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Aaron Worsham

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Where consumers lead, Business follows

ReadWriteWeb has posted an article discussing a recently released Forrester Research report. The pull quote that found its way into the RWW article was that 63% of 260 IT professionals polled believe that web 2.0 technologies will have a positive impact on business this year. I’d normally fact check the quote, but at $279 for the report, I think this time I will just take RWW at their word.

I understand, all too well, that this trend is not without some amount of pain for the corporate IT professional.  Earlier this year, according to the article, Forrester predicted that businesses would be timidly dipping their toes into the arena in 2008.  Knowing how businesses make technology decisions, this lukewarm reception to the web 2.0 crowd from corporate IT does not in any way surprise me.  As control of sensitive data leaks out the glass facade from every department into the systems of 3rd party, unaffiliated companies, you can glimpse the deck chairs of the Titanic getting a newly marshaled arrangement from IT.  Business IT folk have little enough time to create internal applications and services to compete with the Jones down the street.  Now the poor devils have to somehow stay lock-step with the Googles, Yahoos, Microsofts, Facebooks, and Salesforces of the world?

But I can get an integrated map with all my clients locations and directions, their favorite local restaurants, courtside tickets for their favorite sports team online, flowers delivered on the CEO’s birthday with a signed card from our company and more if I use their online CRM.  Plus it never goes down, is readable from my blackberry and its free!

I do believe where consumers lead, businesses will inevitably follow. It is a current upon which companies can try to resist, but rarely succeed and surely never come out better for it.  Looking around a customer’s office, I can see the tendrils of evidence left by the trend.  Gmail has replaced some VIP email accounts who want the web interface features Google offers.  Some sales groups are trying out Salesforce and others have SugarCRM. Social Network providers are being talked to about adding their services to the client’s corporate websites.  Internally, Directors are looking at web 2.0 communication companies to provide secure discussion forums.

As an online business consultant, my recommendation is for companies to embrace and extend the 2.0 technologies without risking too much.  Do pilot tests of some mashup technologies with your existing apps.  Talk to the web 2.0 CEOs about their security options, many times they are looking for exactly that partner to help them better their business offering.  Let the web 2.0 company do 80% of the heavy lifting in a partnership.  As long as your investment is small and your exposure is limited, don’t be afraid to be the first on the block to try a new approach.

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Targeted Advertising needs a soul

Last night, as I sat down in my parent’s couch to watch TV, the last think I expected was to have a conversation about Targeted Advertising with my mother.

I had chauffeured my daughter for her weekly tutoring with the local english teacher and was simply waiting the hour and relaxing.  Passing the time, I turned the TV over to the G4 network to watch Ninja Warrior, as someone in the 18-34 male demographic is want to do.  My father, looking up from his evening paper, remarks that he’s never seen these ads before (The one with the nearly naked women cleaning a young man as if it were a car wash was his favorite, he later told me when mom left the room).  Mom replied that ‘[people our age] are suppose to be watching the evening news’.

Ads targeted to our gender, our age, our ethnicity or our respective tax bracket are old news.  My parents are surprised when they see products or advertising styles that are not ‘meant’ for them.  It has become conditioned in our consumption of ad-funded media to expect some form of targeting in the ads we are seeing.  And yet, this is harmless.  We expect to be advertised to in this way because we find it unobtrusive.  We see ourselves in large, faceless groups that have just enough relavance to our personal tastes and trends as to keep advertising within the ballpark of our interests.

If only those same rules were true on the web.  Those large, faceless groups are becoming ever smaller and clearer defined online.  Targeted Advertising sees the possibilities of demographics of one, and they think ‘Hey that must be what we want!’  If large and general is good, small and detailed must be better, or so the logic twists. Late 90’s was the era of the adware companies.  Software sitting on your machine tracked your surfing habits and targeted advertising based on the results.  Turns out, people were not ok with this idea and the practice got two black eyes and labeled with nasty terms like ‘spyware’

NebuAd found a new way to revive this nasty practice.  They talked smaller ISPs into letting NebuAd’s software ‘jot down’ all the websites you visited without you knowing it.  They claimed that since NebuAd didn’t know who you were, it was totally ok right?  Not that Congress is going to see it that way, since randomly tapping some stranger’s phone is no less illegal than tapping your roommate’s.

Ad agencies should have a sense for what is and is not invasive by now.  ISPs should know better.  Sadly, we should also not be as surprised as we are.

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Your online inventory still needs blockbusters

To be fair, I have not read the book version of ‘The Long Tail’.  I do, however, feel like I have if only because the title finds its way into many strategy sessions for online products and services in which I have participated.   The argument, as I have understood it from Chris Anderson’s own writing on the subject, purports that Brick & Mortar stores are not and cannot meet the demand of the market by only shelving known hits.  The physical limitations of shelf space are removed in online markets and should result in greater diversity of product selection. Online retailers should expect that diversity to translate into longer purchasing curves from their customers as untapped demand beyond those hits start to become fulfilled.  That customers will begin to spend money on niche areas is what is meant by the long tail of products sold in a new marketplace.  The Harvard Business Review has a good writeup here.

The Harvard Business Review also published an article which investigated possible markets which should exhibit this behavior to see if they followed the long tail curve.  Their findings are interesting, if not conclusive in my opinion.  The data shows that blockbuster products, those products which are both highly publicized and in high demand, are still a solid marketing technique in the online retail space and that stores should not underfund or abandon support for popular products in lieu of diversified selection. While this flirts with the fringes of obvious, it is supported by what looks to be solid research numbers which is always a sound practice when analyzing popular pet theories in the business community.  It further infers that the ‘Long Tail’ is greatly helped by having these popular titles in the inventory and possibly acts as a catalyst for more diversified sales.

Starting on page 4 of the report the author has given the online retailers and websites (presumably the reader of the article as well) a wonderful list of suggestions drawn from her research.  Visit the HBR site for more details.  Techcrunch’s Erick Schonfeld also has a good write-up on the article here.

My personal take on the article has more to do with the presumption of availability.  Both the Long Tail and this article make clear the need for an inventory to not languish in the back unseen.  How easily your customers can find the niche products has a huge impact on those sales graphs and it is brought up as an aside in the article.  The requirement for businesses to connect customers with relevant, niche inventory is not limited to retail.  Digg just implemented a recommendation engine that has been largely covered in the press.  The simple act of bringing uncommon or less popular content to a visitor based on their viewing patterns is every bit as much about the Long Tail of content consumption as is Amazon’s product recommendor.  Bringing in the customers with the Blockbusters is half the dollar you can earn.  The rest comes from connecting that customer to other products you have and getting those products in their shopping cart.