Monthly Archives: September 2009

Viva La Evolution!: Dell’s Twitter revenue is not a Conversation Marketing case study.

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Picture 1If you work in marketing and the Internet space as I do, you’re inundated daily with perspectives on the unfolding revolution of ‘conversation marketing’. We’re told TV is dead (though viewship numbers seem to contradict this). We’re told advertising is dead (though ad revenue remains the default – and often only – monetizing strategy among most web 2.0 platforms). In short, we’re fed a lot of attention-garnering hyperbole. The hyperbole works too by making everyone frothy and excited. Join the revolution!

A recent headline seemed to deliver to the pundits of conversation marketing the kind of hard, quantifiable ROI their business clients clamor for. Essentially the headline stated that Dell made $3MM in revenue from Twitter (in terms of hyperbole balancing, its worth noting this is over two years and a sliver of Dell’s overall revenue). This headline and ‘case study’were slapped on many a Social Media Marketing presentation. Cruise around Slideshare or listen in on pundit speeches. You’ll see this headline show up again and again.

The trouble is that the assumptions that come alongside that headline are not supported in the article. Dell’s success had very little to do with what Twitter is known for – namely microblogging and realtime conversation. Here’s why: In mentioning Twitter and $3MM in revenue in the same headline, it could be assumed that the revenue came from a dialogue between Dell and its customers.

However, if you read the article you’ll learn that basically Dell used its Twitter account (DellOutlet) to push coupons and purchase incentives out to the people following it (of which there are over one million). The reality is, DellOutlet’s use of Twitter in this instance is as Sunday Circular 2.0 not Conversation Marketing or even ‘social’media. What’s social about signing up for coupons?

Twitter isn’t being used for dialogue here, its being used as a distribution pipe no different than other media like catalogs, emails or sunday circulars. Sure, you can tweet back your gratitude and the Dell folks will politely acknowledge and thank you, but really, calling that a conversation feels like a stretch to me. What we’re seeing is offline tactics following people as they move online.

Simply being online – even on Twitter or Facebook – doesn’t make it Conversation Marketing.

That’s ok. What’s happening today is an evolution, not a revolution and while the paradigm may be shifting, it moves slower in the real world of human behavior than it does in trade publications and the hype-addicted blogosphere.

I like to point out to people that when the automobile was invented it was called the ‘horseless carriage’. This is important. Without some past frame of reference, new technologies are hard to understand and adopt. So using a new technology to accomplish an old tactic is transitional, it’s a stepping stone toward that great and enlightening revolution we’re being promised every day.

No more should we dismiss new technology as ‘just more of the same’than should we jump on the bandwagon and mindlessly make connections that aren’t there. Dell’s ‘monetizing’of Twitter is a traditional model applied to a new distribution pipeline. Let’s call it what it is because it’s still a step forward. Twitter is helping Dell make money and that’s great. But this is not a case study for Social Marketing or Conversation Marketing or whatever you want to call it.

I get concerned about the continual stream of grandiose claims and dramatic revolutionary language thrown around so easily among social media pundits. They are setting very high expectations – sort of like the pundits of the ‘dot-com era’did back in the day (and we know how that turned out).

People will listen initially. Dramatic talk of revolution stirs us all. They may even experiment which is a necessary step. But if these experiments lead to disappointment because the revolution being promised is oversold and underdelivered upon, then those same people will begin to tune us out. Worse, they may start tuning us out just as we’re reaching a point where its worth listening. That’s happening now. Just as Web 2.0 is beginning to be figured out a little (a.k.a. someone made three million buckaroos with it!), there’s a backlash because too many people are promising too much change and benefit far too soon. And of course it’s all laden with jargon and bullshit language.

We owe it to ourselves as an industry and as business people, to speak frankly. We should acknowledge successes (and $3MM in revenue certainly is) but also be careful not to overstate them. Exaggeration or misattribution of cause and effect creates problems. Hyperbole is undermining the advertising business because over-promising gets outed online quickly. Promising revolutionary change is undermining political agendas as our President promised more than any mortal can deliver, leading to disappointment. Are we doing the same, overselling and over promising, in the name of landing clients? I think sometimes at least, we are, and it’ll come back to bite our industry in the butt. After the dot-com crash it took years (which is lifetimes online) for the business world to take Internet marketing seriously again.

Less spin, more straight talk. That’s the paradigm of Social Media. Industry experts would do well to practice what they preach.

