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Steve Ballmer and Marissa Mayer Face the Same Problems at Microsoft and Yahoo

Posted by Bob Warfield on July 17, 2012

marissa-mayerI know this will come as a shock to many Microsofties who will hate seeing their company compared to Yahoo, but I firmly believe that Steve Ballmer and Marissa Mayer face exactly the same problems at their respective companies.  The only differences are matters of scale and position on the lifecycle to extinction.  Both are CEO’s of once great and now fading empires.  Both organizations have gone a long time without showing much sign of recovery.  In Microsoft’s case, the stock has been flat since Bill Gates handed over the reigns.  The world has started referring to Steve Ballmer’s tenure as Microsoft’s Lost Decade.

I came to this conclusion just as I was about to write about the new Office Microsoft is showing around and what I think the most important work for Ballmer to accomplish in the next 12 months would be.  As the thoughts for the article were percolating, a fresh round of articles about Marissa Mayer taking the Yahoo CEO post began circulating and I thought, “Well, I’d better write about what she needs to do too.”  That’s when I realized they’re both facing the same problems and need essentially to do the same things to fix their respective companies.  Because we’re talking about two large entities that are each worthy of a post of their own, and trying to bring the threads together, this will be something of a magnum opus post.  Appologies in advance for being verbose.

Let’s set the stage with a little review of what’s being written.  I’ll start with Mayer and then go on to Ballmer.  In both cases, the usual suspects did the usual Echo Chamber number on the news.  We got an initial round of, “Golly, we’re surprised at how cool this news is after we’d written off <insert either Microsoft or Yahoo here>”  This was followed almost immediately by the round of grumblers and link baiters who write about how Mayer is the wrong thing for Yahoo being a product person instead of a media person and Office is too little too late.  Both are bullshit-tunnel-vision-link-baited and shallow article types (other than that guys, you did great analyzing these events).  Hey, let’s face it, journalists and what passes for journalists these days write about the news, they don’t make it, and they often don’t even understand it.  They don’t care.  They’re running the modern equivalent of Pavlov’s dogs where if you stick the right stuff in a headline with the right edgy attitude you get traffic, rinse and repeat until it becomes mechanical.  Yada, yada.

So, for Marissa Mayer we got:

Analysts react to Marissa Mayer in the WSJ:

“What we are a bit worried about is that by selecting Ms. Mayer, Yahoo is
explicitly pursuing an aggressive and bold growth strategy, whereas we believe a
value strategy might be more appropriate,”

Uh huh.  Analysts used to mean something to the stock market but they never really got tech with a very few exceptions–Rick Sherlund, Mary Meeker, and Chuck Philipps.  Absent an Oracle-style rollup Godfather for failed Internet media companies, Yahoo has little choice but to bet on a bold growth strategy.  There’s a reason most analysts aren’t running companies.

Ever popular Mathew Ingram on GigaOm tells us Marissa may not be a good fit:

In his post is a lot of gobbledigook from various folks that boils down to Mayer not being a media maven while Yahoo is a media company.  Shouldn’t it really have a media CEO?  I’m gonna call bullshit on that one too.  Where are these media companies?  The idea that media companies would rule died quite a while ago.  We have seen News Corp fail, AOL fail, the Music Industry fail, and Yahoo fail.  We are watching Books fail at the hands of technologists as we speak.  How much more fail do we need from the media world thinking they know how to run this stuff.  OTOH, despite some recent stumbles, we have seen Reed Hastings take what looks to me like a media company called Netflix and totally kick ass.  Reed’s prior post was founding and running Pure Atria software, which produced extremely nerdy technical tools for software developers.  Steve Jobs is another example who captained a launch of Apple into the music business.  Here is an important newsflash to those who think hardcore software product people can’t hack media or marketing:

In an online digital world, media and marketing are products.  The whole freaking User Experience is a product that spans all of these things.

If you don’t understand that, you are going to wake up like a lot of other once great companies and wonder how the software wunderkind ate your lunch.  This is why Marc Andreesen keeps proclaiming that software is eating the world.  Companies that don’t have people like Marissa Mayer can’t play that game.  Media Guys, Sales Guys, and Marketing Guys are never going to play that game.

‘Nuf said on that theme for the moment other than to add for Steve Ballmer, your biggest problem may be precisely that you don’t have what Marissa Mayer brings to the table as a product person.  You’re a snack cake salesman when you needed to be a fighter pilot.

Kara Swisher has 10 Totally Fluff Questions for Marissa Mayer

Oh boy.  Talk about linkbait.  Lists are always link bait and this one is no different.  It covers such critical advice as making sure not to be too geeky and not to think it’s cool to wear a lot purple.  Yes Kara, I imagine you were saying of Marissa, “What. A. Geek.”  And guess what, she runs things.  Jealous?

The less snarky questions focused on:

-  How do you cut enough people to carve out space to work in?

-  Which products do you cut?

-  How will you manage the board and partners?

Kara, you need to go have a conversation with Mark Hurd.  That’s his kind of discussion.  It did not do wonders for HP.  It propped him up nicely, but it has left the world’s largest computer company wondering WTF to do next.  The reason is simple.  These are short term answers.  You can’t cut technology companies to greatness.  You have to actually build something.  Product people are long term people.  They build things.  They understand that you don’t slash and burn out one side of your mouth and then succeed in hiring tons of awesome new talent.  Rather, you come up with a strategy that the talent can actually respect and you build a culture that the talent can thrive in.  Geez, what’s next?  Shall we ask Marissa if she plans to implement Microsoft-style stack ranking during her first 30 days?

The funniest was ReadWriteWeb telling us Yahoo needs a visionary not another product person and then letting Forrester Analyst Shar VanBoskirk define what a visionary is thusly:

“What I think Yahoo needs is a visionary – an aggressive executive who can make some pretty solid decisions about the business Yahoo needs to be in,” VanBoskirk said. “I’m not sure Yahoo needs another product person.”

Sounds like a visionary is a damn bean counter to me.  Let me get very very crystal clear:  a real product person will make solid decisions about the business Yahoo needs to be in.  Seems like Forrester and Gartner Analysts are the only ones whose crystal balls are more cloudy than Wall Street Analysts.

I won’t bore too much with the happy posts about Mayer because they typically boiled down to, “Yahoo is so screwed up we had no idea they could attract someone as talented as Marissa Mayer.”  Cool beans.

I think Fred Wilson had the best happy post I read:

Fred Wilson proclaimed that Yahoo is no longer dead to him.

Funny quote, but a little heavy on the Mario Puzo, no?  While your avatar-caricature looks a bit like a dark haired Marlon Brando, I’m not sure I fancy you the Godfather.  But, I know you have the sense of humor to take this in the sense it was meant.  And yes, I agree with you Fred, Yahoo is making some decent decisions here.

For Ballmer and the new Office release, it was much the same, although the kudos were a little more forthcoming with substance.  Let’s be real, Windows 8 and Office 2013 are the best work Microsoft has done in a long long time.  They deserve some kudos.  And, like the Mayer articles, we got first some good stuff followed by the snarky stuff.

Here are some of the articles that caught my eye:

Ballmer talks about why the Lost Decade is a myth:

Okay Steve, dream on.  It’s no myth.  What had been an awesome shareholder value machine has stalled on your watch almost to the day Gates stepped out.  Yet, Ballmer at least talks like he understands what needs to be done in this passage:

It’s not been a lost decade for me! I mean, look, ultimately progress is measured sort of through the eyes of our users.  More than our investors or our P&L or anything else, it’s through the eyes of our users.  We have 1.3 billion people using PCs today.  There was a time in the ’90s when we were sure there would never be 100 million PCs sold a year. Now there will be 375 million sold this year alone.  So, is it a lost decade?

