Amazon MP3 Store, ITunes and Strategy
Wendy Davis writes today, “Around 90% of the people who purchase MP3s from Amazon have never used iTunes, according to the NPD report, as per Ars Technica. Additionally, the stores are attracting different customers, with men accounting for 64% of Amazon buyers, but just 44% of iTunes buyers.”
She notes that the good news for Amazon, MySpace and other existing or new digital music stores because the market has plenty of room to grow. True. She also mentions the DRM-Free debate which is a whole other but related subject.
What I found noteworthy about the NPD finding that the digital music market is bigger than the current ITunes demographic is the lesson about strategy, targets, and technology. Not that Amazon needs a lesson in where to fish or strategy; just that it seems to illustrate the importance of having a strategy, defining a target and introducing technology that is appropriate for your target and your strategy.
Although the NPD data on the subject was not available first hand and the data reported by ArsTechnica didn’t really say what percentage of Amazon MP3 users were Amazon customers, I think that it can be implied that they most likely were a significant percentage. Amazon has been built on consistent customer focused strategies.
A recent Fortune article quoted Jeff Bezo as saying, “Customers want three things: the best selection, the lowest prices, and the cheapest and most-convenient delivery. ” OK, you start with book, lots of books at low{er} prices, ship quickly (quick, even with free option), great experience design and service which brings a satisfied loyal customer base. Expand from there.
The Amazon MP3 Store is an alternative version of the “fish where the fish are” strategy; Amazon fishes in their own customer pond ( CDs, book buyers) but stocks it with different kinds of fish.
As quoted on Ars Technica, NPD analyst Russ Crupnick said, “Based on US CD sales, Amazon is among the largest sellers of physical music and boasts a substantial and loyal buyer base—many of whom may not be in the iTunes market sweet spot.”
“90% of those purchasing MP3s from Amazon have never purchased from ITunes” sounds like a positive outlook to me. Extremely positive. Conventional wisdom might have said that Amazon would be competing directly with ITunes because that’s where the pay for tunes crowd is.
But maybe Amazon focused on their own customer and applied their “three things”model and their strategy went something like, leverage Amazon Brand equity and offer DRM-Free music downloads to current customers who
visit Amazon.com because of positive past experiences or new customers who heard about Amazon mp3 through positive word of mouth.
As Bezo said in a Business Week Interview in 2004, “We work hard at being very customer-obsessed and expressing that through innovation…we see our customers as invited guests to a party, and we are the hosts.” Amazon is able to expand the market for digital music downloads because people trust Amazon and want to do business with them.
And let’s not forget the strength of the Amazon recommendation system, “recommended because you purchased X”, “people who bought X also bought Y”, “You may also like”….this is behavioral targeting personified. Of course they also have peer reviews, ListMania, author blogs and product picture uploads. And if you are an Amazon customer you have an Amazon profile page. The elaborateness of it and the privacy settings
are up to you. But Amazon is a social place; by design. Which brings me to the strategy, targets and technology lesson I mentioned earlier.
Marketers seem to know that they are supposed to have a copy strategy to create advertising and objectives and strategies to build a marketing plan. Yet, it frequently seems that when it comes to social media, the strategy rules are not applied; not necessary. Wrong! Scott Donaton at AdAge courtesy of Ted Defren’s blog called it the GMOOT (Get Me One Of Those)Syndrome…a desire to do something in new media, strategy not required.
And I have met too many marketers; some of them are clients (I am reasonably safe in saying this because although they want a blog, they don’t want to actually read one even though I tell then people are talking about them on line) who take the GMOOT path to social media….aka Ready, Fire, Aim.
Charlene Li and Josh Bernoff write about their P.O.S.T method for building a social strategy on their blog and in more detail in their book, Groundswell; POST stands for people, objective, strategy and technology. It’s “Ready, Aim, Fire 2.0″.
With the POST method you begin building with People; by determining where your target customer is on the social adoption curve or the social technographics ladder. In other words, in which pond should you fish.
