Posts Tagged ‘Web/Tech’
November 24th, 2009
Like many online video companies, we have been plotting, planning and scheming about revenue models. Trying to create compelling models by sorting through the hype, mis-information, and data of limited reliability is daunting. Sometimes, it’s tempting to resort to the business strategy dartboard instead of even bothering. But, the latest buzz about Microsoft buying the news from News Corp. has had some surprising side-benefits. Primarily, it is causing the smoke to clear and people are talking about their numbers in more specific detail.
Through some number crunching hocus-pocus, the Columbia Journalism Review estimated that the Wall Street Journal probably gains no more than $12 million per year in advertising revenue derived from Google traffic, which represents 25% of their traffic. Think about that for a moment! According to BtoB, The WSJ has a paid circulation of 2.08 million subscribers and 25% of their online traffic is yielding them only $12 million dollars? Gosh, no wonder this stuff has been in the news so much lately. Seems like a crisis!
But, for as much as I respect a lot of the bloggers and analysts out there, I think they often miss the point. Derek Thompson at The Atlantic describes the problem like this:
The central struggle of monetizing online news is that ad rates for web pages are significantly worse than the print ad rates that once buttressed newspapers. So for a newspaper publisher like Murdoch, big online traffic helps, but it doesn’t pay for a sprawling roster of reporters and editors. Somebody’s gotta break the tyranny of revenue-light banner ads, eventually.
Derek is missing the point. There is no tyranny involved here, and banner ads are not “revenue-light”. They cost what they should given their effectiveness. Derek’s way of phrasing the problem illustrates the collective denial prevalent among those who have built their fortunes and livelihoods based upon traditional advertising models. What we are seeing is not the inequity of web-based advertising, but rather what economists call “creative destruction”: the displacement of an economically inefficient mechanism with a more efficient one.
What is “traditional advertising” and why is it dying?
I hate to use a phrase like “traditional advertising” that is bandied about so frequently without being a bit clear about what I mean.
Traditional advertising has been with us for a long time, and is based upon the idea that, by exposing large numbers of people to a message, some percentage of those people will be influenced and some number of them will spend money on the products being advertised. With traditional advertising, you pay to have your message seen, regardless of whether it actually leads to purchases of your product. The advertiser is thus one level removed from achieving their actual goal: sales.
This is a weak proposition at best, but advertisers have been trained well over the past century to believe in it. The various advertising pseudo-sciences of Madison Avenue have convinced advertisers that promoting a product is a “numbers game” and that large exposures lead to sales.
As an example of how completely engulfed in fantasy traditional advertising models are consider that a one page ad in the Wall Street Journal currently costs $277,646, with no guarantee that even one customer will buy your product, visit your website, or provide you with their email address or phone number! For more than a quarter million dollars you actually get nothing. Maybe you get a warm feeling of hope. Certainly you get nothing you can measure unless you spend even more money on your own resources to track and analyse the outcome of placing such an exorbitant ad.
Contrast this with Google AdWords. With Google, you pay nothing for exposure. If your ad is seen by 10 million people, you pay nothing for the privilege whatsoever. What do you pay for? You pay when interested people click and visit your website. You can measure the value of that and you can see exactly what you have spent your money for, and since they clicked, you know you already have their interest and have culled through millions of eyeballs to zero in on the one that is worth spending time on. If your website is effective, you can drive that visitor toward sales.
Paying for exposure is inefficient, high risk, and unpredictable. Paying for actual visits by interested potential customers efficient, measurable, and low-risk. AdWords is damned effective, and Google has found a way to make it affordable.
If you think about Derek’s claim that somebody “needs to break the tyranny of revenue-light banner ads”, you can see how ridiculous it sounds. Indeed the opposite will happen. Instead of people paying more for banner ads, more technologies like AdWords will begin to predominate. Improvements will be made and they will become even cheaper and more effective. Companies who measure their advertising dollars wisely will see that spending money for exposure is a waste of money and gradually more and more dollars will move to mechanisms which assure customer engagement.
