It’s the Ad Creative — Stupid

Blank canvasTime and again at tech marketing conferences the subject of ad creative is neglected or not discussed at all. Sessions are devoted to targeting, big data, attribution and so on. But creative is rarely seriously talked about, though there is some discussion going here in New York at Ad Week.

Often the people who want to talk about creative don’t want to talk about technology and vice versa. Both sides need to come together. All the big data and targeting in the world won’t rescue a terrible campaign. But great ad creative can go some distance to compensate for otherwise poor planning or execution otherwise.

Various studies from comScore, Millward Brown and Nielsen (summarized here) repeatedly have shown that ad creative matters in terms of consumer response, brand perception and purchase intent. Another immediate reminder of that lesson is GE’s new LED bulb commercial featuring Jeff Goldblum (below).

Why is this ad great?

  • It’s funny, getting lots of coverage and being shared widely (earned media)
  • It showcases the product quite effectively, building awareness and purchase intent

Why aren’t more ads effective like this? It shouldn’t take millions of dollars and a Super Bowl slot to generate clever and interesting ads.

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Cities Trying to Protect Taxi Biz Against Uber Onslaught

Uber

I hate the overuse of the term “disruption.” It may be descriptive but it has become a cliche. It clearly applies, however, in the case of Uber, and similar ride-sharing services Lyft and SideCar.

While the taxi business is still healthy in New York it has dramatically declined in other US cities. For example, an article appearing in the San Francisco Chronicle cited this remarkable statistic about the fall off in ridership:

The number of trips taken by taxi plummeted 65 percent in just 15 months, according to a report presented to the San Francisco Municipal Transportation Agency board Tuesday…

The average number of trips per taxi has been on a steady slide – from 1,424 per month in March 2012 to 504 this July.

The reason for this is clear. Notwithstanding that Uber is ethically challenged, the user experience is superior to conventional taxis — from the condition of the vehicles to the app experience, tip-free pricing, mobile payments and emailed receipt. The payments experience is one of the primary reasons I use Uber.

District Attorneys in San Francisco and Los Angeles have reacted to the near-mortal wounding of local taxi businesses by threatening a crackdown on Uber et al. The DAs sent letters to the ride-sharing companies last week citing a number of laws that they’re allegedly breaking. The companies disagree and have protested.

There may indeed be ways in which Uber and its peers are not in full compliance with the law (e.g., insurance requirements). Yet I also believe that at least part of the DAs’ motivation for sending the letters is lobbying by the taxi industry. This is a case of vested interests being threatened and using government to try and stop or slow a competitive development in the market.

It’s also the case of change happening too quickly for government officials. In Europe reactions against Uber, etc. have been stronger. Uber is perceived as a kind of threat to a way of life. And in a way it is.

Uber is an interesting example of several things. Like AirBnB, it’s an end-to-end local marketplace. It’s an example of how mobile payments are being successfully implemented for offline services.

But for purposes of this post it represents a radically better user experience demolishing a relatively poor one. While taxis are entitled to try and “level the playing field” by getting Uber to comply with regulations they must adhere to, in the end taxis must fundamentally change how they operate or face further losses.

Though it happens all the time, it’s ultimately folly for vested interests to use government to block or put the brakes on upstarts and competitive pressure. That only delays the inevitable.

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Apple Pay Triggered eBay-PayPal Spinoff

Apple Pay mobile apps

This morning eBay announced that it would split itself into two publicly traded companies in 2015: eBay and PayPal. Beyond ongoing pressure from investor Carl Icahn, the announcement of Apple Pay was likely the trigger for the decision.

Here’s what eBay said this morning:

eBay Inc. today said its Board of Directors, following a strategic review of the company’s growth strategies and structure, has approved a plan to separate the company’s eBay and PayPal businesses into independent publicly traded companies in 2015, subject to customary conditions.

Creating two standalone businesses best positions eBay and PayPal to capitalize on their respective growth opportunities in the rapidly changing global commerce and payments landscape, and is the best path for creating sustainable shareholder value, the company said…

However, a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively. The industry landscape is changing, and each business faces different competitive opportunities and challenges.

While Square, Stripe, Google, Amazon and others are PayPal competitors there hasn’t been a company until Apple that could radically impact PayPal’s business. PayPal is well known but it’s brand and loyalty remain paradoxically weak.

Depending on how well Apple Pay actually works (usability) it could take much of PayPal’s mobile business and eventually blunt its offline growth in just a year or two. The outlook for PayPal could get very grim very quickly.

While PayPal is interested in working with Apple Pay so far the company doesn’t have a deal. These factors are what motivated eBay to decide that PayPal needs more dedicated and strategic focus and thus to become a stand-alone company.

