Certainly we can question how open a system dominated by Google (Search and Ads), Facebook (Social relationships and activity), Apple (Online content delivery), eBay (Auctions) and Amazon (Online retail) is?

This is not to say that these companies are monopolies, as Matthew Ingram argues on gigaom.com when analyzing the book ‘The Master Switch: The Rise and Fall of Information Empires’ by Tim Wu, the Columbia Law Professor. Certainly these companies have been able to gain a dominant position in the market thanks to network effects, where products or service become more valuable to each individual user as the total number of users rises. However, as we have seen with MySpace and AOL, the network effects work both ways. And certainly Google is making a brave effort in the mobile space with the Android operating system

This duality where we have a struggle between two extremes reminds me of three pieces of academic research I have encountered for my PhD:

1. Marketing to Postmodern Consumers by Geoff Simmons
2. The marketing code: unlocking the secrets of Dan Brown’s success by Stephen Brown
3. Balancing between growth and profitability in product and brand management

In the first example, Geoff Simmons writes about how contemporary consumers are seeking both individualistic and communal experiences. Consumption is a manifestation of individual values and a tool for self-expression. But with limitless alternatives for how to make oneself unique, people are turning especially to social media to find belonging in different groups and sub-cultures.

I have personally witnessed this living in Japan. If you think of the amazing and wacky fashion there, kids seem to be crazy in a way that conforms to the rules of some sub-culture. (See for example FRUiTS magazine.)

The second piece of research by Stephen Brown is a wonderful example of publishing some interesting analysis on a major phenomena in popular culture. His analysis of the Da Vinci Code by Dan Brown proposes that the success of the book is based on a) the shock value of the topic, b) the author’s determination to try over and over again to create a bestseller, and c) the fact that the book plays with a basic human need to solve puzzles.

One of the most intriguing things about the Da Vinci Code was the fact that it was able to appeal

Standing out in business may be possible by combining business propositions considered traditionally extreme (Photo by ilco on sxc.hu)

to such a broad audience. This goes against traditional marketing logic where competitive advantage is gained by serving smaller markets through segmentation, positioning and differentiation. We now have animated movies by Pixar that appeal to both kids and adults. Social gaming takes this even further by basically being segmented for all, if you consider hits like FrontierVille.

The last example came from lecturing the Product and Brand Management course for the Aalto University School of Economics. Looking at the textbook we had, traditional business logic says that on the short-term (less than a year) you can go for either growth or improved profitability in your marketing strategy. However, when companies are applying digital marketing and social networking logic to their business, it may be possible to achieve both! As customer take the role of advocates, the virality of their word-of-mouth can grow your business without increasing the cost of acquiring new customers.

So perhaps we should not take existing business structures and business logic for granted. As academics and practitioners we must strive to create business propositions that break rules rather than conform to them.

As the number of social media platforms are growing, managers are increasingly frustrated with managing customers interactions in various channels. People are aware that they should be listening to their customers, but there is just so much noise. Lots of the marketing systems and metrics in use give only a historical account of what has taken place when brands need to be present and engage customers in real time.

Listening vs. Understanding

A good example of the difference between listening vs. understanding what your customers are talking about is McDonald’s. According to Dan and Jeff, there is a new tweet with the word ‘McDonald’s’ every seven seconds (see for your self http://twitter.com/#search?q=mcdonalds). While this may appear wonderful for marketing people, a closer look at the content reveals that 90% of those communications relate to someone giving directions: ‘Turn left at the McD’s'… The meaning based computing and marketing that Autonomy offers is designed to filter out that kind of noise and give you only the information that is relevant for business.

A lot of the solutions out there for understanding what your customers are talking about are either linguistic or XML and Boolean systems. The challenge with the former method, Linguistic, is that its often a lot of manual work where you can go through small amounts of data. You can get nice descriptive data of what people are talking about, but you don’t necessarily know how authentic the data is in representing views of others.

The challenge for the latter, XML and Boolean, is that the code is quickly outdated. You need to have the list of keywords altered by experts so  it fits the changing the world. Furthermore, you can miss out on a lot of relevant discussion since you don’t necessarily know all the words that people use to discuss about things that are relevant to their lives and thus your business.

What this means is that marketing and brand managers are usually pre-occupied with discussions related to their own brand and product names, when they should be listening to what people are saying when they are talking about their life, their goals and challenges. This is exactly why Google claims that YouTube is the number 2 search engine in the world – people type in ‘How to do xyz?’ into the search.

