March 2010 – Channel Crossing: Mobile

The Battle to Shape the Future of Mobile Computing

Apple and Google are engaged in an epic battle to profit from mobile computing, as mobile phones become the computers of the future, according to a recent article in BusinessWeek. These two companies are similar in many ways. Both are admired by consumers, they each have over $20 billion available for research, product development and acquisitions, visionary founders, competing smartphones, web browsers, music and tablet computers, which positions them as major rivals moving forward.

Google became a direct competitor to Apple’s iPhone with the recent introduction of its Nexus One smartphone that utilizes Google’s Android operating system. Apple recently purchased Quattro, which specializes in mobile advertising that targets consumers based on their behavior, after being outbid by Google for mobile ad company AdMob. With the acquisition of Quattro, Apple is aiming to make the current form of mobile search obsolete by developing new types of mobile ads.

MOBILE MARKETSHARE
Steve Jobs is trying to revolutionize mobile advertising the same way he changed music players and phones. One way he could accomplish this is by using Apple’s geo-location technology to deliver ads that are relevant to your location. Apple also has access to valuable consumer information, including which apps, videos and songs mobile users downloaded and detailed customer data such as credit card numbers and home addresses that will allow them to combine advertising and e-commerce in new ways, per BW.

It’s predicted that within five years, more people will access the Internet through mobile devices than through desktop PCs. Mobile advertising today is only $2 billion compared to the $60 billion online ad market. Mobile search is still in its infancy, but it will account for 23 percent of all searches in 2016, up from 5 percent today. So there’s potential for Google and Apple to tap into billions of dollars in revenue through the sales of mobile phones, software, ads, apps and services as the mobile market grows.

The key to success is through Google or Apple figuring out a way to make mobile more profitable by winning the mobile ad battle and sharing the revenue with app developers. “The mobile platform that creates the most ways to make money wins,” noted David Hyman, CEO of MOG, in BusinessWeek. Apple has a big lead over Google with 125,000 apps developed for Apple devices vs. only 18,000 for Android devices.

Google CEO Eric Schmidt believes that mobile ads will become more important than PC advertising because of the personalization and localization, according to BW. Schmidt speculates that mobile phones might one day be free with advertising paying the way. “If Google could do that, they would be untouchable. Apple wouldn’t be able to come up with an answer for that,” commented technology consultant John Metcalfe to BW.

The rivalry between Google and Apple should be fascinating to watch as these two technology titans battle to dominate the mobile computing space in the years to come.

Peter Koeppel is a Wharton MBA and president of Koeppel Direct, a full-service media buying agency based in Dallas. He can be reached at (972) 732-6110, or via e-mail at pkoeppel@koeppelinc.com.

March 2010 – Feature: The Mobile Frontier

An Examination Of Recent Legal Developments In Mobile Advertising Along With Practical Considerations For Direct Response Retailing Over The Mobile Channel

By Karen L. Neuman

The accelerated growth of mobile commerce, combined with the acuity of location-based applications makes it possible for direct response retailers to use the mobile channel for locally targeted mass marketing. One estimate, according to Mobile Marketer, puts worldwide mobile phone connections at 4 billion; while another by Neustar and SMS Mobile Marketing predicts that mobile revenue in the United States will reach $3.3 billion by 2013. SMS text messages dominates mobile advertising in markets like the U.S.

Regulators and courts are trying to keep pace, attempting to balance business interests in accessing consumer data and tracking habits for operational and transactional efficiencies against consumers’ interest in protecting privacy and controlling the collection, storage and use of their information.

This article highlights some recent legal developments that could be important as you consider adding the mobile channel to your ad campaigns, and offers some practical tips that can be taken to address potential risks.

FTC PRIVACY ROUNDTABLE DISCUSSIONS
The Federal Trade Commission (FTC) has broad jurisdiction to protect consumers from unfair and deceptive practices and promote fair competition. It has used these powers to protect against fraudulent or deceptive advertising. A familiar example for the direct response industry are the October 5, 2009 amendments to the agency’s long standing guides concerning the use of endorsements and testimonials in advertising. The FTC has also exercised its authority to engage the industry and the public in formulating an appropriate framework for protecting privacy and ensuring data security in online behavioral advertising and the mobile marketplace.

The linchpins of the current approach to privacy in the United States are privacy policies, industry self-regulation and nonbinding fair information principles (FIPs). The FTC is now examining, through a series of “privacy roundtable discussions,” whether this approach is sufficient given perceived new risks to privacy posed by the proliferation of more invasive data collection and tracking technologies.

The FTC seems to be particularly interested in: 1) the convergence of offline data collection technologies–such as biometrics and loyalty card analytics–with online data to create a ubiquitous data environment; 2) technologies such as “flash” or other “super” cookies that override consumer privacy preferences; 3) the sharing of social networking data with third parties, including mobile applications for advertising; and 4) how far down the chain consumer preferences should be honored as between first and third parties.

The roundtables are not formal rulemaking proceedings. They do suggest, however, that the FTC is questioning whether the current approach to privacy and data protection goes far enough. It is unclear if there will be immediate regulation. One probable outcome is increased enforcement under the Federal Trade Commission Act. Other plausible scenarios include revisions to the FTC’s FIPs and heightened degrees of protection for sensitive data, such as individual financial or health information. In addition, the record developed from the roundtables could form the basis for an FTC report to Congress in which greater rulemaking authority is sought. This could, in turn, result in proceedings to codify existing guidelines and some of the proposals discussed at the roundtables. These could include regulations aimed at bad actors with safe harbors for other entities that meet specified requirements.

Given this fluid regulatory environment, there are some practical steps that can be taken when planning a mobile ad campaign.

