Week 6: Advertising, Promotion, and Public Relations in the Web World

Materials:

• Read Business Model Generation: Strategy text
• Read Secrets of Googlenomics
• Read Facebook article
• Read Pinterest article (in hopes of understanding my wife)
• Watch Pinterest video (see above)
• Read Social Networking Sites article
• Read article from Online Advertising Playbook

“Pinterest: Is it the New Facebook?” by Jennifer Van Grove, CNET, Feb. 2013 and “What is Pinterest?” CBS News, Feb. 2012

This was an interesting week of reading. I joked above about hoping to understand my wife’s use (obsession?) with Pinterest - and I have to admit that reading the article and watching the video it seems that her interest is not unfounded. However, I took the time to discuss with her how she uses Pinterest and found that for a “social” networking site, it seems (at least in her view) to be a bit less social. For instance, she said she doesn't follow “pins” of anyone she knows in real life, and doesn't interact with anyone,  instead she uses Pinterest to search for ideas to braid her hair in a new way, find a great gluten-free recipe, or inspirations for decorating our house, and put them on a virtual bulletin board - without getting (or desiring) feedback from other users or any real interaction. So at least in this one case, and based on my observation, the question of whether Pinterest is the new Facebook is a silly one in terms of all comparisons except the early struggle of both startups to find how to drive revenue from their popular product. For a highly valued startup like Pinterest, revenue production is critical to sustain financial success, but how does Pinterest do that without ruining what people enjoy about the site? When I asked my wife if she would want to see sponsored results from Barilla Pasta when she searched for a Baked Ziti recipe, she said she wouldn't mind, but that she also likely wouldn't be drawn to clicking on that pin, as she goes to Pinterest for something different. This article seems to suggest that Pinterest founders are aware of the touchy nature of commercializing their product.

This next article highlights ways that they are seeking to drive revenue without impacting the consumers of the product.

I’m not sure this article gave me any desire to start pinning home improvement ideas or ways to do my hair (pretty sure there is only one) but it did give me some thought-provoking insight into the challenge of making a product people want, and then making it generate revenue without ruining the features that drew consumers in the first place.

“Secrets of Googlenomics: Data-Fueled Recipe Brews Profitability” by Steven Levy, May 2009

The Googlenomics article was also fascinating - and made me realize how far advertising has really come as an industry and business model. The advance of internet search has made ads that really can be tailored to the user for the first time ever in quite specific ways, as the article points out.  One thing that struck me was that even early on, before Google’s founders realized the value that advertising would bring to the company, they felt that ads should be “useful and welcome - not just annoying intrusions.” Before sitting down to write this blog, I went downstairs in my condo complex to get my mail. Laid out below the mailboxes were the tossed rejects of my neighbors - the 100% advertising circulars. Everyone in the building (and the block, and the zip code, and likely the city) got the same one. I have no interest in the kids sale at Macy’s (no kids in our household) or the coupons for McDonald’s (there’s not one anywhere near here) - but I get them nonetheless, and see them (as my neighbors clearly do) as wasteful intrusions. So now, as I sit at my computer and check the ads that pop up on my Google search - I can see that they are targeted. There’s that tent that I checked out on REI’s website a few days ago. And, next to it, a camping stove that I hadn't thought about getting - but probably should. And I did click that ad, because it was relevant, and not obnoxious. (Once I got past the privacy issue... but that’s another blog post, another time.) Comparing the two business models and utilization of advertising dollars, it’s clear how far the internet has allowed advertising to come, and the incredible value that advertisers can find in internet advertising - thanks to products like Google’s Adwords.

Week 5: Big Data and Marketing Research

Materials:

• Read “The Numerati” article (hope it is as interesting as it sounds…)
• Read “Big Data and You”
• Read “Demystifying Big Data”
• Read “Advertisers get a Trove of Clues in Smartphone”
• Read “World’s Most Valuable Brands”

I've put a lot of time in over the last week getting caught up on the materials for this class.

"Introduction," in The Numerati, pp. 1-16

I found the “Numerati” article intriguing – and far too familiar. Lately, the national conversation has centered around Federal Government tapping records from wireless carriers, adding just one more piece of data to the already collected and analyzed thousands of other pieces. This article really underscored to me the near futility of maintaining privacy in today’s information age. At least for now, much of the data about individuals is somewhat siloed. The author paints a brief picture of how weaving his Visa and Tivo and Cellular location together paints a pretty clear picture of his last 24 hours. But for now, or at least as far as we are aware, that data cannot easily be stitched together on the average law-abiding individual. If it could, anonymity and privacy would truly become a thing of the past. As Apple and Google both move forward on applications that allow use of your credit cards through their own networks and devices, we're one step closer to unifying identifiable data, a scary proposition for anyone concerned about privacy. 

