Thursday
Jul082010

How to Use a Social Media Release as a Zen Stepping Stone for Newbies

DateThursday, July 8, 2010 at 3:30PM

 

This post is not for those of you in marketing that have “digital native” clients, namely clients who are comfortable using Facebook, Twitter, blogs, podcasts  - all the well-known components of Brian Solis' well-known Conversation Prism.

But if  you've ever had a PR  client that  absolutely, dead-set  refuses to use social media, read on.

It's only fair to say that many of these types of clients are small startup businesses with few marketing resources. They might be brilliant in their own field and industry, but work within a 1994 PR time machine, believing "hitting the news wires with a press release blast" is the only way to introduce their company and products to the world. Especially prevalent among B2B players, they'll vehemently argue that their audience is not using those channels.

No matter what data you put before them, showing  the presence of their audience on social networks, their industry groups on LinkedIn, Twitter, Facebook, their competitors using social media – they'll have none of it. You present all the well-known ROI stories  (Zappos, Dell, Comcast) including your best data from social media workshops.  All is to no avail.

And what if your recalcitrant client is a newly formed company?  There are no existing online conversations to dive into as no one knows about them.

Sound familiar? We recently acquired such a client.

Like the martial arts master, Pai Mei in the movie Kill Bill 2, this situation had me stroking my (virtual) beard circumspectly.


An Odd Thing Happened on the Way to the Webmaster

As fate would have it, in the days before this client's traditional press release went out, an odd thing happened: Their webmaster disappeared.  Gone missing. Left the building.  What's more,  there was no backdoor to the website, no content management system for easy entry. We had no way to post the press release, much less any of the accompanying materials (graphics, white paper) on their website, even by proper Web 1.0 standards.  All this - and there was an an immovable dead line and a constrained budget to boot.

For a PR type that thrives on digital marketing and social media, I was ready to render  Pai Wei's Five Point Palm Exploding Heart Technique, first to the webmaster and then to myself.

Instead I got clever: Crying Force Majeure, we put up the material on Pitch Engine.

Now Pitch Engine is a fine service. You can put up your own media release, news summary, graphics, downloadable white paper and related links. It does have a lot of those dang social media sharing tools though. And when we did this, some magical things happened.

This post is about that magic. How one client, once dead-set against all forms of social media and social networking came to “see the light”. Their discovery, the revealing of what’s so different and compelling in social media, came on with the same gentle surprise as one’s first experience in encountering a zen rock garden.

Source: Wikipedia's image of Honbo GardenThere are no metrics, no verbal descriptions, no graphs nor data that can capture a zen garden experience. To describe a zen garden to a blind person would be exceedingly difficult. A  person, who is afraid to post a comment on Facebook (and there are still a few out there) is much like the blind man in the zen garden.

It’s only when it is right before your eyes, sensorily perceived, that what distinguishes and defines the zen garden becomes understood. So too we find with social media. Your client has to “be in the experience” to get it. So often we work with clients chomping at the bit for social media, we forget the great leap to "getting it" for those who don't.

 

Social Media Release as a Client Base Camp

Source: Shift CommunicatioinsMind you -  we’ve used social media releases many times in the past and fully appreciate their usefulness from the media's  perspective. By definition, an SMR is a deconstructed version of the press release, a statement of the news facts, infographics and related links. With all the base parts laid out for media pitch-free– SMRs are more accessible, allowing quick reading, evaluation and use. Most importantly, these parts are easily shareable, with obvious buttons linking to Facebook, Twitter, Digg and many other social networking and bookmarking sites.

What we hadn't counted on was the psychological impact, a zen slap in the face so to speak,  on the client. For when our client company visited their own final release set in this social media context, it became immediately visually obvious to them that all was set up for sharing on social networks. It may seem trivial, but for digital non-native clients, establishing the relationship between the company’s news and content and how to share it is not entirely obvious. A social media release bridged the gap for them immediately.


Weaning the Client to become Zen Gardener of their Own News

Now our client wasn't totally lost inside their 1994 time machine: They did have Facebook and LinkedIn accounts. But these accounts were sitting fairly idle. 

However, with the social media release in front of them with all its attendant social media sharing buttons, we had a clear gateway for moving the news in front of their industry contacts, trade association professionals and personal contacts.   Aka we had them standing right inside the zen garden.

The rest was all fairly mechanical, the sort of activity going on in every PR agency today. We set up some infrastructure, making sure their existing social media account profiles were complete, had the client join  industry groups on LinkedIn and industry-specific social networks. We showed them how to use Google Alerts to find related conversations to their news topic. Then we did a bit of hands-on social media ettiquette training on listening, focusing on  "soft" approaches, avoiding the sales-y pitch. Of utmost importane was the hands-on training: Via phone coaching or email instructions, we walked them through the mechanics of how to post a status message and attach a link.

 

What the Client Learned 

Extending Presence Directly into Industry Influencers.  Remember, our B2B client started with the view  that there was no point in sending the release onto the social networks. However, as they completed their postings, the commentary that ensured  from each of the social networking environments, whether from the professionals on LinkedIn, the client's  industry peers within their industry social networks and even the more populist views  on Facebook, each rang back different reactions to the release. This all  occurred right before their eyes, with no intermediaries. 

We took them back to the zen garden for their next lesson...

The Zen Garden is Never Finished.  The zen gardener appreciates that the garden is a “living form”.  It may be created once but interacts with changes in the environment which may add to or subtract from the initial desired form. Leaves from a nearby tree are shaken by the wind onto the garden: They are shaped into the garden’s design or removed. Tending, sculpting and constant editing to remove or augment are the ways of a fine zen gardener.

So too with social media. In the pre Web 2.0 days, traditional “PR campaigns” were defined by exact start and stop dates as though the initial creators were the owners of the message. It was a very Ptolemeic view of the universe, where the originator attempted to become the center of everyone’s attention.

But a  press release released in a social media context is simply the beginning of the conversation. How often do we find an interesting news post, only to find that the comments from readers were just, if not more, valuable than the original post?

Like branches and leaves fallen into a garden, the comments, both positive and negative, stick to and become part of the news release. Here the client learned that the reader comments became an invaluable source of information about the preconceptions surrounding their topic. They learned the only way to correct misperceptions as well as acknowlege insights unforeseen was to actively engage, continue the conversation publicly. As the zen garden is never truly finished, a social media release is just a conversation starter.

The client's newly found discovery of participating in online communities built a voracious appetite for more interaction. But even we were surprised with the client's quick realisation that...

Walled Gardens are Archaic.  Once the client began experiencing the value of commenting and open discussion, they were extremely disappointed with those news outlets that did not support commenting. One social networking community we interacted with did not support outbound links. On noticing this, the client exclaimed to the community manager, “How Old School!”  (It turns out nothing is more annoying to those who recently took down a wall, then to discover someone else's wall.)

Summary? For clients still immersed in a Web 1.0 world, a press release in a social context  turns out to provide a familiar “comfort zone” to trigger social media introductions on their own. 


Four Lessons  for PR and Social Media Sherpas

We've introduced and grown social media use for many clients on a larger, more sophisticated scale. However, taking a client from a zero baseline was extraordinary in re-learning a few lessons ourselves. 

  1. Establish the Guiding, Not Forefront Role of Public Relations. A social media release, coupled with real-time social media training, allows you to get your clients discovering their own voice as well as handling commenters'  inquiries directly. You are merely the sherpa guide into social media. All the tools you need are embedded in the social media release. Give your clients the option to use the research tools you use yourself to find conversations.  Above all, resist the temptation to do the ghost-writing for them.


  2. Disintermediate the Media as Sole Reputation Holder. One of the happy results for a such clients is that they are weaned from the uni-dimensional view that a press release is measured solely by millions of impressions or equivalent advertising dollars. Instead, they realise it’s the start of potentially valuable conversations with not only press, but colleagues and potential customers directly. Voila! In one step, you have connected PR into their CRM strategy – one of the most valuable assets of socially based news promotion is revealed.


  3. Demonstrate Live the new “Inside-Out Branding”.  Trapped inside a traditional Web 1.0 perspective, it’s often hard to shake out of a client’s head that it isn’t just about what people say about them on their own website, or on high-profile news sites, that truly matters. However, when the client experiences first-hand that they have personally ignited conversations about their brand on remote social networking sites, places where their audience and futures customers are, they “get it” immediately.


  4. Our last and strangest lesson? It took a failure from the web team, an emergency, to get our client’s permission to post a social media release on a remote satellite website. Now while I can’t recommend this as a "planned strategy" by itself (due to the obvious lack of SEO and web site traffic benfits associated with a  press release), oddly enough, the exercise proved to demonstrate a number of social media benefits that would otherwise have  remained quite abstract to the client. Message to us? Leverage change from steadfast patterns to make more beneficial disruptive change.