• Comply with industry best practices and be familiar with the FTC’s Online Behavioral Advertising Guidelines.
• Disclose the extent of tracking, retention and uses of data, including your policies for sharing with third parties, and provide opportunity for meaningful notice and consent. Tailor disclosures to mobile device screen size and resolution.
• Undertake a review of your terms of service, privacy policies and data security policies, updating them as necessary to address new technologies or to reflect actual or anticipated changes in the law.
• Refrain from using flash cookies, other super cookies or technologies that override consumer privacy preferences. Refraining from using these tools is a good way to differentiate your company from others. Otherwise, fully disclose their use with clear opt-out directions.
• Collect only as much information as necessary for the specific transaction and retain it only as long as necessary.

SMS TEXT ADVERTISING
SMS text advertising involves sending no more than 160-character messages directly to customers’ mobile phones to deliver information about a brand or product, direct them to websites or call centers, or otherwise engage them with mobile coupons, contests and sweepstakes entries or products like DVDs. SMS enables marketers to target and reach an audience that has elected to receive messages and is seen as more likely to respond with greater immediacy than they would with other media.

The features that make SMS appealing to advertisers also raise red flags for regulators and consumer groups. They include the uniquely personal, location-based nature of mobile phones and the corresponding ability to mine, acquire, retain and share individual data for profiling and targeting. SMS technology increases the potential for the receipt of unsolicited text messages or mobile spam in violation of federal and state consumer protection laws. In addition, multiple parties are typically involved at various stages of creating and sending SMS text ads, increasing the possibility that a customer’s consent to receive content from one party will be improperly shared with third parties. This in turn heightens the risk that a customer’s stated preferences will be ignored and their information misused.

A federal appeals court in California recently addressed these concerns in Satterfield v. Simon & Schuster. In that case, the plaintiff brought suit under the federal Telephone Consumer Protection Act (TCPA) for an unsolicited text ad received by her son after she downloaded a free ringtone for his cell phone. The ringtone was downloaded from a website operated by Nextones. The text ad was sent as part of a book promotion launched by publisher Simon & Schuster. The publisher outsourced the campaign to a marketing firm that obtained lists of cell phone numbers, including the plaintiff’s, purchased by another entity from various websites, including Nextones. During the course of the ad campaign, five companies accessed or acquired the plaintiff’s phone number before the text ad was ultimately received some two years after the ringtone was downloaded.

First, the court had to consider whether the TCPA applied. The court concluded that it did, finding that 1) SMS messages are calls within the meaning of the statute, and 2) equipment with the capacity to store, generate randomly or sequentially dialed numbers and call those numbers is automatic dialing equipment within the meaning of the statute. It returned the case to the lower court to determine whether the equipment used to generate the SMS message met those criteria.

The court went on to examine whether the consent given for the ringtone applied to each of the entities in the campaign chain. The court concluded it did not. The third parties involved in the campaign were not “brands” or “affiliates” to which the original ringtone consent applied because they shared no corporate structure or corporate relationship with Nextones. The fact that Nextones licensed its subscriber list for use in this campaign was found to be an insufficient degree of affiliation for purposes of the reach of the Plaintiff’s consent.

This case offers some practical “dos and don’ts” when planning an SMS campaign in the U.S.:

• Know your privacy policies and TOS agreements and follow them.
• Know which law(s) could apply based on the equipment used to store and disseminate the campaign’s SMS.
• Specifically identify the ad campaign and the entity that will be sending the SMS text. Do not send messages to a consumer who has not given express consent to receive these messages. Confirm that third parties with whom you contract comply with required consent(s).
• Do due diligence on lists of cell numbers used for the campaign to determine the precise nature and extent of provided consents.
• Do due diligence on all companies in the campaign chain that obtain a consumer’s mobile number for compliance with the consumer’s consent, including any stated restrictions.
• Comply with industry best practices governing recommended disclosures.
• Although not an issue in the case, refrain from engaging in practices that could reach or attract children. If you do engage in those practices, make sure you comply with applicable laws and regulations.

This case and the FTC roundtables suggest that the interests of direct response retailers and those of your customers may be more closely aligned than you might assume. While it may seem burdensome to implement some of the practical steps suggested here, doing so could differentiate your company, creating a competitive advantage and building good will for your brand or product.

FCC “NET NEUTRALITY” RULEMAKING
An important proceeding that could affect how direct response retailers use the mobile Internet to reach customers is the Federal Communications Commission’s (FCC) net neutrality rulemaking proceeding.

The FCC has jurisdiction over domestic and international communications involving wireline, wireless, satellite, radio and cable. The D.C. Circuit Court of Appeals is considering a case that could clarify the FCC’s jurisdiction over the Internet and the extent of its authority to regulate mobile and other broadband Internet Service Providers.

In October 2009, the FCC initiated a proceeding to consider draft rules that would require broadband ISPs, including various providers of mobile wireless broadband, to provide Internet access for unaffiliated applications, services, content and devices on a nondiscriminatory basis and subject to “reasonable” and “transparent” network management practices.

There are two aspects of this rulemaking that direct response retailers should be aware of.

First, the FCC is considering whether it will permit ISPs, including mobile broadband providers, to employ certain practices to manage traffic over their networks. Some of these practices include using tools that enable ISPs to distinguish among different classes of traffic for prioritization and scheduling transmission, particularly for high bandwidth use applications like video, gaming, and streaming content. Other proposed network management practices include usage-based mobile data pricing or time of day pricing.

Second, the proposed transparency requirement, if adopted, will require ISPs to disclose their network management practices. It is possible, therefore, that ISPs will compete on the basis of these practices, thus enabling businesses, including direct response retailers, to “comparison shop” as they formulate their mobile advertising plans. With sufficient competition, for example, time of day pricing could be a factor in launching an SMS contest or other campaign. The potential for latency could vary from one carrier to another and should be similarly factored into when a campaign’s SMS messages are sent. Similar consideration should be given, if possible, to terms in agreements among ISPs disclosing the extent to which transmission prioritization determinations will be honored as traffic is handed off from one to another.