The stock market has always had its own meter.  Sometimes it’s ahead of itself, sometimes it’s behind itself. A broken watch is right twice a day.  Ultimately all Microsoft can do is focus in on doing exciting products…

Okay, Steve, we agree.  Microsoft needs to deliver exciting products.  Now here is the part you REALLY need to understand:  it has failed to do so under your tenure.  There have been few exciting products from Microsoft for a LONG time.  The Lost Decade is not only a failure to deliver shareholder value, it is a failure to deliver exciting products.  When you have delivered them, they’ve been accidents and not in your core businesses.  Time to change that or get someone who can.  Incidentally, this is absolutely true for Yahoo as well.  They quit being exciting when they quit delivering exciting news.  On the Internet, everything is a product.  If your “product” is not exciting, you lose.

The high level summary of why Ballmer and Mayer face the same problems at Microsoft and Yahoo boils down to both failing to deliver exciting product often enough to matter in recent years.  Microsoft has had slightly better network effects to slow their decline (helps when you control an OS!), but the eventual outcome will be the same as it has been for Yahoo.

GigaOm wonders if Microsoft can recover its superpowers

Great continuation on the failure to deliver exciting products theme.  Consider these quotes:

To put it in the simplest terms, Apple makes products that people are crazy about and will stand in line all night to buy. When was the last time you saw a Microsoft product that inspired that kind of devotion?

Microsoft’s tried-and-true model of chipping away at a product category over the years until it got it right (usually around release 3)  isn’t applicable in the web era of continuous updates.

Of course, there is always someone around who will opine that the lack of quality product is simply a lack of focus.  For this article, Harvey Lubin says:

They have started to compete on too many fronts, against too many competitors.They want to beat Apple at computer hardware, and mobile services. They want to beat Google at Web search.They want to beat IBM at servers. They want to beat Sony & Nintendo at gaming. By trying to do everything, they end up doing none of them very well.

If it were truly a lack of focus, there would be some exciting products and a bunch of also rans.  That’s not really the case.  What we have is a lack of culture or talent that is capable of producing the exciting products.

Ars Technica gave us the Mac Fanboy perspective which is “Why did you bother, you can never be as great as Apple.

Well of course they did pretty much eat the Mac’s lunch for many years, so it actually is worth bothering and for the first time in years Microsoft shows signs they actually might still be able to bother.  Chill dude.

On a more positive note, Larry Dignan notes that Microsoft has a Killer Product Cycle Underway

He’s right, this is a killer product cycle for Microsoft.  Their problem has been that killer cycles happen too seldom.

What’s Next for Microsoft and Yahoo?

As I’ve argued, Microsoft and Yahoo are in the same place.  We may argue about the matter of degree, but both are once-great empires that have disappointed customers and shareholders for a long time.  They are each reaching inflection points where it will be increasingly hard to recover if they don’t take prompt action.  But what should that action be?

First, let’s take a moment to recognize each company gets one more get out of jail free card.  Microsoft gets it because the Windows/Office release cycle is the best they’ve had in years.  Yahoo gets it because nobody expected the likes of Marissa Mayer would take their CEO job.  In other words, we have a temporary willing suspension of disbelief.  The key will be to act in a way that extends that into lasting momentum.  To do that both companies need to produce exciting products at a rate that establishes and builds momentum.  That’s what vibrant tech growth companies do, and it is what has been lacking from these two for way too long.

Marissa Mayer and Steve Ballmer face the same problem:

How do they reignite a steady stream of exciting product launches to rebuild their company’s momentum?

If they each accomplish nothing else in the next 12 to 18 months, there are two key things that they both must do to set the stage for that kind of momentum:

Microsoft and Yahoo Must Both Achieve Agility

Ballmer and Mayer must make their organizations demonstrably agile.  The days of 3 year product cycles for Microsoft are long since over.  Ballmer needs to put a stake in the ground that we will see updates for all the key products with betas out in 12 months and shipping in 18 months from now.  Mayer should do the same for Yahoo. Then they must deliver those results against that schedule, and they must sharpen the pencils still further until they can do 12 month product cycles.  Once having gotten that religion, they must never let more time than that pass without impactful releases of all their key offerings.  The world simply changes too quickly these days, and cycles any longer than that leave companies struggling to stay relevant as they miss one key trend after the next.  As any student of OODA Fighter Pilot tactics will tell you, once you get inside the other guy’s decision loop and make him respond to you, your victory is only a matter of time.

That doesn’t mean shipping mediocre products just to say you shipped something.  Microsoft, that doesn’t mean you’ll get your standard high dollar upgrade fees every 12 months either.  It means you will make it happen, “it” being shipment of a release that really moves the ball forward.  Every 12 months.  Without fail.

If you can establish that kind of momentum, that kind of agility, many benefits will accrue.  You will start to control the agenda as others respond to your initiatives instead of vice versa.  You will attract and retain good talent as they see the opportunity to do something that matters in the near term.  Momentum is key for tech companies.  If a shark stops swimming, it dies.

Microsoft and Yahoo Must Both Articulate and Demonstrate a Product Vision Worth Getting Excited About

Establishing agility is almost a mechanical process.  Yes, it will require enormous cultural upheavals and force of will.  But it is not like trying to schedule that Einsteinean flash of insight that is sometimes called for.  Unfortunately, the second of the two key things you must do is closer to requiring Einstein.  Establishing an agile cycle will help, and you probably have enough stuff on the drawing boards to get through the first cycle with flying colors.  But to go further, to have it all make sense and not just be a rambling features-gone-amuck kind of release cycle, you must have Vision.

This has historically been tragically missing from both companies.  At best, Microsoft has had a Vision to commoditize other people’s ideas, and lately it has fallen far short on that.  Yahoo’s Vision seems to have been to grab up one shiny plaything after the next and claim to be a great media company amassing playthings in a meaningful way.  Not much of a Vision (I use the capital “V” advisedly).

Marissa Mayer may be a Visionary capable of producing that capital “V” Vision, but Steve Ballmer most assuredly is not.  Steve, you’re going to have to get someone in there who is.  Possibly more than one someone’s.  You’re going to have to empower them and you’re going to have to stay the Hell out of their way.  Like Clint Eastwood told us, “A man has to know his limitations.”  This will be extremely hard for Microsoft, which has confused a Product Management Culture with having Vision.  Product Managers mostly only have lower case “v” vision because they listen to customers too much.  They let customers define how the problems will be solved instead of sticking to describing what problems they have.  Despite what MBA school teaches, checking off every request some customer made never results in Vision.  It’s better than nothing, but not much better.  Steve Jobs was never even interested in what problems customers have and went out of his way to make sure they had little input into how the problems he deigned to solve would be solved.  Marissa, if you are not a Visionary, and very very few CEO’s and other successful people (let alone Product Managers) are ever self aware enough to know when they are not Visionaries, you have the same problem as Steve.  You’re simply better equipped as a product person to understand how to help realize the Visions of others.  But if you aren’t the Visionary, you will need to get some in there quickly.

Visionaries are rare indeed, for they are the ones with crystal balls that actually work.  They see clearly how insanely great things could be, and what it will take to get there.  They are unfettered by considerations of how things are today and often whether things will even seem possible.  They ignore Wall Street, pundits, analysts, and customers alike.  Losing their Visionary or even more commonly failing to ever have a Vision that can withstand the test of time is the most common reason Tech companies die.  Visions can be accidental.  Accidental Visions turn out to be proxies for the real Vision.  Minicomputers are a great example.  They were closer to being commodities than Mainframes, but they fell well short of commoditizing computing power the way PC’s did.  By and large their luminaries never figured that out, or if they did, they were unable to do much about it.  Proxies are dangerous, because they work for a time.  Companies worship these false prophets for way too long when the proxies cease to track the real prize closely enough.