O means you need to have objectives such as you want your customers who are already in the Amazon pond and who are interested in music, have an MP3 player or who are currently buying one, and therefore tech savvy enough to download music at the Amazon MP3 store even though they are not necessarily downoading at ITunes. The Strategy will be about enhancing the relationship with your customer; in Amazon’s case by offering a huge selection of MP3 downloads with Technology that is easy, quick, less expensive than ITunes and DRM-free.
I think their strategy completely explains why Amazon will grow the digital download market. They have the pond. The fish are ready to bite and the bait is of the highesy quality for the lowest price; and no DRM. And 90% is about as big as you can hope for. So aim. And read Groundswell.Â
You can buy it at Amazon….and review it, tag it and get other recommendations based upon its purchase.
Pay Per Post Changes Disclosure Policy Following FTC Announcement
Pay per Post is scheduled to announce a change in their disclosure policy and will require bloggers to disclose that they are being paid for their posts. Techcrunch has an advance copy of the press release and notes that "FTC" is mentioned a number of times thereby indicating that the change was no doubt inspired by the recent FTC announcement on word of mouth marketing.
On December 11th the FTC took the position that companies engaging in word of mouth marketing must disclose the financial relationships that they have with those endorsing their products. They declined to field a full scale investigation of word of mouth marketing practices as requested by Commercial Alert. This announcement highlighted the prominence of the word "disclosure" in a world where traditional advertising has become less believable than personal recommendations and consumer generated media and brand "ambassadorships" are becoming increasingly common.
WOMMA (Word of Mouth Marketing Association) distinguishes between word of mouth marketing, which involves disclosure of relationships, and stealth marketing, which does not. WOMMA recently issued an Ethics Adoption Toolkit for use by companies to develop ethical policies and guidelines for their word of mouth marketing efforts. They have endorsed the FTC position. (Full disclosure: I have blogged for WOMMA conferences and received comped conference fees and hotels)
 Commercial Alert, a consumer advocacy group, believes that word of mouth marketers are "perpetuating large scale deception" and that " word of mouth, or buzz marketing as it’s also known, {is} "fundamentally fraudulent and misleading." In October, they petitioned the FTC to require paid "agents" to disclose their relationships and financial compensation with those whose products and services they are endorsing. According to Annys Shin of the Washington Post, Commercial Alert mentioned Sony Ericsson’s use of fake tourists in a New York and Seattle campaign in 2002 as well as P&G’s Tremor’s use of teenage volunteers to promote their brands.
 The FTC already has a policy on commercial endorsements and deceptive advertising but according to Mary Engle, the FTC director of advertising practices as quoted in the Washington Post, the FTC wanted to be clear on disclosure in light on the increase in word of mouth marketing and the likelihood that consumers would make decisions based upon a presumed independence on the part of product recommendations that was in fact, not independent.
While Commercial Alert calls the FTC announcement a giant Christmas present for the word of mouth marketing industry, Andy Sernovitz, CEO of WOMMA calls the FTC’s efforts "supportive of the industry."
It would seem that the Pay Per Post announcement, which is a reversal of their prior positions on disclosure, indicates that they heard the FTC message as the warning it seems intended to be. This is a good thing.
Tags: PayPerPost, FTC, WOMMA, Commercial Alert, disclosure, Marianne Richmond, ethics, blogs,, Andy Sernovitz, Mary Engle, Washington Post, Sony Ericsson, P&G, Tremor
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MyGrace: The Other Blog Evangelists
Inspired by a member of his congregation that used MySpace to attract listeners for his rock band, Rev. Patrick Gray, am Episcopal priest from Boston set up a MySpace profile, the Advent, to attract listeners to his sermons. His site includes reminders about service times as well as audio files of the choir. The graphics are very cool and the Advent has 671 friends. The WSJ reports that churches across the US are using social media such as blogs and podcasts and on line social networking to connect with members and potential members.