In the context of this rulemaking, the FCC is exploring ways to find new spectrum (the range of electromagnetic frequencies allocated for various purposes, including mobile communications), and better use existing, underutilized spectrum (through compression technologies, sharing and other arrangements) to support the rollout of 4G mobile networks. Increased spectrum availability could enhance mobile advertising by adding capacity to mobile networks. In order to add this capacity, the FCC could try to create incentives to encourage existing spectrum holders to relinquish or share their spectrum. For example, the FCC could guarantee broadcasters distribution of their content in exchange for their spectrum. It would be important to know the practical consequences of any such agreements for purposes of planning your campaigns and anticipating the potential for latency as a result of these agreements.

THE TAKEAWAY
This article examines some recent federal regulatory initiatives and legal proceedings that you should be aware of when adding the mobile channel to reach consumers. You should also be familiar with applicable data protection laws, including those intended to guard against identity theft, and pertinent state consumer protection and common law–topics that are beyond the scope of this article. There may also be instances where laws of foreign jurisdictions apply, and you should know when those laws are triggered.

A common theme that connects the proceedings discussed here is a focus on meaningful disclosures of terms and conditions that enable users to make informed decisions about participating in the mobile marketplace, whether the user is a consumer receiving content over their mobile device or a DR retailer seeking optimal circumstances for delivering mobile advertising messages to consumers. Companies that take proactive measures to address these issues will be better positioned with respect to potential enforcement or other legal proceedings. They will also put themselves at a competitive advantage in the mobile marketplace as the mobile channel expands beyond existing technologies and mobile marketing continues to mature.

Karen L. Neuman is a partner in St. Ledger-Roty Neuman & Olson LLP, a Washington, D.C. law firm specializing in technology, media and telecommunications. She can be reached at kneuman@slrno.com.

March 2010 – Cover Story: ShopNBC Revisited

CEO Keith Stewart Breathes New Life Into What He Calls An “18-Year-Old Startup.” The Industry Veteran Talks About Changing The Company Culture And Restoring Customer Confidence In The Brand.

By Vitisia Paynich

For years, ShopNBC had been struggling to capture market share, while its rivals vied for the No. 1 and 2 spots. To differentiate itself from the competition, this $517-million multichannel retailer, headquartered in Eden Prairie, Minn., focused its energy on more high-end product categories with a high pricepoint to match. The average selling price was around $200. However, this business model proved too challenging, leaving the company with mounting debt and growing customer dissatisfaction. And in the past 18 months, the company has had three CEOs.

ShopNBC, owned and operated by ValueVision Media, was determined to shift the tide and transform itself into a formidable adversary in the electronic retailing space. In 2008, the company coaxed Keith Stewart out of retirement and convinced him to take on the role of COO.

Stewart joined the company with impressive credentials. He spent 20 years in retail, 15 of which were with QVC in merchandising and operations. In 1998, he relocated to Germany where he successfully launched QVC Düsseldorf. Prior to his retirement, Stewart had created the largest international televised retailer outside of the U.S.

Why did this industry veteran come out of retirement? “Because I’m a lousy golfer,” quips ShopNBC’s CEO. Although Stewart was self-effacing when first asked this very pointed question, he insists that he was up for the challenge. In fact, he believes in the company so much that he elected to forego his first year’s salary to prove it.

In addition to jewelry, ShopNBC now concentrates on other product categories like apparel and home goods.

Stewart was named president and CEO one year after coming on board. And in the time he has taken the reins, ShopNBC has turned the corner by not only broadening its customer base to 1 million but also increasing its online business by 38 percent–a number that continues to climb. In addition, he’s aligned himself with other seasoned home shopping experts including fellow QVC alums Randy Ronning, who serves as ShopNBC’s chairman, and Bob Ayd, who was promoted in January to president.

Electronic Retailer caught up with Stewart to learn more about how he’s been able to put ShopNBC on the right path.

Electronic Retailer: When ShopNBC approached you to come on board nearly 18 months ago, how would you describe the company’s financial state at the time?

Stewart: It was tenuous at best. You have to be candid with yourself if you’re going to take a big step like that and you have to take a very objective look. At that point in time when I was interviewing, the balance sheet was OK. They had a very long list of strong assets, but the company had been losing thousands of customers every month. And for almost 18 years, the company did not deliver a profit. So, that’s an immense change to have to make, not only in business results but also in the overall culture of the organization. But there was just an awful lot of opportunity in front of us.

ER: Did this cause you to reconsider joining the company?

Stewart: No. I’ve spent considerable time at a startup in Germany and I viewed this as an 18-year-old startup. They have plenty of opportunity and with the right business decisions, the right direction, and the right team, success is imminent.

ER: During that time, about two-thirds of ShopNBC’s distribution agreements were due to lapse at the end of 2008. How did you turn that around?

ShopNBC crew members prepare the set for the next show.

Stewart: I wish it were just the distribution agreements; it would have really simplified everything. Looking at it from an employee’s perspective and vendor’s perspective, there were three CEOs in 18 months. The morale was very low among the organization. As I mentioned, the company was losing thousands of customers every month for quite some time. The business operations itself really drove high return rates and low customer service ratings. We were focused primarily as a jewelry retailer, and we had looming debt of $44 million coming due very soon. On top of that, we had distribution contracts that were set to expire. So, there was an awful lot going on all at once.

Carving out the distribution footprint, what we did was put together an affiliate relations department. Secondly, we knew we had complete control of the negotiations with the MSOs and satellite companies and we approached this very much as a win-win situation. They knew from our requests that we had to lower our costs. They also knew it was important that we continue to provide content for them and for their customers. Fortunately, we did renew 100 percent of those contracts. And not only were we successful in re-upping the distribution, but we also dropped $24 million out of the expense line. In many of the larger markets, we improved our channel positioning.

