Tuesday, May 29, 2012

GM pulls out of Facebook: What next for FB?

This is part-2 of my post about GM pulling out of Facebook and the implications from that. As I mentioned in Part-1, it is probably an indication that all businesses are not suited for Facebook advertising. Facebook will do well to understand this fact as well and work with the categories that are suitable for Facebook advertising to enhance its revenue streams. In the short run, there might be more exits like GM but in the long run, Facebook should have a more solid advertising business with tangible returns for its partners, and in turn, itself. So, here are a few suggestions on how Facebook could display advertisements.

Brands use FB pages to reach out to their customers - currently for free

Ads in Newsfeed but how many?

I have a slightly different take than FB's current strategy on how it should use advertisements. Rather than the small spaces on the already busy (if not cluttered) page, the best place where all users definitely focus is on their wall posts. An item in my news feed is probably the best place for placing an advertisement if you want maximum attention from me. Putting an ad in my newsfeed does have challenges about the number of ads you can put in the news feed but if FB can keep it to a small percentage of my daily news feeds or base it on the amount of time I am active on FB, I may not really mind it. For instance, if I stay online for 15 minutes going through 20 news feeds, I may be fine with a couple of ads spaced out evenly. If I stay on for another half hour chatting with friends on the FB messenger, I may be ok with another ad every 15 minutes. That kind of analysis should take care of the number of ads you can send me. As for what ads to send me, FB already knows so much about me. They know when I was born, when is my wedding anniversary, which schools did I go and when, where I work, what I did last month, what I read yesterday etc etc - the list is long. So, without getting into the wrong side of privacy laws, if FB can share information at an aggregate level with advertisers, they may be able to provide targeted advertisements in the news feed. They can also use the feed for running some small surveys with a few questions which can be used for market research by companies.

Brand Pages: The free ride must come to an end!

Another big change it should do is on the brand pages. Currently brand pages are free. Anyone can create their brand page and promote their products, reach out to potential and current customers for free. Since FB works as a medium for companies to reach out to their customers, it should charge for this access, especially given the kind of recent changes it has announced to enhance the exchange between company and customers. Brand pages can probably continue to be free for really small companies or entrepreneurs, at least for a limited period. After the limited period or after a company becomes big (may be bigger than some amount of revenue etc), brand pages should be charged. Such companies who pay for brand pages should get some data from FB at an aggregate level to help them take decisions and send targeted communications to those identified. Apart from the standard brand page fees, FB can charge companies for pushing out advertisements into users' news feed. May be they can put out plans such as "send email to top 100 customers" based on some attribute or random 1000 people etc. FB knows so much about people - so it should allow brands to send emails to consumers without sharing their email ids etc. Only when you "like" or share their post or reply to them should they be able to see limited customer details. Till that point, customer should only be an aggregate data. I must mention at this point that I am not particularly conversant with privacy laws and therefore some of what I am suggesting here may not exactly be on the right side of the law. But the point of this post is to suggest the general idea which can (hopefully) be expanded on within the limitations of the privacy laws.

Collect more ad-relevant data (within the privacy laws!)

Apart from the umpteen ways in which FB gets information about us, they can also ask people to tag photographs that they upload with categories like personal, birthdays, general party, anniversary, vacation etc to allow FB to target ads towards such people based on the category that the photograph is put under. I remember Picassa does ask for such optional information when I upload photographs there. Once they have this information, for instance, a person who likes photographs of a friend under the vacation category may like it if he sees an ad for some nice vacation plan. The ads will, of course, need to be from a company in the "suitable" category as discussed in Part-1 of this post.

For all we know, GM's pullout might be the best thing that's ever happened to Facebook if it can be turned into an opportunity to better understand the capabilities of the FB platform!

Should Facebook worry about GM pulling out?

There are so many mediums today that bring news and updates to us on so many different devices. Sometimes, these updates are about our personal contacts; some times it is news in general. But when one of the mediums itself starts to make news, it is, more often than not, not so good news. So, when Facebook was in the news for its IPO, it wasn't all that hunky dory. Also, a quick announcement from GM that they are pulling out FB advertisements ensured FB's own status wasn't all that cheerful.

Well, good and bad are personal perspectives. The fact that the IPO did not do as good as "expected" is actually not such a bad thing as people are realizing it  may be the eye opener we all needed.

Similarly, I see GM pulling out of FB as probably an indication of the maturity of advertising on FB - which should help companies understand the true benefits they can expect from Facebook while at the same time helping Facebook to revamp some of its advertising strategy for the better.