Did we trick our client into using social media?  Oh, maybe just a little. ;-)  But we're looking forward to greater social media activities with this delighted client -- now that the big hurdle has been removed.  And with a new webmaster.

Do you have special tricks to assist a client in jumping the gap?

 

 

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Thursday
Jun242010

Wal-Mart & How Punxsutawney Phil Ate My Locally Sourced Produce

DateThursday, June 24, 2010 at 12:03PM

 

Source: Fast Company

Some time ago, November 8, 2008 to be exact, I wrote a blog post, Wal-Mart: Alien Resurrection in the Local Food Movement. There I examined Wal-Marts announced goal to provide more local food within their stores. Along with many others, I raised the question: Is this real?  Or is it pure environmental marketing?

At the time, I was generous in my review of their efforts.

The traffic of readers into that post has been somewhat of a barometer to me of the the kick-up of PR activities from Walmart's Heritage Agriculture Program, their pilot local food sourcing program.  So I wasn't too surprised last week to see folks mulling around again when NPR carried the story, "WalMart Helps Small Farms Supply Local Food".

 

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NPR's story evoked deja vu.  We all agree on the vast impact Wal-Mart could have on the local food movement and, more importantly, the overall food distribution system in the U.S.   As NPR stated so well,

As the world's largest retailer, Wal-Mart greatly influences the products people buy at its own stores as well as other retailers. And a move toward locally grown produce by the retail powerhouse could impact the produce offerings at smaller grocers and supermarkets across the country.

More so than in 2008, the environment and food-miles are a growing part of mainstream consciousness.  And from a corporate perspective, Wal-Mart is deeply aware of the merits of local food sourcing in terms of a critical expense.  From NPR's well-balanced article,

A surprising percentage, on many crops, of the cost of the goods is the freight," says Ron McCormick, the head of Wal-Mart's Heritage Agriculture program.

 

Admittedly, the challenges are great for even a vast entity like WalMart: The market reality is that only a  minority of local farms have the food safety, legal and business infrastructure to interact with large-scale distributors and the likes of Wal-Mart.

NPR's story and detail rings far too similar to 2008 when Wal-Mart originally mounted their power behind the Heritage Agriculture program.  In fact there's so much deja vu, it feels like Bill Murray's Ground Hog Day movie.

How Punxsutawney Phil Ate My Locally Sourced Produce

 

Beleive me, I checked the alarm clock and date by my bed again. 

Just like in the movie, there's odd discrepancies that give you a clue that something's awry.  In July 2008,  a Wal-Mart press release cited that 20% of their local produce in summer season was from local sources.  And now here in June 2010, some two years later, NPR reports that Wal-mart says just 6% of its produce is grown in the same state it's sold.

Obviously, I cannot untwine the statistics for summer 2008 vs. WalMart's 2010 (full year? state average?) statistic. However, on the face of it, it looks like not much has happened.

My direct experience verifies little has happened to justify chest-thumping to at least my state within the national audience.  When i visit my local Walmart here in Ocoee, Florida, there's no evidence of any effort whatsoever.  I cannot find that local produce. If it is there, it is not labelled.  For instance, where's the local Zellwood corn that's so fabulous this time of year here in Florida?

Now, unlike a state like Connecticut, here in Florida, we have a long growing season: At least 8-10 different vegetables - cucumbers, eggplants, strawberries to peas and potatoes - many available for seven months of the year. 

But then perhaps Florida is not on WalMart's Strategic State Partners map for this project? It turns out Florida is not. (See second to last slide at Heritage Agricutlture's powerpoint.) It turns out Florida was not there two years ago either when I looked.


When is Bentonville Bustin' a Move toward Real Local Food Sourcing?

 

Maybe my skepticism is shared and the reason NPR ends its  article on the somewhat diplomatic note, "Wal-Mart won't say what its long-term goal is for the Heritage Agriculture program." 

When a program, such as the Heritage Agriculture Program, stays disconnected from corporate Bentonville's activities over nearly a 2-year span, I  find it difficult to believe it is more than a pure environmental marketing ploy. The same  powerpoint (seemingly not updated or scarsely so) resides on Wal-Mart's oft-used link to the Heritage Agriculture Program that I saw in 2008.

I'd welcome the  counter-views from those of you who live in the program's strategic states. Are you seeing the local, even state-based, food in your local Wal-Mart produce section?  

My friend Punxutawney Phil sez its a few years down the road.

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Thursday
May132010

Wordle of my Last Post on Open Gov, Prizes and Data Visualization Tools

DateThursday, May 13, 2010 at 12:55PM

Wordle Graphic of my last post, Open Gov's Prize Palooza or How We All Became Creative Marketers for The White House.

Click to enlarge.   |    Enjoy    |   Just for fun.

 

Wordle: Open Gov's Prize Palooza or How We All Became Marketers for The White House

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Wednesday
May122010

Open Gov’s Prize-Palooza or How We All Became Marketing Creatives for The White House  

DateWednesday, May 12, 2010 at 9:50AM

You see, boys forget what their country means by just reading The Land of the Free in history books. Then they get to be men they forget even more. Liberty's too precious a thing to be buried in books, Miss Saunders. Men should hold it up in front of them every single day of their lives and say: I'm free to think and to speak. My ancestors couldn't, I can, and my children will. Boys ought to grow up remembering that.(Source: IMDB)



In Jefferson Smith’s impassioned speech, Jimmy Stewart made our eyes tear and put a little choke in our throats. (No? Well, maybe you’re related to the secretly crooked senator in the movie. No spoilers here.)

With "Mr Smith Goes to Washington", Frank Capra provided one of the most compelling creative pieces for citizens to care about our nation, our freedoms - reinstilling belief that an ordinary citizen of good intent can triumph over a lumbering government system when its diverted off it true course.

Now, even more so in this 1939 movie, our government is saddled with huge geological layers of administratrion, immense rule books and daunting only-an-attourney- can- decipher" procedures that seem to defy a person to participate.

From climate change, financial reform to the  U.S. education system, the issues on the table are pressing and  will affect our own and our children's lives:  And yet even as bills are processed through a furious  congressional workload,  with an average 8000 regulations issued per year, an August 2009 Harris Poll indicated  many Americans are apathetic and few are familiar with their leaders in Congress. A recent March 2010 survey  by the Pew Research Center  of People and the Press concludes that " By almost every conceivable measure Americans are less positive and more critical of government these days."

There's an immense chasm to bridge. As in Capra's movie, the current administration inherits a legacy, centralized monolithic system which insulates lawmakers from populist views.

But President  Obama isn't taking that.  Like Jefferson Smith, he  passionately wants to change things. And so it was, as one of his first acts in the White House, he launched the Open Government Initiative, an agenda built on three core principles: Transparency, Participation and Collaboration. One of his core actions has been in directing the release of data by the federal agencies.

How to create more transparency, foster participation and engagement? How to create what Beth Noveck, U.S. Deputy Chief Technology and Director of the Open Government Initiative , has described as  "DoSomething.gov?"

Luckily, it seems all the elements are coalescing toward what Tim O'Reilly has called "Government as a Platform". And though his concept is still evolving, he's struck a resounding chord in describing how the government might deploy the same powerful forces we've seen work in private industry with Web 2.0

In a nutshell: the secret to the success of bellwethers like Google, Amazon, eBay, Craigslist, Wikipedia, Facebook, and Twitter is that each of these sites, in its own way, has learned to harness the power of its users to add value to—no, more than that, to co-create—its offerings.

 The key phrase here is 'harness the power of its users to add value - to co-create its offerings'.

As the old Chambers Brother's hit sang ♫ Time has Come Today. (Feel free to play that  while you read on...;-))

Crowdsourcing + Web 2.0   ☛ Government as Platform

Four forces are converging to enable the government to move  "one data server at a time" to greater transparency and citizen participation:

1. Web 2.0 along with profound cultural changes inspired by social media technologies 

have deeply and irrevocably changed people expectations of how they want to interact. Crowdsourcing experiments like NetFlix $1 Mn challenge and DARPA's Red Balloon contest have made us aware that we can solve the most complex problems through collaboration.

2. The Change Agent Role of Prize Economics is Better Understood.

As I described in earlier post, the marketing appeal and, more importantly, efficiencies of incentive-based challenges have stirred both the public and private sector's imaginations.

3. The Wide Availability of Data Mining and Interactive Visualization Tools

many of which are free, in the hands of net citizens allow the unleashing of talent. The most beauteous of these tools combine "graphical positive reinforcement" meaning pleasing visuals with   "progressive insight": As the user clicks through the different data views, they gain more insight into the data.