ER: Part of your new business model includes recruiting what you’ve described as the “Gold Standard” of executives. How does their experience factor into the restructuring process?

Stewart: Their experience complements the larger group of employees at ShopNBC. And that mix is a very powerful one. Many of these people you are referring to have seen the movie. It’s a very competent group of people who are focused on business results and on customer centricity.

ER: When Electronic Retailer interviewed ShopNBC in May 2007, the company was on the path toward becoming more multichannel-oriented. Does this remain part of your current marketing strategy?

Stewart: It’s central to our marketing strategy. We’re going to serve the customer any way he or she wants to be served. So, those portals–as technology grows–go beyond the platform of merely television. It is a dot-com platform. It is a mobile platform. And we were the very first electronic retailer to launch on a mobile platform with the iPhone. While we continue to improve that technology, one needs to bear in mind that the customer is everywhere. If it’s on Facebook, MySpace or Twitter, we need to continue to service them in the many ways that they want to be serviced. So, we’ll continue to broaden the ShopNBC strategy as part of our multichannel distribution efforts.

ER: What is ShopNBC’s unique value proposition?

Stewart: The unique value proposition starts with our positioning in the market as the premium lifestyle brand. At the end of 2008, our average selling price was over $200. And we knew we had to lower that average selling price to open up access to more and more customers. Our stated goal by the end of 2009 was right under $100 and we did hit that goal. However, that is not about lowering quality–it’s about opening pricepoints and broadening our appeal to our customers. We continue to offer big brands like Movado, Sony and Samsung. And we will continue to build new product categories with notable brands and intellectual properties. Recently, we launched Ted Gibson hair care, Vapour color cosmetics and Via Spiga handbags. Ed Hardy is very timely and profitable and we’ve been very successful with that brand. It’s about offering different products that are meaningful and relevant to the customer.

ER: So, with a lowered average pricepoint of $98, you’re not going after a completely different customer but broadening your customer base?

Beauty is just one of the product categories that ShopNBC intends to expand by offering top name brands.

Stewart: That’s exactly the point. We’re broadening our customer base and in fact, our customer base in 2009 grew 36 percent amid some very difficult economic times for retail. Our new customers grew over 520,000–that’s 60-percent growth in 2009. When we hit the milestone of 1 million customers at the end of December, it was an immense change in the overall structure of this organization. So, we’ll continue that torrent customer growth as we continue to successfully turn this company.

ER: The jewelry category was once a mainstay of the company’s overall product mix. Going forward, will this still be the case?

Stewart: Jewelry is still an important part of our business and will continue to be, but it won’t be the only business in which we operate. We’ll be a general merchandise retailer offering many different product categories to our customers. As I mentioned, we’ve gotten very serious in the beauty category with hair care and color cosmetics. We’ll continue to grow our apparel business. We’ll continue to expand our home business with our domestics and textiles. We’ve been very successful in launching gourmet foods. As we continue to launch different product categories and expand our existing ones, it’ll be a complement to jewelry. But we certainly aren’t planning at all on doing anything but growing that business and making it productive.

ER: Prior to you joining the company, ShopNBC was plagued by high return rates on merchandise. What changes have you made to reverse those numbers?

In 2009, Suzanne Somers joined ShopNBC with her full product line and loyal legion of fans.

Stewart: The first thing we had to do was change the culture. We had to say our high return rates were bad because the customer didn’t want to keep the product, and thus, returned the product. Now that may sound over-simplified but it’s something you really have to look at as a culture of an organization. We started with customer centricity. What does he or she want from ShopNBC as it relates to product and services? Second, once we changed and accepted that, we had to install systems that allowed us to measure the business results specific to cancellation and return rates, productivity and the like. We did install those systems and put in place benchmarks for each product category. We also installed rigorous QA and QC standards and systems in our business process. Now we have total transparency as it relates to our overall goals and targets. Again, these goals and targets are not merely financial. This is all to benefit the customer and it’s not only about creating customer centricity, but connectivity to the customer. So, our goal is to offer that customer a meaningful and relevant product that she likes. If she opens the box and we exceed her expectations when the product arrives at her home, then we’ve done our job.

ER: Given your vast experience in the international marketplace, are there plans for global expansion?

Stewart: This is in our future without question. However, we have much to do domestically before we start to lay the plans for global expansion. We are focused on driving shareholder value, growing our customer accounts, improving our customer service metrics, leading connectivity with our customer, and delivering consistent results each quarter. And as this business continues to be more consistent and predictable, we will start to lay the foundation for additional, organic growth opportunities.

ER: What is your personal stake in ShopNBC?

Stewart: I think the more important question is: What is the insiders’ stake? And, that means the management, the employees and the board. Of the total economy, insiders are 12 percent. So, certainly you can see this organization is very much aligned with the shareholders and the stakeholders like our vendors. As it relates to my personal stake, it’s a little less than half of that.

ER: You’ve set a goal of three to five years in which ShopNBC will double its sales. Given that the economy is still struggling to recover, is this a realistic timeframe?

Stewart: The economy does not control our future. This is an 18-year-old startup. If you look at the productivity, we are about $7 in sales per home. That contrasts with others that are $58 in sales per home. So, there is a lot of opportunity with our existing distribution to become more productive. I would say certainly, a three- to five-year time period is more than reasonable.

February 2010 – Channel Crossing: Mobile

Per Inquiry Goes Mobile

Many advertisers have come to recognize that per inquiry television advertising is a great strategy for generating leads or calls on a cost-controlled basis. This form of guaranteed advertising has been around for more than 25 years, and it has matured into a “must have” for many DRTV advertisers.