Martial Perspectives on Business: Office as Dojo

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Image2As I’ve mentioned before, I’ve spent half my life in the martial arts (specifically Aikido) and now run a school of my own with students of my own. To bring relevance to the martial discipline they are learning I often try to draw connections to their lives outside of their martial arts training. After all, most of us don’t get into physical confrontations and the martial arts can have significant relevance on other aspects of life.

Aikido is commonly practiced in a dojo (literally ‘place of the Way’). Dojo have a number of common elements and then nuanced differences from place to place. At our dojo there is a piece of calligraphy immediately opposite the entrance that says ‘True Victory, Self Victory’. This statement is something akin to our school’s mission statement. It is placed at the front door so that every student remembers why they are here.

Office spaces don’t often work this way, but I wonder if they should. Are your employees aware each day of why they are coming to the office? Do they know the company’s goals and their role in the larger operation?

Leading by demonstration.

At the beginning of class students line up in a particular way. The highest ranking student sits at the far right and the others line up, in descending rank order, to that senior person’s left. The instructor sits in front of the whole group. In this way, even a novice knows from day one that they can always look to their right for an example of how to conduct themselves. Questions of etiquette and posture – foundational training in Aikido – can be answered by observation.

This puts increasing responsibility on the students as they take on rank in the school. With seniority comes an obligation to conduct yourself in a manner appropriate to teaching those junior to you.

This too is less common in the work place. Often times senior managers are separated from their junior co-workers. Training in some industries is almost nonexistent and new recruits are often expected to ‘hit the ground running’with little or no background. This is done in the name of efficiency but often achieves just the opposite. Without proper training and a sense of their place in an organization, companies risk not using employees to their full potential or worse, a revolving door because employees feel no sense of belonging at the company. Managers are meant to manage the processes through which employees use their skills. Often though, managers behave more like doers than the facilitators they’re supposed to be.

Taking ownership.

In the dojo, everyone helps maintain the place. These chores are called Samu, a topic I wrote about in detail earlier. When everyone sweeps the floors and cleans the toilets, everyone takes ownership in the school. Students come to see this as membership in a community rather than tedious work they are forced to do. (Those that can’t often leave the school and in that sense the place self-selects the most appropriate students in this subtle way.)

The corrosive quality of entitlement is well known in corporations. Managers in ivory towers both lose touch with their employees and incur their resentment. Employees who are not given a sense of ownership in the company (and I don’t mean by emptying trashcans at night) do not develop a loyalty to the company. Without loyalty they are easily poached or work below their potential.

It is important, I think, that everyone in a company pitch in toward the well-being of that company. When executives and employees do this side-by-side it builds community which provides resilience and a cooperative spirit during the inevitable hard times every business goes through.

Appreciating Experience.

The instructor in Aikido is called Sensei (literally ‘one who was born before’). This is of course a reference to experiential age, not chronological. Inherent in Aikido is a respect for seniority and tenure. While instructors in their 60′s will not be as strong or fast as students in their 20′s they have witnessed far more and have a different understanding of Aikido.

This reverence for experience seems in decline in corporate America. More and more we hear people being forced into retirement earlier while jobs are handed out to younger, cheaper employees. This helps keep a company’s numbers down, but and adverse impact on the business might come alongside it. Expertise is necessarily linked to experience. Experts become experts by making mistakes. Someone who has had 40 years to watch deals and products come and go, who has had decades to send the wrong email, blurt out the wrong comment in a meeting or make the wrong choice in an employee, brings important expertise to a business. This is something no 20-something MBA, not matter how smart, can deliver. Academic experience is not to be undervalued, but the critical ‘gut’decisions and intuitive sensibility of someone with decades of industry experience is far more valuable in today’s business environment. There is also the matter of true expertise and what is required to legitimately claim this. But I covered that in a previous post which you can read here.

Service over self.

Another aspect of the dojo Sensei is his/her role in the school. The Sensei’s job is to serve the well-being of the students. His skill is measured by the skill of his students. If his students have poor etiquette or sloppy technique, then it reflects poorly on him. Therefore, the Sensei will put incredible effort into his students. By making them the best they can be, he is demonstrating his own expertise. Conversely, a Sensei more consumed with personal reputation, flashy demonstrations and showing students who the boss is, will be looked down upon by enlightened practitioners and ultimately find it hard to attract students of good character.

CEOs might consider themselves the Sensei’s of their companies. Their job is to serve the employees and shareholders. Their worth should be measured in the output of the company which is in turn a reflection of the process and skills brought to bear by managers and employees. When an employee fails at the company, the CEO should reflect on his/her role in that failure. When the products of a company become uncompetitive, the CEO should look within to see if there is some remedy to be made.

