Owning the Consumer vs. Owning the Advertiser

Tags: business, IYP, local+Internet, yellowpages

The Internet yellow pages market is shaping-up as a battle between the yellow pages publishers (YPPs), who own the advertiser, against the leading Internet portals, who own the consumer. The $100 billion question is who will win.

Owning the Advertiser
The YPPs clearly own the advertisers. For over a century, they have built an infrastructure around selling and managing one of the primary advertising channels for local businesses. The YPPs each have thousands of salespeople on the phone and on the street, building relationships with local businesses.

These salespeople, their “feet on the street”, maintain and nurture the greatest asset the YPPs have, the relationships with the local businesspeople, the advertisers.

As with newspapers, telephone directories have encountered very little regional in-market competition. Just as cities naturally evolved toward a single dominant newspaper, the local telephone company owned the directory business in markets in which they operated, with a few notable exceptions. This provided the YPPs with regionally insulated monopolies. The advertiser had other options for their advertising budget (e.g. the newspaper), but the consumer was essentially a captive audience. So by default, they owned the consumer.

The Internet has broken regional monopolies on information. As a result of Feist v. Rural, directories are now aggregated on a national basis, and local users get their own local slice of this information on demand. The typical “one newspaper town” and “one directory town” has given way to a competitive free for all. The result is that the YPPs no longer own the consumer; the consumer is a free agent.

Owning the Consumer
In the other corner, we have the challengers, Internet behemoths like Yahoo, Google, MSN and AOL. In terms of sheer numbers of website visitors, these companies clearly own the consumer. Even focusing solely on the yellow pages market, Yahoo’s IYP is the clear market leader.

An even bigger threat to the YPPs is search engines. Consumers are increasingly using search engines to find everything on the Internet. Will the search engine become the de facto local directory? That is exactly what Google’s local search engine, and every other search engine, is attempting to do.

Consumers are being wooed by portals, search engines, local newspaper sites and Internet yellow pages (IYP) sites. The YPPs can certainly buy consumer attention through Internet advertising. But that buys visitors; it is up to the YPPs to turn those visitors into loyal customers. You cannot buy loyalty, you need to earn it.

Can the YPPs deliver sufficient value to earn consumer loyalty, or will the Internet portals integrate other value-add, such as local search, coupons, voice-over-IP (VOIP), instant messaging and much more to create a more comprehensive and more compelling consumer solution?

This train of thought raises another question. In the software business we always ask whether something is a standalone product or a feature. This question must be asked of the IYP as well. Is IYP a product or a feature? And what does the future hold? Remember, WordPerfect was once the leading product, until Microsoft released the Office Suite and turned it into a feature. The once mighty WordPerfect is little more than a technology footnote now.

What Does it All Mean?
Let us assume that the Internet companies own the consumer and the YPPs own the advertisers. Given the current market shares and trajectories, this is not an unreasonable assumption. Does this create an opportunity for coopetition? We’ve already seen some relationships between Internet portals and YPPs.

Can the market settle into an equilibrium where the Internet portals own the consumer relationships and the YPPs own the advertiser relationships? The answer is short-term: yes, but long-term: no. There are two very powerful dynamics to consider in answering this question.

The first rule of advertising is: Advertisers follow consumers, not the other way around. If the consumers all choose to use Internet portals, local search engines, or newspaper websites to find contact information for local businesses, then that is where the local businesses will advertise. Another way of saying this is that owning the consumer trumps owning the advertiser.

Internet-based self-service is finally driving the long anticipated disintermediation. You may recall the early days of the Internet, when every pundit said that consumers would work directly with businesses and the Net heralded the death knell of the middleman. Instead, it created a number of new middlemen. But self-service is changing that. Just look at how the airlines have unceremoniously cut off the travel agents. The only travel agents airlines pay are the large travel sites that own consumers. Look at how companies are selling direct to consumers and businesses through eBay. Look at how people are selling directly to others through Craigslist, and the impact this has had on the newspaper classified ads. The list goes on and on. Self-service interfaces are becoming simple enough that disintermediation is starting in earnest.