4. The Formation of an Open Innovation community Crossing the Public and Private Chasm to Drive Change.

Within the public sector, key thought leaders like Aneesh Chopra, first Federal Chief Technology Officer of the U.S., Vivek Kundra, Federal CIO, Beth Noveck and others  are leading by example.  And the meeting of like minds within the private sector is clear: Listening to Noveck describe "DoSomething.gov" really evokes  O'Reilly's "Government as a Platform".

The shared idea is that government provides infrastructure , open data sets (eg. Data.gov) and base operating rules (eg. contests) which the private community can then take a step further, building practical applications upon those data sets.

One of the best examples of the meeting of government open-ness with private application development is given by Tim O'Reilly: The City of Wasington D.C's App Store showcases not just raw data sets but applications built by private citizens and companies, such as ParkitDC and FixMyCity DC, allowing identification and reporting of street repairs needed.

Following President Obama's Open Government Initiate, an April OMB directive moved on to encourage federal agencies to use prize contests and challenges to enlist the talents of the public.

Now that's where you and I come in.

Our Marketing Assignment for Stirring Change

In essence, we, the tax-paying-non-Beltway net citizens can be part of the new marketing department for Open Gov. Whether you are an software engineer, data visualization expert, storyboard maker in an ad agency, or university team, here are some of the  changes the federal government wants us to participate in:

Change 1: Motivate our Kids to Eat Better and Engage in Physical Activity.

Big Concept: Conquer childhood obesity, by designing creative, fun, interactive tools using the USDA nutritional database. As of today, some 13,000+  adults and kids have entered this context.

Prize Dollar Value: $60,000 total; Two Grand Prizes of $10,000 each

Contest Website:  Michelle Obama's App's for Healthy Kids Challenge

 

Change 2: Create a Video Explaining Federal Rulemaking & Regulations so Even Your Kid Sister can Understand it.

 

Big concept: Oh, rulemaking. Now that sounds ghastly dry, no? Well, as the video above points out, most  of us know and loved the Cash-for-Clunkers program. But did you realise that was the outcome of a rule-making directive and you could have had input into that program? More motivated now?

Prize Dollar Value: $2500

Contest Website: Rulemaking Matters: The EPA's Video Contest

 

Change 3: Craft a Visualization Illuminating how the Congressional Floor Proceedings Work.

Actually in Capra's movie, Jefferson Smith used knowledge of floor proceedings to his advantage. You can too - or at least help other Americans do it.

Prize Dollar Value: Top Prize $5000

Contest Website: Best entry point is within The Design for America project pages.

 

Change 4. Tell an Engaging Story Describing how a Bill Becomes a Law.

(The flow diagram below is useful. But you can do better than the below, right?)

Prize Dollar Value: Top Prize $5000

Contest Website: Check out Sunlight Lab's The Design for America project page.

There are in fact many more contests you can participate in as you can see by visiting Sunlight Labs, one of the thought leaders in transparency in government.

Useful Data Mining and Visualization Design Tools

Many of these contests have everything to do with taking large government data sets and opening our eyes to rich trends and patterns to help better access, understand the data and make better decisions. Data Viz experts speak of a "magical moment" in which "an unwieldy data set is transformed into an image on a screen, suddenly giving user/viewers the perception of an unexpected pattern."

By making data more approachable, for instance, graphing changes over time or by geography, numbers come to life, telling us perhaps where the next jobs will be, how the Federal Stimulus money is being spent even showing  what sectors  of the economy will likely be first affected with the recovery. Understanding the procedural flow embedded in a government process like rulemaking against a timeline tells us when we as citizens have the opportunity to have impact. 

Many wonderful tools exist to assist in these challenges and here I'll just highlight just a few:

click to interactIBM's Many Eyes

Developed by IBM's Collaborative User Experience research group, Many Eyes consists of a set of visualization tools set within a social-sharing platform. The philosphy behind Many Eyes (also influenced by Many Brains outside IBM) is that visualizations "gains power when multiple people use [them] to communicate and explore information together".

(Admittedly, I didn't spend as much time with this one as with some of the others. Please explore yourself!)

 

 

 

 

Click to interactPrezi

It may seems strange to include a "zooming presentation" editor and creation tool here.  But there's many a reason Harvard Business Review gave it the Steve Jobsian "Insanely Great!" cheer.  Breaking the Powerpoint frozen-logic death march, Prezi encourages nonlinear thinking: its group, layering and zooming capabilities with multimedia objects allow a presenter amazing flexibility in showing the relationships of their ideas.  Check out this great example from Allison Blank to get just an inkling of its compelling power to attract attention and "think deeper". (Go on "Autoplay" or, better yet, discover it's capabilities by clicking around...). You don't need to be a data mining or visualization whiz to master this one.

click to interactTableau Public

Simply put, Tableau blew my mind when I interacted with its "dashboard" to understand the Unemployment Data shown to the left.  I'd never fully understood unemployment trends and was particularly interested in - well- our current time slot.

Tableau Public's website says there's no language to learn, no flash, no plug-ins, no API. With the ability to create interactive graphics, dashboards, maps and tables from any data set, this tool too looks "Insanely Great".

 

 

Trendalyzer aka Google Motion Charts

Created by the internationally reknown health statistician, Hans Rosling (and family ), Trendanalyzer was purchased by Google and now is available as Google Motion Charts.

While I did not play with this tool, the video demo by Hans Rosling to the U.S. State Department (included below) is widely regarded as one of the most profound demonstrations of, as Prof. Rosling puts it so well, "My Data Set can Change your Mind Set".

In the end, changing belief and behavior with data is what Open Gov and science share in common. (Bear in mind- this tool does require, among other skills, competence with Flash.)

 Do we have this now?  This is an Awesome Hey Day for Technical Marketing folks and their Engineering BFFs.

 

Still Need Inspiration?

Actually, you don't need to be a data visualization expert or a technical marketeer to contribute your talents to serve Open Gov's goals.   A great example of that  is  the recent winner of the GSA's $2500 prize for a video describing the most useful features of the USA.gov website.

In this video, Peter Sullivan of Nashville, Tenn. gathered friends and family into his homegrown video, to show how he could find his congressional representative, search out tax information, even find student loan information on USA.gov.  Great stuff!

Too corney for you?

This fabulous 3 minute animated infographic of the Red Riding Hood story suggests how the congressional proceedings challenge might be won:

Slagsmålsklubben - Sponsored by destiny from Tomas Nilsson on Vimeo.

Not deep enough for you?

The mother of all animated infographic visualizations, speaking also to the very heart of the Open Gov challenges, is shown in this TED talk by Hans Rosling, an international health professor at The Karolinska Institute in Sweden and inventor of the Trendalyzer tool. His talk and visual demo not only shows the power of data visualization in busting our myths about the developing world - but much of the data is drawn from U.S. open government data sets.

In the end, whether you want to use Capra-esque video drama, a roiling home-grown video like Peter Sullivan's, a sweet animated infographic like Tomas Nilsson's or use your prowess in visual data visualization -- you can help tell our government's hidden stories, unveil the data, enabling a larger group of people to realise the wealth of resources we have.

It's not new to say: A picture is worth one thousand words. What is relatively new is that an interactive, animated  picture may be worth one million numbers. And when those one million numbers come from a previously hidden societal data set -- that can change mind sets. 

Source:The Imaginary Foundation | PSFK

Like this post?     |        Please share it.      |      We're all in this together.

 

Related Reading:

Five Ways Government Works Better with Social Media- Mashable

The Personal Democracy Forum's techPresident

Obama Has Gove Contest Crazy - AlterNet

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Monday
Apr262010

Crowdsourcing + Open Innovation Fuel a Prize-Driven Economy (part 2)

DateMonday, April 26, 2010 at 1:13PM

In an earlier post,  I gave a precis of McKinsey's "And the Winner is...", a comprehensive study of the $2 Bn  incentive-based prize market. I also described  the March White House initiative to encourage contests promoting open innovation among federal agencies.

Here I continue my summary describing some of the business efficiencies associated with prizes that make them so appealing and  the reasons they are knitting themselves into our business fabric. I'll also identify some of the players who stand to win the near-term “prizes”,namely, building the infrastructure itself for the new prize-driven economy itself.

In early 2009, Virtual Nerd, an online video-based math and sciences tutoring company, won the Olin Cup business plan competition and its $70,000 investment prize The company had entered the contest to help finance their start-up.  Why The NY Times  found the story particularly fascinating is that Virtual Nerd decided not to accept the award. 

This fascinated me as well:  What better way for a startup to announce its presence in the market, attract media attention as well initial customers, partners and financing than to enter a nationally prominent contest? (And yes- Virtual Nerd might have refused the $70.000 - but they ended up accepting a $250,000 loan from a private investor.)

