Aqute Research Blog

Microsoft, Google compete for online attention around elections coverage

I have expressed before my yearning for a UK media company to take on the mantle of "online elections website" in the UK, much as YouTube is already doing (all the way to the head of state).

Well, the space isn't getting any less crowded (Digg Dialogg is the latest addition to the game) and as the US elections develop, we're going to see more online political initiatives from Google. Most recently, a mobile website for elections updates. Hardly a game changer, but "every little helps" is often Google's mantra, especially when your competitors aren't doing much themselves. Google is also charming the press bloggers, helping them cover the Democratic and Republican Conventions (pictures). Not least, Google is providing a free facility for uploading coverage videos to YouTube.

So, in the UK, political analyst Iain Dale wonders what benefits can UK bloggers expect? Not many, presumably, given that no party representative has outlined any blogger-friendly initiatives in response to Iain's post. Guido Fawkes believes that Microsoft is making at least a bit of an effort. Unlike in the US, though, I am not sure how influential UK bloggers are - pure UK political bloggers are not widely read by ordinary folk.

Coincidentally, Microsoft is also behind this US initiative allowing US voters to register (although not actually vote) via their Xboxes.

UK newspapers should preempt YouTube's UK election coverage

YouChoose '08 does not just aggregate online videos of relevance to the 2008 US elections - YouTube more or less created that stream of information, and the demand for it, from scratch.

YouTube serves a formal and informal role. The formal role, through YouChoose, sets out candidates' agendas and similar information:

That is something we in the UK need badly. How many UK voters really know the difference between Labour and Conservative policy on health or pensions or secondary schools? Certainly not me. The other, more informal but perhaps more influential role, sees YouTube hosting videos such as the Yes We Can speech/song:

Americans may be more into their politics than we are, but someone in the UK needs to target this same stream of information - the claim that "the UK is different" is a little weak, especially given that YouChoose '08 created its own niche. You can bet YouTube UK has already lined up its offering, which it will announce shortly after the government sets an election date. After all, YouTube already hosts channels such as the Labour Party and Downing Street. I assume that UK media companies (by which I mean newspapers - the BBC can't deliver the voter-created video because of concerns over quality and integrity; Channel 4 could be a dark horse; ITV and Channel 5 have enough on their plates with their routine business; and Sky does not have voter credibility) have similar plans (serious plans) because it would be unforgivable not to try to capture voter demand for such information ... aside from the extra political influence that YouTube is gaining (in part because of the love affair with its parent, in part because of YouTube's creation of this type of political portal).* Possible voter scepticism over the traditional biased allegiances of each newspaper could be overcome through a collaborative effort.

[*My assumption is not exactly supported by the lack of any such initiative for the London Mayoral elections, however.]

Why should newspapers even bother? At a low level, there are some page views to be monetised - and more importantly a longer term legacy of reader loyalty. At a higher level, there is a battle in the wings for ownership of political discussion and online video, and a newspaper that loses ground in politics coverage becomes that little bit more like Grazia.

As a trivial aside, of the top 10 UK links for David Cameron include three news companies:

• davidcameronmp.com
• webcameron.org.uk
• wikipedia.org
• conservatives.com
• theyworkforyou.com
• davidcameron.com
• news.bbc.co.uk
• timesonline.co.uk
• stormfire.co.uk
• telegraph.co.uk

... whereas the top 10 US links for Barack Obama include six news companies (and Twitter, for goodness's sake!):

• barackobama.com
• wikipedia.org
• senate.gov
• cnn.com
• myspace.com
• twitter.com
• msnbc.msn.com
• cbsnews.com
• reuters.com
• washingtonpost.com

What Etsy can teach UK companies

Online crafts community Etsy has been growing in popularity, and is no doubt set for a successful future. I don't want to write in general about the wonders of Etsy, because a lot of that has been said already (through press and in blogs, both wise and moronic), but I do want to point out the relevance of Etsy to UK companies in various sectors. I am referring to adopting the principles of Etsy rather than suggesting the impractical, unwise and almost impossible idea of a UK company buying Etsy.