At some point, even traditional billboards and other offline exposure-based advertising models will suffer. Why spend money on exposure when you can assure that everybody with an iPhone or other mobile device has access to what you have to sell, and you end up paying only for those people who actually call you or visit your store? True, it may be a while before the genius of online methods like AdWords graduate to mobile platforms to create this “pay only for what you need” model. But, my guess is it will happen sooner than we think and even companies who never considered the web important will see that “digital” is the only answer.
Advertising: Even the concept itself is in trouble
We have been brainwashed into believing that advertising is the method used to reach customers with new products. Remember when that was true? In 1988 I introduced a new product for my company and I remember vividly that advertising was the only method we considered for growing our market. We advertised in Dr. Dobbs and other publications, eventually we advertised in PC World and PC Week. It worked!
Today, things have changed. If you have a new product, there are myriads of ways to tell people about it. You can blog, Twitter, get involved with online communities where there is a need for your product. You can exploit every free avenue online, including news groups, forums. The more you believe in your product, and the more dedicated you are, the easier it is to find dozens or even hundreds of ways to get the word out. You might even, as a last resort, advertise. But, if you do, you will measure your dollars carefully against all the free ways you have been using. Only truly effective advertising is going to appeal to you.
This drastic change is often completely ignored by traditional advertising “thinkers”. The idea that the world could survive and economies could grow without any advertising at all is blasphemous. Yet, if you think about it, maybe it’s possible that advertising, as a concept, is in as much trouble as the Compact Disc.
People still buy, people still sell
Some things never change. People still love to buy products. Companies still create products to sell. Today, there are more ways to inform people about products than ever before. Advertising is no longer the only way to reach people, it is just one. And most traditional advertising is stuck in an age-old model that costs much more than it needs to and is fueled by a myopic ignorance of what makes economic progress occur.
So, the next time you read about “the crisis of advertising”, please don’t lament the passing of traditional models. There are better ways for customers to find and buy your products. Eliminating a wasteful and inefficient means to connect the two isn’t a crisis. It’s progress.
May 3rd, 2006
For almost two years, I’ve been using a Firefox extension called "Tabbrowser Extensions" written by a Japanese guy who really tries hard, but doesn’t quite do English very well. Now, I have to say, he may not know English, but the controversial TBE packs more tabbing features than I even thought were conceivable into one extension. If there’s a feature you want… it’s there! Thumbnails, tree views, horizontal or vertical tabs, closebox management, look-and-feel, fonts for unread items, pop-up blocking and repurposing as tabs. The newest version is even more incredible.
Am I recommending it? I’m not sure. Even the author advises against using it! He says…
This extension strongly unrecommended. Tab Mix is recommended instead of this, because it is stable, light, and it covers most useful features of this…
If you think this is too heavy and too gigantic having many needless features, see a thread in MozillaZine: Rebuilding TBE’s featureset with other plugins. There are many tiny extensions which provide each feature of TBE’s.
If that doesn’t have you clicking to download, the author has an "Advantages and Disadvantages" pages which is heavily weighted toward the disadvantages, including this gem…
Virtually, now no one can update TBE codes, excluding [sic] me. Its codes are
like as entwined spaghetti. Many unknown bugs are maybe there, many
known problems (with unknown reasons) too.
Fantastic! No wonder it works so well under Windows!
The poor guy! It’s obvious from looking at his page that he’s had nothing but complaints from lots of people. Maybe it’s no wonder. Just navigating the preferences pages makes you feel like you’re in the cockpit of a 747. Maybe a 747 is even easier. As a programmer, I can’t even imagine how you can make all those checkboxes operate in combination. I mean, when you add tab thumbnails, have tabs indicate which things you haven’t read, group tabs by color and launch group, there are so many fonts and special-features packed into the tab you really need a quick reference card to understand what it all means!