I have divided this post into two parts. Part-1 (this one) will talk about whether GM pulling out of FB is really bad. Part-2 will continue to talk about some suggestions that FB could take from this episode.

Is Facebook the right marketing strategy for GM?

Let us start by thinking about the online marketing strategy for a company like GM. It would normally pay Google for displaying its ads when someone searches something related to buying a car on Google. The ad at that point makes sense because if I am putting in that search, I am, in all probability, interested in seeing ads from car companies so that I can see the various options available in the market. But how does it work on FB? If I "like" a friend's new car pic, does it mean that I should be shown an ad for a GM car? I don't think that is a very logical advertising strategy because all FB knows here is that I liked my friend's car pic or maybe I just liked the fact that he finally got a car, even though I don't really like that car. So, I would say, for a company like GM, it may not make sense to advertise on FB anyway. I remember recently I was comparing some new cars on and I think I selected, Maruti Swift Dzire, Hyundai Verna and Volkswagen Vento; CarWale brought out Skoda Rapid as a "sponsored" result and displayed all details of that car also in addition to the other cars that I was comparing. THAT is the kind of place I would like to see a GM car ad, not when I am just leisurely browsing on the internet, going through friend updates on FB or some random videos shared by friends.

A car is a product where instances of repeat purchases are spread apart by a lot. I don't buy a car every few weeks or months (I want to, but just can't!). Even when I want to search for a car, I go to Google. If I want friends' recommendations on cars, that is when I would probably go to FB, but by that time, I would have probably done some research and cut down my list to two or three options. If I take my example of cars above, I might now ask people whether I should go for a Verna or a Vento. I am now looking for only some recommendations based on experience of my friends to make that final call. An ad on FB by another company at this stage may not make a lot of difference to me as I have already done a lot of research and have more or less made my mind. Therefore, I would say, a car company like GM may not need to advertise on FB. Instead, there are other options which are more suitable for influencing the decision of today's savvy buyer who does a lot of online research before buying a car.

So, is GM alone? Is it just the car companies who should pull out of FB?

Just like cars, there should be other categories that may not benefit from placing ads on FB, apart from generating some brand recall, maybe. Maybe products that require more extensive research based on attributes are not best advertised on FB in the traditional ad space that we are talking about. Such products are more likely to have their dedicated comparison websites and hence, advertising on those platforms may make more sense. I can think of categories like smart phones, laptops, tablets, TVs etc.  This list is obviously not exhaustive but I believe this ought to have items which can be compared objectively. Items that have more of a subjective comparison would do well to advertise on FB. If I read a number of articles on music, FB would do well to suggest books based on music or guitar lessons or even music players. If I tend to subscribe to lot of running groups or health conscious groups, I would probably not mind advertisements about healthy snacks like digestive cookies etc. With this limited analysis here, one could probably say that if a company's product has a high price, low frequency of repeat purchase and high objectivity in factors affecting buying decision, then it may not be a very good decision to advertise on Facebook. This is not a comprehensive analysis on either the attributes involved or the categories but hopefully gives some food for thought. I will try to come back with a more detailed analysis of the factors and categories.

But does it mean that a company like GM does not need to be on FB at all?

In today's times, as mentioned by GM as well, it does need to be on FB at least as a brand page. Such a page provides opportunities for interested folks to explore its offerings on the FB page (with obviously links to its main website for further details). Also, it allows companies to keep in touch with their existing customers and build the brand connect. This brand page and the connect it builds with existing customers will definitely be a big factor in positive recommendations when a person like me asks friends on FB about which car to go for.

In summary, Facebook should take GM's pull out as an indication of the increasing maturity that its advertising partners are gaining. Facebook should also understand that given that it is a leisure website where people come to connect with friends and chill out, all business are not equally suitable for advertising here. When you are hanging out with friends in the evening after a hard day at work, you don't want calls from people trying to sell you insurance plans. A deal on a pizza combo or a new pub might be more like what you want. Hence, Facebook should concentrate on the categories that are more suitable for the experience it  provides.

So, if Facebook lets companies like GM to pull out, what should it do to get advertisements, especially given the focus on its revenues now more than ever. Part-2 of this post provides some suggestions on that.

Sunday, May 20, 2012

How Blackberry is doing today what Benares did a decade ago!

BENARES: Oh so Beautiful!