No doubt- for risk-taking new startups, winning a high-visibility prize, is one of the most flamboyant, high yield  opportunities for both funding and publicity. Opportunities abound as new commercially-oriented hybrid prizes emerge. Within neglected disease research there is a phenomenal but little publicised prize: According to Cell Magazine, the Gates Foundation and four countries have donated $1.5 Bn for a new financial-marketing instrument, an Advanced Market Commitment (AMC), an extraordinary prize, whereby  the winning team earns a significant purchase order for a certain number of pnuemocaccal vaccines.

For large commercial, philanthropic organizations and soon federal agencies, prizes and contests are now seen as a means of injecting  the innovation of such startups (and the wider public) into a  too-often lumbering operational flow.

 

Open Innovation Prizes as Change Agents

Much of my excitement over the McKinsey report was in contemplating their thought-graphic, "Seven Ways that Prizes Deliver Change".  The graphic captures in one visual snapshot the immense range and power of prize psychology, from  identifying talent, quickening the pace of problem solving for a core societal or industry issue to influencing public perception, waking up the public imagination to  the often amazing ability of humans to solve seemingly impossible problems.

Source: McKinsey's 2009 "And the Winner is.." Report

If you consider the Ansari X PRIZE, it helps to concretize the seven changes: The Ansari X PRIZE, with the lofty goal of creating a reusable manned spacecraft, spurred the development of the private spaceflight industry, attracting 26 teams to invest more than $100 Mn in combined R&D -- an amount far more than the $10 Mn prize itself. 

The endeavor was of epic proportions: Burt Rutan's team achieved what had only been achieved previously by three of the world's most powerful countries.  It captured the press, and captured the public imagination: And while quite expensive now ( at $200,000/ticket) the public can await future trips to space. As Virgin Galactic's video below promotes- it's the advent of Space Tourism. This is something, NASA, from its government agency position, simply could not provide.

 

What an exciting way to create a market!

Whether you tuned into the Netflix Prize progression over a 3 year period or were fortunate to catch DARPA's Red Balloon Challenge last December , it's like watching the real-time game film of science and engineering's most passionate and talented players -- even though, so far,  we've had but blogs, tweets, and website leader boards to watch and comment on the action. (I'll talk more on media coverage in a bit...)

From the prize sponsor's viewpoint, enlisting participants of diverse talent outside their organization boundaries can lead to tremendous efficiencies. 


Business Hyper-Efficiences of Incentive-based Prizes

While McKinsey's report was focused on philanthropies, they make clear throughout that the basic principles of prize psychology and management apply to all forms of organizations. I've taken some liberties in expanding some their points to focus on four important bottom-line and productivity areas:

1. Lower R&D Costs by Outsourcing Development 

Most obviously, a prize contest opens the door to virtual team expansion,without adding salary and overhead.  No longer are companies constrained by their internal talent pool.  As we saw so well with the Netflix Prize and the 55,000 engineers in the competition, even a large prize can marshal the talents of a much a larger-dollar value workforce -- on demand - and directed at a specific critical problem.    

2. Potential for Decreased Human Resource Costs for Hiring World-Class Talent.

With a contest, a company obviously does not need to directly hire talent. However, a networked contest and its prize can serve to attract and identify The Best and the Brightest not only with greater certainty (only solvers hired) but from the immense global talent pool. What better "test" to give job  candidates than to place the toughest challenge in your industry in front of them? All of them?

Organizations like TopCoder in fact are using their prize contests to identify and place rarified expertise within the software industry.  As IdeaConnection, an open innovation service provider, writes near their online prize challenge submission form,

Life is getting simpler for R&D Departments who can articulate their innovation needs...


It's somewhat amazing to think - but organizations like  Innocentive , IdeaConnect and TopCoder  may be the  Creative Artists Agencies of the future -- identifying and managing key technical talent and wunderkin around different industry and societal problems.   

In fact,  I suspect the Class-A headhunters looking for world-class talent from agriculture, automotive, the arts to pharmaceuticals, check in with the prize committees listed in the appendix of McKinsey report. Broadcast search may well be the future preferred method for identifying technical excellence. (And, for that matter, what's to exclude challenges from including business and financial problem-sets to test the skills of next-generation C-level execs?)

3. Increased Speed & Liklihood of Finding Innovative Solutions

 This bears on the "Focus the Community" change effect in the McKinsey diagram. Open Innovation plays a core role here. A seminal 2007 paper, The Value of Openness in Scientific Problem Solving,  drew attention to the power of broadcast search, introducing 166 distinct scientific problem to outsiders, and showing nearly a 30% increase in solve-rate for problems  that had remained unsolved by well-known science firms. That's a pretty phenomenal result.

What a prestigious and high dollar prize adds to the open innovation process is critical marketing parameters: a deadline, rules of engagement, sometimes progress milestones (sustaining motivation and momentum) and built-in publicity.

 The Netflix Prize, directed at achieving a 10% improvement in a movie recommendation engine, demonstrated the collaborative power of a networked diverse group.  As Wired magazine described after interviewing participants, 

"The top two teams beat the challenge by combining teams and their algorithms into more complex algorithms incorporating everybody’s work. The more people joined, the more the resulting team’s score would increase.

This outcome drew attention particularly as the results fly seemingly in the face of the well-known Mythical Man-Month Limit, which describes the problems of adding head-count within the more traditional closed engineering group.

Diversity turns out to be a core asset in problem-solving. : The Harvard study showed winning solutions were more likely from problem-solvers whose core expertise was 6 disciplines away from the problem. Contests -where challenges are broadcast to a wide public and where interim methods and results can be shared among unlike minds -  increase innovative solutions.

 

Source: Steve Fennessy, Innocentive

Perhaps the most famous case illustrating diversity's role is the $20,000 Oil Spill Recovery Institute's challenge  to assist with one of the disastrous consequences of  the 1989 Exxon Valdez oil spill.  The technical challenge was to find a method to separate frozen oil from water.  Much to everyone's surprise - an Illinois chemist suggested the winning solution, one developed from the concrete industry. 

4. Built in Cost Controls and Risk Mitigation.

This is undoubtedly the most potent bottom line savings for prize-giving organizations. As success-contingent prizes are only paid with achievement of a defined goal, Peter Diamandis, Founder and Chairman of the X PRIZE Foundation has described them  as a form of "fixed cost science and engineering". Prizes shift risk from the prize sponsors to the competing participants- who themselves, as in the case of the Ansari X PRIZE, may invest much more than the prize value in the project.

 

Is There Anything Really New Here?

 Open Innovation as a business model and management construct is not new: Originating with Chesbrough's 2003 book Open Innovation: Researching a New Paradigm, the methods have been adopted by some of the world's largest best-known corporations such as Eli Lilly and Procter & Gamble. Principals fromEli Lilly,  an early adopter, founded Innocentive, one of the first company's leveraging incentive-based prizes on top of internet technology.

The new aspiration is that open innovation prizes may become a particularly furious business force when combined with Web 2.0's  open collaboration tools.

Source: EngadgetNothing so demonstrated the power of all elements working  together as DARPA's Red Balloon Challenge. Designed "to see whether social networking sites like Facebook and Twitter should be seen as credible sources of information" the challenge to identify the locations of 10 red balloons strewn across the U.S. was solved by an MIT team and its collaborators within a mere 9 hours.  The solution has made us all keenly aware of social networks role in identifying missing persons in a timely manner.

Net net: Social networks promise still another productivity multiplier to prize-driven markets. So when Forbes magazine somewhat cynically wrote about The Myth of Crowdsourcing as really being still the product of single virtuosos - I believe they somewhat missed the point: Yes, these are virtuosos participating, but the Netflix Prize result would not have occurred had not a significant and diverse number of these virtuosos been sharing and merging their diverse methods.


Who are the Market Makers?

With more federal agencies  soon to join the $2 Bn incentive-based prize market and with much smaller firms now realising the business efficiencies of prizes, particularly as the recessionary economy still struggles back, its likely the market is poised for considerably more growth.

Who will reap the benefits in creating the infrastructure of this growing Prize-Driven Economy?

The McKinsey report suggests there are at least four groups who will benefit, many of whom have years of experience in prize management :

  1. Open Innovation Service Providers. Prize management consultancies and their software platforms are the first and foremost beneficiaries. McKinsey references Idea Crossing, Innocentive, NineSigma and Spigit as offering a wide realm of services, from strategic goal-setting to managing the (often non-trivial) contest logistics.


  2. Contest Tracking Orgnaizations include BigCarrot.com and ChallengePost  who advertise and provide a software platform for these and smaller contests to prospective participants.  


  3. Intellectual Property Law Firms. WHile the X PRIZE and the Netflix Prize are wonderful examples of masterfully navigating the IP rights of sponsors and participants alike, some commercial prize sponsors will find dividing and protecting IP to be a challenge, particularly where it involves point solution types prizes related to products. The complexities become apparent in reviewing the approaches of the service providers. NineSigma requires all submitters to  have issued patents or patent applications for their submitted technology. Innocentive protects participants by requiring their solution "seeker" companies to agree to intellectual property audits; should the company not make the award for a problem, the IP is not used.  