It follows that mobile should be a great way to generate qualified responses, with 275 million subscribers (and growing)! More and more DRTV advertisers say they’re considering dipping their toes in the mobile per inquiry waters. But are they ready?

The attraction to mobile PI is obvious:

• Low cost of entry – a banner ad or text message and landing page can get it started;
• Multiple ways to capture responses;
• Ability to geo-target consumers;
• Flexibility for controlling response volume; and
• Cost-controlled results – pay only for qualified responses.

SO WHAT’S NOT TO LOVE?
Think back to the early days of the Internet, when exaggerated promises were made regarding the ability of sites and networks to generate qualified responses (actually, this still occurs today). Many responses were not qualified, and there were costs attached to finding that out.

Mobile PI advertising is viable and clients are reaping attractive ROI from the responses being generated. Many, however, agree that finding the right approach for generating consistent, qualified lead flow can be challenging.

A client is ready if they are prepared to:

Test and re-test – Each test will help to refine the best approach for generating qualified responses. This will often differ among mobile partners, since their methods for engaging consumers differ (downloaded apps, display ads, audio placements and more).

Monitor results constantly - Mobile vendors are pretty nimble when it comes to making changes in order to get a campaign on the right track. Optimize based on results and be prepared to implement more stringent qualifiers to enhance lead quality.

Change the way the lead is captured – Having consumers call a toll-free number may be the best way to generate qualified leads on TV, but that’s not necessarily true with mobile. The simplicity of mobile’s “click to call” makes it almost too easy for consumers to connect by phone, only to discover they hadn’t intended to make the call at all.

Set realistic expectations – Mobile is a new medium for both advertisers and consumers. Consumers are experimenting with it. While response levels don’t yet rival those from the Internet, the quality of the mobile responses is proving to be much higher.

Partner with an experienced mobile team – Avoid trial and error by working with a team that has vetted many of the mobile partners by running numerous campaigns with them. Over the past year, a solid number of mobile vendors have embraced the PI concept and proven that per inquiry campaigns can–and do–work!

Sally Dickson is president of MMSI in Warwick, R.I. She can be reached at (401) 737-7730.

December 2009 – Column: Industry Insight

Taking Twitter’s Pulse

When teen megastar Miley Cyrus very publicly quit Twitter by posting a rap video on YouTube declaring a desire to reclaim her privacy, the virtual world watched to see if she’d inspire a stampede away from the microblogger. Twitter didn’t experience a mass exodus even after she encouraged fans to follow her lead in subsequent interviews. What does this imply about Twitter and its devoted users?

A recent study by the Pew Internet and American Life Project revealed the Twitterati as young, mobile and new-media savvy. They tend to consume more news than average Internet users, relying on technology to communicate, gather and share information and seeking untethered opportunities for social interaction.

The failure of Cyrus to incite Twitter departures en masse ultimately says more about her fan base than about the popularity of microblogging. Her pre-teen and “tween” audiences probably aren’t tweeting regularly, but a slightly older demographic with discretionary income to spend are.

The median ages of social network users–according to Pew–are: 31 years for Twitter, 26 for Facebook and 27 for MySpace. Nineteen percent of all Twitter users are 18 to 24 years old and 20 percent are 25 to 34. Since sending Twitter’s information tidbits is easy over cell phones, the demographic most inclined to tweet comprise individuals who use mobile devices as their medium of choice.

Is Twitter Here to Stay?
Although Twitter may wind up becoming a fad that is replaced by a new information-sharing tool, it also could attract an even bigger following. Just as parents have embraced texting as a way to stay in touch with their children, Twitter could replace it to become the preferred SMS (short message service). A steady stream of tweets could be the next step after an initial status-updating text message.

This is especially likely given the proliferation of smartphones expected to hit the market. Verizon has made a serious attempt to de-throne the dominant iPhone with the Motorola Droid, which debuted in November. The Droid won’t long remain the only serious contender; more mobile devices are in development.

For marketers, Twitter is a handy tool. Monitoring what’s being said via Twitter and other online social media provides insight into what consumers want and need. Tweeting can generate buzz about something or someone, helping to increase visibility in search engines. It also gives marketers a way to almost instantaneously reach customers to tell them about something new, correct inaccuracies or respond when a problem arises.

Given that marketers of all types have a mission to create, offer, sell and cross-sell products for maximum growth and profits, it’s crucial for online marketers to keep current on evolving communication trends. At least for now, it appears Twitter isn’t going away. Developing a presence there makes sense for marketing purposes. In other words, to be part of the online conversation, marketers need to be where the conversations are taking place.

Chris Rosica is author of the book “The Authentic Brand” and CEO of Rosica Public Relations, which specializes in online and traditional public relations/marketing, including online reputation management. He can be reached at chris@rosica.com.

December 2009 – Column: Marketing Methods

Surprise! More People Are Watching Commercials on DVRs

Nielsen reports that 46 percent of viewers ages 18 to 49 watch commercials during playback on DVRs for the four broadcast networks combined. This is a surprisingly high number, since many in the advertising and TV industry predicted that DVRs would kill TV advertising. A combination of more people owning DVRs–33 percent of households in 2009 compared to 28 percent in 2008–and more people willing to watch the commercials during playback have contributed to this high level of DVR commercial viewership, according to the NY Times.

COMMERCIAL-PLUS-THREE RATINGS
Two years ago, Nielsen began measuring viewership using commercial-plus-three ratings. This replaced the old ratings system and Nielsen began measuring viewing for shows watched live or played back on DVRs within three days after the live show aired. Network executives feared that viewers would zap through the commercials during playback, which would negatively impact ratings and profits. Prior to the current TV season, it was predicted that the increase in playback over live viewing would only be 1 percent for all networks combined. However, to the surprise of network executives, for many shows the increase has been 7 to 12 percent, and for some shows it’s as high as 20 percent, when DVR ratings are added in.