As we watch executive pay skyrocket, with incredible exit packages even for CEO’s that drive a company toward failure, the importance of a executives sense of obligation to the company (and not themselves) becomes obvious. It is no less shameful to bilk a company of millions of dollars after driving it into the ground than it is for a martial arts Sensei to brutalize a student as a means of demonstrating their power and skill.

Obligation and structure.

Obligation and structure are central themes in an Aikido dojo. Structure is provided so that each student is given a clear sense of their place  and a sense of the direction they are moving in. There is a clear idea, even sitting before class, as to what the novice is working for. Employees need this as well. In Aikido, a sense of obligation is important in helping students take ownership of the dojo and instructors take ownership of the students. In this same way employees must take ownership of their company and managers must be obligated to empowering employees to reach their full potential.

Martial arts, on the surface, seems focused on defending against or overcoming enemies in combat. The corporate marketplace, on the surface, also seems focused on defending market share and overcoming competitors in market combat. But the martial arts in reality is about overcoming the enemies within ourselves so that we may reach our greatest potential. In this sense we seek True Victory through Self Victory.

It might be interesting to see what victory (and great potential) a company might achieve if the senior leadership of that company looked at the business through a similar lens.

Dispatches From The Front Porch

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It’s been weeks since I’ve found the time to ruminate on the ol’front porch. This afternoon I finally found a little time. I’ve kept a running list of articles, ideas and mentions that amused or intrigued me. Here are a few of them:

internetSnapshotReal-Time Internet Snapshots: A technology without an application?

WIRED recently ran this article highlighting efforts to provide ‘real time’snapshots of the Internet’s consciousness. The focus was on making the point that search is inherently about indexed information and therefore the past. However sites like Twitter are much more about reflecting the present (sometimes in every mundane detail). This website is a nice case in point. It shows trending topics in Twitter plotted on a geographic map. Admittedly, it is interesting. However, I can’t for the life of me see a meaningful application of this technology.

Real-time data is useful in some places – GPS navigation, day trading on the stock market – but most of the information on Twitter isn’t really useful in real time. Sure, Twitter has helped make a mess of the news industry with its ability to break news faster and from an eye-witness perspective. But all this talk of Twitter-search seems overblown to me.

Information of the type tracked by Twitter is most useful in comparison to previous information. This allows for meaningful trendline plotting and potentially (after some time) predictive modeling. But the real time information itself isn’t especially insightful in the majority of instances.

Interestingly, as I was looking for an image to accompany this bit, I noticed how much an actual snapshot of the Internet looks like a nervous system. Perhaps one use for this technology is to detect ‘pain’in the Internet’s nervous system. Maybe it has security uses. Philip K Dick would’ve been inspired.

auction-792668.JPGPenny Auctions

This article in the economist struck my fancy. I’d never heard of ‘penny auctions’before and having read the model, I felt guilty for seeing the genius of it. After all, in addition to be very smart, it could be seen as pretty evil, especially in a culture like ours.

The concept works this way: I put an item at an unresistably low price (let’s say a $100 iPhone with a starting price of $2). I let the bidding begin. Any number of people can bid and they can bid any number they want (“$3, do I see $4?”). But each time they bid it costs them 25¢. Well, if I can get enough people to bid enough times, one lucky winner gets the iPhone very, very cheap while I make money from hundreds or thousands of bidders. At 25¢ per bid I could take it big bucks.

The concept plays on the same ‘hey, it could happen’mentality that fuels lottery mania and it strikes me a brilliant and predatory at the same time. Interestingly, my favorite t-shirt website Threadless uses a similar (and arguably less evil) model with a crowd-sourcing slant. Any number of artists can submit shirt ideas. The site’s community picks favorites. Those favorites go into limited production. The winning artist makes money for the design, Threadless makes money on the production run, and the chosen design is vetted by the community giving it a better than average chance of being a hot seller. Smart thinking.

fast-good-cheapGood. Fast. Cheap. Pick Two.

When I was a freelance writer I would often be called in on projects with crazy timelines. As a freelancer you’re sometimes the go-to guy when the person before you couldn’t nail it or the project sat in limbo too long and now, holy shit, it’s due tomorrow.

I would often use the ‘Good. Fast. Cheap.’triangle in helping desperate clients understand why buying my time on short notice with a fast turnaround, usually meant either an elevated rate or some lower-end writing. Usually my clients were willing to pay extra to get good work.

Quality (or ‘good’) has always seemed the most important piece of that triangle to me. Therefore, this article in WIRED struck me as counterintuitive. As it turns out, ‘good’is becoming less the driver of technology than is fast and cheap.

