equally a bits economy. This book is about the differences between 20th Century free and 21st Century free–free moving from a marketing trick to a new economic model.

Anything free in the atoms economy must be paid for by something else, which is why so much traditional free feels like bait and switch–it’s you paying, one way or another. But free in the bits economy can be really free, with money often taken out of the equation altogether. People are rightly suspicious of free in the atoms economy, and rightly trusting of free in the bits economy. Intuitively, they understand the difference between the two, and why free works so well online.

– For more see: The Long Tail – Wired Blogs.


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Chris Anderson explains the long tail

UK-based site Intruders.tv is a “global network of video blogs covering the web 2.0 and technology ecosystem”. They interviewed Chris Anderson about The Long Tail at a recent conference and asked why people have attacked his theories, business models and philosophies about the internet. Anderson also discusses his motivations and key concepts in this interesting video.

Vodpod videos no longer available.

more about “Chris Anderson Interview“, posted with vodpod


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The economics of moving from print to online

This is a must read article below, published on Monday Note, September 29, 2008 and edited by Frédéric Filloux. It addresses the structures and costs involved in a print and online newspaper business.

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Let’s kill a myth. The dream of a compact newsroom, able to output a high-intensity general news website doesn’t fly. Numbers simply don’t add up. And here is why.

First, the cost structure of a daily. In a typical operation, the biggest costs are industrial ones: around 25%-35% for paper and printing; another 30%-40% for distribution; around 18-25% for editorial; the remaining 10-15% are for administrative and marketing expenditures. It varies from country to country but we can safely assert most of the costs — at least 60% — are industrial in nature. Evidently, that part disappears when going online.

Now let’s compare three numbers:

a) the cost of an online newspaper,

b) the audience needed to absorb costs

c) the audience of the biggest website

Journalists make up most of the costs of a pure digital newsroom. As an example, assume the “loaded” (salary, benefits, expenses, overhead) cost of one journalist is about 60,000 € per year. If the objective is to provide a general news site, the starting point for a comparison is the print press. As an high end instance, a newsroom such as the New York Times’ still counts 1400 journalists, paper and digital operations included (they tend to merge). The Los Angeles Times now has 720 after the deep cuts demanded by its new owner (10 years ago, the headcount was 1300). The Washington Post has a staff of 600.

For the rest of the article see:

The economics of moving from print to online: lose one hundred, get back eight | Monday Note.


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Starbucks eats itself

Today Starbucks named the stores that will be closed in Australia – 61 of their 84 outlets. Earlier this month they announced that they would be closing 600 stores, or 5% of their outlets, in the US, due to poor performance, letting go 12,000 staff.

Has Starbucks, the company that was to rule the world, a ubiquitous image in Hollywood films and TV comedies from Sleepless in Seattle to Sex and the City for nearly two decades, run its course? (Update: see A Tipping Point for Starbucks by Sean Carmody for an analysis of the store closure figures. Good stuff.)

So what’s gone wrong? Its marketing strategy has been analysed and held up as a shining light in so many articles, blogs, papers, and university courses that the ‘Starbucks’ Way’ is a standard primer for any company wanting to move into the coffee store or, indeed, corporate strategy business (case in point, Tom Ehrenfeld’s article in Booz Allen Hamilton’s Strategy+Business – free access after registration). Is this, ironically, Starbucks’ problem? Has Starbucks become a victim of its own success, having created a massive market of espresso-coffee consumers and taught everybody else how to milk it?

A new participant in the industry can now use the Starbucks strategy at any point of the business life cycle – new entrant, growth / expansion, and mature competition. The most comprehensive analysis of the Starbucks strategy I’ve seen is the lecture given by Bryant Simon, embedded below.

The Seattle Times article says that in the US:

Most customers whose Starbucks stores close will be a short walk from a caffeine fix, the company said, because many of the unprofitable stores were being cannibalized by nearby Starbucks locations.

In her book No Logo, Naomi Klein identified that Starbucks had been highly criticised for the strategy of opening several stores as loss-making operations close to successful cafés to put them out of business –  then closing the unprofitable Starbucks stores and taking the prime location of the previously successful café they had targeted. Klein also identified that Starbucks practised a geographic domination strategy, where they would only open stores in cities they believed they could dominate entirely, rather than open a few stores in cities widely spread across the country. This competitive model may have led to opening excessive outlets aiming to drive down competition and create barriers to entry.

In a country like the USA, with thousands of towns and cities, where most people had never drunk espresso coffee before, this strategy may have seemed feasible – if ultimately dangerous.

In Australia, where we have far fewer people and far fewer towns, and a much greater heritage of espresso-coffee drinking, the strategy needed to be even more aggressive in the face of stiffer, established competition. I remember being shocked to see the first Starbucks open on Collins Street in Melbourne – and seeing people inside.