Church Unplugged, according to the WSJ, attributes its growth to its MySpace profiles, saying that the church profile can be found while searching for music, television, or local MySpace users. Unplugged has about 100 church attendees and over 2000 MySpace friends.
The evangelicals are leading the way with blogs such as Outside the Box Ministry and Church Marketing Sucks that provide "how to’s" for churches to improve their marketing and their messages.Church Marketing Sucks has a Squido lens and posts with titles such as, "What Web 2.0 can mean for your church." Outside the Box Ministry is a little less "in your face" than Church Marketing Sucks but the message is similar. Their language is about engagement, connection and recognition that if people are on MySpace or Facebook that’s where they need to be.
The Vatican is podcasting and has a web site and according to Businessweek is hard at work on a faith based social networking site which is referred to as MySpace for Catholics. Sister Judith, the nun who is responsible for the web site and the upcoming social networking site, says that "the Net is the ultimate way to reach millions of people and to connect… it’s about something much bigger than myself…you can touch it, you can change it, and you can touch people with it." Spoken like some other evangelists at a different church.
According to the Pew Internet & American Life Project (2004) 64% of online Americans use the Internet for faith based acclivities. The study said, "Faith-related activity online is a supplement to, rather than a substitute for offline religious life. The survey found that two-thirds of those who attend religious services weekly use the Internet for personal religious or spiritual purposes." Sounds like online out reach is reaching the target.
But what about the MySpace environment for delivering the MyGrace message? Businessweek recently reported of the growing campaign to protect children from online predators that may close space on MySpace. One church education group mentioned in the WSJ article that the challenge was to reach teens without exposing them to inappropriate content. I think he may have the equation backwards, teens and actually most people, are probably not on MySpace to find a church but rather may find a church while they are MySpace.
As Ross Dawson writes about the MySpace generation, on Trends in the Living Networks, " The way I see relational technologies such as mobiles, chat forums, multiplayer roleplaying games, video sharing and so on, is that they extend our capacity as humans to relate. People have a built-in drive to connect with others, and now that has a far wider canvas across which to express itself. We can now discover many of the latent propensities and characteristics of humans, because we have been given new tools to explore our human identity." Or our spiritual side.
Outside of the Box Ministry has a post titled Blogging is Similar to Spiritual Multiplication which is a pretty good explanation of word of mouth marketing with blogs. If you want your message to be heard, as Businessweek notes, OClick All Ye Faithful.
Tags: MySpace, WOMMA, word of mouth, Church of the Consumer, Evangelism, marketing, church marketing, blogs, social media, media, podcasting, social networks
Word of MouthSpace
What space do gymnasts, cheerleaders, Fall Out Boy fans and gay guys share? http://www.myspace.com/stickitmovie.According to Reuters, Jessica Bendinger, the director of Stick It a movie the opened April 18th from Disney’s Touchstone Pictures devised a word of mouth marketing campaign through niche outlets and a MySpace page.
Disney promoted the movie in a two week flight of TV advertising using 10 and 15 second spots on syndicated shows such as "America’s Next Top Model." The actress, Vanessa Lengies, one of the stars in the movie asked Bendinger is she could set up a MySpace page for the movie. Vanessa set up the page but after several weeks Bendinger hired a freelancer to build traffic on the site.
Bendinger identified the target audience, gymnasts, Fall Out Boys fans, cheerleaders who were familiar with Bring it On (a cheerleader movie from 2000) and gay guys.They built the site to 6000 "friends". Then Disney took over the MySpace site and upgraded the design and features which added another 4000 "friends."
Bendinger definitely gets the effect of the 10,000 MySpace friends as she recognizes that 10,000 friends who have anywhere from 50-3,000 friends can sell a lot of tickets to a movie. But, Bendinger also had a few other buzz building tactics. She sought out a gymnastics writer to draft press releases for college magazines and newspapers highlighting all the NCAA gymnasts who are in the movie.
She also worked with Disney to package the movie’s trailer and the Missy Elliot music video to the 30,000 International Gymnast’s subscribers. Their subscribers gymnastic are gyms clubs…..there are 3000 clubs in the US and each club represents hundreds of gymnasts and gymnasts-to-be who are all high potential ticket buyers.
