A version of this piece was published in Marketing in 2008
As economic belts tighten, advertisers are looking with renewed vigour at getting the best from their media deals. Since the last recession, online has become a major medium – expected to overtake TV this year – and budgets are now substantial.
Encouraged by some agencies, advertisers are looking more closely at how cross-media dealing might create greater pricing efficiencies (procurement speak for cheaper) as increasingly, media groups own properties which span both the traditional and the digital worlds.
But amidst all this hype about synergies and leverage there are some real bear-traps for the unwary here, and some agendas that aren’t altogether straightforward…
Let’s look first at some of the bear-traps.
First, this isn’t a big market opportunity. There’s actually little crossover between the Top 10 traditional media operators and the top 10 in digital – the top ranking traditional media owner in traffic terms is the Daily Mail in July, and that scrapes in at number 10.
The online display market is dominated by the big portals – MSN, Yahoo and AOL, the smallest of which delivers twice the audience of the Mail’s site. Sky might be a 500lb gorilla in the TV market, but it’s at number 14 online. And this raises a further consideration.
When a media owner is selected to meet planning criteria arrived at for the offline property, there’s often a mismatch online. The Telegraph’s audience online is much younger, Channel 4’s is more upmarket and most of the Guardian’s audience is in the US. So plans created for one medium can struggle to translate effectively to the other.
Then there’s measurement. Whilst TV is traded in share and ratings, online is traded in impressions, clicks and outcomes. Smart operators have been using rating points in online for years – it’s a useful way of creating a point of comparison across media, as well as a sense of the scale of a campaign against the audience size. But the danger here is that the tail comes to wag the dog, as lowest common denominator traditional media metrics can replace more business-centric outcome measures in setting objectives.
Of course, there are positives. Editorial teams can be more effectively motivated, and publishers are often more willing to integrate commercial messages into their content. But of course if it’s just running creative on radio and online that you want, arguably that’s possible without a cross-media deal – your online and offline agencies should work together to make this happen for you; it’s their job. And of course if they do, you’re not constrained to using just the properties of that particular media group – you can do anything you like (almost like media planning really).
Where it really gets sticky though is when you try to account for the value. Both agencies and media owners can get into a media version of find the lady – a great price on one medium concealing poor value in others.
This is particularly the case if the agency creating the deal isn’t particularly expert in one of the media channels – they’re keen to show their openness to using that channel (usually digital) but wouldn’t know a good deal if it jumped up and bit them on the nose.
Worse though, since auditors are often employed on a single medium, these deals are often removed from the audit altogether. So a press audit might omit a deal because it has a substantial online component – and it might be tempting for an agency to load the pricing up on that deal in order to demonstrate deeper discounts on that media owner on the parts of their business that are subject to scrutiny.
Heaven forefend, and I’m sure that never happens.
We all want value for money. But as the economic weather gets wetter, it’s wise to remember that nowhere is the free lunch more elusive than in media.
Thursday, September 11, 2008
Thursday, September 4, 2008
Chrome represents the start of the new browser wars
A version of this piece was published in Marketing in 2008
The only billionaire I know collects earthmoving equipment. A visit to his house could well involve digging huge holes in the grounds, or filling them in – for him it’s a contemplative process, and a chance to indulge the engineer in him.
I couldn’t help thinking of him when I read Google’s latest announcement – the launch of their own web browser. Google Chrome will compete in what’s beginning to look once more like an interesting market.
The earliest popular web browser was Netscape’s Mosaic, which burst on to the scene in 1994. Within a year, Microsoft had launched Internet Explorer 1.0 which it distributed for free, and the first browser war was under way. By 1997 it was all over and Microsoft’s Internet Explorer began its domination of the sector – leveraging the software giant’s huge distribution strength.
And it’s not until recently that anyone’s been able to challenge this.
Two things have changed since 1997 that have made this possible. The emergence of the open source software movement (where communities of developers cooperate to create software for the common good) challenged the supremacy of big software companies.