Internet-based self-service is the ultimate in disintermediation. Local advertisers won’t jump to self-service right away, in fact it could take years to build critical mass. But it will happen. As self-service solutions get better and advertisers come to realize the benefits afforded by self-service, they will adopt this mode of operation.

At this time, the YPPs’ large local sales organizations are a valuable asset. As Internet portals leverage their natural cost advantages (no ink, paper or distribution costs) in combination with simple self-service interfaces, the average deal price will drop well below the level that will support inside sales, let alone outside sales. Then the large local sales forces become a liability.

While this article paints a dire picture for YPPs, it is by no means a foregone conclusion that the Internet portals will eventually displace the YPPs. The YPPs have a window of opportunity—during this transition phase—to act decisively in the Internet. If YPPs are proactive they can win. But being proactive means fully embracing the resulting price destruction that the Internet will force on the yellow pages market. It means cannibalizing huge and profitable revenue streams, and that is a tough pill to swallow. But somebody is going to do it. If the YPPs don’t do it themselves, there are plenty of competitors waiting in the wings to do it to them.

Straddling Services: Offline is the New Online

Tags: straddling, IYP, business, Internet, eBay, OnlineOffline, local

I’ll pick-up the Internet Yellow Pages (IYP) thread soon, but I had a thought on a related topic and realized that if I didn’t commit it to words, it would be lost forever.

Today I was reading about eBay’s slowing growth (registration req'd), and how they are attempting to target the 95% of transactions that occur offline. They are doing this by acquiring companies, or stakes in companies, that facilitate transactions by straddling the online and offline worlds. I refer to online companies that match buyer and seller for offline transactions as straddling companies. eBay is hot to sink their teeth into the other 95% of the transactions, so they are betting big in straddling companies.

There are plenty of 1:1 and 1:n cases of straddling. For example, radio talk shows promote ProFlowers. You go to ProFlowers and there is a microphone in the upper right corner. You click on it and enter the broadcaster’s name and you receive a discount and the broadcaster gets a commission. This is a 1:n inbound straddle. It is 1:n because it involves one company, ProFlowers, and multiple broadcasters/users. It is inbound because the objective is to bring outside users into the companies website.

Advertising doesn’t qualify as a straddle because it merely promotes a website or a location. Most advertising cannot be tracked to a specific action by the user. This link to a specific action by the user is critical because only with such a causal link can it be monetized using the performance-based model that is becoming the de facto standard model on the Internet.

What is most interesting, in terms of attacking the other 95% of transactions is outbound straddles. Outbound straddles use the Web to drive measurable offline transactions. An example of a 1:n outbound straddle is online coupons, like that offered by FreshChoice. This coupon can be tracked through both clicks and redemptions, to determine how its effectiveness.

Online coupons are a straddle enabling technology, because they enable companies to straddle their online/offline worlds. Another straddle enabling technology is pay-per-call from companies like Voicestar and Ingenio. These enable the virtual world to extend into the real world in a manner that can be tracked and monetized. For example: Bob visits the Joe’s Pizza website and clicks the call button. This connects Bob to Joe’s Pizza via voice-over-IP (VOIP). Through the pay-per-call function, not to be confused with pay-per-click, Joe’s Pizza knows which website that call originated from.

There are also straddle companies. These companies operate websites that facilitate the straddling of the online/offline worlds. Examples of these companies include classified ads, yellow pages, local comparison pricing (e.g. ShopLocal). ShopLocal is an interesting one, because the company name is CrossMedia Services. With a name like CrossMedia, they get it.

eBay is salivating over the other 95% of the transactions, the offline ones, so they are buying straddle companies. They have acquired classified ad sites, a rental matching website and Shopping.com.

Now, you might say, hey Shopping.com is strictly online. People compare pricing of online stores, along with product features, reviews, etc. But then you would be missing the fact that most people, I am told by a ratio of 4:1, use Shopping.com to compare features and pricing, but they buy offline! In other words 80% of the value of Shopping.com, while currently untapped, is as a straddle company.