Large companies can only find real Visionaries by looking for people who have been right more than once, and never right because they rode somebody else’s wave.  Having found one of these rare unicorns, Visionaries are often completely at odds with the skillset needed to survive in large organizations.  They are not politically savvy (or don’t care).  They do not do well in meetings.  They do not crave gigantic staffs to manage.  They will not suck up at the expense of doing something they know is wrong, or even a little bit less right.  They are prickly and uncompromising.  Yet, you must not only find them, you must prop them up and make them successful despite all the antibodies the entrenched burocracies at Microsoft and Yahoo will generate to try to expel them.  It’s not going to be fun, but the alternative is a continuing slide into irrelevance at the hands of the Visionaries in other companies.  That’s even less fun and you’ve had a taste of what that’s all about.

Are you still hungry enough to do what it takes?  Do you want to win?

Good.  Because now you know what you need to do.  Let’s get on with it–time is short.

Posted in apple, business, Marketing, strategy | 2 Comments »

Twitter’s Biggest Problem: Brevity

Posted by Bob Warfield on July 2, 2012

Twitter CEO Dick CostoloThere are many rumblings these days about Twitter’s recent changes blocking LinkedIn from putting Tweet’s into their streams.  Lots of different reactions from various folks:

-  From Twitter’s perspective, they’re trying to deliver “a more consistent user experience.”  We can paraphrase that one as, “We can’t run ads if you don’t come to our site, so we have to block you.”  This is one of many direct examples where advertising creates a nasty conflict of interest between a large audience and the folks who really pay the bills.  It’s one reason why ad-driven business models are more likely to treat their audiences like cattle to be harvested and milked.

-  Owen Thomas points out over on Business Insider that Twitter’s own Facebook app does cross posting.  Well, that is a bit inconsistent, isn’t it?  Apparently Twitter believes it can live without LinkedIn, but not so much Facebook.  Looking at these three services, I think that’s an astute assessment, but time will tell whether they cut out Facebook too.

-  Mathew Ingram warns Twitter to be careful of what happened to MySpace and Digg, who both alienated developers with these sorts of changes.  Mathew agrees with me on the reason for Twitter’s move, “Twitter wants to control the network as tightly as possible so that it can monetize it more easily,” but he goes on to point out that there are downsides to the simple greedy strategy (as there always are).  He points out that the developer community is not happy with these quotes:

Twitter was trying to shut down third-party services so that they could “inflict a homogenized, boring, monoculture on their user base [that] they can monetize, which will make the experience progressively worse.”

Says developer Jonathan Kupferman in a tweet, “Twitter seems to be mercilessly killing all developer apps of any interest… Light the match, hello 

John Abell of Reuters points out, “Twitter’s value is its integration with other networks. Cutting them off is like being on the wrong side of history.”

Ingram concludes by pointing out that MySpace and Digg, “started to hemorrhage users because it focused more on monetization through ads and other elements than it did on maintaining a good experience for users.”

-  Dalton Caldwell laments Twitter having chosen the advertising route instead of becoming the Internet’s real-time API.  In the beginning, Twitter was great to many developers precisely because it had an early API that made a lot of sense for things these developers thought were very cool.  Not so much anymore.

-  Nick Bilton of the NY Times calls this latest Twitter move a, “Cacaphony of Confusion” for Twitter owned apps and sites.  He points (among other things) out that if what Twitter wants is a more consistent user experience, starting with Twitter’s own apps is not a good idea.

There were not many positive responses, save for the occassional, “We can make lemonade from this lemon” post, or the other stock-in-trade for Internet Hysteria which was Anil Dash’s missive about how the Web was over reacting by a lot.  He chides the developers for feeling hurt because Twitter is finally readily to appeal to the great unwashed instead of being their personal playground.  He claims this will all ultimately be healthy for the ecosystem because it cuts down on ‘bots Tweeting spam.  Except it doesn’t because I can still push articles from LinkedIn to Twitter, just not vice versa.  Hmmm.  So much for that kind of logic.

Twitter’s real problem here is ironic:  it’s own Brevity limits the options for what it can do.

Look, you only get 140 characters.  There’s nothing left if you try to divide that into something smaller.  If you have something like a blog post, you can link to the frickin’ blog post and there’s ample reason to go there.  With Twitter, why bother linking?  Just put the whole Tweet in the article and save people the trouble.  They can read 140 characters faster than they could click through, possibly have to sign in, get oriented, and read it in situ.

I’ve written along similar lines before when I said that Twitter’s biggest problem is the Tweets themselves are ads.  I’m not the only one.  I’ve heard many a person quip that Twitter is write only and never read, or that it’s just bots Tweeting headlines back and forth about one another.  So many have gamed the service to get more followers for their own ads, I mean Tweets, that it’s a joke.  Robert Scoble has gone round and round and seems to choose his latest Social Dingbat of the day based on which one is the easiest to game into another huge crush of followers in the shortest time.

Is the ecosystem really going to be improved by what Twitter is doing?  Can it fix this problem that Tweets are ads?  And what can you do with high quality non-ad/non-bot Tweets?

I don’t think they will fix the ecosystem.  As I said, they want to make it easy to add Tweets via API’s, they just don’t want you reading them in that way.  And to actually separate the wheat from the chaff is not something they’re directly incented to do.  They want to live on the advertising model.  And, to keep a consistent user experience, that’s only going to work if the ads look just like Tweets.

It’s a vicious cycle.  Don’t expect it to end any time soon–instead, expect it to get much worse.  They’re making a final monetization dive bombing run to get to a liquidity event.

Lastly, entrepreneurs and geeks, don’t bet the farm on Twitter.  They are not in business to help you.  Quite the opposite these days.  They’re in business to collect ad revenue.

Posted in business, Marketing, Web 2.0 | Leave a Comment »

Facebook’s Next Business Model

Posted by Bob Warfield on May 16, 2012

Chillin with my PeepsVC Chris Dixon muses in a recent post that Facebook has yet to uncover a business model that will support its IPO valuation and drive future growth in that valuation.  As he puts it:

Facebook relies on an old internet business model: display ads. Display ads generally hurt the user experience, and are also not very efficient at producing revenues. Facebook makes about 1/10th of Google’s revenues even though they have 2x the pageviews. Some estimates put Google’s search revenues per pageviews at 100-200x Facebook’s.

The good news for Facebook is there is a lot of room to target ads more effectively and put ads in more places. The bad news is that, if there is one consistent theme in both online and offline advertising, it’s that ads work dramatically better when consumers have purchasing intent.

I think he’s right about the ad model.  Google has uniquely cornered the market in delivering an ad at precisely the moment the user is searching for something to buy, hence the remarks about purchasing intent.  A banner ad, on the other hand, lurks in hopes that someone with purchasing intent will happen to see it at exactly the right time and place to make a difference.  Given the odds, it’s no wonder the ads make 1/10 the revenue despite 2x the pageviews.  Unless Facebook can engage the timing and content properly to capture purchasing intent, that isn’t likely to change.

So what’s a poor Facebook to do?

Let’s get back to basics: what exactly is Facebook?  If Google, from a monetization standpoint, is the place you go to find something when you want to buy, what is the analogous elevator pitch for Facebook?  It’s pretty simple, really:

Facebook is a platform for chilling with your friends.

