Thursday, August 28, 2008

Shilling your friends the facebook way

A version of this piece was published in Marketing in 2008

A few years ago, I gathered with a group of friends in the living room of a house in Wandsworth. We’d all known each other for years, and we’d convened to hear a sales pitch from Jim for his new business.

Brian had been part of this group of friends since university, everyone knew he was struggling a bit with his income (or lack of it), and he seemed genuinely excited at the prospects this new venture offered.

When he got out his sales materials, we naturally took the piss – but it was good-natured, and we listened to what he had to say. Ten minutes in, and it became clear that what Brian had his hands on was a classic pyramid selling scheme.

He’d never come across one before, and the genius of it swept him up – statistics not being his strong point, he’d not figured out the unsustainability of the plan. His mates gave him a verbal kicking, first for being a mug, then for trying to sell them a pup. Then alcohol became involved, and the story got a bit fuzzier after that.

Brian still cringes whenever the subject is raised (and all his friends know it’s a dead cert when they need to play a joker). But the taboo that was broken was that of pitching your friends.

It’s what makes Facebook’s Social Ads an uncomfortable concept for many people.

Social Ads usually appear in a user’s newsfeed, and allow advertisers to target ads based on other users’ actions within the Facebook network. So if one of your friends bought something through a Facebook application, the system would tell all your friends.

Its first iteration, Beacon, wasn’t opt-in, and caused a storm amongst users, who were surprised to see themselves endorsing all sorts of products. Last month a class action lawsuit was launched by nineteen Facebook users who felt the programme abused their privacy, sharing details of their purchasing habits without their authorisation.

But whilst privacy is undoubtedly important to these users, it’s really just the legal weapon they’re wielding against the company. I can’t help thinking that what’s more hurtful is the abuse of friendship it creates.

So I’m not sure why anyone would opt in to this scheme (perhaps people are more exhibitionist than I think, or think their purchasing habits are more interesting to their friends than I do). But the new Engagement Ads launched last month by the site are nonetheless built on this assumption.

The film, Tropic Thunder, has already trialled the system – running a trailer for the movie that allowed consumers to leave comments about the movie – and other advertisers are already signed up to the programme.

Whilst these are softer, engagement (as the title implies) based concepts, they’re nevertheless making Facebook’s users into (albeit willing) tools of the marketing game.

This isn’t an impossible circle to square, but it’s one that demands great sensitivity and humour – because unless users are aware and happy to participate in a marketing venture of this sort, it will build resentment if they start to feel used – whilst their friends, who are on the receiving end of all this puff will start to see them as what casinos call a ‘shill’ – a player paid by the house to pose as a punter, to get games going and move them up.

And it’s the friends’ views that ultimately will count.

Thursday, August 21, 2008

Selling picks and shovels to the goldrush

A version of this piece was published in Marketing in 2008

I was at a conference the other day, where one of the speakers said that the average consumer has more information at her fingertips today than the CIA did ten years ago. I suspect neither the speaker nor I is in any position to judge the accuracy of this, but there’s a truth in it nevertheless, that consumers are nowadays better informed than they have ever been.

Since 1997, the CIA themselves have published their World Factbook online – the authoritative source for data like the land area of Azerbaijan (86,600 square km) and contextual information (it’s slightly smaller than Maine).

The CIA were part of a flood of content-owners who started to make available their information on the early web – from governments to libraries, academics to companies. Now, ordinary people could research anything from Greek mythology to the demographics of UK voting, for which they would previously have needed access to a specialist library (even if one existed nearby).

So a body of knowledge emerged online that enabled research and decision-making. But the sheer volume of information made it difficult to navigate, and so the next stage of the web’s evolution came about with the development of sites which sought to make sense of all this complexity.

The most well-known, Google, launched in 1998 and quickly transformed users’ ability to find their way through the mountain of online knowledge. Price comparison sites developed to help shoppers compare retailers, aggregators launched to put financial products side by side, and other sites like UpMyStreet combined publicly-available data on local property, schools and crime to present users with a picture of their neighbourhood.