Linux in operating systems. Apache in web servers, MySQL in databases, PHP in web programming – these open source projects now dominate the web’s architecture, changing the business model fundamentally for giants like Microsoft, Sun, and IBM. But it isn’t just software for IT people – this has impacted on consumers too, as the not-for-profit Mozilla Foundation’s Firefox browser has reached 20% market share.
According to NetApplications.com, Internet Explorer has fallen from 80% to 72% in the last 18 months, with almost all of this going to Firefox.
And if you install the Firefox browser on your computer, you’ll see a clue to what else has changed. Because integrated into the toolbar in Firefox is a search panel, which provides listings from Google.
Almost all of Mozilla’s income derives from this search panel – their deal with Google helped them earn $61m in 2006 (the last published accounts), since when their market share has rocketed.
Google know that loyalty to their brand is low. Web users will use what’s to hand – it’s why distribution is critical to the search giant’s success, and it’s why Microsoft’s first move as they launched into battle with Google for the search market was to build Windows Live search into Internet Explorer.
The official Google blog is pretty lukewarm about the new browser – “The web gets better with more options and innovations – Chrome is another option”. Hardly a ringing endorsement.
But one thing Chrome does do is tell Google what people are looking at – reporting back your surfing behaviour. It will add more suction to the data hoover that is Google and that may unsettle some.
But the real point of Chrome is a bigger one. The browser is the window not just onto the web, but on to all of the applications that reside there, from online storage (YoStore) to photo-sharing (flickr), word processing, spreadsheets (Google Docs). In the future, it’s believed, most computing power will reside online – accessed through a browser with little stored locally on our computers.
So browsers are a critical battleground for control of access to the future of computing and the internet, and Chrome’s features are designed to target this.
So whilst there’s little on the face of it that consumers can’t currently get from IE or Firefox, Chrome represents a more fundamental shift in direction. And because it’s open source, the development resource going into Chrome will boost progress of Firefox too.
Google are wealthy, and have a history of launching dozens of software plays and little history of making money out of them. But Chrome isn’t just a rich man’s hobby. It’s a sign that massive change is on the way for how we use the internet – a change that’s set to come at Microsoft’s cost.
The only billionaire I know collects earthmoving equipment. A visit to his house could well involve digging huge holes in the grounds, or filling them in – for him it’s a contemplative process, and a chance to indulge the engineer in him.
I couldn’t help thinking of him when I read Google’s latest announcement – the launch of their own web browser. Google Chrome will compete in what’s beginning to look once more like an interesting market.
The earliest popular web browser was Netscape’s Mosaic, which burst on to the scene in 1994. Within a year, Microsoft had launched Internet Explorer 1.0 which it distributed for free, and the first browser war was under way. By 1997 it was all over and Microsoft’s Internet Explorer began its domination of the sector – leveraging the software giant’s huge distribution strength.
And it’s not until recently that anyone’s been able to challenge this.
Two things have changed since 1997 that have made this possible. The emergence of the open source software movement (where communities of developers cooperate to create software for the common good) challenged the supremacy of big software companies.
Linux in operating systems. Apache in web servers, MySQL in databases, PHP in web programming – these open source projects now dominate the web’s architecture, changing the business model fundamentally for giants like Microsoft, Sun, and IBM. But it isn’t just software for IT people – this has impacted on consumers too, as the not-for-profit Mozilla Foundation’s Firefox browser has reached 20% market share.
According to NetApplications.com, Internet Explorer has fallen from 80% to 72% in the last 18 months, with almost all of this going to Firefox.
And if you install the Firefox browser on your computer, you’ll see a clue to what else has changed. Because integrated into the toolbar in Firefox is a search panel, which provides listings from Google.
Almost all of Mozilla’s income derives from this search panel – their deal with Google helped them earn $61m in 2006 (the last published accounts), since when their market share has rocketed.
