Monthly Archives: July 2007

Online Advertisement Immunity

Online advertising is the biggest revenue generator in the Internet business. Google struck gold with its contexual advertising model and led to a whole slew of companies to enter this fascinating World of online advertising or in Malcolm Gladwell‘s words, led to an online advertising epedemic. But is this epedemic here to stay (or expand further) or is it reaching a point where people are getting ready to develop immunity to the advertisements alongside the information they are looking for on the Internet?

The online advertising business is revolutionary. But this is not the first time something like this has happened. Every once in a while a new medium of information broadcasting comes along and marketers look for ways to use it by putting a part of the trillion dollar advertising budget on to it. For example with the advent of telephones, marketers jumped on to use tele-marketing as a source of selling products. Same thing happened as fax machines took on the mainstream and when people started using emails to interact with each other. But gradually, people became more adapt to these technologies and developed an immunity to these sales calls. They started to ignore, if not hate, most of the marketing messages on these mediums.

Where does online advertising stand? To analyse this, it is very important to understand the different types or classifications of online advertising. It will be a big mistake to generalize the customer immunity to online advertising as a whole. We can classify online advertisment budget in a couple of broad ways.

First type of classification is based on how the advertisers pay for the advertisements. Based on this, there are two main categories of advertisements – click based advertisement model, where the advertisers pay per click on their text ads, and impression based advertisement model, where the advertisers pay per visual impression of their advertisements on the website. If we look into the immunity of the audience to these two types of ads, I think impression based advertising has an edge. As the Internet users get more adapt to using the online resources, they are less likely to click on the advertising links in general. The audience are more likely to be attracted to the relevant information they are looking for on the Internet. But on the other hand, for visual impression of advertisements, audiance are more likely to glance at them while on the website.

Another way of classifying online ads is based on where they appear. Based on this premise, advertisements can be classified into two broad groups. First, the ads that appear next to search results. These ads are mostly click based contextual text ads which appear next to the search results. Google, Live and others do a good job of clearly marking the advertisements as sponsored links. This broad group can be further classified in two parts – ads next to product searches and ads next to information searches. Analysing this group, it is somewhat obvious that audiance are going to develop a high immunity to the advertisements next to the information searches. Reason being, when they are looking for certain information, they would tend to go for the search result that is closest to their request rather than on some sponsored link. On the other hand, in case of product search or local search, where people are looking for a certain product or service, they are more likely to click a sponsored link because that is some page where they will find the product. In this case, it also makes sense for the customer to click the sponsored link because these advertisers are trying to attract the customers to buy the same stuff they are looking for.

Second type of advertisements based on their location are the contextual ones that appear next to the information on the web. Advertisements on these websites largely depends on the context of the website. If the context of the website is like an online mall where people are looking to buy products (like eBay or, the customers will be less immune to the ads. On the other hand, if the context of the website is more informative like news, the immunity to the advertisements will be comparitively higher.

This gives us a general understanding of how more web savvy customers would react to different advertisements. Based on this, more informative decisions can be made on what kind of advertisements should be displayed at what destinations. For instance, if a customer is doing a product search, or is on an online shop, it is better for the advertisers to display click based contextual text ads. While on the other hand, if the customer is searching for some information, or watching some video or surfing some news site, visual impression based advertising should be the prefered model.

I think immunity is something that is prone to be developed for Internet advertising. But to tackle it, the ad placement need to be done in a smarter ways. Like any other epedemic, in order to let this epedemic grow and spread, there need to be ways to counter the immunity towards it, and with lessons from the history and endless supply of monetary muscles from the ad based revenues, it doesn’t seem to be an unattainable task.

Purpose-driven Branding

As the competition in a market increases, the challenge of attaining and retaining customers for a company in that market increases as well. Customers quite rightly believe, until they are shown otherwise, that hidden motive of any brand is to sell something. This reduces their affinity towards a brand, and with the growing number of options available in the market, it is easier than ever for a brand to loose customers to competition. But if the brand is able to prove to the customers that its profit making is only a by-product of a larger purpose, it gains affection of the customers making it harder for the competition to break this customer-brand bonding. This concept of branding, where a company works towards a larger purpose considering profit-making to be a by-product, is known as purpose-driven branding.

Now let’s look into how this purpose-driven branding works. Each company has a mission which gives it the direction in the long run. Any company that is successful has a very clear mission statement. The company founders and leaders have a vision which is the primary driver for attaining that mission. Some brands have a mission that is more than just selling something or being a market leader in some area. This “larger purpose” mission is something that, knowingly or unknowingly, sets the brand on this incredible path of purpose-driven branding, making success a definite “by-result”.