The phenomenon of more viewers watching commercials on their DVRs has helped the ratings for hit shows like “House,” adding more profit to Fox’s bottom line and allowing shows like “Heroes,” which might have been cancelled, to survive another season. “House” is number two in live program ratings to “Grey’s Anatomy,” and is the number-one show in terms of commercials viewed within three days with a 5.68 rating, which translates into 6.63 million and represents a gain of 18 percent over its live rating. “Heroes” saw its ratings jump by 22 percent with playbacks.

DVR PROOF
Among the 18 to 49 age group, Fox experienced the biggest increase from live ratings to ratings when the three-day DVR playback is added in. However, not every network has experienced gains in ratings. NBC thought that moving Leno’s show to primetime would make the show “DVR proof.” They predicted that because it’s a live show, more people would view it live and less would record it on their DVRs and skip through the commercials. But now it appears that this strategy has hurt NBC, since Leno’s show is one of only a few shows that saw their three days ratings to be lower than their live ratings. This happened because not enough people recorded the show and played it back to overcome the live viewers who are skipping the commercials.

Various advertising and network TV executives attribute the lower-than-expected level of commercial zapping by consumers during DVR playback to the fact that viewers are passive and just forget to skip the commercials. Whatever the reason, you can be sure that networks will look to further monetize this trend to their advantage moving forward.

Peter Koeppel is a Wharton MBA and president of Koeppel Direct, a full-service media buying agency based in Dallas. He can be reached at (972) 732-6110 or online at pkoeppel@koeppelinc.com or twitter.com/DRTVBUYER.

November 2009 – Channel Crossing: Online

A Product Launch for the Digital Age

By Michael Weisfeld and Howard Chen

“Extra, extra–read all about it!” This old-time cry apparently used by bygone newspaper boys takes on a whole new meaning in today’s digital age. There was a time when the task of getting information to the masses was an awe-inspiring feat, typically handled by large media companies. Today, the world has gotten smaller and with the capabilities of online technologies, the only real challenge faced by marketers seems to be simply the limit of their imaginations.

But let’s be real. This undertaking requires a combination of creativity and execution–not to mention diligent follow-through.

Perform Keyword Research
Connie Mack, the longest-serving manager in MLB history, famously said, “You can’t win ‘em all.” Likewise, marketers simply can’t optimize for every keyword they can think of.

Keyword research is the process of identifying the set of words to target for pull-marketing tactics, such as search engine optimization and social media. This set of words is specifically identified to give brands the most bang for their buck. Start with a set of about 25 “seed words” that describe the product and company. Feed these into keyword research tools like those offered by Google or SEOTools to determine possible variations and associated search volumes. Review the output to select approximately 100 words for your target list. The criteria for selecting a word is a combination of relevancy to your website and predicted search volume.

Develop Content Strategy
The next step is to develop a content strategy that includes assets such as text, images, videos and other files that can be published to the Internet. A successful strategy incorporates brand messaging in all published content and an editorial calendar for continuous content development.

The content should be interesting and valuable to the users during all stages of the marketing lifecycle. Its presentation should help facilitate users’ awareness, interest, desire, action and advocacy for your product. If you find creating content to be a challenge, Junta42.com is a great resource for ideas and vendors.

An example of a good content strategy is Ford’s FiestaMovement.com. The strategy involves consistent messaging through social media channels like Facebook and Twitter to gain product awareness for the upcoming Fiesta model. To further generate interest, Ford has mobilized “agents” from across the nation to blog about their experiences with the vehicle. Desire is also targeted with a “Design Your Own Fiesta” application, which helps users shape their own 2011 Fiesta. Action is then facilitated by placing calls-to-action like test-drive events and an updates subscription. Last but not least, advocacy is supported with sharable features on all content.

Search Engine Optimization
Now you have to optimize all that useful content so that it’s properly indexed by search engines–and can then be found by your target audience when they are interested in learning more about it or better yet, making a purchase. In combination with an SEO program, PPC advertising also helps drive traffic to your website.

Closely monitor the keywords that are achieving premium rankings on search engine results pages and referring visitors to the website, especially branded terms. It is also important to make note of words used by your visitors as logged by your web analytics or onsite search. These might be words used repeatedly by your visiting audience, but which are not on the targeted keyword list. These words should be evaluated and leveraged for inspiration to amend or optimize your content strategy.

User Experience
Simply having more traffic to your site is not enough. While it’s important to have an intuitive and engaging website, the real success lies in producing quantifiable results that meet your business objectives. You will have to prevent visitors from bouncing immediately after they land on your website; first website impressions play a large role in the success of your product launch.

Many marketers have the common misconception that interesting content will overshadow poor usability. Wrong. When the user can’t find the content on your website, it may as well not exist. To make content more visible throughout your website, create “information paths” for the user to follow. An information path is the logical progression of content from broad to very detailed–and will move your customer through the conversion funnel.

Social Media
With so much effort already placed toward developing user-centered content, it would be illogical to keep this content solely on a single website. Instead, flaunt it using two distinct social media approaches. First, you should look to have social features added to your website to support a positive user experience. Examples of social features include a “share this” (www.sharethis.com) button, ratings and reviews, chat and a blog. Platforms such as Facebook have even created APIs (http://developers.facebook.com/ connect.php) that allow users to sign into your website with their Facebook identity.

The second way you can add social media to your product launch is by creating social profiles off your domain on popular platforms like Facebook and Twitter. But also look to extend to niche online communities relevant to your product.

Social media’s main value in a product launch is its ability to extend the reach and frequency of the broadcast of your content. Social media also markets to a targeted audience which has the propensity to create links in their online conversations, which in turn generate synergistic results with SEO. These created links, if rel=”follow,” supply ample SEO value as they pass the page rank of the website. While rel=”nofollow” links fail to contribute to SEO, they’re still useful in driving traffic to a related destination page.

