Apr 042014
management and executive training, workshops and keynotes for technology

According to AdAge, Instagram has no advertising rate card but if you have a spare million hanging around the photo sharing service will speak to you.

Dropping a million dollars on a social media campaign isn’t a massive amount for a global brand, but is it a worthwhile investment?

As Vintank’s founder Paul Mabray told Decoding the New Economy earlier this week, the social media services were never invented to be business to consumer advertising platforms.

“I think that every social media platform that’s been developed had such a strong emphasis on consumer to consumer interaction that they’ve left the business behind, despite thinking that business will pay the bills.”

“As a result almost every single business application that’s come from these social media companies has met with hiccups. That’s because it wasn’t part of the original plan.”

With Instagram it’s not clear exactly what those companies are getting for their million dollars a month with its consumer focus, it could well be its the cost of experimenting with the new medium.

In the early days of radio it took nearly two decades to figure out how to make money from the broadcast model — it may take a similar period to understand how to make social media pay.

Apr 022014

“This is the most difficult time in history to be a wine maker, declares Paul Mabray, Chief Strategy Office and founder of Vintank.

“Never has the wine industry been as competitive as it is today.”

Mabray’s business monitors social media for wineries and collects information on wine enthusiasts. Since Vintank’s founding in 2008 the service has collected information on over thirteen million people and their tastes in wine.

Rewriting the rule book

Social media, or social Customer Relationship Management (sCRM), is what Mabray sees as being part of the future of the wine industry that’s evolving from a model developed in the 1970s which started to break down with the financial crisis of 2009.

“In the old days there was a playbook originating with Robert Mondavi in the 1970s which is create amazing wine, you get amazing reviews and you go find wholesalers who bring this wine to the market.”

“As a result of the global proliferation of brands the increase of awareness and consumption patterns where people like wine more, those playbooks didn’t work in 2009 when the crisis started.”

With the old marketing playbook not working, wineries had to find other methods to connect to their markets and social media has become one of the key channels.

Now the challenge in the wine industry, like all sectors, is dealing with the massive amount of data coming in though social media and other channels.

The cacophony of data

“If you rewind to when social media came out, everyone had these stream based things and the noise factor was so heavy,” says Mabray.

“For small businesses this creates an ‘analysis to paralysis’ where they’d rather not do anything.”

Mabray sees paralysis as a problem for all organisations, particularly for big brands who are being overwhelmed by data.

“The cacophony of data at a brand level is just too much,” he says.

“It’s as noisy as all get go and I think the transition is to break Big Data down into small bite size pieces for businesses to digest is the future, it shouldn’t be the businesses problem, it should be the software companies’.”

A growing digital divide

Mabray sees a divide developing between the producers who are embracing technology and those who aren’t, “the efficiencies attributed to technology are obvious whether they’re using CRM, business intelligence or other components.”

“The people who are doing this are recognising the growth and saying ‘hey, this stuff actually works! If I feed the horse it runs.”

While Mabray is focused on digital media and the wine industry, similar factors are work in other industries and technology sectors; whether it’s data collected by farm sensors to posts on Instagram or Facebook.

Facebook blues

Mabray is less than impressed with Facebook and sees businesses concentrating on the social media service as making a mistake.

“I think that every social media platform that’s been developed had such a strong emphasis on consumer to consumer interaction that they’ve left the business behind, despite thinking that business will pay the bills.”

“As a result almost every single business application that’s come from these social media companies has met with hiccups. That’s because it wasn’t part of the original plan.”

Facebook in particular is problematic in his view, “it’s like setting up a kiosk in the supermall of the world.”

The business anger towards Facebook’s recent changes is due to the effort companies have put into the platform, Mabray believes; “everyone’s angry about Facebook because we put so much into getting the data there.”

“We said ‘go meet us on Facebook’, we spent money collecting the items and manufacturing the content to attract people and now we have to spend money to get the attention of the people we attracted to the service in the first place.”

Despite the downsides of social media Mabray sees customer support as one of the key areas the services. “It’s easy to do in 140 characters.”

Context is king

“Everything come back to context. There’s this phrase that ‘content is king’,” Mabray says. “Context is king.”

“Anyone can produce content. It’s a bull market for free content. We have content pollution – there’s so much junk to wade through.

Mabray’s advice to business is to listen to the market: “Customers are in control more than they have ever been in human history: Google flattens the world and social media amplifies it.”

For wineries, like most other industries, the opportunity is to deal with that flat, amplified world.

Mar 212014
the new iphone 5 continues to disrupt markets

It’s always risky to make predictions about Apple, particularly when they are silly. The company plays a long game and isn’t known for panicked releases of me-too products.

Time is ticking for Apple to announce an iWatch, say analysts is a good example of a silly prediction about Apple’s future products and something that’s quite rightly criticised by Daring Fireball’s John Gruber.

As I’ve pointed out before, the watch market is tiny compared to the smartphone with the entire global wristwatch industry’s sales making up only one-seventh of Apple’s iPhone sales.

Part of the problem with stories like CNBC’s is the tech media’s focus on consumer goods, particularly in the internet of things and wearable technology markets.

Analysts like those quoted in CNBC’s story fall for this fallacy and overlook that the IoT market profits are going to come from the backend, B2B applications of the technologies.

With Apple we’re already seeing this with iBeacon being deployed in sports stadiums and shopping centres – Apple’s recent partnership with United Airlines to provide inflight entertainment is another step towards locking up business deals.