The first brand that comes to mind while talking about purpose-driven branding is Whole Foods. Whole Foods clearly states that its a company that works towards setting the standards of excellence for food retailers. You visit a Whole Foods store and you get a vibe that this is not a place where making profits is the primary objective (even though the items at Whole Foods are more expensive than those at a Krogers or Safeways). Whole Foods creates an affinity with its customers by making them realize that its primary objective is not to sell them groceries, but to work towards a larger goal of providing them with better stuff, stuff that is good for them and is also good for the environment. You hear Whole Foods founder John Mackey talk, or read the company blog, and you will certainly get a feeling that this company is doing more than just making profits, placing it right at the top of the list for Purpose-driven brands.

Another brand that is able to do purpose-driven branding successfully is Google. Google made its customers believe that its primary objective is not to make profits but just to organize the World’s information and make it universally accessible. Google does not alter its search results to push up sponsored pages and marks sponsored links clearly to prove that they are sticking to their mission. This has won the brand great customer affinity in a market where barrier to entry is almost negligible.

A not so typical example of purpose-driven branding is Wikipedia, the free encyclopedia. It’s a brand driven by volunteers who maintain the most up-to-date information repository in the World. It’s not so typical, because making profits is not even a by-product over here. Another purpose-driven brand to watch for in the future is Wikia, which is founded by Jimmy Wales (the founder of Wikipedia), and has profit making as a by-product.

Purpose-driven branding is not something that can be easily faked by the brand managers. Brands should really keep themselves away from posing as if they are working towards a larger purpose to attract customers. Customers are too smart to identify a poser and such tactics can lead to permanently damaging the image of the brand. The drive towards the larger purpose should be there in the roots of the brand. It should be something that the customers are able to sense, not something they are to be told explicitly. Authenticity is very essential for the success of purpose-driven branding, and if a brand gets that right, it develops the muscles to even take on competitors with far deeper pockets than theirs.

The Swiss Knife Concept

Product designing is one of the most challenging and interesting jobs in any industry. A good product design is something that can provide a great competitive edge to any company. I think there is no golden formula that can define a good product design, but by analysing some successful products, which have good designs, we can find some characterstics of a good design. One such characterstic is to cover all the features of a product under the wrapper of simplicity and provide pivot points to access these features. This is what I call the Swiss Knife Concept of product designing.

Swiss Army Knife, or the “Offiziersmesser” (original name), has a really great product design of its own. The way a small pocket device, that looks like a knife handle, contains half a dozen tools hidden in it is really fascinating. The adoption of this product from Swiss Army and its enormous success speaks great volume about what a consumer is looking for in a product. I think the basic design principle here is to have one really transperent product feature for which the product is primarily known (in this case, a blade) and along with that have lots of other useful features. Then provide the product a real simple user interface and make it easy for the customer to access each feature individually.

Now let’s see how this very concept of product design is consiously or unconsiously adopted outside the World of this pocket device. Search giant Google seems to be built on the Swiss Knife concept. The most transperent feature being search and this surrounded by a few dozen other products is what defines this multi-billion dollar company. The simplicity with which Google has created its primary user interface with a search bar and “pivots” to reach to other products makes the product design as closely related to a Swiss Knife as it could be.

Another place where you can see this concept is in the SmartPhones. The basic feature of these mobile devices, for most of its customers, is to use it as a phone. But along with that there are a lot of other features that almost make the phone as feature rich as a personal computer. These features are discoverable by its customers using the software interface which provide options to the customers to reach to each one of these individual features. Apple iPhones took this even a step further. The iPhone includes iPod music player as an additional feature on the phone, and as the iPhone ads puts it so beautifully, its (Internet, music player and what not), on your phone.

Microsoft Word is a Swiss Knife of its own. Microsoft Word, that looks like a real simple word processor, has a lot of really useful features in it. Same is true with other products in the Office Suite. Normally, 80% of the customers end up using only 20% of these features. In order to ease the discovery of the zillion features that are there in Word and other Office products, The Office 2007 product suite has a ribbon at the top instead of the normal menu list. Word has always consisted many features, or what we can say is it was always a Swiss Knife, what this ribbon has done is added those much required more visible pivot points to make discovery and use of these features easier.

Of course you can not apply this concept to all the products out there. So how can we find out whether a product is right for Swiss Knife Concept? I think this can be done by analysing some things about the product like its primary feature, how its secondary features complement the primary feature, what problem is the product trying to address for its customers and how it is doing so. So if a product is having lots of complementary features, along with the main product feature which is essential for the product to exist, and all these compementary features should be there for the customers to access on demand, Swiss Knife Concept can be worth exploring for the product designers.

Basic thing here is to make the use of a product easy for the customers. How the Swiss Knife Concept does it is by providing customers with a real user friendly interface, which makes the adoption of the product seamless, and along with that provide other features that are easy to discover and use. Swiss Knife Concept gives the unique ability to a product designer to have lot of features in the product without taking away the similicity element out of it.

Advertising Customer Service

Customers are always looking for differentiating factors between different products and services available in the market. In many industries today, like insurance, car rentals and personal computers, the products are getting more and more standardized. They have the same look and feel, similar terms and conditions and in most cases, the same price tag. In such industries, to locate a differentiating factor is very difficult. Some factors which were previously not taken that seriously can now play a more important role in affecting the customers’ buying decision. One of such factors is customer service.

