Posts from — November 2007

How does a company based upon a relatively simple service premise become so influential, such that its mere presence in a tangential category or industry creates changes that the current market leaders couldn’t or wouldn’t have ever anticipated?

On the surface, Google is a provider of information through its search services, a lot like an electronic version of an everyday library. However, the reason it has over $200 billion in market capitalization is because of advertising. And because it’s delivering very effective advertising, traditional advertisers such as TV channels and newspapers are either shifting their business models or slowly dying on the vine, all because of search.

Also, since the future of search will be moving from desktop computers to more mobile devices, Google is interested in the mobile marketplace. Which explains why this information provider is now developing an open source mobile software platform (Android) and bidding in the upcoming FCC wireless spectrum auction against such telecom giants as AT&T and Verizon. And because of its mere interest in this tangential market, Verizon just announced a previously unthinkable (for them at least) opening of its wireless networks to competitors’ mobile devices and software.

In addition, as this information provider has moved from search to advertising to telecommunications and many other ventures, its servers which power its services are consuming energy in incredible amounts. In fact, it is building facilities next to power generation sources just so it can be first in line for raw energy. So now Google is very concerned about an area that has previously been the focus of public and private utilities, as it explores such things as renewable energy through its RE<C initiative. And, as John Battelle cites in his Search blog, energy consumption could represent 20 to 30 percent of Google’s cost of goods sold in 2008.

So where does Google go from here? What’s interesting is that if Google can’t stimulate the innovation necessary in green power generation, than its interest in the politics of energy will also increase. What happens to the price of oil based upon events in the Middle East could suddenly be of great interest to Google. Next stop, Washington D.C.

All because a once little search engine went from providing information, to advertising, to telecommunications, to the energy that powers it all.

Not so much like library anymore.

As I’ve looked across the web for resources on marketing research and consumer insights, I’ve found lots of sites devoted to marketing in general and online advertising, as well as numerous sites focused on search engine marketing and social media marketing. However, when it comes to sites that focus on the consumer research that hopefully informs all these activities, the resources are much more limited.

I have found, however, some sites that do a good job of providing consumer data and insights. The ones listed below are those that I found the most useful, but I’m always open to any suggestions out there that can point me to ones that I may have missed. While this is a Top 10 list of what I think are the best marketing research resources on the web, they are in no special order:

1. Research Brief is a regularly posting blog on Mediapost by Jack Loechner that always has an interesting stat or data table, mostly focused on consumers and their interaction with digital media.
2. Trendwatching.com bills themselves as “an independent and opinionated trend firm, scanning the globe for the most promising consumer trends, insights and related hands-on business ideas”. And they do a very good job of doing just that.
3. As a definitive source on Behavioral Targeting and Web Analytics, Anil Batra’s Web Analysis, Behavioral Targeting and Advertising blog is a great source to subscribe to.
4. Jim Nail at Cymphony’s Influence 2.0 covers consumer insights as they relate to social media and conversational marketing.
5. Many times a good graphic can say more than a deck full of words. Which is why Marketing Charts is a great resource for charts, graphs, and tables that convey quickly and clearly consumer insights related to digital media and internet marketing.
6. eMarketer has a huge amount of internet marketing research information. Some parts, like their excellent daily articles, are free. However, there is even more information, including analyst reports and white papers, for those willing to pay for their total access subscriptions.
7. Another trove of good insights along the lines of eMarketer is the iMedia Connection pages focused on Research & Metrics. There are also other sections on the site that cover media, search, and other digital marketing channels.
8. Another excellent blog centered on web analytics, is Occam’s Razor by Avinash Kaushik. His blogroll linking to other web analytic sites is the most comprehensive I’ve seen out there.
9. Although it is a more a general news site covering online marketing, Marketing Vox always has some consumer centric articles as it covers the pulse of digital media.
10. Finally, while his beat is more marketing in general and branding, Seth Godin’s blog is probably the most innovative and consumer centric writing out there. If you can’t get three good insights reading a month’s worth of his posts, you aren’t reading with your eyes open.

Well, that’s 10. Again, if there are any other good marketing research resources that people can recommend, please post them in the comments.

I hadn’t planned another post on wine, but it’s almost the holidays and Roger Dooley at Neuromarketing has another great post, this time on how even an expert’s sensory perception of a wine can be influenced by external elements such as the name, the label, and whether the bottle has a cap or a cork. If you want to get a cutting edge and very unique perspective on the cognitive part of marketing and brands, spend a little time in Neuromarketing’s archives.

The effect of branding and other external elements on product quality is a great counterpoint to blind only product evaluations. The key is being able to understand where a product sits both blind and branded in order to understand the full perspective of its product quality to consumers.

Blind tastings of products have always had interesting results, the most famous being the Pepsi challenge of the 1970’s. Another less famous but no less impactful, was the 1976 blind tasting between French and California wines that marked the coming of age for American wines. Called the “Judgement of Paris”, it had upstart California wines beating legendary wines from Burgundy and Bordeaux in a blind tasting.

What blind tastings do is strip away from a product all the heritage, myth and hype of a brand (although many high end wineries would cringe at the word brand being applied to their product). What’s left is a product’s sensory baseline, the bedrock of its product quality.