Next we come to straddle services. I believe that the big guys, like eBay, are all chomping at the bit to offer n:n straddle services. Maybe an example would help. Yahoo Local provides the market leading Internet yellow pages. They could go to the vendors and offer them pay-per-call services, coupons, maybe even online scheduling for services companies. This makes Yahoo the single source for straddling services for businesses. This sort of n:n opportunity is huge.

When eBay says they are eyeing the 95% of transactions completed offline, and then they buy various straddling companies, this is what they mean. They want to offer a host of services that enables businesses to straddle the online and offline worlds. Whether your business is selling online or offline, eBay wants it to go through them and they want their cut.

Straddling is obviously big business, and could lead to the next wave of Internet growth. Instead of battling over the 5% of business transacted online, they can battle over the other 95%. Straddling is all about local, since that is where the bulk of the transactions take place. Straddling is shaping-up as the battle royale for Net dominance. It is why Amazon is investing in A9’s local efforts, why every major search engine has a big local effort underway and why the newspapers and phone directory publishers, traditional local barons, are in a battle for their lives…whether they know it or not. So, as Michael Buffer would say, “Let’s get ready to rumble.”

…More on straddling to follow...after I finish my thoughts on the IYP market.

The Internet Yellow Pages Jockey for Position

The Internet Yellow Pages (IYP) market is a very interesting one. While search is great for finding stuff online, when you want to buy locally the yellow pages help you find businesses to buy from, making them a key influencer of transactions. With 98% of all transactions occurring offline, this is clearly the big market. Needless to say, some big players are fighting over the market.

Here is the current market share breakdown:
Yahoo – 25.5%
Verizon/MSN – 18.4%
SBC/BellSouth (SmartPages.com & Realpages.com) – 12%
Switchboard – 7.6%
Infospace – 6.3%
Yellowpages.com – 5.4%
DexOnline – 5.2%
AOL – 5.2%
Other – 14.4%

The regional bells are playing aggressively to defend their print franchises by combining efforts through a joint venture between Yellowpages.com and the regional efforts of SBC and BellSouth, giving them a virtual share of 17.4%. They have also distribution partnerships with Switchboard and AOL giving them even broader reach. Game on!

The Kelsey Group values this market (market cap not revenues) at $100 billion. It is shaping up as the “virtual” Bells et al. against Verizon and Yahoo. Of course, virtual companies (through joint ventures and distribution partnerships) are notoriously harder to manage and less conducive to innovation than centralized companies or divisions. On the other hand, the Bells have huge sales forces on the ground meeting with and selling integrated solutions (search engine clicks, print yellow pages, IYP, etc.) to the local businesses, with whom they have existing relationships. Therein lies another question; how will the sales force rationalize selling fixed price offline advertising and less expensive pay-for-performance online advertising?

The bigger question hanging over this market is who really owns the online consumer. Because the company that owns the online consumer will, by default, end up owning the advertiser too. In other words, will consumers find businesses through search or through an IYP destination site? That is the $100B question.

If consumers decide to enter “plumber san jose” in a search engine instead of going to their IYP and searching for plumber in their zip code, then the IYPs must either partner with search engines or eventually watch their role and revenues dwindle. [Note: Google and BellSouth have a partnership]. With a $100B market at risk, buying a search engine might even make sense. The search engines would benefit from the feet on the street from the Bells. On the other hand, the search engines can buy the same basic IYP content from InfoUSA or Acxiom, and quickly jump into the market.

Of course, Yahoo has the ideal position of having the Internet traffic, search engine, leading IYP and other services like VOIP that they can weave into the mix. If I were an IYP, Yahoo would be the biggest competitor and Google would be the biggest threat.

In my next post, I’ll spell out some strategies I would recommend to the IYPs to help them bolster their ownership of the consumer. The one thing we have learned from Microsoft is that the company that owns the user interface has tremendous influence (dare I say monopolistic influence). If the IYPs cede the interface to the search engines, then they become invisible and replaceable.