As Wired noted MySpace is a community site that converts electronic word of mouth into the hottest market strategy since MTV. Of course, it would have been interesting to have seen the impact of a blog strategy and to have seen what would have developed on the Stick It My Space site had Disney not taken it over.
And, yes, of course, you can see a clip of Stick It on YouTube. In fact there are several.
Tags: YouTube, MySpace, WOM, CGM, Marketing, Media, gymnastics, NCAA, Disney, Touchstone, MTV, Direct Mail
Trust in User Generated Content: Youth Say Yes, Adults Say No
Forrester has released a new study that says that although three fourths of on line adults access user generated content their confidence in the content is declining; conversely, the over 90% of on line youth that access user generated content indicate that their trust in the content is increasing.
Forrester’s report on Social Computing concluded that technology had made the top down model obsolete, that value was in experience not ownership, and that power was shifting from institutions to communities. This report spoke of connected buyers with less brand loyalty, less trust in institutions and more reliance on peer-to-peer networks and user generated content.
User generated content is proliferating. Trust is important. Brad Feld in a post called, Its The Trust Stupid says there are three principles for user generated content, trust, attention and relevance.
So if trust in user generated content among adults is declining but increasing among the young what does this mixed message mean?
Here is some of the available data on user generated content among the young and among adults:
Teens Create Content: An earlier study by Intelliseek indicated that Teens lead all segments in the creation of CGM; almost 30% of teens send photos via mobile devices, 45% have created a blog, and almost 10% subside to RSS feeds.
Young consumers rely on friends and families for purchase recommendations:
According to an earlier Forrester study, 50% of youth rely on advice from those they know and 65% report giving recommendations or information regarding products to others.
Social Networking sites are user generated content. YouTube users add 35,000 videos each day and viewers view 30 million videos each day according to Newsweek.
My Space is the 7th most popular English language website. If you need more data, see If You Don’t Get MySpace, You’re a Lametard at Mashable! or The Site That Ate the Blogosphere at Mobile Jones and Blogher.
MMOG (Massive Multi-Player Online Games) are user generated content. Participation is growing dramatically. There are 10 million people playing. They defy any preconceived demos one might have about gamers being young and male. Games such as Second Life The Sims, or The Movies are driven by the creation of user generated content. Included in the content development tools of MMOG is advertising. Players have the ability to put up their own advertising in the games such as promotions of in-game events or businesses.
Forbes reports that Mind Ark, creator of Project Entropia, and the first advertising tool built into a game has announced a collaboration with the distributors of ads from Coca-Cola and Warner Brothers that will appear in over 100 games. Clickable Culture reports that the Coca-Cola "will make its first official appearance at a live music event as part of the corporations sponsorship of the event’s real-world counterpart." OK, I admit…I am a little confused here between the real world and the counterpart; nonetheless, user generated advertising content is part of the real world and part of this virtual world. Something like life imitating art, imitating life imitating art….Coke’s tagline becomes the virtual thing?
Politicians bypass the mainstream media and turn to blogs: According to the Salt Lake Tribune and increasing number of politicians are using blogs to provide information directly with their constituents. However, a trust warning is included, "Of course as blogs spread, readers need to understand what they are seeing and what is behind it…when searching for information on a candidate or a lawmaker, readers should be wary of what site they peruse because some information may be missing our skewed….some of these blogs are controlled by parties or by parties or by political candidates." Yep, just like that other media source that we don’t trust.
User generated advertising seems to be everywhere. It is used by Jet Blue, Sony, MasterCard, Converse, and Tahoe. Results and opinions are mixed.
Consumer generated health and medical content have and important influence on decisions:A study by Cybercitizen Health (r) v5.0 indicates that consumers are increasing
relying on the Internet for health care decisions. They report a market of 99 million US adults. The Pew Internet & American Life Project confirms that direction but indicates that 52 million Americans or 55% of adults with Internet access use the Internet to get health or medical information. Regardless, the numbers are huge.