But, here’s the rub. I’ve been using it for 2 years. Not a problem. And I love it! When people look over my shoulder at me whizzing through dozens of tabs and sorting and rearranging and categorizing they say I look like some kind of frenzied information junkie. It’s true. I can consume and organise tons of web information using TBE. It saves me time.
And it’s almost like a video game in terms of the fun factor! I change the preferences all the time just because I can!
So, I may be alone. I may be weird. I may be totally off my nut.
But, I recommend Tabbrowser Extensions highly! Get it. Go nuts! In a world of dangerous awful stupid adware and browser viruses, at least THIS crazy thing does something helpful. It may not be for everybody. You really need to be a cockpit junkie. But, if you are, you’ll never go back.
And hey, let’s figure out how to help this guy out of his depressing mess. I’d love seeing this thing maintained and updated and made more official. If there are bugs, I haven’t found any. But, considering how over-the-top this thing is, there MUST be zillions in there somewhere!
Anyway! I give it FIVE UGLY STARS!
April 1st, 2006
Blogging works. But often I’m not sure even top bloggers know why, and convincing skeptics is often difficult without facts to back up claims of blogging success. There are, however, three very tangible reasons why blogging is so effective: immediacy, truth, and loyalty. These are three elusive properties of sites which have been pursued by all good website designers for the past decade.
Immediacy. Blogs, more than any other online medium, make it obvious that content is either current, or not. If you go to a blog, and quickly scan the posting dates and headlines, you know almost immediately whether or not the author is dedicated to frequent communication. In conventional websites, this is very hard to do unless you are CNN and immediacy is part of your core business. Many sites try techniques such as displaying the date of the last update, but we know many of those are ficticious, and only visitors who are already loyal can really tell the difference from day to day. Even if you go to a site frequently, creating the feeling of "constant change" is hard to do, and it’s just as bad to overdo it (which looks like hype) as underdo it (stagnation). Blogs make it simple, and it works better than any other "web site genre" I’ve seen.
Truth. Blogs encourage "transparency of authorship". When you go to a blog, you expect to find an individual who is the author. You expect to find details about them (if you’re interested). The blogosphere has trained you that a pseudonym or "corporate identity" is a warning sign. The truth value of such blogs is instantly demoted. This credibility is essential. You need to see it in the posting style, the "about" page", and in the genuine interaction of those who comment and link to the site. Truth and transparency are the new buzzwords of corporate communications and marketing, and blogs do it best.
Loyalty. Take immediacy, add truth, and visitors have an instant inclination to loyalty. That’s always been true. But blogs add the missing link: RSS subscriptions. Web designers try desparately to capitalize on that inclination with mailing lists, forums, competitions, and other mechanisms. But, RSS creates a direct channel between author and audience that is unrivaled. Because blogs do this so well, their loyalty groups grow more quickly. Without syndication, all a web designer has is word-of-mouth and Google. But, RSS brings with it tagging, blogrolls, sites like Technorati. All of these are technical multipliers of the word-of-mouth effect.
I’ll bet when most people visit websites they find relevant to their purpose, their brain is instantly trying to assess how current the site is (immediacy), how truthful it is, and making a decision if they’ll ever come back (loyalty). With most sites, this is a hard decision. So hard that many people just "click away". With blogs, it’s virtually an instant assessment, and an intuitive one. That’s why they work.
In a recent posting by Scoble (one of blogging’s superstars), he realized he needed to learn to hone his rhetoric:
The common theme I’m hearing is Werner (and the other Amazon employees
who commented here, and elsewhere that I’m seeing) want numbers. They
want statistics. Proof. Science.
It’s true. It is difficult to convey things with anecdotal stories of success, as Robert did in a recent meeting with Amazon. Werner Vogels (CTO of Amazon) was unimpressed. I can see why. Werner is a real numbers guy, and I know Robert’s style of enthusiasm is hard to swallow for certain types of people. But, Robert is right, and his anecdotal stories are real representations of success.