Doesn’t that really capture in a nutshell what people do with Facebook?  Put aside what marketers wish they were doing (yeah, we all go there to worship the sugary soft drinks that use those adorable polar bear cartoons as mascots), this is what’s really going on with Facebook.  And guess what, isn’t owning the world’s leading platform for chilling with your friends apt to be extremely valuable?  It’s got to be.  If for no other reason, look at how big a part of the economy entertainment is.  In 2010, Arts, Entertainment, Recreation, Accomodation, and Food Services amounted to 3.6% of the nation’s GDP.  That’s the platform Facebook has available to tap into.  It’s not as good as say the 5.9% that is the retail trade Amazon and Google tap into, but heck, it’s still not bad at all.  It is a sufficient market on which to base a huge business.  Look at what Apple has been able to do with music alone, for example.

The key for Facebook is to get focused with laser-like precision on how to monetize their Chillin’ Platform before the opportunity seeps away.  Eyeballs and leisure time are fickle as those old enough to remember things like pet rocks and CB radios will tell you.  Right now, Facebook is focused on advertising revenue, but they could get a lot more creative and, given all the capital they’re raising and the opportunity available to them, they should be getting very creative and testing everything under the sun.

What are some potential ways to monetize a platform for chillin’?

-  Social games are an obvious first choice.  Facebook has to relentlessly build this platform and creates as many barriers around it as possible.

-  Making Dates:  Dinner anyone?  They should own Open Table.  Movie Times?  Why am I going to Google to figure that out.  Hook me up.  Make it easy for me to plan and coordinate a date.

-  Music:  Gotta be part of any chillin’ for me.  While we’re at it, plug in media of all kinds.  If Google is gonna do hangouts, Facebook needs to up the ante in some chillin’ fool kinda way.

-  Vacation and Travel:  The ultimate chillin’ game and big bucks involved too.

-  Party Time:  Coordination, invitation, planning, decorations, photos (oops!), eats and drinks.

-  Devices:  What devices do we have around when chillin’?  What facilitates communicating the vicarious virtual thrill of chillin’?  Video, phones, cameras, yada, yada.  But what else, and how does Facebook uniquely home in on all that?

Being successful with all of this will require Facebook to think BIG.  I mean Steve Jobs kinda BIG.  They have to seriously simplify and amplify the act of chillin’ in ways that only a platform can accomplish.  If they do that.  If they can reinvent chillin’ the way Apple reinvented music and the phone, they’ll be here for a long time and folks buying in at today’s market caps will stand to make a lot of money going forward.

This is a big time innovation and UX problem: reinventing the art of chillin’ with your peeps.

Posted in business, Marketing, strategy, user interface | 2 Comments »

Why I’m Dropping InstantSlideup Like a Hot Potato

Posted by Bob Warfield on March 15, 2012

This is one of those minor personal rants that come up from time to time.  What good is having a blog if you have to be all serious and to the point all the time?

I recently had tried a little piece of software called “InstantSlideup” (not gonna link to them as I don’t want to help their link authority).  It’s purpose is to offer a slide up message (can be advertising or anything you like) at the bottom of a web page.  It’s unobtrusive in the sense it doesn’t block much of anything, yet it catches the eye a little bit.  That’s my preferred method for these sorts of things.  Popups that totally stop you in your tracks really bother me, although I do understand their efficacy.

In any event, I had it up and running on my CNC Machinist’s blog and all was well.  That site is one I use both for my hobby/passion around machine tools, as well as to run a small microISV business, and just generally to test out various online marketing concepts.  InstantSlideup is in the category of “nice to have”, but not “must have”.  A must have for me would be SEOMoz (see, I gave them a link).  My experience with InstantSlideup is that while it helped a lot more people to “discover” my product home page on the site, most of the new audience weren’t interested enough to convert.  Net net I was ahead on conversions, but by a lot less than the traffic would imply–gotta analyze yer analytics carefully!

Anyway, I liked it okay, a bit expensive for what I was getting, but I decided to hang in there with it.  Until now.

I’ve been pretty successful with this site, digital marketing works and works well given the right strategies.  I’ve put together a very analytics-driven approach (call it Big Data for Small Business, if you like) and have been tuning it up for about 3 years now.  I get circa 1 million uniques a year roughly doubling every year, which is very good compared to my peers in this rather odd niche space.  Unfortunately, this also led to the undoing of InstantSlideup.  The thing is, their SaaS version (and I always prefer the lower hassle of using SaaS to installing it myself), was a one size fits all that only allows 100,000 impressions per month.  Here is the kicker:

When the 100,000 impressions runs out, they don’t just stop running your slideup ad, they start running THEIR slideup ad on YOUR site!

I couldn’t believe it when I saw this was happening.  I guess I should not have been surprised.  We live in a world where most businesses take the liberty and ask forgiveness later.  Even a casual look at all the privacy controversies we’ve seen swirling so far this year should make that clear.  Yet somehow, this just seemed beyond the pale.

There is that certain kind of marketing that’s all spam all the time.  Shoot the prospect into a landing page that has no navigation so they can’t escape.  Don’t give them too much information because Heaven forbid, they might stop to think instead of filling out that contact information.  Get on the phone and machine them into the purchase any way possible.  The darned thing is that it works.  It even works pretty well.

Seth Godin is one of my marketing heroes, and he thinks there is a better way.  Aside from the digital marketing, Seth’s approach of building a Tribe, is more what I’m after.  I think it works as well or better than the all spam all the time crowd, although it is more work.  Yet even Seth acknowledges that the all spam all the time approach often beats us down.  Well I’m feeling feisty this morning, and InstantSlideup took one too many all spam all the time liberties.  So I gave them the boot off the site and off my credit card and I’m letting folks know exactly why that happened here.

Eventually, I will stop and write the little bit of code needed to do a slideup and the site will have slideups again.  Maybe I’ll just open source that little bit of code so others can do likewise.  OTOH, this feisty feeling can only last so long and I have a lot of other things to do first.

For the record, here are some things I would have considered doing instead were I running InstantSlideup:

-  Send a message well in advance, not at midnight when the impressions ran out, reminding the user that based on history they’re within a few days of running out and tell them how to deal with it in just a few clicks.  Perhaps they’d like to just temporarily no show the slideup.

-  Tell the user they’ve exceeded the impressions but that you’re going to comp them another 10,000 impressions on a one-time basis.  Present them with the immediate opportunity to upgrade to 200K impressions for a slight additional charge.  After all, a site exceeding impressions ought to be one of your star customers.  Why not treat them as such and make them feel special?  I’d have not only paid at least 1/2 of another license for the impressions but I would have written here about this kind of treatment instead of doing the blog post I am.

-  Send the message, but just make the slideup go dark until the impressions are reset for the next month.

See how much nicer not being all spam all the time can be?  Isn’t that how you’d rather be treated by a vendor?  Shouldn’t a vendor of marketing tools, of all possible businesses, be more sensitive in these areas?


Posted in bootstrapping, business, Marketing | Leave a Comment »

Why Adobe is Losing the Hearts and Minds of Developers

Posted by Bob Warfield on July 13, 2011

I’m annoyed today.  That’s my problem not yours, but hopefully you will at least find my story interesting, amusing, or perhaps a cautionary tale depending on the business you’re in.  If not, there’s a lot else happening on the Internet, most of it probably more interesting.  If you like a good rant, read on…

It’s irony day.  Not long after writing that one of the key attributes of a PaaS is helping companies secure sales leads, I’ve personally run afoul of Adobe’s App Marketplace.  It’s a silly thing really, but the way they’re running it is worse than not having a marketplace at all.  I see shades of the same in a lot of other would-be ecosystems whose leaders, the companies that set them up, are doing just enough to get buy, but are not really helping to do what they should be doing.  First, some great examples of ecosystems that work:  Apple’s AppStore and Salesforce’s AppExchange.  Haven’t heard Benioff lately, but he sure beat Apple to the punch on that one, let alone many others.  I will also say that while I don’t always agree with what Salesforce is doing, they’re smart people, they reach out and are reachable, and they help me to understand why they’re doing it.  Plus, a lot of what they’re doing is awesome.  I have less experience with Apple to go on, but have heard good things from friends.

