Paul M. Banas on Consumer Insights, Marketing Research, and the Digital Media Landscape

This is the second post on the potential of the Mobile Internet, and how the current line up of cell phones and their networks are hindering full development of this new platform.

If the data behind the promise of the Mobile Internet is so strong, what is holding back more significant usage? As I mentioned in my previous post, it’s the phones, the service, and the synergy, or lack thereof, of the two.

David Benjamin of the EE Times wrote about an interesting panel discussion at the recent Mobile World Congress in Barcelona Spain around the topic “It’s The User Experience, Stupid!” (hat tip to Digital Design Blog) that illustrated some of the core reasons why the Mobile Internet has been so slow in coming and why the mobile industry was caught flat footed by the introduction of the iPhone.

There were two observations that I felt were particularly apt:

• According to Mike Yonker at Texas Instruments, “Searching on a computer is like going to a store, where the customers sees every product displayed, and can make comparisons, touch the products, even try things on for size. Doing the same search on a mobile is like trying to shop in the same store but through a drive-up window.”

• Another panelist, Lucia Predolin, said that one problem is that people are nervous about using the full range of mobile applications — especially the Mobile Internet — because they worry about what kind of bill they’d rack up. With so many telecom companies advertising heavily the cost of their services per minute, users hesitate to explore possibilities that might devour their precious minutes

From a mobile service perspective, I found some additional insights from this article in Cellular News about analyses of actual cell phone usage by Olista, a consultant engaged in monitoring cell phone activity for the mobile industry:

• 70% of users who sign up to content bundles failed to consume any mobile content, indicating that price was not a factor for these users and the barriers to usage were more likely to be associated with ease-of-use or technical problems.
• 85% of mobile TV users abandoned the service after the first viewing and after passing through the advice of notice charge without hesitation, indicating that the user was experiencing navigational difficulties in moving from one TV channel to the next.
• Another worrying statistic for operators and content providers showed that around 50% of all application downloads failed to complete successfully.
• And finally, 30% of mobile users downloaded the same content over and over again such as the same music track, clearly indicating a misunderstanding of how their network works.

So what’s the solution?

Not surprisingly, several of the panelists at the Mobile World Congress cited the iPhone as being the best positioned to bring the Mobile Internet to life. In fact, according to a ChangeWave customer satisfaction study, the iPhone far outclassed the next highest mobile device with 77% of customers being very satisfied with their iPhones, significantly ahead of the runner up Blackberry at 50%.

However, the same could not be said for the iPhone’s service provider, AT&T, which only managed a 31% very satisfied level from a service perspective, which was a distant second to Verizon.

So as long as the iPhone is shackled to AT&T’s painfully slow Edge network, the Mobile Internet will have to wait for the device/service plan bundle that will do what Google did for the Web.

In my final post of this series, I’ll look at a couple of consumer insight based ideas or issues that may need to be levered or addressed before the mobile boom can truly become a reality.

This is the first in a series of posts on the potential of the mobile internet, and how cell phones and their networks need to lever market research and consumer insights to fully develop this new platform.

More than personal computers, cell phones are now the globally ubiquitous electronic device. There are not many inhabited places in the world where you can’t find someone chatting to someone else on a cell phone. As Joel Garreau from the Washington Post illustrates:

“From essentially zero, we’ve passed a watershed of more than 3.3 billion active cellphones on a planet of some 6.6 billion humans in about 26 years. This is the fastest global diffusion of any technology in human history — faster even than the polio vaccine.”

And in the US, as people are leaving their land lines behind, cell phone usage sophistication is finally catching up with Europe and the rest of the world.

In addition to having the value of a cell phone to users increasing significantly in the past 5 years, US consumers are finally crossing a tipping point that will lead to widespread adoption of elements from the mobile internet, such as web surfing or using dynamic GPS maps via their cell phones.

