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Sir Martin Sorrell: I Want Quantitative Marketing Businesses

Tuesday, August 4th, 2009

Well, Sir Martin Sorrell, Group CEO of marketing communication services giant WPP, wants a lot of companies, that’s his deal.  However, an article describing a recent presentation of his – he, Sir Martin, the best mind in media on media – discussed what is valuable to him in a company. Comparing these ideas/mantras of his against what we have been led to believe is the most important piece (users/visitors/readers), is worth doing.  Two newsworthy items from today articulate a few of his points in ways we should understand in trying to predict where the internet Spindeltop is, or better, how do we make revenue wells more efficient per strike (increase revenue per user/visitor).

SORRELL says: “surveys have found that client companies prize, above all, insights about consumers, which in turn, drive the value of quantitatively-measurable products and services”

News we’re excited to see, proving he’s right: Bit.ly revenue model.

Bit.ly gets it.  Praise be.  Bit.ly, for those unaware is an online “service/tool” that is popular with the tweeters that need to shorten urls to fit in the character requirements for tweets.  While the vast majority of bit.ly users find this to be the prime benefit, what I saw quickly after using it, was that I got more interested in their reports on the links I placed in the internet  They will tell you how many people clicked on your links, and some more advanced data, that can be simply useful.

Ok, so now you know bit.ly, let’s return to the model a sec.  Ok, so whether you are a SaaS or a publisher, you need to understand that length of engagement generally is the most important value to an ad.  This is a problem in the ad-serving model in the internet (another is ad networks, but that’s for another article).  For example, the reason Bloomberg began serving ads in its terminals, was because they saw doldrums in the trading day – traders staring in front of screens for long periods – high engagement.  Also, high engagement of a niche target audience (rich 20-40 somethings) equals ads you’d see in the Robb Report going into Bloomberg terminals.

On the flip, you have something like Twitter.  Twitter’s very existence is predicated on not staying long – to tweet is to be flighty.  So, I don’t know how you take time out of it (from what we see higher time on page creates higher clicks too).  It’s not a very valued ad space, so that contextual ad revenue model is going to be tough because of the nature of the system.

Bit.ly is the first company that we’ve seen that is coming at it in the way we believe more online companies should.  Just package and sell the data baby.  A little can go a long way.  And this also allows Bit.ly to continue to have a free subscription model.

As Sir Martin expresses, insights on consumers drive tremendous value.  Give’em insight packages for dollars.  Congrats to Bit.ly, Twitter will eat you now.

SORRELL says: “having a local focus is becoming more important as with having a global focus”

News we’re excited to see, proving he’s right: YouTube attacking local news (globally).

Can you believe the headline?  YouTube Goes After Local News, Attempts to Sign Newspaper, TV Partners.  Obviously that headline is coming from the web, because it could use an editor.  And, let’s understand I’m taking Sir Martin out of context (slightly) to make a larger point (which is a derivative of his original).  He was referring to global media companies needing to expand and be more knowledgeable locally – all true.  But so do networks and ad models.   This ability is the genius of the Google AdWords model – that they performed this so well – and oh, my they’re doing it again.

This takes us to another Sir Martin point: “We know that consumers spend 20% of their time onine – we also know that our clients only spend 12-13% of their budget worldwide online, that’s a disconnect that has to be eradicated.”

By the way, ‘eradicated’ is a word you use when you’re pretty serious, so I think he’s frustrated with this disconnect in the media world’s approach to reaching their audience.  And in this little story I think you see the smartest advertising company, Google, take on the question, “How do we monetize our video network?” And that they choosing to focus on Local TV.  Just think about that for a second.  Yeah, probably Google has some analytics on that. What’s old is new again.

*Our quotes from Sir Martin Sorrell, are located here (also a reasonable video).

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Posted in Advertising, Publishing, Social Media | 1 Comment »

Twitter & Friendster: Capacity Problems

Thursday, July 30th, 2009

Dear people that keep asking me about using Twitter for your business. Please understand a basic history of social media networks. It is fickle and only Russian or Formula 1 history have more revolutions. I will outline a few points in a series of Twitter related articles.

The Retention Problem

Peter Drucker famously said, “The purpose of business is to create and keep a customer.” Twitter is undergoing a retention problem. Twitter retention rates have recently been reported as low as 30%. There are many reasons – one is that the accounts are free and people log in check the fuss and leave. Another may be more serious. Where those that want to use the system are blocked. I can’t log in when I want.

The Log In Issue: Engineering Problems

How many times have you tried to log into Twitter and found the error “over capacity”? In this day in age of essentially free storage this should not stand. Moreover, just three social media fads ago we saw this exact issue kill Friendster (well, one of a few factors – all of which Twitter is in danger of hitting).

Friendster was the first social network, and it was awesome – for a time. As it grew the page speeds started to slow down, and it became harder and harder to log in – not enough capacity. Around this time Friendster received investment from a well respected venture capital firm, Kleiner Perkins.

What happens next is well documented, and if you’re interested, a great article was in Business 2.0 about a year ago, but sure enough it’s back in the news at the LA Times, and it should be, because not enough people talking about social media understand the failures of Friendster – here’s an article: Friendster founder on the rise and fall of America’s first big social network],

But long story short, after investment Friendster changed never to be the same fun social network again, it begins to focus on adding features (ads) nobody wants. Suddenly an already stressed engineering capacity is directed at ads and applications while more and more subscribers can’t log in. Eventually the whole ecosystem slowly starts to change (like the elimination of the “fakesters”) creating new ill will of users to Friendster, which only months before had started out like a honeymoon – a good one. And then, trouble and subscription abandonment (different than loss), but it probably could have been managed and prevented simply by focusing on the customer need which would have lead direction to focus engineering on capacity. Then, as Friendster was week along came a spider – the new competitor, MySpace (which had had mp3s!) and that was that (until facebook, which is another story). By the way, when was the last time you thought about MySpace? Think about that.

But back to Twitter. Potentially a similar situation is unfolding, the power they have obviously is the large network, but it’s 70% waste (the users not using the system). Further, the technology appears highly replicable and there is room for a competitor to take the very tenants that are effectively logged out of the system and getting angry about it. Dear Twitter, help those of us you like your product to access our accounts.

And yes, I haven’t been able to log in the last 5 times I’ve tried during the day. Next time we are going to discuss Twitter and possible uses for business.

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Posted in Social Media | 1 Comment »