Now on to my tale of customer service and developer relations with Adobe.

First, there are a gazillion people out there who work for Adobe and have words in their titles like “Product Manager”, “Evangelist”, or “Developer Relations”.  These are people one would think should be highly approachable and interested in anything new or unique that’s happening with their platform. After all, they make their contact info fairly available.  The platform I’m referring to for this article, BTW, is Flash/Flex/AIR.  Many would like to sweep it under the rug and place all bets on HTML5.  You’d think that in that sort of atmosphere, Adobe would want to work hard to stand out as a beacon for their developers.  But it’s been a pretty foggy night and the beacon isn’t visible.

I have so far contacted no less than 5 of these folks to tell them about some work I’ve been doing with Flash/Flex/AIR.  It’s not like I’ve invented Cold Fusion or anything (well of course I didn’t mean the software, they did invent that), but I happen to think it is cool stuff, and it is certainly unusual.  Rather than being a flashy (pardon my pun again) bit of marketing adware, or some game, I’ve actually been building software that is more traditionally done as desktop software written in C++ and the like.  It’s something that is <gasp> useful and in fact being used by professionals at some of America’s foremost manufacturers.  I’ve stretched the envelope pretty far from most of what I see being done with Flash/Flex/AIR.  These are rich UX apps that are for the CAD/CAM market.  Just getting these Adobe products to run against the large volumes of data and high performance graphics required by such a market was no easy feat.  So you’d think someone out there might think it was interesting.  Might at least respond to the queries, anyway.  Nope, no response whatsoever.  These were all people, BTW, who are highly visible in the blogging community, giving talks, yada, yada.  Probably way too busy to take time out to talk to everyone who is using their platform, and I say that in all sincerity, not trying to be snarky.  They don’t know me from Adam, but you’d think there’d be someone more junior it could be delegated to, or they could dash off a quick note in response or something.

On to the Adobe Marketplace.  They have a special marketplace for AIR apps and it looks like a pretty neat place.  “Cool beans!” sez I.  And so I promptly applied for a listing.  My status as publisher was granted almost immediately, last May.  And there things have languished ever since.  I can go into my little control panel and see my app still sitting there waiting for review:

Adobe AIR Marketplace

I marked with a red outline my submission date last May, that I am still queued for review, and the one place I could find anywhere about how to get help.   Trying to get help, as it turns out, was a terrible idea.  It basically just wound up annoying me enough to write this post.  You see, I wound up on chat with a representative named “Neela”.  She basically had nothing to offer.  First, rather than reading my detailed explanation of what had happened, she assumed I wanted information on some app I’d bought that was listed on Marketplace.  She was at pains to tell me that Adobe could in no way help with this and I would need to contact the developer.  I then proceeded to explain that I was the developer, I was an approved publisher for the marketplace, and I very much did expect to get some help from Adobe.  Each time we had a go round, the software for the chat would fill time while she dealt with how ever many other parallel chats she had going.  It automatically generates little messages to keep me warm.  So I’d get 3 or 4 after each of my responses that were like this:

Neelu : I'll be right with you.

Neelu : Thank you for waiting. One moment please.

Neelu : Thank you for the information.
Neelu : Sorry for the wait. Please do stay online.
That's verbatim, BTW.  And there were only 6 or so different messages, so I got to know them all quite well.  Classic Eliza-style simulation of a human.  Eventually, Neelu came back again:
Neelu : Please contact marketplace to get help on this. 

Bob: Marketplace provided this chat. How else am I supposed to contact them?

Neelu : I am sorry, we don't have any information, you need to contact with the individual developer who develop the software.

LOL, as you can see, things go circular after a bit. So my last response was that I would do what she recommended after I got done writing a blog post about the terrible customer service Adobe was giving me. I got a one word response back, “Okay”, and then the chat window unilaterally closed itself leaving me sputtering in its wake without even a chance to escalate.  If you’d seen my beet-red expression, you would have been laughing your heart out at me.

My guess at this point is I never will get listed. Maybe if they’re monitoring social media enough to see this blog post. I know I’m not wasting any more time on them, and you shouldn’t either.

This is why developers ask themselves why they should spend money on tools rather than using free Open Source all the way.

Adobe, dudes, if you are listening, you just broke my guitar loading it into your airliner. You know where that leads. What were you thinking?

Posted in business, Marketing | 3 Comments »

Why Do the Cool Kids Keep Missing the Tragically Knowable?

Posted by Bob Warfield on July 8, 2011

I just read an article on GigaOm about Facebook (Techmeme caught it too) app vendors being up in arms because Facebook’s new spam control was too strong and knocked out a bunch of legit apps.  It isn’t just Facebook, we read these stories constantly about various Valley companies.  Mostly they are companies that don’t have enough grey hairs so far as I can tell.  Twitter is another one that keeps thrashing around.

I don’t get it.  I’ve been spending a lot of time lately telling various Marketers that Marketing is a Product.  It has a UX, you want to delight your prospects with it, yada, yada.  I guess I need to be telling Product Guys that Products are Marketing after I read stories like this.  They can be A/B tested.  They can be trialed.  You don’t have to roll out changes wholesale and wait to see who screams, and then frantically roll back what doesn’t work.  In fact, it’s much better if you don’t.

Look people, in an online / social / connected / mobile / viral / cloud world, the distinction between marketing and product blurs to the point of being nonexistent.  It all carries a message and a User Experience that either strengthens or weakens your position.  And, it is all Tragically Knowable.

Talk to your customers.  Listen to your customers.  It isn’t hard to do.  You’re supposed to be Social Networks for Heaven’s Sake.  Once you get good at it, you’ll realize it’s actually a lot of fun.

Why screw around with your entire audience and momentum when you could do some tests and do what’s right?  I don’t care how brilliant the wunderkind at the top may be, they are wrong sometimes.  Save us poor customers and prospects the pain.  Life is short, we don’t need any more pain, and we’d like to get on with just loving your products if you’d let us.  Quit doing stuff that was Tragically Knowable.

Posted in Marketing, strategy, user interface | Leave a Comment »

Google: Stop the War on SEO and Get Some Better Algorithms

Posted by Bob Warfield on July 4, 2011

Interesting post on Quora (are they posts or questions?):

Is Google intentionally trying to kill rank checking (SERP lookup) by closing their Web API?

I found it as a result of doing some research on how to get Google search results programmatically–turns out you have to cheat as Google really is working overtime to obfuscate and deny programmatic search results.  They do this through Terms of Service that object to programmatic access and limiting their supported API to custom search for sites, which doesn’t return the search results you’d typically see.  Let’s leave aside the impact of personalization, which is also very hard to turn off, but which I think of as a relatively good thing according to my White Hat definition below.

This business of fighting against SEO is a bad thing born out of weak algorithms.

Okay, calling the algorithms bad and weak has got to be picking a fight with a company that prides itself on not doing evil and on algorithmic prowess.  What the heck am I on about now?

Let’s start with a very odd analogy.  Assume you’re trying to encrypt data.  At the same time, you want to create a tool that measures the strength of the encryption as simply as possible.  What would you do and what else would the tool be good for?