A couple of key insights and graphs from John Horrigan, associate director of research for the Pew Internet Project, illustrate this change:

• The number of people who felt that it would be hard to give up their cell phone grew from 38% in 2002 to 51% in 2007.
• “Even in 2006, the landline phone was still the most difficult device for people to do without,” said John Horrigan.

• From the same study, we find that while daily usage is low for mobile data related activities, almost 60% of users have done one of these activities at least once.
• Even mobile internet usage, which is hampered by sluggish networks in the US, has almost 20% penetration, with 7% of users using the mobile internet daily.

So if the interest is there, why are we still waiting for the full promise of the Mobile Internet? In short, there are three answers: the phones, the networks, and the lack of synergy between the two.

My next post will focus on why cell phones and networks aren’t delivering, and how good market research and consumer insights might just show them the way to unlocking the potential of the mobile internet.

One consumer research technique that has been getting a lot of attention lately is deprivation research. It is a technique where something a consumer uses a lot is taken away, and then the researcher notes how they react both physically and emotionally to this deprivation over a period of time.

An example would be to recruit a Starbuck’s consumer and then take away their ritual morning latte for two weeks. Then you would record their behavior and their feelings over that time frame as their brand loyalty was being tested.

If done right, this type of research can really hone in on why people buy what they do and what can be done to enhance a specific product’s benefit delivery and/or marketing efforts.

What I find interesting is how this research technique has been used front and center recently in advertising campaigns to highlight consumer passions for products and brands.

The most widely known example is the Burger Kinger “Whopper Freakout” campaign. A recent Wall Street Journal article by Suzanne Vranica demonstrates how the technique was used to do both the research and then to form the centerpiece for the campaign.

My favorite line from this spot from the “Whopper Freakout” campaign is at the end, where a couple of interesting patrons suggest they may need to change the name to “Burger Queen”, now that the Whopper is no longer on the menu:

Sites like Facebook and MySpace seem on the surface to be all about the Web 2.0 experience:

• User generated content is rampant throughout them
• Social interaction is dynamic, and happens on a worldwide scale
• Members enjoy a wide range of applications that allow them to customize their personal user experience.

However, when looked at from an outside perspective, most of the Web 2.0 essence of today’s social media sites is hidden behind virtual walls.

Because of the lack of data portability or two-way interoperability, these sites look from the outside like many of the “walled gardens” that made up Web 1.0 in the 1990s, such as an AOL or a Prodigy.

There is an extensive amount of connection and activity within, but those connections are severed (at least one way) when you leave the site.

The reason for the walls is simple: the promise of monetization for these sites is based upon people staying put, in order to watch ads or buy products. The datasets on their users are a social network site’s most valuable asset, and they have little inclination to share.

While these sites may publicly support things like Open Social, in reality, as Shiv Singh states on Going Social Now:

“Most of the vendors who have joined these initiatives are more interested in plucking each other’s social graphs than actually opening up their own networks.”

From a user perspective, breaking down the walls of the social network sites through data portability would be a good first step. However, data portability simply means the ability to take your contacts list from one walled site to the other. And for many users this is probably not something easily undertaken if it was offered, and some would even call the whole concept “boring” (hat tip to Robojiannis).

What is missing are applications with simple and elegant interfaces that float above individual social network sites, and allow a free flowing interaction between participants linked across multiple social networks.

Thanks to several posts by Allen Harkleroad at the Favorite {fvrit} Blog (who always seems to be spotting new and innovative social media applications), I can see the beginnings of a solution through social aggregators.

Although they aren’t open to the public yet, services such as socialthing! and iminta seem to be a good first step by at least putting all your communities in one place as a social network dashboard. Plaxo’s new Pulse service also seems to be playing in this arena.

What seems even more intriguing is Socialstream, a Carnegie Mellon project that was sponsored by Google. According to their description, Socialstream “is a system where users can seamlessly share, view, and respond to many types of social content across multiple networks”.