Digital systems are inherently cheap distribution channels. As it turns out, convenience is a bigger incentive that quality. Musicians lament the tonal sacrifices of MP3 formatting versus the fuller sound of AIFF. The Fling camera, intentionally manufactured with downmarket parts and fewer features, is the fastest growing category in camcorder sales. Even our video viewing standards are dropping. We’re more and more content with YouTube, staying home from movie theaters and watching more programming online (despite poor production values).

This got me to thinking, what does an emphasis on ‘fast’and ‘cheap’mean to other industries? It leads to fast food in the food industry. That’s cheap and quick. And maybe even tastes good. But its no good for us.

It also leads to brand-sanctioned or sponsored viral videos in the advertising industry. This is also fast and cheap (at least when compared to hiring an ad agency). Good. Well. The jury is out there.

The legal industry offers off the shelf boilerplate contracts to solve legal issues which is cheap and fast and perhaps ‘good enough’in some instances.

What then about medicine?  Construction? Insurance? Automotive?

Interesting to think about.

Civil War: Socialism vs. Capitalism online.

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The original culture of the Internet has always struck me as predominantly socialist. Consider the concept of ‘open source’ programming and you’ll see what I mean. While socialism is a dirty word in our healthcare debate, it’s an important consideration as capitalism continues to integrate with the Internet. WIRED recently ran an entire article on the ‘new socialism’ though I think they neglected to cover how the new socialism is colliding with the established capitalism.

Of particular interest is the Social Web (or Web 2.0) which I find more left leaning than Web 1.0 ever was. From the name on down, social media is all about collectivism and sharing. But if Web 2.0 is to grow up, my belief is it will need to follow the trail of Web 1.0. That means making some concessions to capitalism. The reason is innovation, pure and simple.

Socialism has historically proven limited in its ability to facilitate sustained innovation and the widespread distribution of continually improved-upon tools and services.

The USSR surprised the world when the Berlin Wall collapsed. Behind the iron curtain, the Soviet Union was decaying from the inside out and its industrial apparatus was decades behind other first world economies. China didn’t begin its ascent onto the world economic stage until it adopted some capitalist trappings. More hardline socialist nations North Korea, Cuba, and Venezuela struggle on the global stage today. Even nations with strong socialist programs that are noted for innovation, like Norway, pay for it via the money from taxes generated through an aggressive capitalist marketplace.

Capitalism facilitates innovation by rewarding hardwork and efficiency in a way socialism does not.

The Internet is a curious place. Many of it’s inventors start with lofty and selfless ambitions to make the world a better place (or at least to offer people some cool opportunities to do interesting things). However, to take these inventions from a niche fringe or early adopters to the masses usually requires infrastructure, people and a means of paying for these two. The aim remains socialist (improvement for all people) but the means is necessarily capitalist. Here’s why:

Most people want some type of personal benefit in exchange for their efforts. You may find a handful of selfless people willing to work for free, but its hard to staff a floor of accountants or managers or customer support staff with selfless do-gooders say nothing for material costs.

I believe much of the tension online among ad agencies, marketers, businesses, and investors is due to incompatibilities between the internet’s socialist soul and the capitalist methodologies necessary to see innovation reach a widely dispersed online audience. This isn’t just my thought, it’s rather old in fact. The Cluetrain Manifesto expressed anticipation of some of this friction a decade ago. Here are some of the friction points I see today that are undermining the integration of capitalist-driven sustainability with altruistic socialism online.

Friction point #1: Free isn’t free.

Inventors are often driven by sheer curiosity, lofty desires to make the world a better place or baser desires like sharing music with friends, make their inventions available for free. Early adopters glom onto these tools and free becomes a viral accelerator. The problem, as any businessman knows, is free isn’t really free. At infancy an inventor may be able to build his tool by investing purely through sweat equity. Success however means wider awareness and demand. This traditionally results in one of two scenarios. One is that a threatened entity or industry stomps the innovation into oblivion (as the music industry did to Napster).

The other outcome is a realization that to grow, one must acquire staff and infrastructure. This in turn takes capital. The choice then is either to become beholden to investors or to stick to your guns and deal with the consequences. Either way, there is a price tag for ‘free’  be it a tiresome battle with the incumbents (as with Napster), sacrificing some degree of freedom (as with taking on shareholders) or struggling against diminishing returns (as with refusing to adapt while competitors invest in innovation advantages).

2Friction point #2: There’s no historical precedent.