A few years ago I had dinner with a couple of marketing people from JVC’s unit producing accessories for divers. Before our meeting, I did a few searches on Google and sure enough – if you put in the brand name, most hits are to the company’s website. If you put in the product names, you get a first bunch of review sites followed by brand sites. If you put in ‘How to make a video?’ or ‘best video cameras’, a search that consumers would realistically make, the brand sites are nowhere to be found. So much for marketing and brand managers ‘controlling’ discussions related to their products.

In the webcast, Dan and Jeff promote the probabilistic method understanding customers. It is a self learning and updating, language independent and robust system that can cover large domains. This is the basis of their meaning based computing and marketing software.

Wisdom of the Crowds

Customers are more and more going to social networks to ask and answer questions as well as rate companies. Linked in and Yahoo answers are places where people go to talk about not maybe products but problems they have. Companies must actively be present solving the problems of customers or potential customers.

Thomas Fredriksson at Snoobi, a Finnish web analytics firm, presented a nice case study of My Starbuck’s Idea. The site allows people to post, rate and discuss ideas to improve Starbucks. In their first year, the site generated 75 000 ideas for improvement out of which 25 were implemented. Though the number may be small, anyone working with innovations knows how hard it is to get that many good ideas out of your own people. Plus the customer engagement and advocacy the site enticed is amazing.

Social Media Impacting the Bottom Line

The managers I speak to often think that social media is useful only for B2C companies that want to increase brand awareness and loyalty. The IBM ‘Listening for Leads’ program is evidence that even B2B companies can use social networking to drive sales and impact the bottom line. IBM sales staff actively build an subject-matter expert image for themselves in the eyes of customers in a specific industry with blogs and twitter accounts. The idea is to talk about things relevant for your customer’s business, not about your own products and services.

Specialized ‘seekers’ at IBM regularly scan online discussions and government agency sites listing RFP’s (request for proposal) to find potential customers looking for information to certain problems. Providing help in that situation is a great way to start the sales process early. For more information on the IBM Listening for Leads program check out this eMarketer case study.

Twitter is a social networking tool that I feel is undervalued and constantly gets misunderstood as a site where people send short status updates about their insignificant little lives. IBM uses Twitter to promote customer events, which include  webinars, podcasts, virtual trade shows or physical trade shows. Followers get information about special promotions and even  individual reps use Twitter to keep their own customers updated about interesting news, events and other relevant issues.

Find special deals on @DellOutlet

Dell is another example of a company that has turned Twitter into a sales channel. According to research by Danand Jeff, the company created the @DellOutlet to quickly move inventory and offer quick buys. So in this case its OK to talk about yourself and your own products, because your customers are following the account to get good deals. The account is now among the top 50 Twitter accounts with nearly 1,6 million followers and has generated more than USD 3 million in revenue.

Making your Offering More Relevant

Dan and Jeff quote  interesting data published by Accenture  (2007) stating that the average company churns 50% of their customer base in 5 years. According to the study negative perceptions about customer experience is the second most cited reason for customer flight immediately after price. I think this goes to show that managers often don’ know who their customers are, what they are doing on your website, and what they really want.

I posted earlier news related to a company called Frosmo here in Finland as I have been doing research on the company for several years now. The CEO of the company, Mikael Gummerus, told me about his philosophy during a chat we had the other day. I agree with him that all companies, regardless of if you are in B2C or B2B, need to understand the rules of social networking and how they apply to your business. For B2C companies, social networking is not only about raising brand awareness or deepening emotional tie customers have with you company. Its a way to send personified messages and create a more relevant offering for each individual customers. Similarly, for B2B companies it is a great tool for lead generation as the example of IBM shows us.

Dan, Jeff, Mikael and many other managers I have interviewed for my research emphasize that now it easier than ever to join social media. You don’t have to build your own site and try to teach people to spend time there. Its often a question of simply integrating into existing systems and using the wisdom of the crowds discover and share solutions. If you look at the Frosmo gaming tournament system for flash-based skill games on Facebook, there are a couple of elements that make it a social media service.

First, each registered user is recognized by name and greeted upon entering the service. Facebook Connect integration allows the service to also recognize who that persons friends are. Second, the game is designed so that its more fun with friends. You can advance and achieve goals faster if you invite friends to join your team. This is a simple way to entice advocacy and virality. Third, players get personified messages for example about what has happened in the game since you last logged in. This gives people the feeling that something fun and relevant is taking place in the game every day and you don’t want to miss out on it. Fourth, knowing who your customers are and what they do enables sending them personified special offers. This is a way to sell more. If a person hasn’t logged in for a while, a small incentive may bring that person back. Lastly, its important to understand all the different types of customers your company has. Some segments may bring in most revenue, but others may be important in word-of-mouth. Smart marketing performance metrics also measures virality and advocacy. People who bring with them lots of new players through e.g. their Facebook wall posts and status updates are rewarded in the Frosmo World.