What I was even more impressed with was this:

“The goal of Socialstream is to present social information in a way that ties it to the person who posted the information, and not the site from which it came.”

In the case of the Socialstream ideal, data portability becomes an non-issue. You never have to worry about breaking down walls in order to move your network, since your network never leaves your side.

A large part of the promise of Web 2.0 has been the digital realization of the Wisdom of Crowds. However, it seems that unlike its “power to the people” promise, the Pareto Distribution of the 80/20 fame is alive and well across the icons of Web 2.0.

Thanks to a Stumbleupon link, I found this article on the myth of Web 2.0 democracy from Slate Magazine. In particular, the article calls out Digg and Wikipedia as being less “vox populi”, and more “vox oligarchi”.

Here are a couple of key quotes:

• “1 percent of Wikipedia users are responsible for about half of the site’s edits.”
• “Last year, the top 100 Diggers submitted 44 percent of the site’s top stories. In 2006, they were responsible for 56 percent.”

That’s not to say that it’s all bad. Wikipedia is supposedly as accurate as Encyclopedia Britannica. As the Slate article concludes:

“Digg and Wikipedia’s elite users aren’t chosen by a corporate board of directors or by divine right. They’re the people who participate the most. Despite the fairy tales about the participatory culture of Web 2.0, direct democracy isn’t feasible at the scale on which these sites operate. Still, it’s curious to note that these sites seem to have the hierarchical structure of the old-guard institutions they’ve sought to supplant.”

While this would seem to be a refutation of the democratic underpinnings of Web 2.0, it also points to a different perspective on the issue. Instead of judging a system based upon a simple on/off voting system, what if it were judged by level of participation.

I found this interesting graphic in a blog post by Gary Hayes at PersonalizedMedia.com that addresses the myth of non-participation in Web 2.0 social networks.

As you can see from the graphic, democracy on the web is measured by degrees of influence, which depends upon your level of participation in the total conversation.

So Web 2.0 is not exactly a simple democracy with one vote/one voice, but with different levels influence coming from individual commitment to participation and creation, it doesn’t have to be the tyranny of the few either.

Are people ready to give up their traditional television viewing habits and spend significant amounts of time with the emerging technology behind online video?

These numbers from eMarketer certainly indicate rapid household penetration growth of online video, with at least 50% of US households expected to watch online video in 2008, up from less than 20% four years ago.

However experimenting and watching a YouTube clip here and there is one thing, but truly replacing significant amounts of television usage is something else entirely.

Michael Estrin at iMedia Connection has done some informal qualitative research to see if online video is ready for primetime, by gathering together a small group of twentysomethings who weren’t heavy online video users, then showing them some examples of different online video services, and then discussing their merits and shortcomings.

Here are some key insights from the discussions:

Expectations for online video are low (the YouTube effect)

With its buffering and the amateurish quality of most of the content, YouTube doesn’t fit with what people are looking for from long time frame entertainment:

“If I want to be entertained, I sit down on the couch,” says one participant, “this other stuff [short clips on YouTube] is just for killing time at work.”

Response is better with more professional sites that feature professional quality content (such as Joost)

While sites such as Joost have better quality content and a more technologically sophisticated interface, the lack of more popular TV shows and videos is disappointing:

“We open the Comedy Central channel and disappointment sets in. ‘It’s got everything you don’t want to watch,’ Todd says.”

The television advertising that was hidden by Tivo is now back

Other sites such as Veoh have some of the more popular shows available, however to people accustomed to using DVRs to skip ads, viewing pre-rolls was a disappointment:

“I could just as easily watch this on TV without the ads because I have TiVo”

In the end, while participation and interest in online video is certainly increasing, its ability to garner significant amounts of viewer’s time is still being constrained by expectations and technology. Michael Estrin summarizes it this way:

“There’s something terribly basic about TV from a user perspective. You watch the show, the ads come on, you go get a snack, and you watch the rest of your show. But while internet video may look a lot like TV (assuming the content and the quality make their way to the computer screen), the advertiser/user relationship is something quite different.”