PayPal has an “account base” of more than 220 million users globally. How active and loyal they are isf20

another matter. By comparison Apple has more than 800 million credit cards on file with iTunes. Apple’s brand is at least 10X as strong as PayPal.

Apple Pay is likely to quickly take hold for in-app payments as most commerce apps adopt it as a payment option on iOS. NFC/in-store payments will be slower to take off but eventually they will.

The anticipated ease of using Apple Pay (one thumb or one click) for in-app payments will make other payment methods (including PayPal) much less desirable. Just having to sign in to PayPal is a major competitive disadvantage. PayPal’s obnoxious use of your bank account (vs. credit card) as the default payment method is also a major disincentive to use the system.

Not having to sign a receipt or payment slip (and potentially skipping the line) will be drivers of in-store usage of Apple Pay, along with increased consumer awareness and merchant NFC-terminal adoption. But we’ll see in-app payments ramp very fast now and many of those will be for offline services (think OpenTable, Uber). If Apple Pay is genuinely secure and as easy to use as promised it will gain mass adoption quickly.

And that could be very bad news for PayPal.

Updated: here’s the story behind the story of why Apple isn’t working with PayPal. According to this report:

Apple and PayPal started talking early on in Apple’s development of Apple Pay, as Apple was setting up partnerships with the card issuing banks and card networks. Since PayPal’s a payments industry leader, it would have been shortsighted for Apple to not reach out to PayPal.

But while these talks were going on, PayPal went ahead and partnered with Samsung on the Galaxy S5 fingerprint scanner, a move that was reportedly forced onto PayPal by eBay CEO John Donahoe. PayPal’s now-former president David Marcus was purportedly categorically against the Samsung deal, knowing that it would jeopardize PayPal’s relationship with Apple. Donahoe won the day, however.

Donahoe miscalculated and now is forced to split his company in two probably to the ultimate detriment of both halves.

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With Atlas Online-to-Offline Conversion Tracking Goes Mainstream

The online and offline worlds are coming together in multiple ways. For some time I’ve been talking about how in the near future offline measurement will be imperative for digital marketing platforms and networks.

No longer will it be sufficient to report just impressions and clicks — or any other online only actions. Marketers large and small will want to know about actual visits and offline conversions. It’s still the case that more than 90% of US retail transactions happen offline.

Screen Shot 2014-09-29 at 8.44.14 AM

Before mobile devices this kind of tracking was extremely difficult. You could survey users after the fact, run campaigns with coupons or you could undertake expensive and complex media mix modeling. However because clicks and online conversions were much easier to measure, most digital marketers focused their conversion tracking on online forms and e-commerce. Over time calls kicked in as a proxy for offline conversions and an important tracking metric.

The lack of offline conversion tracking produced an incomplete picture of campaign effectiveness. Now with geofencing, smartphone tracking, CRM/payment matching and indoor location, tracking offline conversions is getting easier.

Last night Facebook relaunched Atlas, the ad-serving platform it acquired from Microsoft in 2013. The new platform promises better audience-based targeting and cross-device measurement. What was also very interesting to me was the promise of “online-to-offline measurement.”

On the Atlas site the company says:

Atlas allows advertisers to measure which channels, platforms and publishers within their online campaigns impacted the actual sales that happened in-store. Bringing new transparency to the online touchpoints that drive buyer behavior, Atlas connects offline purchase data with online campaigns to show a more complete view of their marketing effectiveness.

There’s no precise discussion of offline tracking methodology. However Facebook works with Datalogix currently and otherwise employs a number of different methodologies to track offline conversions. Atlas competitor DoubleClick enables offline conversion tracking via advertisers’ own database uploads, but this is more narrow than what I believe Atlas is offering.

Regardless of the precise methodology, the larger point is that offline conversion tracking is starting to go mainstream with these two ad-serving platforms now offering it and mobile marketing platforms starting to report on in-store lift and place visit rates. Within three years there won’t be a digital campaign for a real-world retailer or brand that doesn’t include offline conversion tracking.

If you’re attending SMX East I’m moderating a panel called Attribution Success In The Age Of Mobile on Wednesday. You won’t want to miss it.

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YP Dives Deeper into Transactions with GrubHub Food Delivery Deal

YP homepage

YP has gotten more deeply into transactions with the addition of food-ordering and delivery service GrubHub. The new capability will be available on YP.com and the YP mobile app. It complements hotel and restaurant booking already enabled in the YP app, and it’s another third party relationship intended to enhance the content and functionality that YP delivers to users.

Earlier this month YP announced a deal with Goodzer for enhanced local business data.