I spent four of the best years of my life in the wonderful town of Benares about a decade ago. This was the time when the internet was a very new thing and you could find people who did not have email ids. Tweety meant that yellow bird and nothing else. 20 overs cricket meant that rain had played spoil sport or something like that. You get the idea. This was a time when cyber cafes was a pretty booming business in India. You could see small shops opening up at the nook and corners of small towns and cities across India. One could access internet at one of these shops for about 20 odd bucks an hour. Benares was no exception to this trend. If anything, it had more of these shops because a whole lot of international tourists come there to explore this rich heritage town which is arguably one of the oldest cities in the world. There were a lot of these shops next to the banks of the river Ganges (the famous ghats). One evening, while roaming around on one of the ghats with friends, I saw a cyber cafe which proclaimed, like all other cyber cafes, it had internet along with phone, photostat, STD, ISD etc. What was interesting was that the board in front of the shop also mentioned it had,,! My friends and I had a good laugh about it - obviously if you have internet, you have all of it but this guy mentioned those separately as if he had special connections to those websites!

Do I need to buy a Blackberry for IM, email and (Android) apps?

Laughing about a thing like this was fine, especially in a small town like Benares. However, of late, when I see Blackberry advertising its BBM as its USP, I am reminded of that cyber cafe again! BBM and enterprise email were USPs for Blackberry about 5 years ago but today with smart phones proliferating like political scams in the Manmohan Singh government, these USPs seem a bit dated. I don't need BBM today to message my friends without eating up my minutes - I can use anything like gTalk or dozens of other IM clients. They did try to popularise the BBM thing by allowing people to connect to other BBM users using just their QR code. But who really would carry their QR code literally on their sleeve to connect to any one on the street? Having said that, I recently had to eat my words when I read about Sid Mallya tweeting that the girl who claimed that Luke Pomersbach assaulted her was all over Sid in a party for his BBM! 

So, point of points is that Blackberry was (and is) a great product but its differentiation based on the email and messenger has outlived itself. It is time for the apps to rule along with full touch screen models. While it did something to allow Android apps to be available on Blackberry (but still there are problems there), it took quite some time to move away from the physical qwerty phones. They seemed to have taken too much time in understanding the market direction and how it was sweeping the ground from underneath them.

What should Blackberry do?

OK - easy to rip apart a company based on what it did not do. Now, what would you do if you were Blackberry? How would you get back in the game? Its differentiation in the features space is gone. Apps is the new battle ground - BB is lagging behind Android and iPhone by miles. It has got into an arrangement with Android to let Android apps work on BB also but that only underscores the point that there are not enough developers making apps for BB. So, it ends up being there as another Samsung or HTC where it can fight the battle on the basis of its old relationships or some sort of really cool UI on top of the native Android. But as some others have found out, this does not sound much of an exciting story as it would fall into the commodity area. One good exit strategy here would have been to get sold to Google who could then use them for creating a hardware cum software integrated phone manufacturer. But Motorola beat them to this game as well!

How should BB differentiate in today's world?

So, the only way out for BB then seems to be to move up on the differentiation scale. Provide features and services that are really niche. For instance, they could provide extraordinary email features to make the mobile email experience closer to that of the desktop email access. While I kinda kicked BBM and Blackberry email earlier, they do provide encryption which is crucial for security and enterprises must like that. Given the security concerns raised on and off regarding Android and even iOS, security could be the big differentiator. Alternately, BB could  create multiple devices like the Playbook and create an eco system that would help a BB user become more mobile and still more user friendly. What I am referring to is the creation of additional docks which can be used to connect the small phone to a larger screen with keyboard to enhance the overall experience of the consumer. But all these can also be copied by the competition sooner than later but if BB is confident about its technology, it can try this or some other niche features which will help it retain its differentiation.

Should Blackberry reinvent itself as a software security provider to other mobile phone manufacturers?

An offshoot of the first option could be that BB should  totally move out of the hardware business and just provide security layers for other phone manufacturers. Maybe BB could come up as an app on the Android, iOS and Windows Marketplace for users who want to ensure their emails and IMs are secure. A lot of enterprises would probably like to enforce that. I guess this is the most drastic option that completely changes everything but one that Blackberry should consider based on their own analysis of the strengths of the company. 

Blackberry did a Benares in still using BBM as USP; can it again do a Benares in terms of retaining its rich heritage and prestige, and reinvent itself, so many years later as well?

Friday, May 18, 2012

Are Nokia or Windows Phone even serious about smart phones?