While this could all change with media providers moving beyond dabbling and getting serious with online video, people probably won’t be getting rid of their television sets any time soon.

In 2002, the US based office products retailer Staples was 2nd in market share behind category leader Office Depot, and just ahead of OfficeMax. In looking for a competitive edge, the Staples marketing team did extensive consumer research with their small and big business clients.

The insight they uncovered was that low prices were secondary to a quick and efficient shopping experience for these business customers. In this article by Michael Myser from Business 2.0 magazine, Shira Goodman, VP of Marketing at Staples tells how they turned this insight into a foundational tagline for their campaign:

“‘They wanted knowledgeable and helpful associates and hassle-free shopping,’ Goodman says. The “That was easy” tagline was the simple - yet inspired - outgrowth of that realization.”

Beyond creating memorable advertising around the “That was easy” idea, Staples created the red plastic Easy Button, which spouts their tagline when pressed. To date Staples has sold over 2 million Easy Buttons, at $4.99 a piece, the proceeds of which go to charity.

Having consumer insights to help create great advertising is always a best practice. However, using these insights to create a viral marketing device like the Easy Button, that consumers will actually pay money for, is to truly drive brand engagement.

I’ve said before “You are what you search for”; now it seems “You are what you search with”.

Heather Hopkins at Hitwise Intelligence has done an interesting analysis by filtering Yahoo! searchers and Google searchers through Mosaic’s cluster distribution groups to find out which type of searchers spend big dollars online. It seems Google searchers had a greater tendency to spend at least $500 online in the past month (larger bubbles further down the X axis).

What is also interesting, if you know a bit about Mosaic cluster definitions, is how Yahoo! has a more rural U.S. and downscale urban concentration, while Google reflects such clusters as Affluent Suburbia and Upscale America.

To my earlier post, my guess is that we would find significantly more “Natural Born Clickers” on Yahoo!, than searching through Google.

Any conversation about digital marketing generally gets around to the fact that companies like Google are making a ton of money from people clicking on online advertising. The invariable next question is “Who clicks on all those ads anyway?”

This study by Starcom sheds a little more light on the issue:

“The study illustrates that heavy clickers represent just 6% of the online population yet account for 50% of all display ad clicks.”

Additionally,

“Heavy clickers skew towards Internet users between the ages of 25-44 and households with an income under $40,000. Heavy clickers behave very differently online than the typical Internet user, and while they spend four times more time online than non-clickers, their spending does not proportionately reflect this very heavy Internet usage. Heavy clickers are also relatively more likely to visit auctions, gambling, and career services sites – a markedly different surfing pattern than non-clickers.”

From another study done by AOL, Dave Morgan, head of advertising strategy, describes heavy clickers the follow way:

“They are predominantly female, indexing at a rate almost double the male population. They are older. They are predominantly Midwesterners, with some concentrations in Mid-Atlantic States and in New England.”

They also found that:

“They look at sweepstakes far more than any other kind of content. Yes, these are the same people that tend to open direct mail and love to talk to telemarketers.”

This post on SEOmoz.org, uses a point from the Starcom study to distinguish between equity driven display ads that do well in delivering on branding objectives, versus the online call to action ads that want you to “Punch the Monkey” that are the type that attract most of the “Natural Born Clickers” the study cites.

The important thing behind all this research is that the meaning to an advertiser of a click, or even a whole month of clicks, is minimal. Depending on the type of campaign, online conversion rates may be more important, or maybe significant movement in some sort of brand affinity measure.

But unless your target demographic looks like the narrow one above, a simple click is probably not worth very much at all.

Found this neat interactive visualization from Wired Magazine of what happens to a blog post after you hit Publish.

Just click and see where it takes you. Just be careful of the text scrapers!