Google know that loyalty to their brand is low. Web users will use what’s to hand – it’s why distribution is critical to the search giant’s success, and it’s why Microsoft’s first move as they launched into battle with Google for the search market was to build Windows Live search into Internet Explorer.
The official Google blog is pretty lukewarm about the new browser – “The web gets better with more options and innovations – Chrome is another option”. Hardly a ringing endorsement.
But one thing Chrome does do is tell Google what people are looking at – reporting back your surfing behaviour. It will add more suction to the data hoover that is Google and that may unsettle some.
But the real point of Chrome is a bigger one. The browser is the window not just onto the web, but on to all of the applications that reside there, from online storage (YoStore) to photo-sharing (flickr), word processing, spreadsheets (Google Docs). In the future, it’s believed, most computing power will reside online – accessed through a browser with little stored locally on our computers.
So browsers are a critical battleground for control of access to the future of computing and the internet, and Chrome’s features are designed to target this.
So whilst there’s little on the face of it that consumers can’t currently get from IE or Firefox, Chrome represents a more fundamental shift in direction. And because it’s open source, the development resource going into Chrome will boost progress of Firefox too.
Google are wealthy, and have a history of launching dozens of software plays and little history of making money out of them. But Chrome isn’t just a rich man’s hobby. It’s a sign that massive change is on the way for how we use the internet – a change that’s set to come at Microsoft’s cost.
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.
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.
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, Net-a-Porter.com 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 iconicchic.com 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.
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, Net-a-Porter.com 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 iconicchic.com 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 Weblins.com, 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.
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 Weblins.com, 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.
Thursday, July 31, 2008
It'll take more than good search to beat Google
A version of this piece was published in Marketing in 2008
The story of David and Goliath has attracted people over the generations, for its tale of hope for the small guy, for triumph in adversity, overcoming the odds. Hannibal, the Cartheginian commander, is remembered not just for that terrible film with Oliver Reed, but amongst military tacticians for his victory at Cannae where he destroyed a Roman army which massively outnumbered him.
This celebration of the underdog reflects our need for heroes, but also our desire to control and check the powerful.
So the launch last week of Cuil (pronounced ‘cool’) a new search engine from some ex-Google staff is interesting not just because of what it is, but what it says about the incumbent.
What it is, is impressive. Cuil claims to index three times as many sites as Google, using an algorithm that looks not at popularity (the number and quality of links pointing to a site) but at context – examining the context in which the searcher’s keywords sit in a page in order to understand better the relevance to a search.
If you look at search in purely rational terms, the user is only looking in reality for one result, not thousands. But Google’s claim to index billions of pages, and then its practice of presenting thousands of them to the searcher, give the illusion of breadth and choice – regardless of whether they find the thing they’re looking for. This is a powerful proposition, and it’s one the Cuil clearly have in mind when they promote themselves as listing three times as many pages as Google.
There’s another noteworthy feature of Cuil – their attitude to privacy. Coming hot on the heels with Google’s experience with a US court demanding they hand over all the viewing data for every user on YouTube, privacy is a weak spot in Google’s armour. Google hang on to the search data of every user for eighteen months – a fact that unsettles privacy campaigners, particularly after AOL’s disastrous public release of thousands of searchers’ data two years ago.
Cuil keeps no data from its users’ searches, and it makes a point of this. They keep no log files, IP addresses or personally identifiable information – as they put it, “Your search history is your business, not ours”.
The search results themselves seem promising – an interesting and different layout to Google’s, with three columns of text and pictures. A sliding box to the right allows the searcher to drill into different categories – so a search for Orange brings up the mobile phone company as first listing, but categories allow you to focus your search into Orange County, California, Orange Sodas or Citrus fruit.
This is smart and useful, because the engine is making a reasonable fist of differentiating between fruit and phones – for which it needs to understand context. It doesn’t always get this right – Sky TV comes first in the listings for a search for ‘sky’, but there’s a Virgin Media logo next to the listing.
So Cuil’s interface is a useful improvement on Google’s. But good search and a useful interface isn’t enough.