I would create a tool that measures the apparent randomness of the encrypted string.  The other thing the tool would be good for is as a metric for compression algorithms.  If a string is truly random, there is no apparent intelligence there–it is well encrypted.  If a string has any patterns to it whatsoever, those patterns could be exploited to learn something valuable about how to decrypt or further compress the string.  For example, “e”  is the letter that appears most frequently in English text.  If we don’t obscure that so letter frequencies appear random, we have a valuable clue for decryption.  If we don’t take advantage of the relative frequency of various characters, we have an inferior compression algorithm.  Either way, randomness is not a bad proxy to measure encryption or compression even though it doesn’t measure it directly.

What does this have to do with SEO, for Heaven’s sake?

Let’s differentiate White Hat (Good) from Black Hat (Evil) SEO strategies in a particular way to make the point:

Black Hat is gaming the system to provide an unfair advantage to search results that otherwise would be considered undesirable by searchers.

White Hat is understanding the system in order to gain insight into what searchers are doing to make it easier to find your valuable content.

Can you see where I’m going?

Content Farms are Black Hat.  They throw together a mish mash of relatively low value content in order to brute force their way to the top of search results.  We all know one when we click-through their links.  With Panda, Google is working hard to push them back down the results.

But, why, OTOH, is Google acting like it is Black Hat to want to understand how your pages are ranking against various queries so you can do better at designing pages users can find more easily?  The only way it could be Black Hat is if Google’s algorithms are not very good at understanding what good content really is.  So they have to keep changing things up to prevent gaming the content with slick strategies that can emphasize any old crap in the results.

Getting back to my encryption example, Google needs some sort of simple test to identify good content.  Perhaps all this personalization and +1′ing will do the trick.  But Google, while you’re wrestling with the problem, recognize one important thing:  Computers don’t understand Language!

Yes, I know you of all organizations must know that well, but you’re threatening to show a lack of understanding while throwing out the baby with the bath water in this war on SEO.  You’re denying legitimate content creators the tools they need to help you get their content into the right hands.  Meanwhile, the Bad Guys are not going to listen to your Terms and Conditions anyway.  They’ll figure out how to game you over and over again.  Why penalize the Good Guys in the process?

Lest you think you can win this arms race in any meaningful way, consider the difficulty of truly stopping the analysis of keyword rank.  All the players have to do is put their application in the Amazon Cloud or go to a P2P system to distribute the load across many machines and you’ll have no idea whether you’re facing one SEO Tool you could try to block or a zillion hand typed queries from legit searchers.

This talk of Clouds and P2P brings me to another thought–search engines of all kinds should take advantage of elasticity to add value.

The infrastructure of any search provider must have elasticity as search demand is not constant–it has ups and downs.  I first thought of this watching Amazon’s algorithms for making recommendations for what I should read next on my Kindle.  They’re better than nothing, but they’re actually not all that good.  I’m sure they’re missing out on the opportunity to sell me a lot more books based on how often I go root out books searching by hand, and how I usually go through a lot of their recommendations before I find something I really like.  I don’t know whether Netflix does a markedly better job, but I have been impressed that they run contests to see if anyone outside Netflix can come up with better results and then they try to add what they learn back into their engine.

Search engines should be asking what they could do with the extra cycles to improve search results.  There won’t be enough elasticity to improve all results.  Some of the problem with search engines is likely not that they don’t know better algorithms, but that they’re too expensive to implement at scale.  Perhaps the secret is knowing how and when to implement them to the extent they can in order to bring up the poor user experiences to better standards (or to optimize user experiences that are particularly valuable by some metric).  For an Amazon-style E-tailer, should they apply the extra cycles finding things for shoppers who are known to spend more?  Google could do the same, but that would be somewhat Evil in that organizing search results to increase ad click-through seems fraught with peril.  OTOH, what if Google invested the elastic spare time in more expensive algorithms focused on high volume searches that are known to produce lower quality results?

In terms of measuring result quality, they have a variety of proxies for that too.  They’re known to use live human reviewers sort of like Secret Shoppers (only I guess they’re Secret Searchers).  With all the toolbars and other gizmos out there measuring our every move, they can determine how long people spend on a search result’s page before popping back into to search to look at the next one.  Let’s not forget Personalization either.  Surely all of those signals can be put together to identify trouble spots where more powerful algorithms might be put to good use.

There’s got to be a better way than going to war against SEO in general.

Posted in Marketing | Leave a Comment »

There’s a New Sheriff in Town and His Name is “Content”

Posted by Bob Warfield on June 24, 2011

Just read a great top-level overview of Google’s Panda on SEOMoz.  If you haven’t been following Panda, or you’re not involved with marketing much, it is Google’s latest algorithmic attempt to minimize the ability to game search results.  This article is at a good level for CEO’s, Board Members, Investors, and other Interested Parties to understand the flavor of this huge watershed event for marketing on the web.  I’ve talked to a number of companies that were impacted by Panda.  In most cases, the impact hurt their search traffic because they’d been relying on SEO games to get the job done.  In a few, it has transformed their search traffic for the better.   Those few are companies that had been almost overly focused on content.

Google wants to interfere with the SEO strategy of manipulating search results mechanically by delivering search results that searchers actually like.  Towards that end, Panda lets Google blend in subjective evaluations of search results to tune up their search engine and start to de-emphasize those sites we all come across that aren’t really that enjoyable or even informative despite great search ranking.  This is mainstream when you start to see Dilbert cartoons about it, and it is life threatening for Google when we read that measurable amounts of web traffic have left the general web and gone to sites like Facebook.

Marketers should expect a lot more of this sort of thing over time.  It will be increasingly important to quit worrying about SEO voodoo and start publishing content people are delighted to find.   I have been saying to everyone that will listen:  Marketing is a Product.  It has a User Experience.  Make sure yours is one that delights would-be customers lest they not only tune you out but have an increasingly difficult time even finding your content.  First impressions will matter more and more as feedback loops like Google Panda and Social “Like” buttons that affect search results are not going to give you a second chance if you blow the first one.

If you’re running an established business that focuses most of its efforts on SEO manipulation, start thinking about how to ramp your content quality up quickly.  If you’re an entrepreneur thinking about bootstrapping a business or an investor wondering where to invest, you need to add another couple of tests to your framework for evaluating potential ideas:

-  Is this space crowded and noisy due to an abundance of great content, or is it one where there is a tremendous hunger for scarce content?

-  Does this company already have a track record for producing differentiated content that is driving traffic?

-  Does the company have content creation talent on board and does it understand how to use content effectively?

You want to be a big fish in a small content pond when you’re starting out if you expect to be noticed.  And importantly, it’s hard to farm out the best content until you have a critical mass of folks familiar with your market and products who want to contribute.  Make sure you have the ability to operate with great content until you’ve spanned that gap.

There’s a new sheriff in town, and his name is Content.

Related Posts

Small Businesses Need a Minimum Viable Marketing Strategy

Pitfalls of Free Content and an Inbound Marketing Strategy

Posted in bootstrapping, business, Marketing, strategy, venture | 1 Comment »

Small Businesses Need a Minimum Viable Marketing Strategy

Posted by Bob Warfield on May 18, 2011

I’ve taken to thinking that marketers should view marketing on the web as a product.  As I said in my post on the Pitfalls of Free Content and Inbound Marketing:

Marketing is a Product that has a UX and Competes Like Any Other Product

It’s easy to forget because we don’t charge for it that Marketing is a product too.  In particular, online marketing is increasingly indistinguishable from an online software product.  It has a User Experience that we want the consumer to be delighted with.  It has Business Logic and is the System of Record for critical Enterprise Value if you want to get all Enterprise Software about it.  Think about Marketing as a Product and you’ll find some breakthrough insights.

And don’t assume you don’t charge for marketing either.  You’re charging your customers the highest price they pay for anything you sell–you’re asking them to give you their trust.