Importantly, Cybercitizen Health reports that there are a "small group of health
consumers (20 million)" that have tremendous influence on those using the Internet for health information. They speak of a "zone of influence, ranging from spouses, children and elderly parents to extended family and friends. In fact, other health consumers are very
likely to seek out advice from this group of highly influential health consumers, who are more likely than the average consumer to be using interactive media such as the Internet."
An aside, GE Healthcare joins and sponsors the delivery of consumer generated health care content. See also GE Imagination at Work.
So…there are many more data points indicating an increasing reliance on consumer generated content which doesn’t track with the reported decrease in trust among adults…at least as yet. In fact, a increase in reliance on user generated medical advice would indicate that adults are trusting the advice of their peers with something quite valuable….although a decline in trust measurement might precede an actual change in behavior.
The marketers who get the importance that consumers place upon the recommendations and opinions of their peers combined with the extent of the connections are already building new relationships with consumers and revising their marketing to foster collaboration and participation.
Clarence Fischer of Remote Access while drawing some comparisons between MMOG and classroom learning makes an interesting point about what makes these games
successful, "For a game to be successful, the secret is often not to make the game better, but to make the community which surrounds the game better. Empower them. Give them responsiblities and the power to personalize their experience." This might also be applied to marketing within the context of social computing.
Cory Treffiletti says that user generated content is a viable ad medium and makes the point that once a brand is in the public domain it belongs to the consumer, is controled by the consumer, and if they are provided with a sense of ownership for the brand and the ability to provide input that is responded to, will be a successful brand; if not the brand will suffer the consequences. He refers to this as brand democratization and says it is the wave of the future.
Technorati Tags: consumer generated content, consumer generated media, marketing, advertising, media, social computing, trust, MMOG, MySpace, blogs, advertising,
SuperBowl Ad Engagement Measured By Brain Scan
There were two messages that came accross loud and clear at the recent WOMMA Conference regarding new marketing versus old marketing : the consumer is in control of the information and advertisers are there to provide the means to the information; this means that advertising should engage, not disrupt, intrude, or "break through" the clutter.
There has been much discussion regarding the portfolio of advertising presented at the SuperBowl and many different opinions offered as to the effectiveness of the various ads. Researchers at the University of California at Los Angeles’s Ahmanson Lovelace Brain Mapping Center and FKF Applied Research used brain-scan images of people watching the advertising during Superbowl XL. They tracked the ads by measuring "activity in key parts of the brain areas that are known to be involved in wanting choosing, sexual arousal, fear, indecision, and reward" and then provided their results in terms of engagement: most engaging, middle of the road, and least engaging. The brain images are on-line for your viewing pleasure.
Their press release mentions that their sample was a group of "male and female SuperBowl viewers in their 20s and 30s chosen to represent typical audience viewers of the SuperBowl." Obviously, this has to be taken into consideration when interpreting their findings.
The "Most Engaging Ads" according to the scans were Sierra Mist, "Airport Security" and the Disney "NFL Dreamers" spot although this was engaging only on the first showing. The "Middle of the Road Ads" were Bud Light’s "Employee Incentive Plan" and Cadillac’s "Catwalk". The "Least Engaging" ads were "Aleve with Leonard Nemoy, " Burger King "Whopperettes," Budweiser’s "Junior Clydesdale," and Career Builder’s "Chimps Celebrate."
Dr. Joshua Freedman, UCLA Clinical Assistant Professor of Psychiatry and co-founder of FKF Applied Research notes that one of the advantages of brain scanning versus more traditional kinds of ad research such as focus groups, interviews and polls is that with brain scans the viewer’s emotional response is measured without relying on their interpretation of their reaction and without the influence of other’s responses or questions.
Other interesting results of the brain study were the contrast between the results at SuperBowl Ads.Com and the scans. For instance, FedEx Caveman placed #1 in the poll while failing to show activity in the emtional centers of the brain. The Dove "Real Beauty" ad which has been described as tugging at the heart strings did not show significant engagement in the emotional centers of the brain.