There’s no doubt those business deals will flow into the consumer market and an iWatch may well be part of Apple’s longer plan to lock customers into their products.

However claiming Apple have 60 days to launch an iWatch is plain silly, particularly when you have a company with a track record of not being panicked into launching me-too products and playing the long game.

Mar 052014

Madrid have renamed a subway station to Vodafone Sol and plan to rename an entire metro line as part of a corporate sponsorship deal.

Personally I think renaming places changes the culture of place; something well understood by dictators but possibly not so well by corporate marketing people.

Do you think this is a good idea?

Picture of Madrid Sol station courtesy of Zaqarbal through Wikimedia

Jan 282014

During the recession much was made about the ‘lipstick effect’ – the idea some businesses and products would survive because they’re little luxuries that cash strapped consumers will spend on while scrimping and saving in other areas.

Some of those areas are ladies’ cosmetics (lipstick), chocolate, movies and coffee shops. All of them offering small pleasures for a few dollars.

It’s a theory I’ve always been sceptical of and an episode of the BBC’s World Of Business where Peter Day travels to Cork to see how Ireland’s second city is recovering from the great recession illustrates the reality is a lot more complex than the theory suggests.

“We really struggled to keep alive,” Claire Nash of Nash 19 restaurant says in her interview with Day on her business experience during the recession.

“My turnover just absolutely took a spiralling tumble and it wasn’t that the customer weren’t coming in – those that had lost their jobs weren’t coming in – but those that hadn’t lost their jobs were really hurting and they were very careful with their spend.

“So they started using us as a treat, which was a model I never wanted to enter into but we weathered the storm.”

It can be argued that Claire survived because of the lipstick effect – she kept enough customers to survive – but it was tough and had she taken out the loans offered to her during the boom it’s unlikely her restaurant would have survived.

The key point though is the lipstick effect turned out to be a very different, and much less lucrative business, for Claire and other businesses in Cork.

So assuming a business will remained unscathed because of the assumption the lipstick effect is a big risk, if that’s the plan then Sequoia Capital’s infamous Powerpoint of Doom comes to mind.

While the presentation was aimed at tech companies and investors, it’s a good overview of how the Global Financial Crisis happened and Slide 49 – Survival of the Quickest – is probably the best lesson for any business: Act fast to adapt.

The lipstick theory is a nice way to justify unsustainable business models, particularly those that rely on consumer spending, in the face of a recession but the assumption spending will remain the same as customers will seek little luxuries is deeply flawed.

A business that doesn’t respond quickly to changed circumstances and reduced spending is one that might not survive a downturn.

Peter Day’s Cork story is a good listen on how Ireland and Cork have weathered the global financial crisis, the main question from the piece is how much have the Irish and the rest of the world learned from the mistakes of the boom years at the start of the 21st Century.

Dec 082013

Facebook is further restricting the reach of brands on their social media platform reports industry news site Ad Age.

It’s not surprising that Facebook is doing this seeing their stock is currently trading at 120 times current earnings and sixty times estimated revenue. The income has to come from somewhere to justify those prices.

The social media service is quite blunt about it’s objectives in making brands pay more to get their message out on Facebook as Ad Age reports;

“We expect organic distribution of an individual page’s posts to gradually decline over time as we continually work to make sure people have a meaningful experience on the site.”

Facebook’s idea of a meaningful experience though might be very different from its users, who are showing their irritation with the service messing around with their news feed. It remains to be seen just how interested those posting on the site are in clicking on sponsored or promoted posts as opposed to finding updates from those they care about.

For smaller businesses, Facebook’s moves make it harder to use the service as an effective marketing or engagement platform as it means stumping up substantial amounts of money to get your messages in front of your customers and friends.

It’s going to be interesting to see how this pans out for Facebook and the social media marketing community. It may mean that social advertising is monopolised by big brands while small and local business finds other channels to get their message out.

One thing is for sure though, the idea that social media would replace the news media is beginning to look shaky as people’s feeds start to be dominated by messages they don’t want.

The next few years promise to be interesting for everyone in the social media industry, particularly Facebook’s shareholders and advertisers.

For smaller businesses, it’s clear that Facebook is no longer a cheap marketing platform.

Nov 302013

In a local shopping centre over the weekend this business was selling massage tables using the fact they’d been mentioned on TV to enhance their reputation.

Citing an appearance on TV in the hope of improving your credibility is very much a mid-20th Century way of doing things. In the 1960s or 70s an enthusiastic mention from a TV host was the way to get the punters beating a path to your door.

Today, things aren’t quite the same. TV was on a decline as a trusted medium – despite the successes of talk show hosts like Oprah Winfrey – long before the internet arrived. The web bought social media and now buyers can consult their friends and peers before deciding to buy.

What was interesting about the sign was there was no indication of a social media presence or web page and that in itself showed how old school this business’ advertising was.

For the business owner, it would have been hard work getting a mention on TV. Space isn’t cheap to buy and getting a mention on a current affairs show requires either the services of an expensive PR agency or many hours of bugging producers and not a small degree of luck.

Then again, maybe a complete lack of online engagement didn’t matter. The shopping centre I was in would have an average customer age well over forty and, most of the market the business was aiming probably comes from the sizeable retirement village across the road.

How this business ignores modern communication channels is instructive about the generational change in business and society, particularly on how different age groups find their trusted sources.