If we’re going to think about Marketing as a Product, then the concept of Minimum Viable Product makes a lot of sense for Marketers to think about as well.  MVP is all about the idea of not building in every possible feature and refinement.  It’s about building as little as possible to make a product that you can get in front of customers sooner, so you can learn from their feedback.  Doesn’t that sound exactly like what marketers should be doing to avoid making mistakes that were tragically knowable?

I was reminded of all this while reading through a brief post and subsequent comments from Hubspot, called “How Valuable is Social Media, Really?”  In the post, some charts are presented that show Social Media produces very few inbound visitors but its conversion rate to leads may be higher.  Readers are implicitly invited to speculate that the obvious conclusion–Social Media is not valuable–might be wrong and follow on posts will reveal why.  I opined as how I saw it as an inventory problem:

We’ve got 4 to 8x the volume from the non-social and only a 50% better conversion.

It ain’t enough.

Reminds me of Bing. I get much better conversion from Bing searchers–makes me think it may be a better engine. But so many fewer show up than Google that it doesn’t matter.

Someone else raises the issue that the cost of getting the different kinds of visitors affects the ROI and therefore may change the picture.  But as I say, we have an inventory problem (potentially).  If I can only get x conversions from Social Media and that number is sufficiently low, that’s the inventory available for marketing dollars in this kind of program and it doesn’t matter what the cost is unless it is to make the program even less attractive (e.g. if there are too few leads AND they’re very expensive, we really don’t like this kind of spend).  Last aside, they talk about conversion to leads, but that isn’t conversion to revenue.  I have also remarked and believe that optimizing the wrong metric is the root of all marketing evil, so we may have been led down a primrose path on that one (though the $ money bags on the chart are a tacky misdirection if so, LOL).  What we want to optimize, in other words, is not leads but actual sales.  Marketing and Sales departments fight like cats and dogs over that one all day every day at nearly every company.

What does all this have to do with a Minimum Viable Marketing Strategy?

It’s a perfect example of why you need one–to avoid the distraction of programs that can’t produce enough results to make a difference even if the results that are produced may be good and cheap.  Put another way, when you are small, one more good, cheap, but relatively insignificant marketing program is just like one more good, cheap, but relatively unimportant feature on a product.  You don’t need the distraction, shouldn’t spend the time and money, and it won’t move the needle.  Cross it off the list until you are much bigger.  You’re looking for big hits.  Test as many small ones as you can until you find the big ones and then double down.  These numbers, at least what we have so far, don’t make Social Media look like a big hit for the business as described.

Lest we leave the subject thinking I am not a Social Media believer, let me just say that my own business experience suggest much better numbers are possible for Social Media.  For example, my CNCCookbook business is my test bed for these kinds of experiments and gets numbers more like this:

Minimum Viable Marketing

We can see that Social is generating quite a lot (15%) of the traffic to the site.  However, its conversion to leads is just the opposite of Hubspot’s numbers, being lower than many other sources.  Being a heavy content marketer, I’m of the opinion (unproven), that getting so many visitors is worthwhile and I will eventually nurture them to conversion.   In addition, I suspect referring sites link to me partially because of my content and partially because I have a following on the social communities peculiar to this space.  For example, I know a lot of machinists through the social who may then go on to connect.  FWIW, while I have tried Facebook, Twitter, and LinkedIn, and maintain presences on Facebook and Twitter for CNCCookbook, these are very poor sources of leads and visitors.  The richest sources are niche communities totally focused on the market CNCCookbook is in.

Here is the more interesting thing to consider, though.  If you’re looking for the minimum viable marketing strategy for the CNCCookbook business, which programs should you focus on?  Which should you ignore?  FWIW, I have sorted the data series in order of most to fewest leads produced.

For example, the Paid category (largely Google AdWords) has a very high conversion, but doesn’t yield enough leads.  I spent months tuning it until I was only paying for clicks that actually yielded profitable business.  That mostly resulted in long tail keywords, which are cheaper to bid for than mainstream more generic keywords.  Unfortunately, they have an inventory problem–not enough long tail searches with profitable economics.  Will I keep running the AdWords campaign?  Yes, the work spent tuning is sunk cost.  But I won’t spend more time trying to improve AdWords other than to monitor that the ROI stays profitable and cut it back when it doesn’t.  In retrospect it wasn’t worth the amount of time I spent on it and shouldn’t have been part of the minimum viable marketing strategy for CNCCookbook.

For this business, the cutoff is after email.  It isn’t worth focusing on Bing (and I definitely wouldn’t buy ads there) or PPC.  My email is worthwhile, largely because it is low effort and consists mainly of periodically asking my customer base to refer their friends (hence the very high visit to lead ratio).

What I should do next is find some more things to test, and that’s what I’m doing.  Keep in mind, your mileage not only can but will vary–you have to test, test, test to know what works and what doesn’t.  Double down on what works, cut what doesn’t, and keep some powder dry to keep testing new things.  Cast your net wide and don’t get focused on going deep except in a very few areas that are well proven.


Small Businesses should look for a Minimum Viable Marketing strategy.  Don’t get distracted (as I did) trying to optimize programs that can’t possibly produce the results you need.  Run some tests and ask yourself how much improvement you would need to see in those tests before a program would be in your top 3 or 4.  PPC was never going to get there for me, so I never should’ve invested in improving those results.  It would’ve required hundreds of percent improvement, and I had proven viable programs already doing much better.  Focus on those and keep enough bandwidth to keep testing new possibilities.

Posted in Marketing, strategy | 3 Comments »

Pitfalls of Free Content and Inbound Marketing

Posted by Bob Warfield on May 13, 2011

Free SignLet me start this article by saying it’s not intended to be a negative article against free content or inbound marketing.  Rather, I want to talk about some of the strategic considerations when you use these tactics.   I believe wholeheartedly that, properly employed, there are no better tactics for building your customer base and getting the word out.  Let’s also define “inbound marketing”, at least for purposes of this post, as follows:

Inbound Marketing is giving away valuable content for free in order to attract an audience and earn the right to sell them something.

This may not be exactly what firms like Hubspot who are experts on the topic use, but it is how I think about it and it will work well for this discussion.

This post was motivated by some thinking that’s been going on in the back of my mind about inbound marketing that all bubbled to the surface when I read John Jantsch’s “When Free Becomes Free For All — 5 Reasons Free is Hurting Us All“.   Along with Seth Godin, John Jantsch is one of my top two favorite marketing bloggers. But, with this latest post, I think John has missed some key points and gone off the track.  Rather than debate his 5 points up front, I want to drop back and paint a more strategic backdrop for understanding the value of free and I also want to call attention to the alternatives.  To paraphrase Winston Churchill’s famous quote about democracy:

“It has been said that free is the worst form of marketing except all the others that have been tried.”

Let’s start from that premise when considering John’s proposition that too much free is damaging by asking, “What are the alternatives?”

Just enough free to get the job done and charge for the rest?

Pay walls?

Intangible costs and friction like registration landing pages you go through over and over again to get one white paper, webinar, or slide show at a time?

I’ll bet John will have a hard time defending those alternatives, I know I would.  As an aside, ironically, I had gotten a new Hubspot email (one of two this morning, easy there boys) offering me a white paper that looked valuable.  I clicked to the landing page and was immediately presented with an old style fill in the form to get the content.  Now I know you want to capture the individual’s contact information, get them on your house list, yada, yada.  But I’m on Hubspot’s list–they’re emailing me for cryin’ out loud and I haven’t opted out. They can tell I’ve clicked through with silent instrumentation.  This is an artificial and annoying barrier that cause me to think them slightly less enlightened and to click off the page and go on about my business.  They either did it that way through sloth or because they are trying to “qualify” me by making me do the work of reentering my information.  Either way, it cheapens the Inbound experience.  If you’re going to be Inbound, be inbound.  Once you get someone’s information, treat them as you would want to be treated.  End of rant, these guys should know better.