Yes, I am asking this question because I really doubt it. At least in India. On one hand, there are reports of people none other than Steve Wozniak (Apple co-founder) praising Windows Phone's features but on the other hand, I still don't see enough Windows Phones on the market or in the hands of my friends. I had to buy one for my wife last month and I got another Samsung Android (in the 15K range) even though a good part of me wanted to go for a Windows Phone. But the lack of applications (along with the lack of the phone itself in one of the leading chains) kept me out of it. I may not even use a lot of the apps but there are a number of apps that I use and if Windows Market Place cannot provide abundant apps, I won't fork out my 15K plus money just like that - right? If I were getting it as a free phone with a 2-year connection like they get in the US, I might have thought about it but even then, I may still have rejected it 'cos of the apps.

So, some of the earliest smart phone experts had predicted that it would be an apps game after all in the smart phone arena. And I guess, with that purchase decision going the Android way for me, even I have finally realized that apps will be the deciding factor. So, let us quickly see where our smart phone players stand in terms of apps. iOS, the pioneer of them all, has more than 500,000 apps; Android has quickly ramped up over the last couple of years on the apps game and now stands around 450,000. Windows Phone is about 10% of these at around 70,000 apps as of 13-May-2012. Now, some of the more detail oriented folks may point out issues like removal of apps and quality of apps etc but even after you do the math to take care of those issues, Windows Phone apps are a small fraction of what is available on the Android Market or Apple's App Store. It is more like 5,000 Windows against 300,000 Android apps (high quality apps). Since I am talking about India, I am not talking about the all mighty iPhone as most people  may not want to dish out more dough for a 3.5 inch phone than you do for a 40 inch (plasma) TV.

Now, let us say, maybe the numbers don't really matter for the average dude - you know, just like people put across that argument about processors - the average dude does not need the high end super computer processing capability. Fine, but there are some things I know I MUST be able to do with a processor, for instance, multiple browser windows, multiple tasks and videos and of course FB and Twitter etc. So, let me see what I normally do on my Android phone and see if I can do the same on a Windows Phone if I were to buy one today. Here is a list of the apps that I use on Android and whether or not they are available on Windows (in cases where I am more concerned with the functionality rather than brand, I have indicated yes as long as there is another app that meets that functionality).

Ok, so it does seem it has more apps than I was expecting. The red ones are the only ones where I seriously think there is a problem but others are not a problem for me. Even though there are no official apps for LinkedIn and Dropbox, I must say that the focus on apps is not as bad as I thought initially.
Update: LinkedIn has launched an official WP app and they say in some cases "Windows Phone app offers even more functionality than its iOS and Android siblings."

So, to be fair, I would say if I had done all this research slightly earlier, I might have gone for WP because it does look like meeting my needs more or less. I am not a fussy guy after all (or so I think!). I am not sure what the other hundred thousand apps are on Android, but I apparently am not using them. So, what I need is pretty much out there in Windows Phone as well. But the big P.O.I .N.T is that no one knows this fact. So, Nokia and Windows should let people know that. Do they expect all their customers to do this research before buying a phone?

So, when I started writing this article (more like a rant), I knew what Nokia and Microsoft have been openly telling me and other consumers and did not know what they have not been telling us. So, I thought Windows Phones are good but I think they lack the apps. If only someone had told me that most of what I use is there in WindowsPhone (courtesy some good application development work driven by someone in one of these companies), I might have been sporting a cool Windows Phone as well!

I mentioned previously that Nokia seem to be goofing up in India by pushing their overseas ads for Lumia in India as they don't seem to connect. I did see some Indian ads finally for Nokia Lumia - a guy saying something about the usefulness of the Nokia Lumia while babysitting kids. Thanks for the Indian ad Nokia but I am sure the youth of India would like to see themselves in much more exciting situations than babysitting! Samsung had used the setting of impressing a girl with the Samsung phone - so cliched, I know, but at least it works!

I was also happy to see Nokia introducing phones at various price points and probably varied features to give some choice to the consumer. The website mentions 3 now, which is some good news! Nokia Lumia 800, 710 and 610 are mentioned on the Nokia India website but the online shopping websites seem to have only the 800 and 710 at approx 24K and 15K respectively.

I had come up with the title for this article before starting to write it. Hence, before I started it, I thought Windows was goofing up big time on apps also, but it seems they are on the right track there; they are not up there yet, but are on the right track. So, after this realization about apps, should I change the title of this article? I decided against changing it because the average customer on the streets is still not gung-ho about this apparently capable phone. Are they letting a capable phone go down because of poor marketing or is it something else?

OR Am I missing something here? If so, please share your thoughts - I will be happy to learn!