So what happened to the market?
As Bryant Simon says, “What we drink says something about who we are” – and, indeed, where we drink it does too. When Starbucks started pumping out highly caffeinated, European-style coffee to Americans, they fell for it hook, line and sinker. Why? Watch the video. Same in Australia, for anyone who hadn’t been used to drinking espresso coffee, or who got hooked by the syrups – but ALSO because of all the emotional connection from the value-add such as leather lounges, newspapers, Wi-Fi et al. And because in the beginning it was foreign and new! Yet, the coffee was expensive, upsized and not great (really not good – in my opinion, of course).

However, in both countries, Starbucks had successfully converted millions of people to espresso coffee and to using cafés. They had created an entire culture. And they had shown an entire generation of café entrepreneurs how to market to these new coffee-drinking, paper-reading, Wi-Fi-using clients.

What was happening to the drinkers? They were getting addicted to caffeine and needing coffee, but they also understood that “what we drink says something about who we are”. And they were looking for a differentiated, richer, more personal experience. Starbucks had promised an intimate, upmarket experience and it had now, because of its massive expansion program, become a common, mass-market brand. No longer the “the third place”.

And what was happening to the vendors? If you walk though any suburb in Sydney or Melbourne or through the city streets, there is an absolute proliferation of cafés, espresso coffee stalls, coffee machines poking out of bars and restaurants – and McCafés to boot. There has been an explosion of café culture over the past ten years, and a massive increase in quality of product and environment. I would argue that this has been led by a need to compete with organisations like Starbucks and Gloria Jeans. Now, why would you pay a premium to go to Starbucks if you want to be cool? Starbucks is NOT cool any more. It is a mass-market phenomenon for people who don’t know the local scene.

It is this dual phenomenon, changes in the habits of drinkers and more aggressive competition, which has eaten into the Starbucks business model – regardless and on top of any economic impact.

What has this got to do with digital media?

Well this blog is Beyond Digital Media, and coffee is a critical element of any digital strategy.  But seriously, whether you have a business online or offline, you must understand the implications of your strategy into the future. And we’re not talking that far into the future. Building huge businesses that remove engagement with the customer and turn out cookie-cutter results destroy relationships and ultimately your entire reason for being. Starbucks’ relies entirely on customers emotional connection with the brand (watch the video). When that is lost because small, more agile competitors can connect with agenda-setters and then their market, it is very hard to re-establish their brand-proposition.

By the way, my prediction is that Gloria Jeans will ultimately go the same way, it’s just that they are not under the same fiscal pressures and have not overextended themselves, having benefited from the franchise model. Does this mean it is impossible to have a mass-market chain of coffee stores? I don’t know about you, but I don’t go into a café because of its mainstream advertising. I go for the atmosphere and the coffee – and perhaps because I know the people. I know that, more than the bean being used, the quality of the coffee turned out relies on the skill of the barista.

I think it was Australian millionaire entrepreneur Dick Smith who said, “the easiest way to make money is find a successful business, open up next door, and do it better” (or something like that – can’t find the quote on Google). Large businesses stay large and successful because they create barriers to entry from smaller, more agile competitors. Getting cheaper coffee, and being able to mass-market their brand is not a substantial or significant barrier to entry in the café market.

Love to hear your thoughts – especially from Starbucks’ and Gloria Jeans’ devotees.

AFR obfuscation strategy

In my post Why the subscription model is hard to lose, I wrote about media companies often having two different brands – one subscription-driven and one advertising-driven – riding off the same content in order to maximise overall revenue without cannibalising existing income streams. In this post I want to look at the specific example of the Australian Financial Review and their cunning obfuscation strategy!

In my post I suggested that the AFR‘s advertising-driven / free brands were the Sydney Morning Herald and The Age. This, from a corporate perspective, is true, however, from the brand level, the AFR also pumps content through to other AFR brands such as technology magazine, MIS. This content is somewhat protected through an “obfuscation” technology that makes it unreadable if it is selected to copy. Part of a hard-core copyright protection strategy to bring maximum traffic to the site for viewing content and advertising, perhaps?

Obfuscation!

Obfuscation!

Sarah Stokley from LifeHacker had this to say:

This is bizarre – often people like to cut and paste to read later, or to email to a friend to tell them about the article, or to quote in their blog. Enter the Deobfusticator – a website created by Lindsay Evans which lets you enter an AFR URL and get a page of readable text in return. Thanks for helping us keep the Fin somewhat user friendly, Lindsay. :)

However, when I checked the comments on Sarah’s post, I noticed that Sean Carmody found the Deobfusticator no longer functioning. I checked, and also found it on the blink. Is the Deobfusticator broken or is Fairfax onto it and changing code.

Is the AFR trialling a free advertising-driven model with the technologists who read MIS? When will the next deobfuscator arise? Is obfuscation necessary?