Customer service has always been a very important factor to ensure long term success in any industry. But normally, customer service is something that comes under the radar when something goes wrong with the product, or in other words, after the product is already bought. We can draw an interesting parallel between customer service and product design. When the design of something is not upto the mark, it is noticed, but when the design is good, it is taken to be as expected and goes unnoticed. Similarly, if the customer service is bad, people notice it and talk about it, but if it is good, it is taken to be granted. It is the job of the company to expose this good customer service and make sure people consider it before making a buying decision. 

There are several ways to expose customer service. With the growing interaction between customers and companies through new mediums like blogs, newsgroups and message boards, it is becoming easier then ever to expose customer service. Another very effective way to expose customer service is through advertisements. It’s true that many companies advertise in order to create brand awareness, but along with that, advertisements should also be used to highlight factors that may be able to influence the customers. Something that the customer can remember when making a buying decision. Something that can put your product above the competing products. If your company has the customer service that can play this crucial role, make sure you bring it up in your advertisements.

One company that does a stellar job in advertising customer service is Avis. Avis has designed everything from its tagline (We try harder) to television commercials around its customer service. The car rental company tries to make sure that they communicate to the customers that it will put extra effort to provide the best customer service. Another company that falls under this league is Dell Computers. Customer Service at Dell is exposed right from the moment the customer thinks of buying a computer. Dell makes sure they communicate to the customer that the computer they make is made just for you. Dell commercials and the company blog does an excellent job in to expose both their pre-purchase as well as post-purchase customer service to the customers.

The unique thing to notice about these companies is that they are highly customer focused and they make sure the customer realizes that. They have great customer service divisions and they make sure that the customer takes customer service into account while making the buying decision. No matter which industry your company falls under, you should put in great effort to join this league by following these two steps – first, provide great customer service to your customers, and second, advertise customer service, make sure you communicate to the customer that customer service is an important thing and you are the best option available out there.

iPhone – iPod way or Mac route?

Apple released its much awaited iPhone on June 29th. The wait, the hype and the buzz around the product was expected, but still it’s really hard to believe the overnight queues outside the AT&T and Apple showrooms on June 29th. People waited hours in the queue to buy a mobile phone. In the industry where the service providers give away the phone for free, or sometimes even with cash back, people are eager to buy a $500 iPhone. Well they are the loyal Apple early adopters, but the million dollar question is: will iPhone do an iPod or will it go down the memory lane like the Macintosh?

iPhone is a very closely protected product like Macintosh was in the early 80s. Steve Jobs is well known for controlling the end-to-end development of his products. (If Apple had the strength of laying down their own cellphone network, it would not have surprised me if they went for that.) So in order to control its product closely Apple released the product only with At&T as the sole service provider. This is not the only tight coupling in iPhone. Apple has its Mac OS on the iPhone, and through it Apple controls what software can run on the phone and what cannot. Like Apple has put Google products like Maps and YouTube on the phone. In short, Apple is doing the same thing that they did with the Mac, creating a closed ecosystem for its product. This makes me wonder if this is a call to a Microsoft to come up with a more open ecosystem and concur the World?

iPhone is a design genius just like iPod. Each reviewer who reviewed iPhone gave great reviews. Walter Mossberg of WSJ and Steven Levy of Newsweek describe iPhone to be revolutionary and the best product in its class that lives up to the expectation. People admire the design work of Apple. iPod is the most sold personal music player in the World.  So just like Apple took over the personal music player market from Sony and others, there is no denying of the possibility of them doing the same with the iPhone.

iPhone does differ from iPod in some significant ways. The release of iPod was a modest release. The expectations were limited and there was no hype. And as expected, the big players in the personal music player market did not take it that seriously. But in case of iPhone, the case is different. Steve Jobs has become a design icon with each successful release of iPod and the expectations here were set as high as possibly can. And of course, all the major players in the mobile phone as well as other related business are on high alert to take on the iPhone. As per the early reviews, iPhone meets or beats the high bar set by Apple for Apple. Another significant difference is the product dependency. Apple went all alone with the iPod with its own software, music store and the hardware. But in case of iPhone, if they want a similar global reach, they will have to do partnerships with service providers around the World (which Apple is known for not liking that much).

iPhone release has stricking similarities with both iPod and Macintosh. iPhone is sure to change the entire dynamics of the cell phone device business. I think they also got the price equation pretty correct (people who are willing to buy iPods for $300, will happily pay $100 or $200 extra to get the best phone in the market, which is also an iPod). Within a few years, Apple will have a whole range of iPhones in the market with different functionalities and price tags to meet the needs of different customer segments. The thing to watch for is the partnership strategy of the company. Will the company learn from its past and go for a better approach to be more open for partnerships or will the competition come up with better strategic positioning and send iPhone the Mac route? But if they get this one aspect right this time, there is no denying that iPhone is going to rock the World the iPod way!