Once a year, I am afforded the opportunity to write an article for the CognitiveDATA Marketing Insight concerning marketing and advertising trends pertinent to our readership (i.e., B-to-C and B-to-B database marketers, primarily those in the retail trade). I will follow up on some of the items I mentioned in previous articles, as well as introduce some new concepts I think will gain traction over the next few years.
Let’s start off with the title of my article—indeed, since when do toddlers demand that their parents buy an iPad?Well, according to a piece published recently in Advertising Age, the children of Generation Y—i.e., those ages 6-12—are “key drivers for the adoption of the iPad and other tablet computers,” and that nearly 40% of “tweens” (children ages 11-12) routinely use social networks, even though (according to, for example, Facebook’s user guidelines) they are technically not allowed to do so. (To read the whole article, click here.)
“If you’re a digital native parent and have a smartphone that accesses the internet and gets apps,” said Donna Sabino, Senior VP, Kids & Family Insights for Ipsos OTX, “it’s not out of the realm of possibility for you to introduce your child to that when they’re 1, 2 or 3.”
Three years ago, I asked readers to pay close attention to the e-book and tablet computer phenomenon. “As flexible flat-panel electrophoretic display technology improves,” I wrote, “it will eventually have an effect on how multichannel marketers sell their wares.” It was pretty easy to see how it would affect the sale of periodicals and books—articles like the one in Advertising Age confirm that your customers will spend diminishing amounts of time consuming advertisements in the printed form, and increasing amounts of time doing so on tablet computers and mobile devices.
Depending on what and to whom you sell, the effects this trend may have on how you allocate your company’s advertising budget may vary. Like they say on Wall Street, though, “Don’t fight the tape.” In other words, ignore this trend at your own peril.
Another retailing trend that has caught my attention is that of conscious consumerism and the rise of social entrepreneurs—or, seen from the perspective of the corporation, that customers are increasingly asking (and, in some cases, demanding) that the companies with which they do business literally share their personal values, and help build and sustain the communities in which they live.
Michael Porter, the Bishop William Lawrence University Professor at Harvard University, and Mark Kramer, co-founder (with Porter) and managing director of FSG Social Impact Consultants, wrote a compelling article on this topic titled “The Big Idea: Creating Shared Value” for the January-February 2011 edition of the Harvard Business Review. In it, they argue that mere corporate social responsibility should be superseded by creating shared value when companies make investments in their communities.
“Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success,” said Porter and Kramer. “It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.”
Think Tom’s Shoes—their “One For One” concept is not merely a charitable pastime; it’s fundamental to the company’s value proposition. Other retailing ventures, like San Francisco start-up Schoolbags For Kids, are following suit, with a “One Here, One There” concept around children’s school bags—the wrinkle here is that bags donated abroad will arrive containing basic school supplies. The list goes on and on— many companies, including past and present clients of ours, like French Toast and Russ Reid, were, to borrow the lyrics of an old Barbara Mandrell song, “socially progressive when being so wasn’t cool.”
Next, let’s change gears to a topic that is near and dear to our new parent company, CognitiveDATA, Inc. —data accuracy, quality, and trustworthiness. I remember what I called their (now I can say “our”) signature product, IntelliDRESS, when I had the pleasure to test it on some of our clients’ mail files almost a decade ago: NCOA on steroids! (Please, I live in San Francisco, folks—Barry Bonds jokes are not appreciated.) I have also had the pleasure of assisting my old firm, LENSER, build out a database marketing consulting division oriented towards B-to-B marketers.
I think you see where I’m going with this—when will we have the B-to-B equivalent of IntelliDRESS on the market? That’s a very good question, one in which I hope to play a role in answering. To be perfectly honest, it’s going to take some time—this sort of product can really only come to fruition if we first obtain similar licensing arrangements to those obtained for the standard B-to-C IntelliDRESS product from best-of-breed B-to-B data compilers, and then broaden our business application focus to include more marketing/contact channels than just print/in-themail.
Conceivably, there is a lot of value in the B-to-B marketplace in utilizing resources to confirm: a.) that an individual is still employed at a particular company/institution, and b.) that an individual, via one’s title, still has the same set of responsibilities/decision-making abilities as has been understood previously.
The B-to-C data accuracy and data quality business is maturing quickly—it is part of our core business at CognitiveDATA, and we are proud of our efforts, to date, to provide these services. Where I see significant opportunity, though, in the years ahead is in the B-to-B space. There are several compilers of “general” business information (InfoGroup, Dun & Bradstreet)—i.e., they seek to make contact with all businesses, large and small, irrespective of industry or category. There are also a great multitude of business sector specific compilers (e.g., HDS, SK&A in the health care field, MDR in the education field) that collect “better” information at businesses in their particular sector—i.e., improved reliability with respect to names, titles/responsibilities, and recency/relevance of the data. Then, there are a bevy of B-to-B marketers, advertising/communication with customers and prospects alike in many channels (internet, direct mail, phone, in person—might throw mobile in there, too), that have customer and prospect databases that, many would admit, are in desperate need of the hygiene opportunity a B-to-B IntelliDRESS equivalent could supply.
I will let you connect the dots—this press release from InfoGroup’s OneSource, now over a year old, identifies a clear trend: the use of social media, specifically LinkedIn, for lead generation efforts is on the rise. It is only a matter of time before LinkedIn’s B-to-B information storehouse is used for—you guessed it—data accuracy and data quality initiatives.