So…if the results of the brain scans indicate that none of these spots were engaging, what’s an advertiser to do at the Superbowl? All those consumers dressed up, but where do we go?
Manfred Marek summarizes some recent studies that incorporate neuroscience into the discussion of engagement in advertising. Scott MacDonald of Conde Nast presented a paper at the 2005 Worldwide Readership Symposium which looked at consumer’s relationship to magazine and television advertising. He said that with televsion, engagement with program content leads to
increased advertising resistance. Can we hypothesize perhaps that the more engaged the consumer is with the game, the less engaged they will be with the advertising?
Marek mentioned another study by Starcom which indicated that the most "time-shifted" TV
viewing happens during the most highly rated shows. Again, the message is the more involved the consumer is with the content, the less involved they will be with advertising that interrupts the content. Hence, the increase in product placement makes sense.
Viacoms Brand Solutions (VBS) conducted research using MRI brains scans of TV viewers and found according to Marek "that advertising content that is relevant
to the programme environment in which it appears is more likely to
stimulate brain activity in areas of the brain commonly associated with
advertising effectiveness…But the survey also shows that programme content
primarily activates the part of the brain that deals with absorption,
indicating that viewers lose themselves in the programme. But as soon
as the commercial break starts, viewers re-engage with their
surroundings – memory and decision-making faculties take over again."
A couple of possible conclusions: Superbowl advertising might be more engaging to the viewer if it was relevant to football. Remember Mean Joe Green? Maybe it was so mega-engaging because it was about football! US Today lists 10 Rules to Make Ads Magical that I think make some excellent points…one more might be engage with the programming.
Technorati Tags: SuperBowl, advertising, neuroscience, brain scans, consumer engagement, WOMMA, ad research
Wombat Podcast #10: Sean Glass and Chris LaConte
Sean Glass and Chris LaConte of Higher One talk about how they have used Word-of-Mouth to build their on campus financial services business on a podcast at the Wombat Blog .It is fascinating!
Sean and Chris talk about how when they started the business their first encounter with the influence of word-of-mouth was through negative word-of-mouth generated through misinformation about their on-line bill pay product. They astutely realized the importance of getting the right message to the right people by joining the conversation.
They began working with students to identify the physical locations, the venues, on campus where the conversations were happening and began providing students with the tools to facilitate the spread of information about their products. They gave students copy and content that they could then personalize and pass along to their friends and classmates. They identified students who believed in their products and were willing to talk about them and made them Agents.
The Agents were required to provide written reports of their activities and to encourage students to submit high quality reports, they were given points based upon the quality of their reports. The reports provided Higher One with immediate feedback, both negative and positive, that was then used to make changes, improvements, or otherwise build their business. The Agents functioned as the marketing department as well as the market research department. Impressive!
Sean and Chris say that word-of -mouth can be an entrepreneurs best friend….it is important to give early adopters the tools to amplify word of mouth…this includes finding the venue, providing information to share, and motivating the evangelists. Advertising they said can build awareness and create demand…word-of-mouth drives the decision to buy.
I mentioned Sean in a post in November about Word-of-Mouth Marketing on college campuses and he emailed to thank me and to tell me that he had started blogging. I am sure he will have a lot to say!
Besides Higher One, which is projecting sales of over $18 million in 2006, the 26 year old has among many other accomplishments, co founded the Yale Entrepreneurial Society a non-profit that promotes entrepreneurship in the greater Yale community and ThreadKill.com which I suggest you read his explanation for, and is an investor in Axon Labs, a sleep research labortory that is developing products to enable peak performance based upon research in neuroscience. The Axon web site links to an American Medical Association study that officially declares waking up the worst part of the day. Just visit our house any school day morning to confirm that.
Technorati Tags: WOMMA, advertising, blogging, WOMBAT Blog. word-of-mouth, buzz marketing, college marketing
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