All these sites aimed to make sense of what was out there, but in their own way. Each is rightly obsessed with what its consumers want, but broadly provides one way of finding it – like visiting a library, but having to ask the librarian for everything.

Recently though, this thinking has been challenged by a number of sites which allow users to build their own tools.

Facebook was amongst the first, publishing an API (a software ‘key’ that tells developers how to create applications that will integrate with the site). Within weeks thousands had been written, creating a wide range of new features and games for facebook users, and making facebook one of the most popular sites on the web, overtaking its key rival MySpace earlier this year.

Ning isn’t a social network, it’s a site that lets you build your own social network. Public or private, you can build a network for anything you like; a group ski trip, where everyone can post their pictures, videos and comments and stay in touch; an internal company network for employees to share information; a project network for people in different locations to coordinate on a common venture.

Ning puts its social network creation tools in the hands of users, and lets them get on with deciding what to do with it.

And in search, Yahoo has just launched a new service it calls BOSS - Build Your Own Search Service. The toolkit enables users and businesses to create their own search engine – customising the output to their own needs, combining it with other data sources like the user’s own preferences to produce search results that are specific to that site. A travel agent could use the tool to put results from searching their site next to Yahoo results, so a user has more options and doesn’t need to leave the site.

There’s an old adage – that selling picks and shovels to miners on the goldrush was more profitable than being a miner yourself. Mark Zuckerberg, facebook’s founder, clearly appreciated this, and he’s part of a trend that’s subtly altering the architecture of the web, as more and more sites open up the engine room that drives them, allowing a flood to creativity to surge in – and moving the emphasis from informing to equipping consumers.

Thursday, August 14, 2008

Luxury goods are struggling to get online

A version of this piece was published in Marketing in 2008

16% of the world now connects to the internet via broadband. But this small group represent 78% of the world’s earnings.

This single fact lies behind the extraordinary growth we’ve seen in online retail over the past ten years. In 2006 total online retail spend grew by 33.4%, 13 times faster than the retail sector, and online clothing sales alone expanded over 40% in that year. According to the ONS, by 2007, 70% of UK web users had bought online.

But as the market has changed beyond recognition for categories like books, music, consumer electronics and insurance, one group of brands as lagged behind – resisting the trend to sell direct, and often discouraging the listing of its products with online retailers.

Concerned that the web didn’t offer brands the quality environment they require to sustain their premium positioning, many luxury brands have steered clear of selling on the web – some electing instead to have ‘brand experience’ sites. Despite this, according to the Luxury Institute, most luxury brand websites are poorly designed and constructed, with MyDeco’s founder Brent Hoberman noting that many make extensive use of Flash animation, making them all but invisible to search engines.

When Tyler Brûlé did the rounds of super-premium brands as he worked on the development of the Monocle magazine/website, he expected to find dazzling on-brand websites and web-savvy marketing directors – “how wrong I was”, he told Luxury Briefing.

Over 9.5 million people worldwide have assets of over $1m, and the luxury goods market is outperforming many markets – growing at over 20% a year in the UK. And since these people are much more likely to be heavy web users, it’s not surprising that the online luxury goods market is expected to grow rapidly – doubling in the next three years.

In Japan, Ledbury Research report that 39% of high earners have purchased an item online at over £1,000, with 28% in the US and 26% in the UK.

For the last eight years, has been mining this seam, successfully creating a market for high fashion online. The site cleverly reinvents the experiential qualities of boutique shopping through the quality of its editorial – a Vogue where you can buy the clothes, and its pioneering same-day delivery and beautiful packaging have helped to make shopping online exciting for its customers.

Sites like Net-a-porter, Myprestigium, CoutureLab and new UK startup are filling the void left by the big brands’ reluctance to engage in the online space, and are providing stiff competition for the high street-based retailers as these businesses develop their online offering too.

High end high street fashion retailers Browns and Matches both have online retail operations, whilst Harvey Nichols sells accessories and Harrods has a pretty comprehensive online offering everything from cocktail dresses to confectionery.