Distracting as it may be, the anecdote relates to John’s complaints about free.  Let’s talk about the 5 things he worries about (paraphrased):

It doesn’t hold the content consumer accountable.  

If it’s free, they can sign up and then no-show.  This is a variation on the VP of Sales contention that you have to charge a lot or the customer won’t respect you.  My problem with this perspective is it reflects artificial scarcity and a presumption about the stage that the prospect has reached that isn’t justifiable.  When you’re engaging in Marketing, you’re not yet at the stage where you’re entitled to demand a price.  You’re not ready to close a sale.  You’re earning the customer’s trust and any artificial scarcity or cost interferes with that trust, just as my experience with Hubspot made me trust them a little less.

With respect to artificial scarcity, the history of any market is a march to commoditization unless the participants find a way to create defensible unfair advantage that limits competition and creates artificial scarcity.  Other than via legal entanglement, content is not amenable to unfair advantage through limited availability because it can be reproduced and communicated too easily. Your only opportunity for unfair advantage is to make your content better than the other guy’s.  Leaving aside all that, think about monopolies, patents, record labels and other cases of successful artificial scarcity.  Do you want your marketing to reek of that?  As I said, you’re earning trust, not selling patent-pending titanium toilet seats to the Air Force.

It would be awesome to see my two marketing blogger idols, John and Seth Godin, debate this proposition.  My impression from Godin’s writing and tactics for self-promotion is that he totally gets this business of creating unfair advantage through better content and then making it even more unfair by aggressively giving it away until it goes viral.

Let’s turn this one around from a unpleasant problem to a prescription for success:

Make sure you are accountable for your content and it is so good that it is irresistible.  And then give it away.

That formula will knock the cover off the ball of Inbound Marketing every time if you can deliver.

Eroded Value

John’s description of this point is worth repeating:

When content is consistently given away it loses its value–not only for the producer, but also in the eyes of the content consumer. How good can something that’s free really be?

This lumps thoroughly researched, well-presented, useful content in with shoddily veiled pitch fests.

My problem with this argument is two-fold.  First, it goes down the traditional Mad Men marketing and sales path of assuming consumers are sheep.  I know it can be easy to fall into that trap, but John knows better.  Consumers are better judges of your content than that.  The ones that matter know a “shoddily veiled pitch fest” from useful content.  Go back and read the endless admonitions to content creators for Inbound Marketing about delivering value.  If you’re not delivering enough value that it’s obvious to consumers, you may have accidentally produced a pitch fest.  Blame yourself, not the consumer.  Value is in the eye of the beholder, not the author.

Finding great content is hard.  If it wasn’t there wouldn’t be so much controversy over search, there wouldn’t be so many bookmarking services, and there wouldn’t be a long tail.  The great content would be obvious, plentiful, and easy to come by.  Instead, there are relatively few Duct Tape Marketing or Seth Godin blogs, so we read them incessantly and don’t take them for granted.

This brings me to my second point–be aware of the state of the free content ecosystem in your space.   John Jantsch’s Duct Tape Marketing content plays in the most crowded on-line space that there is for great free content–marketing.  The bar in that space is absolutely sky high–so high there is almost no oxygen up there.  Social Media, Email Marketing, Inbound Marketing, Affiliate Programs, on and on.  There is lots of great marketing content available free.  Whenever a content market gets that big and there is so much great content available, value is eroded.  You can’t take it back by deciding not to give it away.  There’s too many struggling for competitive advantage by giving their great (or even pretty good) content away.  Markets are eating their own dogfood, drinking their own champagne, and practicing what they preach.  It’s tough love, but you better get over it.

I’ve come to believe this is a key strategic point for entrepreneurs to consider.   Not every space is as crowded as the Marketing space.  In fact, very very few are.  Most spaces are still very much starved for great free content.  For entrepreneurs, when you’re evaluating a space, do a careful evaluation on your chances of becoming an early Thought Leader there through your content.  You want to be a big fish in a small pond where the bar is set extremely low for your content.

Lowered Expectations

John says:

This creates an atmosphere where content producers can simply slap something together with little value because, “What are they going to do, ask for a refund?”

I’ve nothing new to say here other than that you are accountable for your content and you have to make it so good that it is irresistible.   If you don’t and you’re in a crowded content ecosystem like marketing, you’ll never be noticed.  May as well go buy banner ads on AOL or Yahoo.   If you don’t and you’re one of the first fish in a small content pond, you’ll be noticed but vulnerable to a fast follower.  You will also miss igniting the level of passion for your content that you may otherwise have had, which will slow people passing on and talking about your content and prolong the window for the fast follower to take you out.

Blocked Revenue

“When the expectation is that all of your content, speaking and presenting will be made available at no fee, your business’ greatest potential asset is cut off.”

First, if your only business is content, you need to think carefully about your strategy.  In the ideal case, you have something else you’re making the money on besides the content.  Inbound Marketing is a wonderful no-brainer if you do have something else to sell.

Second, even if you don’t have anything but content to sell, who says it’s all or nothing?  Will they pay to see you deliver your content directly?  Will they pay for you to apply the mind that produced that great free content to their problem?  Will they tolerate ads in the content?  Will they pay to have your content in a different format, perhaps one that’s easier to consume or more compact?  Thinking of books that are compendiums of content that already exists where curation and packaging is the value.

Seth Godin is a master of this.  He gives away books he’s actively selling.  He encourages buyers to give their book to someone else when they’re done reading it.  It works for Godin, why not others?

Community Buster

Having spent a fair bit of time in the Social Web both personally and professionally, this is one I totally do not understand:

When people are invited into a community where everything is free, there’s actually less chance of building a strong community. Community builds when there is value.

That has not been my experience in the least, and I’d like to see such a community to understand what it’s real underlying problems are, because they’re not due to “free”.  Let me give two strong examples:  Stack Overflow and Quora.   Everyone reading this must have heard of one or the other.  They’re completely free, they are strong communities by any measure I have ever seen, and they deliver huge value.

Free has some really odd dynamics where behavior and community are concerned.  People will polarize around and defend free in ways that you just don’t see for things people pay for.  Try to make your living attacking virtually anything Open Source and you will see.  Free begets fanaticism because it creates obligation.  If you give somebody something for free, they feel an obligation to reciprocate in some way.  If they pay you, however little, they have discharged that obligation.  This is problematic for companies that want to be the cheapest offering in their space.  To me, they attract the worst of all worlds.  They don’t get the fanatical support of free, and they’ve attracted a legion of penny pinchers who feel no obligation and who are ironically much higher maintenance than the sort who buy premium products.

People generally have good intentions.  Give them a lot of valuable free content.  Set them up in a free community where they can get free help and give free assistance and I have seen magic happen multiple times.  If you find yourself in a space where no such resource exists, stake it out quickly–it will turn into a gold mine and you won’t be sorry.

Conclusion:  Marketing is a Product that has a UX and Competes Like Any Other Product

It’s easy to forget because we don’t charge for it that Marketing is a product too.  In particular, online marketing is increasingly indistinguishable from an online software product.  It has a User Experience that we want the consumer to be delighted with.  It has Business Logic and is the System of Record for critical Enterprise Value if you want to get all Enterprise Software about it.  Think about Marketing as a Product and you’ll find some breakthrough insights.

And don’t assume you don’t charge for marketing either.  You’re charging your customers the highest price they pay for anything you sell–you’re asking them to give you their trust.

Posted in bootstrapping, business, Marketing, strategy | 2 Comments »


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