I think the best premise for people like Werner is to argue that blogs are nothing other than extremely effective websites. Skip the evangelism about "the conversation". Though it might be interesting, and even real, it detracts from the firm message about why blogs are effective. They’re effective because, in their current form, they build an audience by using a rare combination of immediacy and truth, coupled with unprecedented ways to cement the loyalty of that audience.
Contrasts need be be drawn so people can see this more clearly:
- How effective is your mailing list? How clean is it? How much control do subscribers have of what they get? And, how often do you use it? If you contrast most mailing lists with RSS, RSS will win hands down by just tallying the answers. RSS wins.
- How do you know what your visitor’s think? Surveys? Market research? Compare blog comments and the transparency of such communication with more conventional web mechanisms. With the exception of a few enormously dedicated market research efforts, blog comments will win this game, especially for smaller organizations that need to be more agile. Comments win.
- Don’t focus on things like "hits, visitors, and sessions" but rather effectiveness ratios. Blogs may not have higher visitor counts than well-marketed websites. But, you can bet that their ratio of "engaged visitors" to "casual visitors" is higher. Finding numbers to support this may be hard. Tools like Feedburner can help by redefining statistics in terms of "circulation" and slicing numbers differently. Blogs will win most "effectiveness ratio" arguments by the numbers, if you can manage to collect them.
Some of this is hard. I’ve done KPIs for sites many times, and slicing and dicing numbers to prove a point can sometimes be harrowing. As a blogger, I know intuitively that what I’m saying is true. But I also have had the same failures of rhetoric Robert describes and know that in the end, a more potent analysis is needed so that people can understand whether blogging will work for them.
A year and a half ago, I was skeptical myself. But, if I’ve learned anything over that time, it’s that blogs are not a new, amazing gadget which reinvents the web. They simply do what we’ve always known we need to do online, and they do it very, very well.
March 29th, 2006
I know Ballmer’s going to take a lot of flak for this comment from today’s CNN article:
Do you have an iPod?
No, I do not. Nor do my children. My children–in many dimensions
they’re as poorly behaved as many other children, but at least on this
dimension I’ve got my kids brainwashed: You don’t use Google, and you
don’t use an iPod.
Though perhaps an offhand comment, I assume it’s not a joke.
I think Steve needs to step back and listen to some of his employees. Maybe they really do know quite a bit that Steve doesn’t. Let’s see…
Last February’s Wired article "Hide your iPod, Here Comes Bill" reveals that Steve Ballmer is in the minority:
"About 80 percent of Microsoft employees who have a portable music
player have an iPod," said one source, a high-level manager who asked
to remain anonymous. "It’s pretty staggering."
…
So concerned is management, owning an iPod at Microsoft is beginning to
become impolitic, the manager said. Employees are hiding their iPods by
swapping the telltale white headphones for a less conspicuous pair.
A year later, it seems management is not only concerned, but positively paranoid. Many Microsoft employees see things differently than Steve and Bill. Tom Harpel, a Microsoft Employee who is not hiding his headphones, understands why understanding competing products can be empowering:
Yes, I use a Mac. I love using a Mac. Yes, I
carry an iPod. I don’t love it, but it works pretty well. I have a TiVo
today, but I’m sure I’ll be adding a Media Center to my living room
sometime in the next year.
I like toys. I like gadgets. Every
product out there tries to use technology to solve a problem. It’s fun
and enlightening to try stuff out, to try to understand how each
company approaches problem solving differently. Using competitor’s
products is one way to get at that understanding.
Today in Paul Kedrosky’s Blog, Robert Scoble also had no hesitation in his open-mindedness about the competition:
March 28th, 2006
Windows has finally crossed the line, and there’s nothing Microsoft can do about it. It’s the beginning of the end. It’s a pattern that I’ve experienced first hand. You start with something excellent, and in the service of your customers you try, try, try to keep it moving along. It succeeds for a long time. It becomes number one. But, you become so involved in the idea of the product that you forget about what it’s like to be a customer. You assume that it must be good because that’s what the market share tells you.