A quick look at Google’s Q2 results (which despite disappointment in the markets were still 39% up on the previous year) shows that 31% of their revenues come from partner sites – other websites which carry the Google search box.
Distribution is the key to Google’s massive success – most sites take Google’s AdSense program, and Google pay big money to them; $1.47billion out of the $1.66bn they earned that quarter.
So Google’s success in gaining distribution is down to two key things. The monetisation they drive from each search is better than their competitors, and their ability to model and predict this is better – so they can cut better deals for distribution partners, with stronger guarantees.
This is the barrier to entry for Cuil. It isn’t just the quality of their product – it’s their ability to drive distribution that will determine ultimate success. So Cuil is an interesting launch, but the chances of it launching that single stone that strikes the giant between the eyes are pretty slim.
The story of David and Goliath has attracted people over the generations, for its tale of hope for the small guy, for triumph in adversity, overcoming the odds. Hannibal, the Cartheginian commander, is remembered not just for that terrible film with Oliver Reed, but amongst military tacticians for his victory at Cannae where he destroyed a Roman army which massively outnumbered him.
This celebration of the underdog reflects our need for heroes, but also our desire to control and check the powerful.
So the launch last week of Cuil (pronounced ‘cool’) a new search engine from some ex-Google staff is interesting not just because of what it is, but what it says about the incumbent.
What it is, is impressive. Cuil claims to index three times as many sites as Google, using an algorithm that looks not at popularity (the number and quality of links pointing to a site) but at context – examining the context in which the searcher’s keywords sit in a page in order to understand better the relevance to a search.
If you look at search in purely rational terms, the user is only looking in reality for one result, not thousands. But Google’s claim to index billions of pages, and then its practice of presenting thousands of them to the searcher, give the illusion of breadth and choice – regardless of whether they find the thing they’re looking for. This is a powerful proposition, and it’s one the Cuil clearly have in mind when they promote themselves as listing three times as many pages as Google.
There’s another noteworthy feature of Cuil – their attitude to privacy. Coming hot on the heels with Google’s experience with a US court demanding they hand over all the viewing data for every user on YouTube, privacy is a weak spot in Google’s armour. Google hang on to the search data of every user for eighteen months – a fact that unsettles privacy campaigners, particularly after AOL’s disastrous public release of thousands of searchers’ data two years ago.
Cuil keeps no data from its users’ searches, and it makes a point of this. They keep no log files, IP addresses or personally identifiable information – as they put it, “Your search history is your business, not ours”.
The search results themselves seem promising – an interesting and different layout to Google’s, with three columns of text and pictures. A sliding box to the right allows the searcher to drill into different categories – so a search for Orange brings up the mobile phone company as first listing, but categories allow you to focus your search into Orange County, California, Orange Sodas or Citrus fruit.
This is smart and useful, because the engine is making a reasonable fist of differentiating between fruit and phones – for which it needs to understand context. It doesn’t always get this right – Sky TV comes first in the listings for a search for ‘sky’, but there’s a Virgin Media logo next to the listing.
So Cuil’s interface is a useful improvement on Google’s. But good search and a useful interface isn’t enough.
A quick look at Google’s Q2 results (which despite disappointment in the markets were still 39% up on the previous year) shows that 31% of their revenues come from partner sites – other websites which carry the Google search box.
Distribution is the key to Google’s massive success – most sites take Google’s AdSense program, and Google pay big money to them; $1.47billion out of the $1.66bn they earned that quarter.
So Google’s success in gaining distribution is down to two key things. The monetisation they drive from each search is better than their competitors, and their ability to model and predict this is better – so they can cut better deals for distribution partners, with stronger guarantees.
This is the barrier to entry for Cuil. It isn’t just the quality of their product – it’s their ability to drive distribution that will determine ultimate success. So Cuil is an interesting launch, but the chances of it launching that single stone that strikes the giant between the eyes are pretty slim.
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