I’m continuing my research on Frosmo and hope to publish interesting findings after the summer.

If you are interested in Dan and Jeff’s  full webcast, its available here on the AMA website. I’m not sure how long they will keep it online.

You can find the original full article online here.

Ever since I was a little kid, parodies of TV shopping have brought me lots of joy. Think of all the crappy products and cheap studio

How can anyone take this seriously?

sets – cheesy presentations of everything you can buy from the convenience of your own home. For example, how lazy can you be if you expect to lose weight by wearing a sauna belt around your bum?

I don’t know if HSN was carrying that product when Mindy Grossman took over as CEO, but the company was certainly not doing well. It was famous for uninspired clothing, beauty products that didn’t really do what they claimed, and logistics that would ship gadgets arriving broken. So her first goal was to change course completely and  to make the channel relevant again for customers. Now HSN is a 24/7 scripted broadcast building momentum for a shopping frenzy hour by hour, product by product.

The basis for the HSN turnaround was to understand who their customers are. These ‘professional shoppers’ as Grossman has named them are 80% female, over 35 years old, middle class people who buy products to feel better.

So the actions taken at the company included first to eliminate all

Serena Williams has her own department in the HSN store

products that could be easily found elsewhere. Second, each product sold on the show is an unique offer to the customers. Its a special deal that is available only for a limited time on their channel. Third, the products are either branded by popular designers or endorsed by celebrities.

Proof of the turnaround for HSN sold designs by Naeem Khan and Badgley Mishcka as well as fragrances by Sean Combs and apparel/accessories by Serena Williams.

Here is a YouTube clip of Sean ‘Diddy’ Combs pitch his fragrance on HSN. Notice how how he casually drops important scripted lines such as ‘I love that bag, I carry my laptop in it’ and ‘We made this exclusively for you, you cannot find it in any other shop’.

From a marketing perspective, the key issues to take from the HSN case is the narrative. Home shopping doesn’t have be about a person shouting ‘Buy now!’ on your TV. The celebrities and hosts try to be natural, more like talking to friends than selling something. They talk about their life, the products, and how it would make you feel.

Furthermore, the channel is able to position itself in an unique way by drawing from style icons. The product line is unique and available only for a limited. Products are often sold out, so there is a sense of urgency to purchase. Lastly, there is always the up-sell. When Serena Williams talks about a necklace, there is always a matching set of earrings to buy.

Introduction to journal article on ‘monetizing storytelling’
On April 5, 2010 media industry professionals are attending the meeting of the Producers Guild of America (PGA). News of the proceedings spread fast over social networking sites such as Twitter through Hollywood insiders such as Nikke Finke on Deadline Hollywood. The board revises qualifications for media industry professionals and now for the first time ‘transmedia producer’ is added to the code of credits (PGA, April 6, 2010).

This acknowledges the work by individuals who expand narratives to multiple cross media platforms creating comprehensive experiences out of media franchises. According to the new definition, ‘transmedia narrative projects’ comprise three or more plot threads that are set in the same fictional universe. They can utilize a broad array of media platforms, including film, TV, internet and mobile applications, as well as print media and special venues. In the spirit of transmedia storytelling as defined by Henry Jenkins, this is not a question of merely redistributing the same content in new channels, but rather expanding and enhancing the overall media experience by making the most of the unique characteristics of each individual medium.

This move by the PGA reflects an evident trend by producers in the media industry to rely transmedia to monetize content over various platforms. After mass market examples such as the American Idol, its quite clear what the potential of leveraging intellectual property (IP) and entertainment brands across various channels is. The franchise generated nearly USD 80 million in revenue in 2009 giving more opportunities for the audience to spend time with their favorite show and the characters they love (figures from USA Today).

PGA guidelines state that a transmedia producer credit can be given to a person who creates, produces and further develops narrative continuity across multiple media platforms. This activity must be long-term by nature and thus differentiated from short-term individual marketing campaigns that may otherwise utilize elements of transmedia.

Our research shows that though some transmedia producers may be technology, software, social networking or marketing experts hired by producers to develop transmedia applications for projects, there is an increasing number of producers who create their stories with transmedia applications in mind. This not just advertising for media content that has already been produced, but a new approach to showcasing gripping and immersive multi-platforms content that engages audiences into the content development and consumption and building a fan base. Furthermore, transmedia is also about business models that enable novel forms of financing productions and monetizing the IP across multiple channels.