Big Data Infographic:

Business Model Canvas #1: Supercell

Supercell is a mobile game development company based out of Helsinki, Finland.  The developer has been enormously successful since the founding of the company in 2010 and has recently been valued at $800m USD. 

Supercell focuses on making free to play games for mobile devices that earn revenue primarily through the sales of virtual goods; this model is similar to that of Zynga’s Farmville.  The company is currently seeing about 8.5m users log in and play their games, generating revenues of over 2.4m USD some days.  The mobile games category is incredibly competitive; capturing, retaining, and monetizing users is the key to success.  Supercell has been able to add value to the category in user retention.  The attractive graphics, addictive gameplay, and innovative controls of their games keep users engaged and willing to play day after day.  Supercell has also unlocked the secrets to incite casual gamers to pay real money for virtual goods.

The ecosystem that Supercell thrives in isn't too complicated.  Key relationships with the App Stores of Google and Apple provide much of the activities surrounding customers, revenues, and advertising.  This simple system comes at a high cost of commissions going to the app stores, Apple takes nearly 30% of gross revenues outside of ad sales.

The attached Business Model Canvas is based on various sources on the internet found below.  These numbers are very rough due to a lack of public information.

Sources:
Number of casual gamers:         http://www.casualgamesassociation.org/
Paying vs non-paying casual:         http://www.hollywoodreporter.com/news/video-games-facebook-addictinggames-295720
Number of mobile gamers:         http://www.pocketgamer.biz/r/PG.Biz/Newzoo+news/news.asp?c=48541
Paying vs non-paying mobile: http://www.gamesindustry.biz/articles/2013-03-29-digital-game-sales-growing-33-percent
Avg mobile gaming sale:         http://skillz.com/corporate/2013/03/05/65-mobile-gaming-stats-to-impress-your-friends
SuperCell's Users:         http://pulse2.com/2013/04/18/supercell-2-4-million-daily-revenue-84435/
Daily advertising cost:         http://www.trademob.com/infographic-calculating-the-cost-of-a-top-10-rank-in-the-app-store/
Supercell employees:         http://www.crunchbase.com/company/supercell
Server costs:                 http://calculator.s3.amazonaws.com/calc5.html#key=a-european-web-app
Current valuation:         http://techcrunch.com/2013/03/28/supercell-2/

Week 4: Business Models and the New Era of Competition

Materials:

• Read “Business Model Generation – Patterns”
• Read “Business Models on the Web”
• Read Warby Parker articles (contemplate getting new glasses from Warby Parker)
• Read Dollar Shave Club
• Read Bonobos article
• Read “A New Way to Shop” article
• Watch recorded Breeze session
• Learn to use Business Model Canvas tool
• Watch/Read “Twitter Turns 7”
• Read “Economics of Giving it All Away”

Lots of required content for this week, just catching up from the last week so this was a busy one! One thing I have been noticing now that we're a month into the class is how I am beginning to think differently about business models I encounter in my day to day life. I notice that I am analyzing them more, looking at how they do (or don't) use social media to their advantage, what they could do to build a better online brand, basically I am just thinking a lot more about what makes each company’s business model work. It’s interesting to have the tools to think about it on a new level, and I have also been thinking a lot about my own business model in a new light, with more thorough understanding. 

http://www.nydailynews.com/life-style/fashion/warby-parker-sees-bright-future-soho-article-1.1312950

I found the articles about Warby Parker really interesting and very counter-intuitive for me. I have been aware of Warby Parker, and have been wanting to try their service next time I need a new pair of glasses. I know they've been quite successful from a business perspective, so was surprised to learn that they were pursuing brick and mortar stores. Generally, it seems that stores begin as brick and mortar, then move to a model that also allows online retail. In Warby Parker’s situation, the opposite is true, making this a unique strategy. Although getting away from the overhead of a retail store is one of the important aspects to Warby Parker’s low prices, they seem to be correct in their thoughts that some customers still want a “showroom” experience for items like glasses.  They want to try on more pairs than they could with the home delivery service, and want the enriched experience of shopping in a store.  The Wall Street Journal article supposes what would happen if giants like Amazon and Google were to open similar showrooms, taking their business from the web to the streets. I’m not sure that would be a sustainable business model for companies who retail such an enormous variety of goods, but I do think Warby Parker may be on to something with their niche retail/web hybrid.