Speaking of social networking sites, have you been paying attention to the press that Facebook and Zynga (specifically, its signature game, Farmville) have been receiving, relative to their relationship with firms like BlueKai (which, interestingly enough, lists Datalogix, formerly NextAction, and Axciom as two of its “data sources”)? I am not sure if the old adage of “any press is good press” applies here—but, the comparisons to DoubleClick’s announcing in 1999 that they planned to combine online behaviors obtained via ads served by DoubleClick with the personally identifiable transactions recorded by the then-recently-acquired Abacus Direct are uncanny.
Well, that was twelve years ago—long before the existence of Facebook, Twitter, LinkedIn, YouTube, smartphones and iPads. Then, consumers were rightly concerned over how online behavior might play a role in the advertisements they would be served—it was unchartered territory.
Today, I am not convinced the internet’s heaviest users care that much—much of the user-generated content posted, read, and commented on is inherently narcissistic. Social networking sites (with the obvious exception of LinkedIn) have enabled individuals, both young and old (think parents and grandparents), to make public information out of images and words that, only a decade ago, would have, intentionally or unintentionally, remained private. So, it stands to reason that if personal privacy has already been abdicated, online marketers, and their enablers (e.g., BlueKai), probably will not face the same scrutiny and privacy advocate consternation that DoubleClick did back in the good ol’ pre-Internet Bubble days.
For the moment, let’s return to Facebook, and add Zynga’s game, Farmville, to the conversation—the topic of Facebook’s ever-evolving business model, as well as that of social network-based game makers, like Zynga and Playdom (the latter of which was acquired by Disney in July 2010), comes up often here in our San Rafael, CA, office.
Imagine, if you will, an online gaming virtual transactional cooperative database—one consisting not of real, but of virtual, transactions, hopefully within an entire social gaming community, not just one (e.g., Farmville, Sorority Life). Participants/contributors of virtual transactional data could leverage the cooperative database in a number of different ways—to paying players of their game(s), to non-paying players who pay for virtual goods within other games, and to non-paying players who haven’t yet paid for any.
Now, review this Playdom press release. Go ahead, pour yourself a glass of wine—this is about to get interesting.
If what was said last year about Farmville is true—i.e., 30M daily active users, 2% of which (or 600K) are paying for virtual goods, and the average paying user spends $20 per month for 3-6 months—then Farmville generates $12M per month, or $150M annually. Not too shabby—a retailer of [insert favorite merchandise category here] selling $150M worth of product is probably a “good” client for a co-op database firm trading in “real” (i.e., actual, in-the-flesh products and services) transactional data.
So, a couple questions to consider:
What’s the sum total of Facebook game virtual goods sales? The Farmvilles of the world are great, but even the little guys matter—after all, in the beginning, Farmville was small, too. I confirmed via an anonymous source at one of the major “real” co-op firms that the ratio of [sum of transactions, in terms of merchandise sold, L12MO for ALL co-op participants] to [sum of gross revenues earned by co-op via the various products / services available to participants, L12MO] is about 300:1. (Or, for every dollar sold, in terms of merchandise, the co-op can make $0.0033, one-third of one cent, in gross revenue.)
Using the Farmville example, $150M annually in game revenue = $500K annually in co-op revenue potential, using the revenue model I just described. A 5% lift in revenue on $150M annually is $7.5M. $500K divided into $7.5M = 6.7%. Do you think Farmville would pony up some reasonable percentage of that increased revenue figure? I would bet they would. Which means the $300 transactional revenue : $1 co-op earned revenue model (i.e., 6.7% of increased sales as payment for services rendered) is perhaps too modest, at least in the early stages. Everything’s negotiable.
Marketers, both real and virtual, will have interest in such information, I am sure—so, based on existing privacy/commerce rules, just how much transactional data do we have access to? Is it entirely exclusive to the game—meaning no real personal information is available, only that data which exists within the virtual world—or are there some loopholes that do (or, perhaps when the rules are relaxed, can eventually) exist to allow for real personal information to be utilized?
Also, the comment from Playdom’s press release that installs were becoming more difficult to achieve as the marketplace saturates makes the need for such a tool even more relevant. It seems as if they already need a user harvest strategy as the returns on the new user strategy diminish. I think it could be an easy sell when saturation/maturation is achieved. The selling proposition, therefore, is something like: “Now that you have customers, how do you sell more to them? And, as it becomes increasingly difficult to convince new customers/users to install, won’t the business need to focus more attention on the installed (and perhaps formerly installed) base?”
So, what does Zynga’s privacy policy look like, you ask? Click here. Clearly, Zynga has a relatively open privacy policy regarding personal/transactional data that would support this idea. They may, in fact, be working towards a similarly sophisticated advertising revenue generation strategy already.
I could be completely wrong, though, with regards to consumer privacy. Newton’s third law of motion—that for every action, there is always an equal and opposite reaction—certainly could apply here.
Perhaps social networking will enable consumers to demand full ownership rights to their individual and household transactional data, and that advertisers will have to pay consumers directly for access, rather than the third-party compilers and aggregators that trade in such information today. If that marketplace existed today, I would charge a hefty price to advertisers for the knowledge that I was listening to Peabo Bryson’s “Reaching For The Sky” when I finished this article, shut my computer down, and turned out the lights here at the San Rafael office.