Local is as Local does

Tags: business, local, smallbiz

Being considered local, by local residents and businesses, is a good thing. You are part of the in crowd who are doing battle against the out-of-towners. The evil out-of-towners are perceived as siphoning money out of the community. Doesn’t everyone want their money to stay local and help the local economy? Since the vast majority of money spent is spent locally, being considered local is a good thing for any business. Of course, Walmart demonstrates that being cheap is more important than being local when it comes to consumers, but being local carries considerably more weight with business customers.

In any case, as I pointed out in my previous post, the “local” label is not black-and-white, there are shades of gray. However, perception is reality, and perception tends to be much more black-and-white than reality. If you ask people to label businesses as local or out-of-towners, there is no hesitation to convey labels. But these labels are often influenced either by personal knowledge of the people who own the business, or by a personal interaction with the business. In other words, if you know the local owner of McDonalds, you consider that McDonalds local; if you don’t, you typically consider it an out-of-towner.

This leads me to my point. The more interaction a business has with the local population, the more people begin to think of the business as local. For this reason, putting a human face on a business and getting involved in the local community and local business organizations is a great way to earn the title “local businessman” and that title is then conferred to your various ventures as well.

In fact, even company owned stores can earn the local label by putting a local human face on the employees and immersing themselves in local projects. Sponsor a little league team that bears your name. Put a human face on your business with a picture and story about the local manager. Highlight the community service of your employees. Join local business groups. Speak at local business functions. Make it a priority to buy from local vendors and make it clear to them that you are buying locally because you want to develop relationships within them. In short the more you put a human face on your business and the more you interact with the community, the more you will be considered local, and being local is good for your business, no matter who you are.

Now, I'm off to our local bar...

What is Local?

[Please tag: business, local, flatworld, local+internet]

As you’ll notice, the name of this blog is ThinkLocal. I started it because I believe I have some unique and valuable insights into the intersection of the Internet and local business. But when it comes to defining “local business”, things get fuzzy very quickly. Let me explain:

Local clearly means that a business has a local presence. So, we can say that Amazon is located in Seattle, so here in silicon valley it is not a “local business”. But they have a research group (A9) in Palo Alto. Does this make them local or does a satellite office, employing a fraction of the number of people as their headquarters, fall short of conveying the local title upon them. It gets worse.

In Georgetown KY, Toyota is the largest local employer, with 8,000 employees. They seem pretty local to people in Georgetown, but are they? In total Toyota employs 36,360 people in the United States, so are they foreign or domestic? In the individual towns, I’ll bet they feel pretty local. Does the fact that their headquarters is in Japan make them less local?

If you ask a local coffee shop, Starbucks isn’t local. But Starbucks employs local people. These employees describe themselves as working at the local Starbucks. Is a single store owner-operated coffee shop more local?

So what about franchises? They are owned and operated locally. My closest McDonalds is owned by someone here in town. Sure they buy supplies from corporate and pay franchise fees to, among other things, pay for national advertising, but they are independently owned and operated. Aren’t they local? They’re certainly more local than company owned stores, but not as local as the single store owner-operated burger joint.

What other factors are considered when proclaiming yourself a local business? Is the source of the goods or materials you work with factored into the equation? Would McDonalds be considered more local than a mom & pop store whose inventory is primarily manufactured in China? Do we consider where the items come from? Do we consider who added what value in the manufacturing process? Or is ownership of the business where the items are sold the sole consideration?

OK, consider this one. I just bought a laptop from HP, a major local employer with their headquarters here in the valley. Sounds local right? Well it was manufactured and assembled in China and shipped directly to me. If I have technical problems I call an 800 number and speak to someone in India. Did I buy from a local vendor?

Does it matter whether a business is local or not? Yes, people like to buy from local vendors, to keep the money local, to support the local economy. My business makes a point of saying “Support your local vendors”. But what does local truly mean? In speaking with friends they don’t always grasp the nuance that franchises like McDonalds are locally owned and operated. They view McDonalds as a mega-corporation (that also happens to be the international symbol of American imperialism). So to them a single store burger joint is local, but McDonalds isn’t. HP is considered local because it employs so many people here in the valley, but is it?