Then a line is crossed. You know that something is wrong. Your engineers can feel it. There’s a malaise in the air. But, nobody says anything. At the lunch table, you read PC Week’s scathing criticism. People stare around the room, some even laugh or scoff. Most say nothing. You go back to your work, you immerse yourself in further enhancements to your product. You convince yourself everything is OK. You look at competitive products only for purposes of punching holes in their strategy. You find the holes. You reassure yourself. Everyone smiles.
Repeat until fail.
I recognize the pattern. That’s where Windows is right now.
I just figured that out. I think it’s the Windows Vista slip that triggered my realization. The NYT Why Is Windows So Slow? article almost literally describes the phenomenon. It was also the Scoble debacle that seems to have finally ended with Robert’s Better Mail than Jail posting, where he realizes he shouldn’t have been so defensive. That is the leak in the dike. I see it on other Microsoft blogs too. I don’t want to single Robert out, but I think Robert, as well as others, feel the malaise I described above. The "unspoken truth" that something, though no one can say what, is wrong.
In 1988, I was fortunate to be the archtect of The dBASE Professional Compiler, a product that was never released. Remember dBASE?
From Ashton-Tate? You don’t know what I’m talking about do you?
In 1988, dBASE had 63% market share of the database market. That’s not just the PC database market, we’re talking about the entire database market. Ashton-tate was on top of the world, and knew it. My company was designing the compiler, so we weren’t part of Ashton-Tate, but we worked closely with all the developers. They were motivated, interested in their product, their customers, and confident they had the best solution for everybody. Just like Microsoft today feels about Windows.
But, we were a small company of innovative engineers. We looked at dBASE more objectively and saw clearly that dBASE was a mish-mash of features which had been built up one layer at a time until the whole no longer made sense. Sure, we were doing the compiler. It was an important problem to solve, and there were many people in the market who needed it. It was a good thing to do. But we knew what we were doing. We knew we were creating a compiler for a language that should, by all rights, be obsolete. At Ashton-Tate, such words were heresy. Only rarely did we mention how we felt, and when we did, we knew we had stepped on some emotions.
There were some brilliant people at Ashton-Tate, and I was fortunate to know many of them. When talking about dBASE, they were proud of their product, and it was the size of the customer base that was the de facto definition of why dBASE was a good product. This is part of the pattern. We are number one! Our product clearly must be the reason.
As I got to know people during that project, eventually there was more trust. Engineers at Ashton-Tate knew something was wrong. There was almost a sadness in discussions about how to fix it, as if they knew it was unfixable. dBASE had become a huge albatross, a product that had years of features heaped on top of an architecture that was never designed to handle such a load.
By 1989, dBASE’s market share dropped to 43%. That’s a 20% drop in just one year. When Microsoft Access came out in 1992, dBASE was dead. Crashed to the ground in no more than 4 years.
Compatibility. That’s what killed them.
dBASE had to be upward compatible at any cost, even if it meant creating extremely bloated and arcane features to support such compatibility. Why? Because of the market. The market was all Ashton-Tate had. With over 60% of the database market, and with the hint that the product may be far from perfect, compatibility became the holy grail. Compatibility assured Ashton-Tate that their market would "come along", that the effort to switch would remain higher than the effort to keep using the product.
Today, I saw the clear signs of the pattern in Microsoft’s behavior. It’s clear that Vista is a struggle. Regardless of whether the code rumors are true (they probably are not), the product is slipping. Worse, as an engineer I can read between the lines in the New York Times article:
Several thousand engineers have labored to build and test Windows Vista, a sprawling, complex software construction project with 50 million lines of code, or more than 40 percent larger than Windows XP.
I can’t tell you the feeling of deja vu I had when I read that. 40 percent larger than Windows XP? There is no possibility that Windows is in good health. NONE. They’re adding, but they’re not removing. They’re not moving forward, they are stuck so deep in the muck that every step is painful. Dan Farber at ZDNet sees the same desparate quandry for Microsoft. Good engineering does not result in products such as this.