These guys aren’t threatened by designers selling direct to the consumer online. If customers can be bothered to wait for the bloated flash-based sites to launch, they’ll rarely find anything to buy, with only around 30% of luxury brands selling online.

But even those who do e-retail merely give the impression they don’t understand either retail or the web. Prada sells online in 15 countries, but has a site built entirely in flash. Gucci’s site is similarly flash-based, whilst Armani has a tiny link on its homepage to ‘shop online’ – clicking on which has no effect (one wonders if anyone’s monitoring sales).

But a few labels are taking on the challenge. Louis Vuitton’s site is elegantly designed and still functional, Paul Smith’s lo-fi but effective.

It’s remarkable that despite the vastness of the market, and the success of retailers in the space, these two are amongst the very small number of luxury labels who are making a serious attempt at ecommerce.

The luxury market online is in its infancy. But since both online and luxury tend to be recession-resistant, we could be seeing a lot more soon.

Thursday, August 7, 2008

The avatars are taking over the asylum

A version of this piece was published in Marketing in 2008

Over the last few years, the web has come alive with avatars. The word comes from Hindu mythology, where it describes a spirit coming down to earth; and on Second Life, World of Warcraft and dozens of other online worlds, people use these digital representations of themselves to interact with each other.

But digital being digital, these avatars don’t have to look like you, or even look human. Entire subcultures have emerged for non-human avatars, with their own art, literature and websites.

Furries – anthropomorphic animals with human characteristics, Weres (people who claim – mostly spiritually – to be lycanthropes) and Otherkins (elves, ETs, dragons and other fantasy characters) abound, and have even attracted academic interest.

The University of California (there’s nothing surprising in this sentence) looked at the sexual aspects of furry culture, which is certainly evident in Second Life, where things can get quite, well, hairy.

All this might seem pretty bizarre to the average resident of Tunbridge Wells, not to mention the rest of us, and we might have been able to remain comfortably insulated from this other world carrying on somewhere behind our computer screens.

But avatars are set to break out from the games, worlds and chatrooms they live in, and they could be coming to a website or a TV near you.

Second Life and IBM recently announced a collaboration to bring portability to avatars, allowing them to be transported between games and sites, like characters from Eastenders popping up on Coronation Street.

The idea’s already been pioneered by, who have created a social avatar community that’s spreading across the web. Installing a piece of software on your computer, you get an avatar which you can customise to your preference – man, woman, character from Horton Hears a Who – it’s up to you.

Whenever you visit a website, you’ll see your avatar standing at the bottom of the screen – alongside all the avatars of other people visiting the same site. You can wave to them, wousle them (a bit like poking in facebook), chat to them – the idea is to make visiting a website a social phenomenon, rather than a solo one, and it’s revealing.

The average level of conversation is just as banal as most chat rooms, but if you’ve got a website it could be a valuable tool for talking to customers – when was the last time you could hang out in a website and watch others?

And it’s not just the web that’s seeing avatars shaking off the ties that bind them.

On the Nintendo Wii, players can personalise their Mii – their avatar on the game console. But by selecting the right options, they can set it free to wander around. Since Wii can be connected to the internet, this means your character can start turning up in the audience of your friends’ games – when they’re playing tennis, there you are in the crowd. Importantly though, you’re not controlling this – your Mii goes off to find things to do when you’re not playing the game.

As far as I can tell, nobody’s yet figured out what the point of this is, other than curiosity value.

But its significance is clear. We have no sense of shared experience with the web. With TV, we are conscious of the fact that others are watching the same things we watch, because people talk about what they saw on telly the night before. But online there’s no equivalent water cooler moment – and it’s hard to conceive the number of people who see what you see.

But Weblins and Mii gives you a little of that sense – somehow putting a face to the audience, and an idea of their existence.

The rise of social networking whilst rapid has nevertheless been constrained to individual sites. Portable avatars could change that, embedding social activity into every site, and creating an awareness of others in cyberspace that we take for granted in the real world.