From GrubHub’s perspective it offers additional exposure and distribution for its restaurants. GrubHub, which merged with Seamless, faces competition from several startups and Yelp, which began offering food delivery a little more than a year ago.
YP-Grub Hub

While food ordering and delivery is not a “must-have” feature for local search apps and sites these sorts of transactional services will become more common to the point that they may eventually become a competitive requirement.

Beyond adding utility for YP users, features like appointment scheduling and ordering/delivery help “close the loop” for business owners. They show self-evident value to SMBs vs. more abstract or intangible metrics such as impressions, clicks — even calls.

In the consumer market YP seeks to compete with Google, Yelp and Foursquare. While the functionality and content on its app aren’t yet at that level it’s impressive that the company continues to invest in both its user experience and brand to remain competitive. Along those lines, during Advertising Week in New York, YP is taking over Grand Central Terminal to promote its brand and various properties.

This effort to refresh and reinvigorate the brand will also help with local advertising sales. In my view it’s easier to sell marketing services to SMBs when there’s a brand being sold rather than just a product list of set of benefits.

Given that the pace of these third party deals appears to be picking up, I would assume that YP has plans for more such content/feature integrations coming in the months. YP also continues to aggressively push MyBook, its social favorites and personalization tool. Assuming continued adoption MyBook has strong potential to be a differentiating feature for YP.

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Alignable: a New B2B Network for SMBs

Small Business Alignable

A new startup Alignable aims to create a B2B social network for small business owners. Part Facebook, part LinkedIn, the site seeks to be a place that business owners can find support, community and unbiased advice to help overcome the isolation that often accompanies running a small business.

I spoke to co-founder and former ConstantContact executive Eric Groves last week about the site and its ambitions.

Alignable launched in January of this year. There are members now in all 50 states and Canada reflecting more than 3,000 communities. Groves did not disclose the precise number of SMBs participating or active on the site but says that growth has happened so far without any formal marketing by the company.

The rest of this post is on the Local Search Association blog.

Alignable

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Will iOS 8 Disclosures Shut Down Location Access for Most Apps?

iPhone 6

The new iPhone operating system, iOS 8, gives users more control over apps using location. Apple will now tell you that an app has been capturing location in the background and ask you if you want to change that.

Selecting “settings” from the message sends you into “location services.” What users will find there is that most if not all apps are set to “always” by default. Accordingly they’re capturing location on your handset even when you’re not using them.

This is how many developers and ad networks profile users and assign them to audience segments. Location is the new cookie.

location settings on iOS 8

People are quite conflicted about location on their phones. They’ll allow it to be used by an app when that makes logical sense (e.g., Yelp, Google Maps). However surveys repeatedly indicate that users are sensitive about who/what has access to their location and will turn off location services when they don’t want an app to track them.

My initial sense is that most iOS 8 users, when confronted with one of these messages (above), are not going to permit “gratuitous” use of location in the background. In fact, my visceral and immediate reaction to receiving this message for the first time (about Google Maps) this weekend was to shut down location for 85% of the apps on my phone — “never.”

Pew location privacy

Source: Pew Research Center, July 2013

I suspect that others will do something similar. Hoping to compel users to enable location, some apps currently permit a binary choice: “always” vs. “never.” But many apps allow a third possibility, which is to permit location access while the app is running. Ultimately this third choice will be required of all apps that seek to obtain location data.

By bringing users awareness (and more control) to those apps that want access to location in the background Apple is doing the right thing. However as users cut off location for some of their apps, it’s going to put a crimp in the efforts of certain publishers, networks and developers to capture valuable location data all the time.

Location services iOS 8

What are your thoughts? Do you think that users won’t care or that they’ll do what I did and shut location down for most of their apps?

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SMB Marketing Organizations Need to Add ‘Business Services’

Business processes cvita

At the 2013 LSA event in Las Vegas I participated in a session called “State of the SMB Union.” One of the points I tried to make was that directory publishers and others offering marketing services to small business owners should diversify into transactions and business processes. So far that hasn’t really happened.

It’s starting to happen in Europe. Last week at the SIINDA conference in Munich a number of local media publishers discussed integration of scheduling and other transactional tools into their sites (or subsidiary verticals). Scheduling and appointments were the most common and are the obvious first step into this arena.

I’m frequently told by Europeans that US market is seen as “two years ahead.” However in terms of these transactional/operational services, this is not the case.

It’s very true that in the US market there are a many startups and vertical “marketplaces” offering scheduling, payment processing and other types of services for SMBs. However most of the larger SMB sales channels have not yet embraced or integrated them.

The full post is at the LSA blog.

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Inside, Outside, In-Between: What’s the Future of Local Media Sales?