  4. Public Relations Firms Skilled in Prize Contest Management. Mckinsey describes the case of  the Man Booker Prize,  a yearly contest to identify the best novel written within the Commonwealth of Nations. The visibility of the prize has greatly  benefited from the efforts of the PR agency involved,namely Colman Getty. There are clearly many other agencies with similar prize promotion expertise.

There's perhaps a fifth group yet to benefit: The Sci-Entertainment Media Group. For with such vast sums of money riding on highly-publicised prizes -- The Media is sure to follow.


Lights, Action, Science!

 Having spent a bit of time myself in the past sitting in the dark surrounded by oscilloscopes, it's inspiring to think that we may be living in an age where scientists and engineers can get the form of fame and fortune previously reserved only for the world's most elite athletes and celebrities. 

We're just missing the large Olympic stadium fan fare and tv cameras. But this too may not be far away. According to Cell Magazine, multiple television companies have approached the X PRIZE Foundation to document the next $10 Mn Automotive X Prize.

Will we soon see the likes of Discovery Communications (owners of the Science Channel)  cover world-riveting technical challenges, much as the social gaming world in the Electronic Sports World Cup?

What's more exciting is the likes of TED TV, Wolfram (inventor of Mathematica) and O'Reilly Media doing it. (After all, O'Reilly's mission includes "amplifying "faint signals" from the alpha geeks who are creating the future". )

With some 5.8 Million science and engineering researchers on the planet and a much larger base of teachers and next-generation student-scientists, as well as readers of Gizmodo, EnGadget and the many other high profile Sci-Tech blogs out there- it's clear there's an immense global audience for instilling excitement over some of the world's finest scientific and medical challenges. (More to it- not only are Nerds not  a minority but they include some of the highest net worth, influential people on the planet)

What do you think? Is an Electronic Sports World Cup format disrespectful of scientific endeavors? Would cheering scientific teams online while they pose solutions to climate change or a medical problem be distasteful? Or would scientists benefit from a bit of such Hollywoodization?

 

Related Posts:

Crowdsourcing + Open Innovation Fuel a Multi-Billion Prize Dollar Market (Part 1)

EPA Contest Seeks the Biggest (Kilowatt) Loser- GreenBiz News (April 27)

Six Marketing Lessions of the Netflix Crowdsourcing Experiment

 

AuthorLisa Thorell | CommentPost a Comment |
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Wednesday
Apr142010

6 Ways for Online Business Directories to Convert More Freemium to Premium

DateWednesday, April 14, 2010 at 8:25AM

Source: Chris AndersonDuring the past four years, some of the hottest Web 2.0 companies have been experimental labs for the Freemium business  model. A portmanteau of the words “free” and “premium”, freemium refers to giving a baseline version of your product or service away for free, while charging for upgraded features. Originally championed by NYC VC Fred Wilson in 2006, some VCs have found the business case for Freemium so compelling their portfolio investments aim primarily for freemium-based digital product startups. Why? The appeal of freemium is tremendous, promising  huge brand awareness, shorter sales cycles and, most prominently, a marked reduction in the cost of customer acquisition. The efficiencies are captured well by Wired's Chris Anderson, author of Free: The Future of a Radical Price in a blog post on freemium math,

“...you give away 99% of your product to sell 1%. The reason this makes sense is that for digital products, where the marginal cost is close to zero, the 99% costs you little and allows you to reach a huge market. So the 1% you convert, is 1% of a big number.”

The  success stories of freemium-based companies are now legendary: From Skype, Flickr, Evernote, EBay to even Intuit’s TurboTax.  Although less ballyhooed by the techno media, freemium has even worked for B2B companies such as Hoover’s and The Financial Times.

Recently I was approached by a successful online business advertising service provider, offering a listing service and additional lead-generating marketing features to law firms. While the provider adopted a "vintage freemium" model in 1998 common to business directories, it's competition is now on the rise. Under this duress, there is considerable disagreement within the company  as to whether  the entry-level  free listing service (and leads provided)  is helping or hindering their customer acquisition and revenue growth.

Challenges

For this B2B marketing services provider as with others of its kind, executing  successfully on a freemium model  has its challenges: 

Incomplete Profiles. First and foremost, when a business appears in a listing directory, it's well-known that the probability of gaining a lead, getting a click-through, is very dependent on the “richness” of the business profile in wooing the web visitor: Has the business completely filled in its profile? Included photos and videos? Do recommendations exist? Are white papers or demonstrations of expertise provided? Social media links? 

An industry-wide problem is that  freemium business directory listers, often busy professionals with little marketing training themselves, many times do not take the time to fully develop their profiles. 

Potemkin Village A second and related problem, a freemium model can lead to pockets of poorly documented listings, reducing the overall credibility of the directory service.  

Delayed Gratification. A third  challenge is posed by the inherent time delay of “reward” associated with directories offering business leads. These are  not at all like freemium-based social games  or application software where the freemium customer gets immediate gratification upon installing the application. Rather the leads benefit show up days, weeks or months later, making it difficult for the lister to establish a  “positive reinforcement bond" with the service provider. 

Total Population of Directory Users. A fourth and formidable challenge for business advertising directories is that the service is only as good as the total number (and quality) of leads the freemium service provider can provide  customer companies. Hence, as web visitor bait, we see the auto-populating of directories with company names. But as we see only too often (MerchantCircle, anyone?) - this can back-fire, enhancing the Potemkin Village effect.

In the case of the law firm directory provider, the frustration is that while less than 1% of  their Freemium legal firm customers go on to upgrade, among those that do there is an 80% renewal rate. Their core question was: How could the company increase conversions to paid premium services?

In a freemium model, there are two obvious paths to increase paid-for customer revenue: (1) increase the total freemium customer base size which you will know will convert at X% into paid customers or (2) proactively focus on increasing the conversion rate of your existing customer base.

Here I’m principally going to discuss the second method, increasing the conversion rate as I’m assuming the business directory provider already has a fairly good installed base of freemium customers-- therefore the risks are less. Here are at least six questions that the service provider using a freemium model can ask itself to optimise conversion.

 1. Are you flaunting the success of your paid-for customer plans to increase the urgency of upgrading?

Source: FashionFame.com

In the case of the law firm listing service, the 80% renewal rate, while a huge marketing asset, was not mentioned on their website. (!) And yet- if a no-fee customer would see that wonderful statistic, they could not help but think, "Gee- my company may be a newbie to this service, but, clearly, the full sets of services is  benefiting the majority of firms using it -- some of which may be my competitors."

 

 

 

 

2. Are you promiscuously offering  "Upgrade Everyware" with every customer marketing interaction? 

Source: Adapted from Adam GreenfieldSuccessful users of freemium seed “Upgrade Now” messages on their web sites, within customer account areas, in email newsletters, in customer service and support calls and emails at every opportunity – Everywhere Everyware.  The classic case of a successful promiscuous upgrade strategy is GoDaddy.


 

 

 

 

 3. Are you “Edu-Marketing” to Freemium users, cluing them into the successful mechanisms used by your best practice premium customers?

click to sourceWhile the law firm directory has great recommendations on their web site from pay-for customers, what is missing from the testimonials is direct reference to the specific paid-for services contributing to the customer’s lead success.  So if a specific feature, eg.   the addition of a video or use of a social media sharing feature, contributed to a  subscriber’s success –  the inclusion of these details bridges the gap in the freemium user’s mind, allowing them to see beyond their current tunnel-vision view.

Obviously, this approach has the additional benefit of educating premium customers as well.

4. Do you maintain a fast (relentless) pace in introducing new “Pay For” features? 

Source: Gizmodo via Arstechnica.comPerhaps nothing creates a feeling of increased trust in a marketing partner as well as a sense of  “missing out” among non-pay partners than introducing new, highly desirable  features.  Evernote, a freemium-based supplier of  online memory aid tools, ascribes much of its success to the steady introduction of new features .

I particularly like their approach as it’s a triple-edged sword: New pay-for features not only serve as marketing morsels to entice Freemium users to the pay-for service but can contribute to customer retention among paid users. Further,  by  introducing new features into the premium service, a company has the potential to “raise the bar” on freemium competitors, commoditizing competitor freemium services by recycling "last version" premium services into "now version" freemium offerings.

5. Is a  Customer Reward Referral Program appropriate for your market? 

Source: David Chin OnlineWhile the data isn't completely in on this approach for revenue growth, only customer growth, I believe it will prove relevant so describe it here.  

One company that has effectively used an “increase the freemium base size” strategy is DropBox, the online storage and file-sharing company.  As reported in GigaOm, DropBox dramatically iincreased their customer growth (now up to 4 Mn as of this writing) by dropping their search marketing strategy for customer acquisition and instead focusing on incentivizing  customer referrals,  giving away additional storage to users who provide referrals which install the product.