Every single aspect of this matches the dBASE experience. Microsoft is defensive about new features, with Brad Goldberg saying "The perception that nothing new has come out of the Windows group since XP is just so far from the truth". When they talk about things that are new, the list is almost laughable, consisting of "Tablet PC versions" as proof of Microsoft’s continuing "innovations". I dug up an old review of the newly-released dBASE IV by John Pochodowicz. It’s a kitchen sink of sad additions which lead to the unbelievably bloated dBASE IV product which really had only one thing to offer: Compatibility.
I’m expecting Vista to be close.
Can Microsoft maintain their lead with Windows? I don’t think so, though it may be a slower death. Microsoft isn’t as bad off Ashton-Tate was. Their products are better-built than dBASE was, and Microsoft has more market-share, so, as a corporation, they can remain blind longer. But the only answer for Microsoft will be to finally throw away the shackles of compatibility. Microsoft has more time than Ashton-Tate did, and a lot depends whether they use it wisely.
Microsoft knows this. NYT pointed to an internal memo by Ray Ozzie, chief technical officer, who said, "Complexity kills. It sucks the life out of developers, it makes products difficult to plan, build and test, it introduces security challenges and it causes end-user and administrator frustration."
Mike Benson was Ashton-Tate’s most brilliant architect. He knew what needed to be done, and talking to him at the time was a breath of fresh air. But, Ashton-Tate had crippled his ability to act by isolating his thinking in a "new products" division. His work never came to light.
So Ray Ozzie knows, just like Mike Benson did. But, from the behavior of the company, the politics of compatibility is winning. The flawed belief that compatibility will assure market share has been disproven time and time again.
I was just lucky enough to have been there once, and know the pattern.
tags: Microsoft
Omar Shahine, another Microsoft employee, goes one step further when he says that there simply isn’t a better audio device than Apple’s iPod:
How frustrated and demotivated must employees like Omar feel when they hear this in an interview with Bill Gates:
Kristian Rickard, program manager for Entertainment & Devices, questions everything, but admits that innovation at Microsoft at least deserves to be put in quotation marks for now:
Kintan Brahmbhatt, a designer at Microsoft, has one of the most genuine and open-minded views of the iPod and its influence in his ipod and the design of things to come post:
About a year and a half ago, Steve Ballmer enraged bloggers and Microsoft employees alike by being quoted as claiming that iPod owners were music theives. It’s ironic that at the same time, intelligent insightful Microsoft employees were looking at the iPod, enjoying it, and trying to understand that allure. I’m sure most of them were trying to figure out just what they could do to help their company (and Steve Ballmer’s) come out with better products that could compete with the iPod.
Without a doubt Microsoft management is missing a huge opportunity to harness the hearts, minds, and potential of their employees. And, for the first time, the barrier between Microsoft employees and management is becoming transparent, even in print. I’m sure that accounts for the recent brouhaha claiming that some Microsoft employees want Ballmer out.
But, one thing is for sure. Ballmer is saying the wrong things these days. Very wrong.
It would be better to keep quiet than start claiming that competitor’s products are not allowed around the house "by edict". This is one of the worst possible messages not only for the
world, but for Microsoft’s employees.
In fairness, not everybody agrees. While it’s true that using your own products is important, I’m not sure that denying use of competitor’s products is quite the same. It wouldn’t be so bad if Ballmer had said "My kids have iPods along with several other music devices, I like to observe their choices." Maybe he’s ignoring his press briefings, who knows?
Microsoft used to impress me
because they would embrace good technology no matter who developed it.
I was impressed with MS engineers who would, almost without ego, reveal
to me just how much they knew about Linux, Java, and other competing
products. I would always tell people how formidable Microsoft was because of their unrelenting pursuit to squash the competition and
their unhesitating egoless assessments of competitors strengths and
weaknesses.
Surely, things have changed. At least at the top.