I’ve just completed a report with Neal Polachek on the future of local media sales: Local Media Sales 2020 — Platforms, Profits or People?

Local media sales

Based on interviews with executives from Google, Yellowbook/Hibu, Dex Media, Web.com, Hearst, Buzzboard, ReachLocal, Yodle, newspaper sales executives and others, it looks a few years into the future and tries to engage in a conversation with some of the challenges in the local market today.

Here’s the paradox or dilemma facing traditional media sales organizations:

  • Audience fragmentation and the loss of major distribution/traffic has forced newspapers and YP companies to become “agencies” for their advertisers buying lower-margin digital media from third parties
  • This creates “structural” pressure that makes it harder to support an outside salesforce. Accordingly many are calling for a major migration to inside sales to reduce costs
  • Inside sales are cheaper but generally lose the benefits of in-person, face-to-face contact with advertisers
  • In addition lots of companies are using inside sales. That combined with similar-sounding product lineups makes differentiation increasingly tough in this market where SMBs are getting as many as 20 sales calls a month
  • Traditional media companies can no longer afford all their outside sales reps. But you can’t sell all accounts with inside reps
  • What’s the right balance between premise sales, technology and t-sales?

Local Sales Report TOC

The 27-page report is free but you have to register to get it. Read it and see whether you agree or disagree with its assumptions and conclusions.

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Beaconpalooza: Macy’s to Deploy iBeacons in All 4,000 Stores

Macy's appUsing Shopkick as its vendor Macy’s has decided to roll out iBeacons in all its 4,000 US locations. This follows a limited test of the technology 2013 and marks the largest retail beacon deployment to date.

The news appeared as part of a larger release about various “omnichannel” initiatives at Macy’s.

The beacon rollout cements the status of Bluetooth beacons (and iBeacon in particular) as the leading indoor location technology. Ideally, beacons are combined with other indoor technologies for a more complete solution.

There’s still widespread ignorance and misunderstanding about the limits and capabilities of beacons. I wrote a report about these issues earlier this year while I was at Opus Research.

For example, beacons currently cannot be used to identify precise user location and thus cannot be used for indoor navigation. (This may change in time.) Macy’s had previously worked with Meridian (now part of Aruba) using WiFi to provide that functionality in a couple of stores though its app. It’s not clear whether the Aruba relationship will continue.

While there are some limited indoor analytics that can be obtained from beacons, they’re not very rich or deep. Beacons merely broadcast messages/offers to nearby users who have relevant apps installed. An app is a prerequisite to receiving beacon-based notifications.

Here’s what Macy’s said in its press release about how it will work with Shopkick and iBeacon:

In what will be the largest implementation of iBeacon technology at retail stores to date with more than 4,000 devices, shopBeacons, an enhanced mobile location-based technology built upon Apple’s iBeacon Bluetooth Low Energy (BLE) protocol, will be placed within various departments at Macy’s locations, allowing for users of the shopkick app to get more personalized department-level deals, discounts, recommendations and rewards. Installation of shopBeacons is expected to be complete by early fall 2014, with activation beginning shortly thereafter.

Once live, as shoppers enter any Macy’s nationwide, shopBeacon will remind those shopkick app users who’ve opted in to receive notifications to open their app. During the initial phase of the program, customers will receive the currently available Macy’s promotions, deals or discounts. In early spring 2015, these Macy’s offers can be even more precisely tailored by departments in the store. This enhancement in Macy’s mobile technology arsenal will allow for increased consumer engagement and promotional and marketing relevancy that will benefit customers nationwide.

Macy’s is silent on whether the functionality will be integrated into the Macy’s own app, beyond the Shopkick app. I suspect the answer is yes over time.

One of the major challenges that individual retailers face with indoor location is getting users to download their apps. They haven’t done a good job to date giving users more than just a small-screen e-commerce experience. Thus a majority of smartphone owners currently don’t have retailer apps on their phones — despite the increasing time spent with apps.

Retail aggregators such as Shopkick or Retailmenot may thus turn out to be instrumental in the process of educating consumers about indoor location. Survey data have also shown that despite privacy fears, consumers will share location with marketers in exchange for tangible rewards and benefits (e.g., offers).

The Macy’s rollout is supposed to happen this year in time for holiday 2014. It’s smart for Macy’s to get ahead of the curve and learn how consumers interact with indoor location now for more effective marketing and a better customer experience tomorrow.

Perhaps most importantly, Macy’s move validates indoor location/beacons in a way that no other retail deployment has so far been able to do. Accordingly we should see an acceleration of indoor location adoption at national retailers over the next several quarters as they start to feel some competitive pressure.

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