This tactic has legs especially in our shiny new social sharing world: Now customers have the choice of directly paying for premium services or “paying” with referrals.

As I started off here, one major caveat here is that I do not know that this tact has contributed to growth in for-pay customers of DropBox.  On the one hand, one would expect some cannibalising of "for pay" customer conversions as a result of offering more freemium.  On the other hand, even with some dimunition in conversion percentage, one would expect an increase in the revenue-side as some customers need for increased storage space outdistances their willingness to rely on iffy  "referral" storage space.

6. Have you considered a mid-tier priced “jumpstart” service? 

Source: Australian ParkourAssoc.The problem for many freemium-based companies is getting their business customers to jump the gap from “free” to often a much higher priced product.  In the case of our law firm advertising directory, users have a choice of “free” vs. $200/month, a substantial price gap.  One obvious solution is to introduce a lower priced service, peeling off a set of the premium service features.  However, this by itself may not address one of the B2B Freemium challenges, namely, that busy professionals do not have the time to set up their accounts properly to receive the benefits.

Some potential is suggested by  Google's new Local Merchant program.  Aimed at former small business customers of Google Adwords. Google identified that many small businesses, despite paying thousands of dollars per month, were not reaping the benefits, principally due to lack of knowledge of SEO and keyword marketing.  Observing the rapid drop-off rates of these small business customers (and really wanting to hold onto the local search market), Google has recently offered a fixed and lower-priced product where  first-tier support staff “fill the knowledge gap” by setting up both the small business’s keywords for them. This holds a lesson for the freemium-to-premium business directory gap as well:  By introducing a sub-set of premium services of high benefit but relatively low company cost, a  directory supplier can bring a "mini-premium"  experience to a larger group of its freemium business users.  Collect some revenue today and win more trust for the higher-priced tier service tomorrow.

Unfortunately, I know of no magic parkour-like freemium to premium gap jumps  that avoid the sweat work of market testing and scaling the rows and columns of an excel spreadsheet, looking at marketing and development costs of new marketing and product offerings-- all tracked against free customers base growth and  conversion rate data. What's a good conversion rate? As Chris Anderson pointed out in Freemium Math: What's the Right Conversion Percentage? the answer varies from market to market.

In the End...

click to sourceHave I taken the coward's way out by mostly avoiding the  "Increase the freemium base size" approach to increase revenue even while conversions stay fixed? Yes. But I've got my reasons.

The chicken-vs-egg choice of  enlarging the freemium base vs. increasing paid conversions is not unlike the final scene in the movie, "The Big Lebowski." [Spoiler Alert]  Standing on a cliff, face to the wind, John Goodman starts to cast the cremated  ashes of his friend Donny (Steve Buscemi) into the ocean. But a big gust of wind foils his intent, blowing the ashes to coat the onlooking Jeff Bridges standing behind him.  Had Goodman been facing back to the sea and cast some test ashes over his shoulder, he would have foreseen the outcome. (Although it would have been less hilarious.) 

As in this scene (and offering me a great deal of artistic license here ;-))   for companies already invested in Freemium and with an established base,  facing your existent base, not the new wide sea of to-be-acquired customers, offers you the best view of what’s most likely to happen next. Not only do you have a ready set of customers to upsell to, but by focusing on pay-for conversions you’ll attain a great deal of knowledge about the exact premium features that your customers are willing to pay for. (Hopefully, without sacrificing your big toe. ;-))

 

Related Articles

Case Studies in Freemium: Pandora, DropBox, Evernote, Automattic and MailChimp (GigaOm)

Financial Times Goes After Younguns with Foursquare Deal  (Silicon Valley Insider, 4/09/2010)

 


 

 



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AuthorLisa Thorell | CommentPost a Comment |
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Tuesday
Mar232010

Crowdsourcing + Open Innovation Fuel a Multi-Billion Dollar Prize Market

DateTuesday, March 23, 2010 at 5:30PM

(This is Part 1 of a 2-part posting.)

One of the fabulous things about the internet and this era of user-generated content, social platforms and collaborative technologies is that they have made us keenly aware of the many talented people out there. It’s silo-breaking, allowing us to identify and access the genius talents of individuals outside our organizational borders. It’s community building, allowing realization of team strengths and the development of new social skills that magnify group intelligence.  Best of all, the new social web has built-in PR: a resident blogosphere which writes up and actively discusses these team collaborations, many of which, like the DARPA Red Balloon Challenge, light up the public imagination of what’s possible. No where is this more apparent than in the emerging world of incentive-induced prizes and contests, where a cash reward is offered to encourage pursuit of a specific goal.

As I wrote in an earlier post, nothing so woke me up to the potential value of contests and prizes in changing the rules of business-as-we-know-it  as the NetFlix Prize, attracting over 51,000 contestants with the hope to win $1 Mn for improving a movie recommendation engine. There’s consensus that NetFlix leveraged that investment extremely well in terms of received R&D benefit, marketing community brand building and much more.  In fact, there are marketing lessons in the NetFlix Prize that any prize sponsor or challenge seeking organization can learn from.

According to a recent post on the TechPresident blog, the latent potential of such success-contingent prizes has not been lost on the White House which issued a directive on open innovation in January.  Two weeks ago, the Office of Management and Budget  released guidance to federal agencies on how they could legally arrange contests to seek ideas  for using technology to promote innovation, open government and other national priorities. The message is clear: “Go forth and crowdsource.”

To facilitate the agencies’ action on this, the White House is launching  a public website within the next 4 months which agencies can use to “advertise” and promote their challenges  Adding momentum to the initiative, Michelle Obama simultaneously launched her “Apps for Healthy Kids” contest, part of her Let’s Move campaign.  The contest invites software designers, game developers and others to build fun and engaging tools to motivate children to eat better and engage in physical activity. It has  built-in lesson to agencies watching too as the contest design requires using the USDA nutrition data set. What a clever and constructive way to build a better user interface to what would otherwise be fairly dry and abstract data to kids.

Starting with a great example is smart, but how will federal agencies new to this learn the intricacies of both crowdsourcing and contests? (Obviously, DARPA, NASA and a few others within the fold have talents to share.)

Enter McKinsey's Roadmap for Understanding Prizes


For those seeking to understand how to successfully construct prize contests and challenges, the OMB memo references a 2009 McKinsey study “And the Winner is…Capturing the Promise of Philanthropic Prizes” . This  124 page report describes McKinsey’s research, case studies, a rather comprehensive database of prizes as well as  their future potential. But what makes the report extremely valuable is that it leverages the knowledge of sponsors and administrators of some of the best known and successful large-scale prizes, including interviews with experts from NetFlix, The World Food Prize, the X Prize and many others.

 

The Attention Rivetter: A  $1-2 Bn Big Prize Market


What’s capturing a bit of attention right now is that McKinsey estimates there’s a $1- 2 Bn Prize market today in the U.S. – and it’s growing.  They point out that the dollar amount for prizes over $100,000 has tripled in the last decade to $375 million a year, expanding particularly in the area of incentive-induced prizes.

Now with part of  federal agency budgets to be unleashed soon, there’s more money to add to the prize pot. As Thomas Kalil, Deputy Director for Policy at the Office of Science and Technology Policy at the  June 2009 incentive2innovate conference  reminded conference attendees,


When you consider that the government invests a total of $150 billion in research and development, there’s a bit more room for experiment in this area.

 

Starting Point: What Types of Prizes Exist?


One of the more useful thought tools within the"And the Winner is..." report  is a description and analysis of  six archetypal prize types. ( The diagram below modifies the original McKinsey exhibit to include some of their examples for each prize category.)

 

Source: McKinsey's "And the Winner is...." Report

We are all perhaps most familiar with their "Exemplar" form of prize, one, like the Nobel prize, which sets a standard for excellence in a field. But there are newer, less familiar prize forms here, ranging from the narrow  "Point Solution" (eg. NetFlix prize) in which a specific challenging problem is posed to the broader "Market Stimulation" type, the canonical example of which is the X Prize portfolio, in which real world market conditions are emulated inside the challenge.  Perhaps nothing so raised public perception of the raw power of prize development as the $10 million Ansari X PRIZE, which helped ignite the development of the private spaceflight industry.

The diagram is great mind food for considering the types of prizes your own organization might consider, depending upon your goal.

What prize can your organization offer? Will your organization build and implement prizes? Or will your organization seek to win one of the prizes to the benefit of your brand’s value?

If I’ve inspired you to read McKinsey's “And the Winner is…” report, that's great. That was one my goals. But bear in mind that while there's a groundswell of interest in prize mechanisms to address complex problems and identify emerging markets and a growing corpus of knowledge, the report makes clear that the intricacies of successful execution are non-trivial.