In the end, as Thomas L. Friedman says in his book “The World Is Flat: A Brief History of the Twenty-first Century”, everything is being blended. Almost nothing is 100% local these days. Instead we get degrees of locality.

In the end, the underlying facts about what is local and what isn’t are meaningless. The real issue is whether businesses and individuals perceive a company as local. Perception is reality. So, in effect, when we say support your local businesses, we’re actually telling people to support businesses they personally believe are local, because local isn’t black and white, it’s shades of gray.

Online Shopping Engines vs. Local Businesses

EBay’s recent $620M purchase of Shopping.com and Scripps purchase today of Shopzilla (AKA BizRate) are a testament to the fact that consumers are increasingly using the Internet as a bargain-hunting tool. People are using the Internet to “spend time to save money”. Studies have also shown that online content drives 4 offline sales for every 1 online sale. Based upon this, the next wave of activity will be solutions, like the price comparison engines that enable people to save money offline as well.

There is ShopLocal, but they repurpose the circulars that are sent out in the mail. They ship them off to India where the data is input into a database that powers the site. In other words it is a very manual process and doesn’t rely on self-service by the companies. For this reason, they only provide sale information for the large chains…for now.

I believe that the next wave of bargain-hunter tools on the Internet will provide offline shopping information that leverages a self-service interface, enabling local companies to enter and manage their own inventory and pricing information. This sort of “local deals” website will enable local businesses to capture online bargain hunters, instead of sitting idly by while the shopping engines (Shopping.com, PriceGrabber, Froogle, NexTag and Shopzilla, et. al) funnel these consumers to online stores.

The Mac is Suddenly So PC

[Please tag: business, computing, Intel, Mac]

In 1994 I was interviewing for a job with Apple and everything was going well until they asked me: “If you were the CEO of Apple, what would you do?” Without hesitation, I responded: “I would port the Apple user interface to Windows, because once you hook the customers with the UI, you can start to build Mac services behind that and hollow out the Windows OS, becoming the standard operating system across both platforms.” Needless to say, the interview was quickly terminated and I was sent packing for my heretical statements. At least they didn’t call security.

The bottom line is that anyone who has used a Mac prefers it to Windows (except those masochistic types who enjoy the break-fix-break cycle). But the Mac has a 2% market share. Computing loves standards, and at 2% Apple isn’t even close to being a standard. But what would happen if they followed this plan:

Phase 1: Apple ports OS/X (a Unix-based OS from NeXT) to the Intel architecture
Phase 2: Apple convinces PC peripheral vendors to write OS/X drivers
Phase 3: OS/X and OS/X applications run on generic PCs

[Note: Like The Brain in Pinky and the Brain, I always enjoy a good world domination strategy.]

Apple could then operate as a platform/apps company like Microsoft, and have a separate high-end hardware company spitting out well-designed laptops, desktops and servers. Then the Mac lovers, those who used Macs in school and have been forced into adopting the PC to fit into corporate infrastructures, can once again embrace the Mac.

Close your eyes (after reading this paragraph) and imagine this. Years from now, you're configuring your new HP laptop online and they ask what operating system you would like: Windows, OS/X or Linux…hmmm.

The Businessperson's Guide to the Web: Past, Present & Future

[Please tag: Web2.0, Internet, future, tagging, digitalDJ]

The future of business is increasingly intertwined with the future of the Web. Yet, most businesspeople slip into a coma when they hear techie-speak about XML, RSS, BFD. So, I thought it would be helpful to provide a non-technical review of where the Web is heading. Unfortunately, you need a little context on where the Web came from, to better understand where it is going. So, here it is, laid out much like Charles Dickens' A Christmas Carol:

The Web - Past:
"Those who ignore history are doomed to repeat it." --George Santayana

After Al Gore invented the Internet (Ha!), a guy named Tim Berners-Lee realized that we could use it to publish stuff in a machine-independent way (def. so that any machine could display it, Mac, PC, Altair, etc.). So he invented HTML (HyperText Markup Language) and some other stuff I won’t bore you with. It was really simple, it basically labeled stuff bold, italic, etc. and it also allowed links from one page to another. Thus the World Wide Web (AKA Web) was born along with that annoying www thing for webpages.