Social links are even more likely to get clicked than banner ads because they are essentially online word-of-mouth referrals. Therefore, when launching a product, it is important to create ways for your growing customer base to easily become advocates and share their experiences with their online contacts. Also, don’t ignore the feedback provided by conversations developing in these communities. Think of these conversations as focus groups with data to supply to product managers or engineers for risk mitigation or future inspiration.

Analytics
Like DR, online marketing is all trackable. You need to gather data from numerous sources and assemble it in an analytics dashboard. Key performance indicators (KPIs) should be applied to each content. When tracked, these KPIs should tell a story about not only the performance of each piece of content, but also the user behaviors. For example, you should be able to determine the popular keywords that drive traffic to your website, how many visitors stayed and for how long and what content they consumed during their visit. Ultimately, these KPIs supplement your analytics platforms to determine the ratio between site visits and products purchased.

As marketing shifts from push to pull, traditional to online and paper to digital, product launches require more than just a smart idea and capable technologies–they require a smart online execution.

Michael Weisfeld is director of online marketing solutions at BusinessOnLine. He can be reached at michael.weisfeld@businessOL.com. Howard Chen is senior social media analyst and can be reached at howard.chen @businessOL.com.

October 2009 – Channel Crossing: Radio

iPhone Applications–The Third Screen

By Rich Ringrose

Mobile media is redefining how people listen and interact with radio stations and advertisers. With a global market of more than three billion users, mobile devices–including phones, PDAs and other handheld units–dwarf the number of computer users and most experts agree that this is just the beginning for mobile media. And with more and more of these mobile units making audio a prominent part of their appeal, the entire concept of “radio” is being turned on its ear. Is your station, staff, website and/or marketing strategy taking advantage of this mobile audio revolution?

THE MORPHING AND ADAPTATION OF RADIO
The popular misperception is that radio is dying. I completely disagree: radio isn’t dying; it’s just morphing beyond its traditional AM/FM confines in order to survive. The radio world recognizes that in order to engage a new generation of listeners who have come to expect interactivity with their media, radio needs to ratchet up its connectedness with its audience several notches. Every successful industry has had to change to accommodate the people they serve. The radio industry is no different, and if stations aren’t positioning themselves to take advantage of the mobile revolution, then they run the risk of becoming obsolete.

iPhone applications are the ideal mechanism for combining mass-market appeal with interactivity. Apple has made the process of building apps for the iPhone and iPod relatively straightforward–allowing good ideas, useful tools and entertainment to easily reach millions of people. iPhone applications for radio stations are designed to provide listeners with another way to hear their broadcast and to interact with the station and advertisers through the web, e-mail, text and phone.

iPhone apps for radio stations tend to fall into two major categories. One group of iPhone apps acts as radio aggregators, allowing thousands of stations to stream their broadcasts in one large application. Listeners can choose the type of music or talk show they want to listen to, as well as select from stations in cities across the country. AM/FM and Internet radio options are offered. There is very little station branding with this type of application, and listener engagement is negligible; however, listeners like the fact that they have so much variety from which to choose.

The other type of iPhone radio station application offers an app for a single station, thereby maximizing branding and listener engagement. These customized applications are approved individually by Apple and are available through their app store. The value proposition to the station of the latter model is the captive and exclusive attention of the listener.

Let’s face it, streaming and mobile device usage is only going to continue to expand exponentially, and once the 4G network is launched, it’s only a matter of time before streaming becomes the preferred way to listen to a radio station. Heck, radio never sounded so good–or offered advertisers more opportunities to reach and interact with the audience.

Rich Ringrose is the executive vice president of Robinson Interactive. He can be reached via e-mail at rich@robinsonradio.com.

October 2009 – Channel Crossing: Social Media

DR Marketing and Social Engagement

By Chris Peterson

If you have any doubts about the growing importance of social media today, consider this: If Facebook was a country, it would be the eighth-largest in population, just ahead of Japan. Two-thirds of the world’s Internet population visit social networks. More than 100 million YouTube videos are viewed every day. Flickr now has one photo for every two people on the planet. More than 3 million tweets are broadcast on Twitter every single day. Social media now accounts for 10 percent of all Internet time.

The good news is that customers using social media want us marketers to participate. In a Cone research study on business in social media, 93 percent of social media users believe a company should have a presence in social media. But “presence” doesn’t necessarily mean advertising with a strong CTA. That’s akin to walking into a party of people you don’t know and announcing from across the room that you want to sell them something.

Integrating social media into your overall direct response strategy is not difficult–but it does require a different mindset. It means engaging in these platforms in a manner that delivers value, with sales as a happy by-product. That’s not exactly direct response marketing, but it’s still measurable and potentially very effective. Let’s consider two areas that direct marketers feel very comfortable with: acquisition and conversion.

Conversational Acquisitions
There are some very straightforward ways to acquire customers using social media. You can simply place banners or links on various social media sites. Or you can create a sponsorship or host a particular area within a social media site. Unfortunately, these tactics rarely pay out. Either the underlying cost structure is too high or response rates are too low–or both.

For a more effective strategy, consider what is happening on these sites. These are groups of people with shared interests who are communicating with each other frequently. There is a social connection or common interest that is at the root of the communications–and the conversations represent the most valuable asset, not the impressions.

So how do we get into the stream of all these conversations? First, we can establish our own presence on various sites, which is often a very simple exercise. The challenge is scale. You may end up putting a lot of energy into engaging with the seven people who happen to find you on Facebook.

A second option is to harness the social power of your existing customer database–to get to the group of highly social people online who tend to be the “connectors.” They know a lot of people and pride themselves on the vast networks they have built. They are customers who like to be heard and who are also willing to advocate on your behalf, assuming they have been treated well.