While France still makes incredible, high quality wines, the effect of removing the “French Mystique” from its wines left its lesser quality bulk wines vulnerable. The subsequent results have been predictable in the face of inexpensive, but high quality wines from South America, Australia, and South Africa: as mentioned in this article from Slate by Mike Steinberger on the “Judgment of Paris”, France’s market in the US for imported wines fell from 26 percent in 1994 to 14 percent in 2004.

Rather than wait for a competitor to do it to your disadvantage, a good check for any brand would be to see if it can survive going blind. If it can’t, all the advertising and price discounts in the world won’t be able to save it.

When is conducting a focus group better than flipping a coin? Some people (see this article from Slate) would say not often. However, as a way to provide consumer-centric texture to quantitative data or as a way to optimize ideas or products midstream in development, it can be a very useful tool. On the other hand, there are some not so good uses of focus groups and here are three of them. And, full disclosure, I’ve been guilty of all three at different points in my career. But now I know better…

1. “We have made a decision, but would still like to run it by consumers just in case”: In this instance, chances are pretty good that consumers will tell you your decision was wrong. This is probably to be expected, since if the team truly felt its decision was right, the desire for a focus group wouldn’t have arisen. The team psychology was that they weren’t sure they were making the right call, but if for some reason consumers were OK with it, they at least had some form of validation to move forward.
2. “We don’t know how to solve this problem, so lets ask consumers and see if they know”: On occasion, you’ll have a “Eureka!” moment in a focus group where the solution to a previously difficult problem is now clear based upon something a single respondent said. However, almost always that response is in reaction to some form of stimulus or questioning that the team developed internally based upon an ingoing hypotheses . While consumers generally know what they like and don’t like, they generally don’t know the ins and outs of new product development or advertising. And they also don’t know much about your business problems, and frankly, they probably don’t care. That’s why companies pay marketers and market researchers a salary and not the consumers.
3. “We don’t have time or money to do a formal product test or an ethnography, so let’s just do a couple of groups”: Sometimes no research is better than a focus group, especially if the results need to be projectable or psychologically deep. The advantage to focus groups is that they are cheap and quick. But sometimes that’s their biggest problem.

The best way to see how prediction markets work is to see them in action. Below are some actual markets that can give you a sense of what exactly prediction markets are and how they can be used to generate insights and forecasts.

1. “And the Oscar for Best Picture Goes to….”: the Hollywood Stock Exchange is one of the most established prediction markets. In 2006 it correctly predicted 7 out of 8 of the major Oscar awards.
2. “And the next President of the United States is….”: the Iowa Electronic Market is one of the oldest and most well known prediction markets out there, allowing participants to purchase futures in events in areas such as politics and macroeconomics.
3. “Our revenue from New Products in 2008 will be….”: Inkling Markets can help companies establish internal prediction markets to help in such areas as business forecasting and new product development. Companies such as Cisco, Chrysler, and Abbott Labs have use Inkling to establish their own internal prediction markets.

In this video clip from last week’s FTC forum on Behavioral Targeting, web guru Esther Dyson discusses the concept of “Disclosure 2.0″ as a market driven alternative to FTC regulation of online personal information.

She talks about how marketers can come up with ways for consumer to “curate” their online behavior targeting profiles by moderating the pieces of data they want to share with marketers and advertisers, much the same way they moderate their public profiles on sites such as Facebook.

My concern with her proposal is the ability to edit your advertising profile. If it’s a matter of what I show versus what I don’t, than that could potentially work. However, if consumers are able to construct their profile (like they can in Facebook), the value of that creation to marketers and advertisers would be minimal. One of the strengths of behavioral targeting, is that it focuses on actual behaviors, not claimed behaviors or attitudes. If it was all consumer generated, it wouldn’t be behavioral targeting anymore.

I think that most people agree that some form of assurance that consumer’s personal data won’t be abused needs to be implemented. However, the industry and the FTC need to be careful that the solution doesn’t also end up taking the behavior out of behavioral targeting.

This post by Seth Godin on using survey results in marketing got me thinking about one of the most memorable survey results in market research history, the one he references from the old Trident gum commercials:

“Four out of five Dentists surveyed recommend sugarless gum for their patients who chew gum”.

While it sounds impressive (which is why everyone still remembers it), the sharp eye will see the potential push behind the fact. The key, as with most published statistics, is in the qualifiers, this time in the sample base and around the word “recommend”.

On the sample base, it’s a potential signal that it may not represent all dentists, just the ones who were “surveyed”. If you have a large and truly representative sample, why would you be using that qualifier?

The second is the qualifier for the word “recommend”. The dentists surveyed aren’t recommending that you chew Trident, just that if you do chew gum, it should be sugarless. No one asked whether you should be chewing gum in the first place or if any other brand of sugarless would suffice. Like percentages in my previous post, there can always be fun with numbers.

In this great post by Roger Dooley at Futurelab, he explores the psychological reception by people of two identical percentage values:

“Which is scarier - undergoing a potentially fatal surgical procedure that has a 95% survival rate, or one that causes death in 1 out of 20 patients? If you are like most people, you would find the latter statistic far more worrisome, even though mathematically the two statements are the same. A variety of research shows that marketers should choose carefully when throwing numbers at their customers.”

This is something researchers should not only pay attention to in marketing communication, but also in how they present data internally. Is it better to say 90% of new products are considered failures by year two, or is it better to say only 1 in 10 are successes? Of course, in that particular example, I’m not sure it really matters.