Other guys built simple applications to view all this stuff (see Netscape, see Microsoft, don’t see Netscape anymore). The Web became such a big deal and it's simple enough that now my Mom uses it to Google me (not always a good thing).

The net result of all this is that we have freed the pages from books, brochures, magazines, and other stuff to put them up on the Web where anyone can read them. Very cool stuff. As the number of websites grew, we realized that finding our way through this mess was going to be a royal pain in the ass. So a couple of guys at Stanford started keeping a categorized list of websites. This becomes Yahoo, founders David and Jerry become multi-billionaires and we become jealous that we didn't invest early enough.

Important Point #1: The Web is a mess, and making sense of it is worth big money!

Problem: Yahoo cannot keep up with the growth of the content on the Web. So search engines evolve. The search engines use machines to automatically surf the Web, so they can gather information a lot faster than a bunch of sleep deprived Yahooligans. Search engines like Infoseek, Excite, etc. make their founders rich.

Important Point #2: (a) There is so much stuff out there that even big rich Yahoo cannot manually make sense of it all. (b) Helping people find information on the Web is still worth big money.

Problem: As the amount of stuff grows, search engines lose their value because every search results in 100,000+ webpages, and you have to sift through it all to make sense. So Google figures out that they should not only index the Web, they should also figure out how many websites link TO each webpage. The idea is that the more links there are to a particular webpage, the more interesting it must be. This enabled Google to rank its search results more effectively. This made Google so popular they were able to give Wall Street the finger and IPO their way (Dutch Auction), making yet more billionaires.

Important Point #3: Provide people with a better way to find relevant information (search plus ranking) and you'll be rich enough to buy a small country. Do you see a pattern evolving here?

Problem: The amount of stuff on the web continues to grow and even with ranked search, we need to be able to better make sense of it all.

The Web – Present:
"In order to figure out where you are going, you must first understand where you are"

The Web liberated the text from books, brochures, magazines and more and put it all on the web where we can search for it. Now you can search for any term or phrase and get millions of page links. Then you can sift through this to find something of value.

Problem: Wouldn’t it be great if we could get people to add more value in terms of context and ratings? Clearly Google’s counting the links to pages helps with ranking popularity. The problem is that an older webpage may have more links to it than a really interesting new article. We’ve found that no one company, not even Yahoo, can categorize the entire web. So like the Dewey Decimal Classification, we turned to the users to add value.

1. Open Directory Project: Instead of relying on Yahoo employees to categorize the ever-expanding Web, some smart folks figured they would create a community-edited directory. At this point 68,375 people have edited this directory (Yahoo's total employment is about 1/10 of this number).

2. Wikipedia: What the Open Directory Project did for the directory, the Wikipedia did to the encyclopedia. It is a Web-based free encyclopedia where tens of thousands of users write individual articles and link to other applicable Webpages.

3. Tagging: Isn’t that what punks with spray paint do to walls, trains and buses? Yes. But on the web it means people adding their personal notes to webpages. For example, you see a Webpage about word-of-mouth marketing that mentions Gmail, you tag it with the words "WOM", "Marketing" and "Gmail". Later when you have forgotten the address of this webpage, you can easily find it by searching your personal tags using any of the key words. More importantly, you can see what other people are tagging. This is important because is provides us a window into what the aggregate group finds interesting on the Web, sort of a list of "what’s hot now" for every category. Del.icio.us, Spurl and Furl are some of the more popular tagging applications. (BTW, here is a cool application for Del.icio.us called scrumptious)

These applications demonstrate that: (a) automated solutions like search are great, but nothing beats context added by humans; (b) the only way to scale the effort of adding context to this mass of information called the Web is to encourage large numbers of users to do it.