In my next post, I will continue this topic, summarizing some of the business efficiencies associated with prizes that are wooing government as well as commercial ventures, despite the complexities. I'll also identify some of the pre-game players who stand to win one of the near-term “prizes”,namely, building the infrastructure itself for the new prize-driven government and commercial markets.

 

 

AuthorLisa Thorell | Comment1 Comment |
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Tuesday
Mar092010

Five Schema-Busting Slides for Moving CEOs Beyond Search to Social

DateTuesday, March 9, 2010 at 2:25PM

 

As Valeria Maltoni (@ConversationAge) put it so well in a recent post describing the increasing adoption of social media "marketers are finally putting their money where our conversation has been -- integrating social with their activities".

Even so, as a marketing consultant to smaller companies, I am approached by client firms that are still resistant to the "sea change" in the air. Frankly, some are still operating with 2007 market data (and schemas) in their heads. So it is I find myself called into executive strategy briefings and staff meetings and given a short time slot to plead the case for adopting social media.

Perhaps you know the drill?  Fifteen "make it or break it" minutes to stand and present, survive a firing line of questions and, hopefully, actually survive long enough to open the door to discussing the company's own social media strategy. Catch: There's not enough time to show the Social Media Revolution video.

What I've found works very well in such situations is to have an opening set of market research slides, "schema-busting" slides I call them, which set a big picture marketing context, highlighting that our former Google-centric view of the online universe of the past decade is changing.

Yes- I refer to the ROI of Dell's social media use, Zappos, the brilliant customer service case studies of Comcast, the product innovation crowdsourcing by Starbucks, the even more brilliant crowdsourcing experiment by NetFlix  and many others. However, too often, there can be a NIMI (Not-in-My-Industry) attitude that raises objections. So I launch usually with a more macro view of recent significant data. The sole purpose of these schema busters is to establish that significant changes are underfoot which require an alteration of the current marketing strategy, a realization of that "Ignore at your own peril" moment.

After all, why else would I be advocating a marketing strategy change?

Lately, I've had good results using the following slides.

 

Slide 1.

Social Media Sites are now among some off the top web properties. Dramatic changes have taken place since 2007.

Compete data | Erik Qualman's Socialnomics slideshare

There's no sense in being taken down on the first serve. As they say, begin on an unassailable point. Starting off with  Compete, Quantcast or Nielsen data -  authoritative market and web researchers - does just that. So I start by borrowing this slide from Erik Qualman's Socialnomics slideshare which shows Compete data to show that social media has changed significantly the top visited places on the net - places where people are sharing photos, product recommendations and links to articles with friends and colleagues. (Perhaps not the best time to point out that  'adultfriendfinder' will soon be replaced by Chatroullete though.)

This simple slide forces the conclusion " Dang, major tectonic shifts  have happened since 2007." More importantly, it forces the question," Maybe we should revisit our strategy?"

 

Slide 2.

People online now spend 7 hours per month "friendcasting".

This is more time than spent on search engines Google & Yahoo, as well as MSN and YouTube combined.

In a sense there's nothing really shattering about the data actually as it reinforces what we've always known, Word of Mouth is the most powerful recommendation driver.

You can make a similar point by referencing Compete's latest data in terms of "attentional time" market share, shown  in a more visual format.

Slide 3.

Facebook Commands More "Attentional time" Market Share than Google or YahooSource: MarketingCharts, Feb 2010

What's cool about these last two slides is that they now set the stage for you to raise the question: Would you like your company to be part of this 7 hour per month conversation, one which is rising in attentional market share? Be part of the shared photos? The shared articles? The product reviews and recommendations?


Slide 4

Facebook is Besting Google in Driving Traffic to the main portal sites.

Based on data from Compete, Feb 2010

Compete Inc. and their director of online media and search Jessica Ong ignited a powder keg in revealing this data during a late February interview with the San Francisco Chronicle,

I say "powder keg" as this data ignited considerable reaction from within the SEO community. So be advised, Search and SEO aficionados within your audience may also take issue, especially as that group commands the lion's share of the digital marketing spend today. (It may help with any tumult here to say, to those who dispute that Google competes with Facebook and Twitter that more recently Google lists both as competitors in their latest 10-K report. )

 

Slide 5.

Social Networking is Passing Search in Driving Referral Traffic

Source: Compete January 2010

I first saw this slide just days ago during an enlightening presentation by Gigya CEO, David Yovanno at Gigya's "Social is The Next Search" webinar. While I've not actually used this slide yet, I will as it really delivers the coup de grace. In fact, if you only have one slide to show - this is it.

That social sharing is outdistancing search in referral traffic was pointed out earlier in a prescient blog post by ReadWriteWeb's Marshall Kirkpatrick. He wrote

What would it mean if social networking over-took search in terms of sheer visits online? It would mark a sea-change on the internet. No longer would our dominant use of the web be seeking out web-pages built by HTML web-masters! Now we would all be publishing tiny little updates that perhaps only our friends and family care about. We'd be subscribing, more than we ever did by RSS, to syndicated updates from organizations of interest, large and small.

There's no doubt: there's an increasing intersection between search and social sharing. But perhaps it isn't that people are changing the way they search,  so much as their friends are changing the way they find things. One of the more important questions you can open up at this point: Is the digital marketing spend allocation for social media vs search adjusted to these new market realities?

So there you have it: Five slides that can all be understood in five minutes. (Isn't it odd that we have to unroll the past conceptions, bust the old 2007 mental schemas, in order to see the best way to meet the future?)

What slides do you find work best to open the door to deeper social media discussions?

 

Postscript: My title notwithstanding, I am not advocating a wholesale revision of the search vs social media budgets planned. Just saying: The relative sizes may not be in line with the most recent 4-6 month marketing data.

 

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Wednesday
Mar032010

Facebook vs. Twitter: Who's More Interesting to Social Bookmarkers?

DateWednesday, March 3, 2010 at 1:30PM

Recently social media analyst Dan Zarella, posted a provocative post, Twitter-Centric Stories are not Heavily Shared on Facebook. I encourage you to read it. Simply put, the questions were: How shareable is a story when someone on Twitter tweets about Twitter vs. Facebook? What happens when someone on Facebook talks about Twitter vs Facebook?

In brief, Dan's research showed that while articles that use the word “Facebook” in their title get shared more often than the average story on both Facebook and Twitter, stories that mention “Twitter” actually get shared less on Facebook. In contrast, Twitter stories shared on Twitter led to a 300% increase in retweets,

Tribal Vanities

In a sense, it's no surprise: These are two very different cultures: The age range skews toward a younger population on Facebook which likes the all-inclusive web services environment.  Technorati's 2009 State of the Blogosphere report shows a very high percentage of bloggers (73%) tend to use Twitter, relative to the total internet population as a whole (14%). 

If we look at Trendistic data of "Twitter" vs "Facebook" mentions on Twitter, the base level of Twitter talk is considerably higher than that surrounding Facebooky subjects.


Conversely, looking at Facebook's data, we see a similar self-obsession with Facebook-related terms.

 

Facebook Statistics: "Twitter" vs."Facebook" data from their "Top 15 Status Terms of 2009"

Source: Facebook Data Teams Notes

Interestingly, during the Twitter hey days of March-May 2009, Facebookers themselves chatted up Twitter.

Seeking Agnostics: Key Social Bookmarking & Social News Sites

To look at the interest in "Facebook" vs "Twitter" in a more agnostic setting, I reviewd the trends in Twitter and Facebook as keywords and tags on two of the larger social bookmarking and social news sharing sites, Digg and Delicious. 

Recognised as among the most popular social sharing platforms, by latest counts, the number of inbound links for Digg is 383,598,000 and that for Delicious is 427,665, together totally more than inbound links for Twitter (760,750,806).

A set of social bookmarks contains in essence a web users's shared library of interests and topics they deem worthy and exciting  enough to share with others.  Social bookmarks can be used as indicators of what topics people think are important to understand and have some present or future value, perhaps for an upcoming research project sorting out this fast paced new social media landscape, and sharing with others. For bloggers and webmasters, social bookmarks and their curators play a special role in increasing SEO, driving traffic to their blog posts and web sites. In a broader (but perhaps less agreed on) sense, as social media watchers, the frequency of Twitter vs Facebook social bookmarking can also be viewed as a rough indicator of our personal bets on the "next  great social networking platform".

The figure below compares two Digg searches on Facebook vs Twitter performed in late February 2010, excluding the competing term in order to pull out posts that focused primarily on one service vs. general social media articles. Digg's count  for "Facebook" totals some 74,624 articles vs "Twitter" related articles at 72,412.  These are actually quite comparable, given plus or minue 2000 posts, well within a single month's worth of data. That said, a salient feature of the graphs is that the mentions for Facebook appear to still be on the rise, while those for Twitter are levelling.