You can identify these customers a number of different ways. As a start, external databases that aggregate social data can be overlaid on your customer database. You can identify who in your customer database has a Twitter account. Establishing presences on social media will attract them. You can also invite your customers into referral programs where you can help them look like an expert or a helpful resource in the eyes of their friends.

Simply bribing your customers with incentives to refer other customers may not be the most effective way to garner referrals. Response rates are often higher when you focus more on a customer’s achievements and status. For example, Adobe Software uses a series of valuable guides that are passed along to friends to garner referrals for photography software. The key is to think about how you can fuel interactions between your customers and their social networks that puts your products in the spotlight while making the customer look good. For companies with larger databases or with products of high value, these types of programs can be very successful. In some cases, these programs can yield the lowest CPA when compared to other media channels.

As an example, consider a company that sells a product for $150 and executes a four-month referral trial. If there is a customer database of 250,000 and three percent refer an average of two customers over four months, that’s $2.25M in sales. If the pilot costs $100,000 to $150,000, the ROI is 15 to one.

Converting Social Interactions
Not long ago, direct response marketing was very direct. You ran ads and counted calls. Now media, especially DRTV, drives both direct orders and research. There are a significant number of responders who prefer to first confirm your claims by consulting their peers.

Peer reviews often rank very high in search because so many people rely on them for purchase decisions. If someone is considering a product, it’s pretty easy to locate reviews written by other customers to get the unvarnished truth about products and services. Unfortunately, when a customer has a bad experience, one of the easiest ways for them to vent is in peer reviews. You may then have a disproportionate number of negative reviews from a small group of customers. All of this has an effect on conversion. If your media sparks research and your customers are bumping into negative content, then they may not buy.

The first step to improve conversion is to perform a social media audit of the conversation and content about your product. By parsing peer-review data, you can gain an understanding about what issues you may have with your product or customer service. You can also use this data to help improve your overall rankings.

If you want to improve review ratings, then turn to those same customers we talked about above–the social advocates who are in your database. If you proactively invite customers to write reviews on your behalf (without telling them what to write), you will generally get positive reviews. The overall effect will depend on the volume of existing reviews, but sometimes products with only a few reviews have one or two really negative reviews that drag the scoring down.

Austin’s Park, a family entertainment park in Austin, Texas, had a handful of reviews on various local review sites like Yelp. Some were old and negative. The park then printed a message on the back of all park receipts that asked customers to write reviews about their experience on various review sites. When they brought a printed review back, they got a free pass to the park. The effort garnered 15 to 20 new reviews that were very positive. It was a simple effort that dramatically changed the online chatter about the park.

Measuring the exact impact on conversion from these types of tactics can be difficult. But if you believe that online reviews and online conversation are affecting purchase behavior, then these efforts are well worth it. Investment in managing the effect of online conversation tends to be small when compared to your overall media spend.

Chris Peterson is president and managing partner of R2C Group, one of the nation’s largest direct response agencies, headquartered in Portland, Ore. He can be reached at cpeterson@r2cgroup.com.

August 2009 – Ask the Expert

Infomercial Twittering: The Long and Short of It

By Timothy R. Hawthorne

Q:How can micro-blogging enhance my DRTV marketing efforts?

A:The June ERA webinar “Top Five Keys to Twitter Retail Success” is a must-see presentation for anyone with deep roots in infomercial marketing (https://retailing.webex.com/ec0600l/eventcenter).

Presenter Randy Price explained how micro-blogging offers several opportunities for brand building and commerce, each of them premised on engaging consumers in real conversation. Most encouraging, Dell–which alerts followers to hot deals by micro-blogging–made over $3 million via Twitter by June.

My previous speculations about Twitter’s potential have been grounded in the bottom-line practicality that drives most DRTV campaign decisions. And indeed, Price confirmed that micro-blogging expands your arenas for personalizing customer service, conducting pre-qualified focus groups and serving as a means to sell products on cell phones. But for DRTV practitioners, these uses are secondary to the “real” messaging–long-form programs and one- and two-minute spots.

Are there any marketing techniques more diametrically opposed than half-hour commercials and 140-character messages? The math is amusing. It’s been said that 140 characters create about 25 words and can be spoken in about 10 seconds. If you believe as I do that the more you tell, the more you sell, your Twitter channel will be selling with one keyboard tied behind its view screen. Why bother?

DRTV vets are a features/benefits-obsessed bunch, but we prefer them to be plain to see. While it may be that nothing that fits on a cell-phone screen is plain to see without squinting, Twitter may offer some valuable meta-benefits. Yes, there’s more!

• If seen as a sales channel, micro-blogging will be an additional sales channel–one that enables incremental sales. As audiences shrink for traditional media formats, the best way to recapture TV expatriates is to track them down where they’ve moved. Twitter is one of those places.
• To thrive as a sales channel, you must persuade fellow tweeters to follow and find you. Price offered several suggestions for building an audience, which fundamentally boils down to this: be interesting and be relevant. It’s equal parts effort and opportunity. Twitter is new, and best practices are evolving. Helping define them requires innovation, and thus sharpens your creative staff’s skill set.
• If campaigning for the imaginary title of “The Soul of Wit,” brevity is an excellent option. If campaigning for improved sales upon Twitter, it’s pretty much mandatory. Pitching products in 140 characters or less demands a pithy presentation of product benefits. In other words, you need a unique selling proposition. Creating sales-minded tweets requires your creative team to conjure a memorable “just set it and forget it” for every product you pitch. Not everyone remembers to devise such a slogan for traditional DRTV shows and spots, but they should.

So start to tweet; new sales may be sweet!

Timothy R. Hawthorne is founder, chairman and executive creative director of Hawthorne Direct, a full-service DRTV, print, mail and digital ad agency founded in 1986. A 36-year television producer/writer/director, Hawthorne is a cum laude Harvard graduate.