Problem: The Web is so filled with content that a combined solution of ranked search and consumer-driven context, while helpful, isn't enough. It may be enough to make a few more billionaires (yet again) but it is by no means the ultimate answer. It is more a partial solution. The problem is that Internet is still about people "surfing" around to find relevant "pages" of information. Wouldn't it be better if your computer could find and process small bits of information, instead of you having to read many pages to extract those tidbits?

The Web – Future:
"The Web liberated pages from books, now we need to liberate information from the webpages" – Mike Hogan (just made that up, you like it?)

A fair amount of the content on the web is generated from databases. These databases store the data in well-labeled and organized fields. For example, you might have clothing, in clothing you have pants, in pants you have jeans, in jeans you have Levis. Then each pair of Levis jeans has a style, size, price, color, etc. When you flatten this out to put it on a webpage, the computer can no longer process that information, instead a user must read it. But more and more, website owners are exposing the original database content as well. This is hugely valuable.

At the same time, you have people using tagging tools to label content. You also have consumer applications that provide users with forms to enter information. This information is then presented in a structured format as well. taken together, this means that there is growing amount of structured information available on the Web.

Big deal, structure, labels, who cares? Well, now that your computer can understand what the data "means" it can do cool stuff with that data. Let me give you an example:

GasBuddy: This is a simple application that allows users to enter the gas and diesel prices at their local gas stations. You can search the data to find cheap gas near you. In essence, this community of users has created a database, meaning the information is all labeled (gas station name, address, gas price per gallon, diesel price per gallon). Pretty cool information.

Google Maps: This is a service that can place structured information on a map. Pretty cool service.

CheapGas: Essentially, this individual mixed the information from GasBuddy with the service from Google Maps, to create a new service. It enables you to search via a map for cheap gas in your area. Extremely cool solution.

Cheap gas is just one example, there are hundreds more. Another good one is HousingMaps that mixes Craigslist information with Google maps. Here is a collection of other cool sites using the Google maps. The point is that as more structured data and services are exposed on the Internet, we will see people mixing various data sources with various services to create new a cool solutions, tens or hundreds of thousands of new solutions. Just as local DJs create mixes of songs, people will create mixes of Internet data and services. The popular ones will take off, creating a life of their own.

The ability to consume structured data and mix it with various cool services is the future of the Internet. As they take off, they will drive a tremendous wave of structured data sources and services to consume them. While your computer can’t read web pages, it can process structured data. As the web becomes more structured, individual computers will start "reading the web" for us and acting on that information, leaving us to make high-level decisions.

How Can You Profit From This?
1. If you provide content on the Web, in addition to the flat webpage version, you should also expose the structured data.

2. Get your users to create structured content. This approach results in more quantity, quality and lower costs.

3. Your content is no longer constrained to your website, in fact it may only be read by computers, so find a business model that addresses this. For example, look beyond banner and text ads (sorry). BTW, if you don’t liberate your content someone else will do it for you.

4. Create simple services that consume data and offer real value.

5. Encourage "digital DJs" to mix your content/services with other content/services to assemble compelling niche solutions.

I realize that this is contrary to everything you've been taught in business school. I'm telling you to essentially give away the crown jewels in terms of content, services, intellectual property. I'm not saying this because I'm an anarchist, but because it is the future. You can try to fight it, but if you do, some 24-year old with a laptop will do it without you. Oh, I guess I should point out that this new wave will undoubtedly create a couple more billionaires just like the previous technology waves...maybe you.

The New York Times' Free Classified Ad Tabloid

The New York Times recently announced that they will provide a free tabloid newspaper that will focus on classified advertisements. When they say free, they mean that it will be distributed free of charge to readers, it doesn't mean that putting your classified ad in the paper will be free, it won't be. This strikes me as a desperate attempt to increase their circulation numbers in order to justify high advertising rates in the face of superior free solutions like Craigslist.

This effort is too little too late. It is too little because online classified ads are simply much better for both the advertiser and the reader. It is too late because, as Rupert Murdoch points out, classified ads are already moving online at an accelerating pace and there is nothing newspapers can do to stop it. My advice to the NYT, if you can’t beat ‘em, join ‘em.