 

What's of interest considering Zarella's data is the difference in Diggs, an indicator of the story's popularity.  For the 4 year time period sampled, Facebook-related posts which resulted in more than 5000+ Diggs outnumbers those for Twitter by a factor of five, roughly corresponding to the relative size in Facebook and Twitter active memberships. (According to Compete, Facebook attracted approximately 134 million unique visitors in January. Twitter had 23.5 million unique visitors for the month.) For Diggs exceeding 500+ and 1000+, Facebook bests Twitter by nearly twice as many.

Well, you say, perhaps not so surprising. Digg is not truly agnostic with its alliance since mid-2009 with Facebook Connect.

So let's take a look at the data from Delicious users. Used for private as well as social sharing by researchers and others, with a strong historical bent toward technology topics, this gives us a more "geeks-eye" view on the interest in these two social networking sites.

The figure below shows the trends in social bookmarks for articles posted and tagged "Twitter" or "Facebook", where articles tagged both are eliminated in the search as well as login and home domains, where the bookmarks would be biased toward the user population difference size of these two social networks. The exact searches made can be seen on these pages: Delicious Facebook search and Delicious Twitter search 

 


Comparing "Twitter" to "Facebook" tagged postings, we find over 581,072 results for Twitter and 388,472 for Facebook. "Twitter" tagged postings best "Facebook" postings by over 49% and still today exceed considerably in posted bookmarks per day. However,  much as in the Digg data, we see the interest in Twitter is flattening to falling, while Facebook interest still seems on the rise.

Other Social Bookmarking sites.  The table below shows search data for several other well-known social bookmarking sites.  These are ordered according to inbound links, the highest sites appearing first. (Caution in comparing these: While attempts were made to get the running total, usually the default, the time horizons of each site can be markedly different. For instance, Yahoo Buzz seems to be offering a much narrower time window. Also- except for Reddit, noted with *, all counts were unfiltered so there is overlap in the tagged stories. Technorati is obviously only counting the most influential blogs.)

These are but a small sampling of the over 250+ social bookmarking sites, but it's clear that the more technology-oriented sites show a marked interest in Twitter.

 

What Does it All Mean?

Perhaps the most surprising aspect of this data is that interest as gauged by social bookmarking and sociallnews sites reflects so even an interest in the two social networking platforms, and this despite Facebookers outnumbering Twitterers by over five times.

During the period of much of these graphs (2009) we 've seen Facebook take-on many of Twitter's best-appreciated features: the ability to tag friends or companies they mention in status updates, commenting and real-time updates. Ironically- many of those Delicios and digg postings were about Facebook taking on Twitter features.

The preliminary data indicating a rise in Facebook and levelling off of Twitter interest is consistent with the maturing of both social media and Facebook in particular. A great deal of the ongoing conversation on social networks concerns social media's use for business. As Facebook positions itself as a bonafide business promotions channel, the fact that Facebook's advertising business model seems to be working certainly increases business confidence that its a viable  platform for conducting business.   The bigger its tribe grows, the more stories (written by more people) it has to share with more people. And interest in how to build great Facebook landing pages,pay-to-learn webinars and podcasts, building great Facebook landing pages and advertising opportunities all swell as the social media consultants see a rising tide of new social media customers.

It will be interesting to see the next shoe to drop, as there are  rumors of Facebook including more support of external sites and page bookmarks on the Dashboard in Q2 2010. That may have profound implications for the future of many of these social bookmarking sites, particularly as it addresses one of the key shortcomings of Facebook to many - its closed garden wall architecture.

Twitter's linchpin? That garden wall is anathema to many of the free-spirited freelancers and some of the blogsphere's most prolific, content creators, many of whom built their wide audience through social bookmarking sites and Twitter. And this is, in the end, the content we love to share. Perhaps some hint is afforded by looking at the Technorati data, showing over 1000 more influential blog sites tagged "Twitter" as opposed to "Facebook".  While Facebook is still hidden behind its wall, it seems these influential blog sites - along with WordPress, Tumblr and Posterous - may be the best friends Twitter has.

Postscript: This blog author is a fairly frequent user of Twitter and Delicious.

 

 

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Monday
Feb082010

Sustainable Product Innovation: Does Your Product Tell a Story?

DateMonday, February 8, 2010 at 5:22PM

Forum for the Future's "Paint the Town Green" ReportAs a marketer frequently interacting with environmentally oriented companies, I've enjoyed  participating in my share of design charettes and brain trust meetings.  I've been fortunate to be part of Gold LEED for Homes projects as well part of a green product development team creating a very low-cost residential solar product.  It's a long arduous process: 1% inspiration amd 99% perspiration.

Since the start of the sustainability movement in the 80s, we've seen that products resulting from that 99% perspiration  "have a story" to tell. Legendary are brand stories like the waste reduction program at carpet-maker Interface, Aveda's stories of skin care products sourced from indigenous people and Jeffrey Hollander's book, What Matters Most, describing Seventh Generation's trek toward creating toxin-free household cleaning products.

So I was pretty excited to find The Forum for the Future's recently published report, Paint the Town Green. For here was a new product announcement  accompanied with its full story.

The culmination of a 3 year U.K.-based research project between ICI Paints AkzoNobel, a paint manufacturer and supplier, Carillion, a paint specifier, and Forum for the Future, an organization of sustainability experts, this is one of the most understandable, colorful and enjoyable reports on sustainable product innovation I've encountered. 

For decision-makers in R&D, sustainability innovators and their marketers alike,  the report details  the vision, processes, cradle-to-grave product lifecycle analysis and business benefits of the team's trek  --  all in a compact 27 pages.

Yes, it's about paint

the pigment-emulsified  liquid, some billion gallons of which  U.S. commercial and residential owners brush, roll, pour and spray over all forms of surfaces annually. (so now you see why it's  a "colorful"report ;-))

Like most man-made materials, the environmental issues associated with conventional paint are many, ranging from VOC emissions affecting human health and climate, ingredients requiring high fossil fuel use, energy-intensive manufacturing processes, voluminous water use for cleanup to package and product disposal issues for landfills.  (If you are a manufacturer in another industry, do not let this dissuade you - for this is a story of not only how sustainable products can be designed but also marketed.)

Partners of this project set out to create a more sustainable paint - ideally one which was emission-free.  By setting the bar high, the  project partners achieved numerous product and process innovations along the way. To name but a few of these:

  • A new almost "VOC-free" paint line with carbon and water-use footprints reduced each by 50 percent.
  • For construction customers, development of an environmental wash system for cleaning paint equipment on site, avoiding contamination into drain systems.
  • For all end-use customers,  launch of a Take-Back Service allows for paint cans avoiding land-fill use (and in the U.K., associated land-fill charges)
  • A new recycling process which allows cans from the Take-Back service to be redeployed  by the manufacturer for use in new paint cans.
  • A new closed-loop water process in manufacturing allowing water reclamation of equipment cleaning water for use in new paint

While the paint manufacturer benefited in bottom-line cost savings and competitive position, my reading recommendation relates to the marketing value of this report.

What Marketing Lessons Can Sustainable Product Innovators Learn from it?


The Forum for the Future's report holds five key lessons for sustainability innovators:

  1. Market your  Multidisciplinary Team. The involvment of partners and suppliers from all phases of the product lifecycle clearly enriched the wide set of innovative solutions  delivered.  In doing this, both commercial and residential  customers are more readily assured that the manufacturer has a keen knowledge of the product's A-to-Z environnmental context.
  2. Provide Graphical Authenticity of the Team's Involvement and Milestones.  Replete with graphical illustrations, from project artifacts, hand-hewn concept drawings, colorful marketing flowcharts to finished marketing materials, the report brings to life the early thinking and explorations of the design team. (Too often I read sustainability reports where the R&D process seems distant and abstracted from the final product. Not here.)
  3. Discuss Forward-Looking Projects. Much as vendors disclose to key clients their product futures to increase confidence, the report discusses midstream and future projects - again increasing confidence that this is no "one-off" venture, but that  the vendor and partners have incorporated sustainable practices into their planning and operations.
  4. Redeploy R&D documents as part of the Product's Marketing Story. The report provides a detailed "behind the scenes" look at the product's innovation.
  5. Time the Release of  the "Story" upon Product Announcement.


Sure, sustainable product launches need  eco-conscious product names and easy-to-read tables allowing today's educated customers to see and compare specifications. But smart companies and their marketers are also learning that disclosing the efforts behind a brand's environmental design, revealing the R&D process itself - the story, is one of the best uses of marketing.

Reading the report - I couldn't help but think: What if all product packaging had a simple written statement?

Read the full sustainability story behind this product at www.XXXX.com. 

As potential customers scanned that into their iPhones and BlackBerries, would your product have a sustainability story to tell?  How would that story compare to your competitor's?

 

 

 

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