• CPG. Susan Mernit suggests that Etsy attracts "moms who want to run home based businesses". As such, it should be of interest to companies such as Procter & Gamble and Unilever, whose raison d'etre is these women. The thinking behind Etsy is similar to the thinking behind communities such as Mumsnet, which are currently the holy grail of online CPG marketing. Being Etsy-like would make CPG companies real enablers of the dreams of women who want to run home businesses, would create a tangible link between the brand and those women, would encourage loyalty and reliance on the CPG company - materially improving the lives of those women in a way that advertising promises but usually does not deliver. The Etsy structure could also provide a way to solve the problem many parents have of what to do with the toys and clothes that their babies grow out of so quickly.
• Retail. The suggestion that Martha Stewart (herself not a million miles away from being a CPG brand) should buy Etsy was not surprising but nonetheless interesting (the idea may have been little more than guesswork from Valleywag, but it turns out that Etsy and Martha Stewart do in fact find each other attractive). We don't have a Martha Stewart equivalent in the UK (Delia has never expanded beyond the kitchen), but there is some fit between the Etsy concept and retailers such as John Lewis, (US company) Whole Foods Market, Selfridges or Harvey Nichols. These retailers have all made some gesture towards the Etsy ethos offline, and hosting an Etsy-style service online could differentiate and greatly extend their commoditised or non-existent websites.
• Countryside publications. Susan also points to the appearance of Etsy at the US Country Living Women Entrepreneurs event. Indeed, I was first introduced to Etsy by Designer's Block, which is very much in the Country Life mould. Country Life (now owned by Time Warner) could well breathe life into its mediocre online listings section by giving local craftspeople a platform that actually helped them sell their products. The same goes for Archant Life, owner of titles such as Cotswold Life. There is potential for a a Country Living fair made up solely of Etsy-style merchants, particularly given current trends towards local, organic, ethical products.
• Local directories. One of the interesting things about Etsy is the impression it gives of being a local website, despite its US/international base. In part this is because Etsy promises/delivers what we believe "local" merchants will give us - things like personal attention, honesty and uniqueness of product. Etsy is not a million miles from Yell's People Behind The Numbers campaign, which tries to inject a personal element into the impersonal listings of a yellow pages directory. By the same token, municipal authorities could adopt the Etsy model to promote the likes of Savile Row, Islington Antiques Market or Borough Market (forgive the London-centricness).
• Regional newspapers. For the same reasons as local directories, regional newspapers have a natural affinity with Etsy principles. Online classified listings are an important area of investment for regional newspapers as their revenues decline. Regional newspapers are also debating which of the various available local and hyperlocal strategies will work best for them, and an Etsy model for local merchants fits in well with most of them. Also of interest to regional newspapers (and to local directories, especially given the dovetail with the similar Google print advertising initiative) is Etsy's plan to launch a cooperative advertising programme.
• Finance. The link between Etsy and the finance industry is not as clear cut (although Etsy founder Rob Kalin cites Muhammad Yunus's Banker to the Poor as inspiration), but it does give me a gratuitous opportunity to mention the popularity of online microlending to the point that Kiva has more money than it can lend. This desire for connecting with small craftsmen and merchants is similar to Etsy, so much so that eBay has invested in its own microfinance website, Microplace. Not that the borrowers need to come with the do-good appeal of living in a developing country: lending to peers in developed countries is also proving popular (in the UK, we have Zopa). And what could be closer to the Etsy ethos than Lloyds TSB's For The Journey ads?

"Doing an Etsy" is not easy - Etsy makes it look easier than it is, and a lot comes down to the details of execution. Nor is it easy to avoid straying into eBay territory, wherein lies tried and tested futility. But Etsy has proven that the concept is popular, and I have indicated above some of the ways in which Etsyness could help UK companies.

Other companies should copy MyStarbucksIdea

I already wrote about how MyStarbucksIdea is not a community, but Jim at NetBanker positions MyStarbucksIdea as a good template for companies to follow (he says in finance, but it could be anywhere of course). Companies such as FirstDirect and Virgin Atlantic would seem very natural fits, but in fact most companies would benefit from the positive publicity of rolling out something that is actually quite cheap ... the cost and effort comes in implementing whatever the top suggestions are ;).

AdWords: A lot of measurability about the wrong thing

I already blogged about how Google dazzles you with charts and data, but it does not tell you how much stuff you sold, which is what you really want to know. Donna at Insider Chatter has more great comments on that:

The big, bad Google “performance” ROI myth is that the “performance” being sold is a click, NOT a sale. The supposed impending holy grail of Pay Per Call products also is based on “performance” ROI myths: Advertiser costs are driven up for the extra perceived “accountability,” but the “performance” being sold is a call, still NOT a sale.

A call may be more valuable than a click, BUT it is also not a true performance metric for the only advertising result that counts at the end of the local merchant day: A local sale.

React early to Google Ad Manager

I don't believe in being alarmist, but I wanted to point to the new Google Ad Manager as to why UK  companies potentially threatened by Google (for example, advertising agencies, newspapers and directory companies) need to see what Google is doing in the US and use the 1-2 years lead time to get a head start.

Google Ad Manager is easy to use, has an interface with which Google's thousands of UK advertisers are already familiar, provides measurability and is integrated with AdWords, Google Analytics, etc. Whatever its faults, we have seen the effect of such Google products before. With (currently) strong competition (e.g. aQuantive, Advertising.com), Google may not achieve the same dominance in display advertising as it has in text advertising, but you can bet that Google will try, that its competitors will feel the pressure, and that a few years from now Google's part time competitors (who, unlike aQuantive owner Microsoft and Advertising.com owner AOL don't have competing with Google in their veins) will have lost serious display advertising revenues to Google. You can't wait until Google enters your sector before you defend yourself, because Google has so much more development resource than you do that it would never be an even race. And Google will not just erode the revenues from your current customer base, but from new markets that you should be entering (and whose potential may be validated by Google's interest in them).