Our discussions and in-depth interviews among international media industry professionals at industry markets such as MIPCOM in Cannes provide evidence that the media industry is a game bringing together three issues: content, eyeballs, and technology platform. Producers with content traditionally partner with media companies and distributors that can deliver the audience, the eyeballs. The emergence of social networking sites such as Facebook and MySpace introduce a new technology platform for connecting with audiences and monetizing media content. Many producers, such as the winners of Streamy awards for web television programming, have actually empowered themselves by creating their own media and delivering content directly to the audience through online video services such as YouTube (See for example Ashton Kutcher’s webseries The Beautiful Life).

A good recent example of a successful transmedia webseries is Odd Job Nation, which helps people cope with the recent economic uncertainty and unemployment by showing how working odd jobs can be fun and even increase your life quality!

The purpose of our on-going research is to describe how understanding media as a service enables new and novel forms of engaging audiences, driving popularity and generating revenue for media content as comprehensive transmedia experiences. This research setting was inspired by a chat I had with Mika Salmi at MIPCOM. He is currently Chairman of Sulake (Habbo Hotel), and on the board of Blinkbox, among others, and used work as  president of Global Digital Media at Viacom/MTV Networks (NYSE: VIA). You can read his thoughts on Media as a Service at paidContent.org.

Be sure to follow this blog for updates on research findings!

Storyselling can be considered an goal-oriented form of storytelling. Jim defines it as a brand planning model that is

Jim Signorelli - Author of forthcoming book on StorySelling

rooted in story structure. So its not about advertising, but rather way to connect with your customers and do more business.

I’ll publish the article in three parts reflecting on Jim’s presentation with examples from my own research. So stay tuned for the rest of the story!

PART 1: From creative briefs to customer autobiographies

Usually marketing people rely on a creative brief, which typically starts contains the following elements:

1. Define target segment
2. Explain how do they feel and think
3. Describe what they need
4. Justify how  you can satisfy that need better than the competition

At each stage you should rationalize your claims and choices with hard data. The goal is to develop a unique selling proposition (USP). The problem is that often managers don’t have a clue what their customers value and makes their company unique in the eyes of the target segment.

This is an issue my colleagues at the Aalto University, School of Economics have noted as well. While traditional market research can provide us with a historical view of what customer’s think of us and how individual products or product groups have performed, it rarely give us cultural insight into our customer’s everyday life and practices. My friends Joel Hietanen and Joonas Rokka have published interesting work on ‘videography’. In essence capturing customer interviews or just observation of what people do on video can be an inspiring resource for branding and business development. You can read more about their work on their blog ‘Inside Videography‘.

If this sounds to simple for you, I challenge you to watch the ‘Pizza turnaround‘ documentary by Domino’s Pizza. Its

Domino's Pizza is no longer void of taste

great example of how you can embrace negative customer feedback, turn it into a driver for business transformation, and communicate your passion for your product to customer. And yes, I agree, at some points the clip is comical, but you’ve gotta agree these people love what they do.

A good way to monitor customer sentiment as well as follow or even take part in conversations customers have online is netnography, a market research method popularized by Rob Kozinets. A lot of service providers offer software that can scan online discussions related to your brand or other issues relevant from your customers perspective. They can often assess if the discussion has a positive or negative tone. However, this doesn’t substitute your own close reading of what kind of meanings people associate with these issues. A couple of companies that people have recommended to me for social media analytics are Scout Labs and Buzzient.

Jim argues that these creative briefs actually kill creativity by forcing agencies and managers to crystallize their vision in this format. This is not to say that branding shouldn’t rely on facts, data, trends or insight to the everyday lives of our customers, their culture and practices. However, the outcome of this kind of a process should be something meaningful and factual from the customer’s perspective. With creative briefs you go wrong as soon as you start writing it objectively in third person. Brand owners think how can they show customers that they understand them, share wavelength, and get their problems.

Of course we can argue that the creative brief is not a document that is shared with customers. But what’s point of writing it if we can’t share it with our customers or it doesn’t explain to our employees what they can do in their everyday work to put things into action? Jim suggests writing an ‘autobiographical sketch’ of your customer. Writing it in the first person and putting yourself in your customer’s shoes can be enlightening. This story can be a compelling rallying cry for customers and employees, an embodiment of what your brand stands for.

Stay tuned for part 2 of my analysis of Jim Signorelli’s StorySelling, where I dwell on how brands become stories.