Web 1.0 had a much easier transition from socialism to capitalism. Though it felt revolutionary at the time, in many ways businesses took a tried and true construct of capitalism – purchase transactions – and simply moved it online. Voila! e-commerce was born and it became easier to cleanly map old world business practices like advertising revenue and shopping carts to the Internet.

The going will be harder for Web 2.0. One problem is that there is no old world model to work from. Conforming these tools of collectivism to capitalist markets has not been tried before. Ratings, reviews, comments and forums are all becoming standard features on business websites, that is true. They empower consumers like good socialist media and therefore are enjoying huge demand. But like email and instant messaging before them, they also don’t directly generate revenue making them harder for capitalists to work into their value calculations. This has lead to rampant experimentation – some successful, some not so much. Rampant, baseless experimentation is an expensive way to move forward. In the quantifiable world of capitalism its hard to get behind the mushy world of social media. Even with its sizeable traffic the metrics of measurement do not align clearly with capitalist needs. How many comments equal a sale and how much does it cost to create those comments? This is an exacerbated extension of the problem marketers have always faced. What is the value of a positive brand perception and how much does it cost to make? Over a half century into modern advertising those answers remain allusive. There’s no reason to expect social media will be able to provide satisfactory answers any time soon either.

Could community applications like Twitter, Facebook and Skype be headed for the same status as email and instant messaging? Could they become must-have features that no consumer is willing to pay for? That would be bad for capitalist investors who bet millions that these socialist tools could be bent to serve capitalist needs. But if you can’t get someone to pay for a service, you can at least serve them ads through it right?

Friction point #3: Advertising is breaking down online.

The most obvious way to bend the socialist Web to the capitalist will is to monetize the traffic through advertising.  This worked reasonably well with Web 1.0 even if it took the advertising agencies a bit longer to pick up on it. It’s getting hard now though. One problem is that since Web 1.0, the model has moved from impressions (pay per view) to actions (pay per clicks), and that means lower volumes and higher costs, especially since click through rates have been trending downward almost since day one.

Another dilemma is the increasingly important question of how much advertising we can pack into our environment. Forget people even clicking on ads, with so many of them out there, we’re having an ever harder time recalling any of them – let alone acting on them.

Worse still, social media itself throws wrenches in the centuries-old methods of marketing by adding a readily available layer of untethered consumer feedback into mix.

Somewhat ironically, companies today pay for the very social media applications on their sites that lead to the flaming, complaining and ‘outing’ that often costs them their own customers. True, it works in the inverse too, and good ratings mean better sales but the reality is, negative travels faster and is more compelling. Think of the stories that make press headlines…

In addition, because consumer commentary is both plentiful and accessible, it undermines the efficacy of any advertising message. Suddenly the content that costs so much to make (advertising) isn’t worth as much as the stuff consumers write as comments to that content. That’s a capitalist nightmare. Worse still, companies can’t really control what consumers say. Instead they must invest more and more to make every experience flawless lest they wind up the number one search term on Twitter for all the wrong reasons.

If anything, in gross aggregate I’d wager that social media thus far has cost capitalists more than it has earned them.

Why can’t we all get along?

Is social media incompatible with capitalism? Is it less a market gainer than a necessary market defense? Do the sales it creates offset the costs it requires?

Social media gathers people better than any technology in history. Ironically it also undermines many of the traditional ways capitalists have made money from these aggregated groups. But social media and online communities need capitalists as much as the capitalists need the communities. Historically capitalism has been a necessary ingredient in the growth, evolution and establishment of the Internet.

A lot of digital ink is rightly committed to discussing the imperative of business to be transparent. Less ink is offered up on the responsibilities of the consumer in this symbiotic relationship. This is not to say we must begin to click on banners to support corporations. We should however re-evaluate our expectation that everything be free. We should view ourselves as contributing to innovation every time we write a positive review or recommend a product to a peer. Ranting and ripping some company a new one might be a lot of fun, and is necessary at times. But so is the flip side.

The system works best when both sides benefit and the upheaval caused by social media can be minimized and adapted to, to everyone’s benefit, if we all participate in how the new marketplace unfolds.


Interestingly Web 3.0, the Semantic Web, seems poised to have an easier time reconciling itself to capitalism. Of course if it works really well, none of us will actually know it as it will be completely invisible even as it delivers a more individually customized online experience.


The inherent benefits of semantic intelligence are right in line with the holy grail of business – connecting products and services precisely to the people who want them right then and there. In hindsight, Web 2.0 might be a bump in the road. Right now, its a battleground as socialism and capitalism come to terms with each other in an uncomfortable dance.