Twitter, Second Life etc are a bad idea

I would like to think, despite the best effort of IBM, that few people see Second Life as a wise investment of their marketing budgets any more, especially in the UK. However, every now and then the danger signs come up that a British company is going to use Digg or Twitter or whatever for some Amazingly Cool Marketing Initiative, which is crazy. Note the following:

• Remember that all these services are primarily popular with Silicon Valley. If that is your audience (say you are Cisco or Oracle), then the service may be useful to you. For most companies, however, that audience is not very relevant. Do you know anyone outside the IT industry who uses Reddit or StumbleUpon? No.
• These services have very small user bases. Nearly one million people use Twitter. That is almost negligible for a US website but guess how many people work in IT in California? Nearly a million. So how many "normal" people do you think use Twitter?
• Even if you argue that the whole world is your audience, the quality of traffic that you can generate from these audiences is pretty worthless (quantitatively so - these websites are very difficult to monetise). It is well known that you can game Digg, and even if you want to be part of that, why would the BBC, who invite you to Digg their every story:
  
  
  
  want to feature on a website whose top ten stories of the year have been been:
  
  
  
  Apart from the (admittedly petty) argument that they are using UK licence payers' money (when I see those links on the page, I am paying for the BBC's bandwidth in sending me that text) for a service that no one in the UK uses, they are using space on their pages to target a small audience with obviously little interest in mainstream news, and who (I am guessing) are not crazy about clicking on display ads anyway (assuming BBC World wide serves ads against those pages that Digg users would see).
• Pre-empting the BBC's objection to my argument brings me to the next point. These communities are not influencers - online influencers are a very difficult group to pin down, and when you find them they tend to be part of fairly normal communities, not out on the fringes. When was the last time anyone normal (i.e. not people who get paid to look at these things) did anything (that did not involved a dancing seal or laughing baby) as a result of Twitter or Digg or Second Life - or even to a slightly lesser extent Facebook or FriendFeed or MySpace?

If this were all theoretical, I wouldn't really care. If people in the US are having fun with a cool new toy, good for them. But the last thing I want to see is UK money being spent on such services: the BBC's use of Digg is close to futile; suggestions that museums should use Twitter or Second Life or that schools should use Twitter, are ill-advised; and I know consumer goods companies who would like to use StumbleUpon and Facebook to promote their products (don't). In one sense, this is a get-rich-quick philosophy, and like most such philosophies will not work - the real rewards come from putting a bit more effort into more mainstream online communities.

Google shares vs newspaper shares

I suspect Seamus is being slightly playful in his comparison of Google's share price against newspaper share prices: 

I say playful because not everything comes down to share price and because Google would use a five year chart instead of a three month chart instead:

Still, Seamus's point is a valid one, and I love his comparison. The truth is in between these two charts - yes newspapers are facing real problems and yes Google is head and shoulders above the competition, but the destruction of the newspaper industry isn't the sure thing some bank analysts seem to think, and Google doesn't have the relentless Midas touch that some bank analysts thought.

Starbucks's new social network isn't

Starbucks have announced My Starbucks Idea, but although widely reported as a social network, My Starbucks Idea is far from that. My Starbucks Idea is the equivalent of a feedback form, or the comments section of a blog post asking how Starbucks can improve. As such, it is over engineered (why force customers to create a Starbucks account?). Customers whose ideas are implemented will not be rewarded, and more importantly there is no community because the communication is bi-directional (if that - arguably it only flows from customers to Starbucks), not multi-directional. My Starbucks Idea is a good enough idea but has little to do with the online community that Starbucks should have started a long time ago. The company has a rare chance to create a community based on its real life, deeply local coffee shops (a little like the Mumsnet coffee sessions, although certainly better funded), creating a proposition different from what Facebook et al offer. Why Starbucks has done nothing about online communities remains a mystery to me.

Doubting the effectiveness of AdWords

Insider Chatter manages to be critical and at the same soundly analytical. I like the way Donna describes AdWords as advertisers "bidding up their own rate cards in the big, bad very black box Google ad machine". Having run AdWords campaigns for four businesses, and researched AdWords often, I have yet to find a real advertiser who AdWords-derived sales exceeded the money spent on AdWords to get those sales. AdWords may be very measurable and chartable but until it starts using cost per sale or charging as a percentage of sales, AdWords is measuring red herrings. Google is pushing visitors, rather than revenues, as the ultimate success metric, continuing the delusion behind many Silicon Valley startups, a delusion that Donna blogs about here and here (on a side note, imagine what Boeing or Sony or BMW could produce if they just worried about popularity and not revenues).