Word of Mouth Marketing IV: More Tips & Tricks

[please tag: WOM, Marketing, Buzz, Coupons]

Here are a few more tips and tricks to make your word of mouth campaign more successful. Remember, word of mouth is all about getting people to share positive experiences with friends.

1. Focus on Women
When men socialize, they talk about facts and opinions (e.g. who will win the playoffs), when women socialize they talk about experiences (e.g. that new day spa is wonderful). Since word of mouth is all about encouraging people to share experiences, women are far more effective at building buzz than men. In fact, insurance industry statistics show that over the lifetime of a customer, women will provide, on average 28 referrals, while men will provide only 13. Women are more than twice as effective in building buzz than men, so focus on them.

2. Package User Experiences
Word of mouth is a unique medium; a spoken medium conveyed by untrained fans of your business. Keep this in mind when you craft your marketing message for this medium. Your marketing message needs to be compelling, memorable and most importantly "tellable". Your job is to craft user experiences into a tellable message.

For example: A restaurant might focus on providing a family experience. They could provide balloons for the kids, a play area, games on placemats, whatever. The key is to then package that experience into a tellable tagline, such as "A great restaurant for kids". Then what happens is two women are talking about their weekend plans. One says to the other, "I'd love to go out to dinner, but the kids can’t sit still that long." The other replies: "You should try Mike's, it's a great place for kids." When crafting your marketing message, consider the medium and act accordingly.

In packaging your marketing message for word of mouth, consider the power of testimonials that reinforce your message. Testimonials enable you to phrase the words to be spoken. Using the example above, you might have a testimonial that says: "My kids love Mike's" or "Finally a place where the kids can play and my husband and I can enjoy a meal together."

3. Use Rewards
Reward people for helping you build word of mouth, both personally and spiritually. Everyone enjoys helping people, especially women. For women, helping friends and people in need is interwoven into their socialization process. So by providing rewards you make it easier for your company to work its way into that socialization process.

There are a variety of ways to reward people:

* Reward the individual: You can reward the individual who is spreading the word of mouth. As the network marketing industry has demonstrated, word of mouth spreads 100x faster when there is a financial incentive. You can do this by rewarding referrals with a rebate or discount, for example.

* Reward the recipient: People love to help others. If you create a reward for the recipient, that person will thank that person who told them about it. This, of course, further establishes the social bond between the two people. This positive feedback creates additional incentive for that person to tell others about this wonderful reward. For example, as a deli, you could provide each customer on a specific day with a secret word, say "bubbles", and every customer who uses that word the following Wednesday gets a free drink and chips with their sandwich. People will immediately share that secret word with friends.

* Reward the community: Create a tangible or perceived reward to the community, this creates the feeling that the community shares in your success. For example, "We will donate 10% of your profits during July to the local soccer field." Every soccer parent will help you spread the word, because the community benefits from your success.

* Reward the world: Can your success make the world a better place? Donate a percentage of sales to breast cancer or the rain forest or some other worthy cause that you care deeply about. I happen to know a 5-year old boy who needs a liver transplant to save his life. If you promoted the fact that a percentage of your sales went to this adorable little boy, parents would quickly empathize and join you in your fight to save him.

There are karmic rewards and tangible rewards. An example of a karmic reward would be "We buy from environmentally friendly suppliers" while a tangible reward would be "We donate 10% of our profits to breast cancer research". Even more tangible is "10% off your first order". Trust me, the more tangible the reward, the more effective it is.

Using coupons is a powerful way to provide tangible rewards. Online coupons are more powerful than offline coupons, because you can combine this with a tell-a-friend feature. Tell-a-friend emails can spread like wildfire. The other benefit of tell-a-friend emails is that you get the chance of crafting the message that is sent to those friends. Email is also easier for your customers because they simply enter the friend’s email address and click send. Who doesn't appreciate hearing about a great discount from a friend?

I hope that you find these tips and tricks helpful and I wish you well in your efforts to use the most powerful marketing medium in the world: word of mouth marketing. If you have tips and tricks or personal experiences with word of mouth marketing, please share them with me.