Well, one positive thing is the fact that EA has already spent 2,5 years wondering how to transform their business model from selling game boxes for $60 to distributing them online. BusinessWeek estimates that the company still gets about 80% of its revenue from traditional shrinkwrapped games. In 2011 this would lead to sales of $3,45 to $3,7 billion and a loss of $200 to $300 million. Growth is expected to come from the digital business, which could amount to $750 million, up from $575 million in 2010, as reported by mocoNews.

Another positive thing are all the titles that will be available online with the freemium business model. Kotaku reports on EA’s plans from the company’s Q3 financial earnings call by quoting COO John Schappert: in 2011 ”every one of EA’s releases will have an online component—both downloadable content and online play.”

And the following year does seem interesting if we look at the forthcoming releases. I’ve quoted Dean Takahashi from GamesBeat before in posts and he has put together a nice summary of what we can expect. I’m personally looking forward to trying out

• The new Medal of Honor game, which will take on the successful Call of Duty Modern Warfare 2 franchise
• All Points Bulletin, which is a massively multiplayer online game that competes against the Grand Theft Auto franchise
• Madden NFL and other sports franchises on Facebook (Explains why EA acquired Playfish as I speculated in my previous post) as reported by All Facebook and Barron’s
• A free online version of FIFA Soccer and Tiger Woods Golf (revenues coming from micro-transactions of digital item selling and additional content) reported by 1up.com
• UPDATE: the Sims as a social game on Facebook

The question remains, can EA make the transformation into digital business models. At least it seems that they are investing heavily into the future.

This is a very interesting new twist and take on social gaming. Until now, many social games have required people to invite their friends to the gaming experience to advance faster and reach new levels. Good examples are top-selling social games such as Zynga’s FarmVille, Café World and Mafia Wars. The problem with these games is that you don’t really do anything or achieve any common goal with friends that have joined your team. It can be actually quite annoying to receive invitations from your friend to, for example, help out assassinate some imaginary mafia Don! So social gaming on Facebook tends to be something you do alone, even though you are surrounded by 350 million other users.

Best examples of gaming where groups of people join forces to achieve something together are massively multi-player online games and role games (MMOG’s & MMORPG’s) such as World of Warcraft. The problem there is that you all have to be online at the same time to

work together. So it requires a greater commitment and more time spent playing the game than social gaming.

Social gaming on Facebook is a very much competitive industry and certainly Frosmo would have not received much attention if it would have just published a new game. Their gaming portal contains games by 3rd party developers. For them, Frosmo is a new channel to monetize their IP. What Frosmo does is create a new layer over the games that enables arranging money and prize tournaments. This revenue is shared by Frosmo and the independent gaming companies they partner with.

UPDATE: I had a chance to talk with the company CEO Mikael Gummerus, who said that Frosmo’s basic idea is to “make it easy for publishers, social networking sites and Internet portals to quickly increase ARPPU”. Note that he makes a difference between Average Revenue Per PAYING User (ARPPU) and the traditional Average Revenue Per User (ARPU). This is done by connecting site traffic with Frosmo content and tournaments with payment gateways and then sharing revenue streams. Previously Frosmo did this as a while-label service for their media partners, but now with the Facebook application they can themselves also tap in to the huge pool of some 350 million Facebook users! Inside Social Games reports that Frosmo has been growing 20% monthly since its launch in mid-2008 and expects to reach 15 million players by the end of 2010. They currently have some 3 million gamers.

For these players, Frosmo provides a new and novel gaming experience, where how you you do in your individual games has an impact on how well your team is doing. Everyone doesn’t have to be online at the same time to play, but the more active your team is, the faster you rise in ranks and travel forward in time. At the same time you can learn cool and interesting things about historical times.

Check out the Frosmo Facebook application at http://apps.facebook.com/frosmoworld/. One of the first people to write about Frosmo is Dean Takahashi from GamesBeat. Check out also his in-depth analysis.

An interesting thing that retailers are doing now is adding video content to their e-commerce sites with clickable links. Pics and 3D animations are great, but there is nothing like seeing the product in action or presented by a designer or fan. If you see something you like on the video, just click on the product for more info, then share it on Facebook or Twitter, or proceed to purchase it.

Check out the original article by the Ottawa Business Journal on how one of the world’s biggestonline shoe and apparel stores, Zappos.com, has chosen local technology firm Overlay.TV to provide clickable video descriptions of its products. I uploaded Pål’s demo on YouTube. Check it out to see how it works.

Have fun shopping!