Wednesday, May 12, 2010

My New Blog!

Check out my new blog: www.castronovaj.com/wordpress

Facebook: Innovator or Antagonist?

My Dad just joined Facebook, and he is currently tracking down family members and reporting the details to my grandmother. Fortunately, I recognized a while ago the dangerous potential ability of Facebook to let skeletons out of the closet. I was in college when the 40 somethings decided to migrate in mass to Facebook. Friends of mine turned paranoid in fear that pictures of their drunken promenade might just reach their parents monitors (or law enforcement).

They were right.

Of course, that was when the user had more control over their identifying data. All they had to do was remove the tag, picture, or album. When Facebook reformatted user metadata under the "Like" function, identifying data was no longer completely in control of the user. Many users have been put off with the recent deals Facebook has made with Yelp, Pandora, Microsoft and others to share their identifying data to enhance an internet experience based on sharing and collaboration. Oh, and to make their advertising partners happy. In a recent blog post Zuckerberg said that

"This flow of social information has profound benefits—from driving better decisions to keeping in touch more easily—and we're really proud that Facebook is part of the shift toward more social and personalized experiences everywhere online."

This sounds a lot like a move to the Semantic Web that we have been hearing so much about (often referred to as Web 3.0). And I have to admit that this has wonderful potential for online marketing. Think of all of the consumer data that the "Like" function will bring. It would be a nice addition to the "pay-per-click" data. I think users would be more likely to "Like" something rather than click on add that pops up in their tweet or some viral, kitten video.

But is the consumer/user ready for Sir Tim-Berners Lee's Web 3.0? There has been a lot of backlash about Facebook's new plan. Two consecutive posts on Wired's Epicenter showed the frustration.

Post 1: Only Old Fogies Hate the New Facebook by Ryan Singel speaks about recent data that Facebook users, 35 years and up (not really old fogies after all) have responded negatively to news that Facebook revised its Privacy Policy. This is not good considering for the past two years this age groups makes up the fastest growing demographic on Facebook.

Post 2: NYU Students Aim to Invent Facebook (Again). We’ve Got Your Back. by John C Abell cites the attempts of a bunch of NYU students who want to create an old-school (as in 2004) alternative to the current Facebook. They just want social networking to be social networking again where the only thing you have to worry about is your Mom seeing all the things did last Friday in a well document album entitled "All the things I probably should not have done last Friday!" This article seems to capture the angst from the younger side of that demographic. The ones that Facebook has counted on to maintain its power.

Web 2.0 is about the user conforming the web to meet their needs. Web 3.0 is about the web doing that on its own. That is only going to happen with initiatives like Facebook to share Market relevant data. Amazon does this to a small extent within the bounds of its own servers by selecting products that users might like based on their purchasing history. Facebook isn't inventing the wheel; there just finally bringing it to the masses.

These discussions are also coming in the middle of the Data Wars. In the 70s and 80s it was the hardware wars. In the 90s that battle shifted to software. Since Web 2.0, that war is over where users will store their data, where will they network, where will they make purchases, etc. Facebook wants to be the Virtual Mall of America, as does Google. And Microsoft just wants to get a piece of the pie while maybe throwing a few jabs at Google and Apple along the way. Users love how these tools help them coalesce, shop, analyze, educate, or just vent. There might not have been a Revolution (2009) in Iran without Facebook and Twitter. Ok Go would not be selling songs without YouTube. But consumers/users are put off by big companies that war over market share because it exposes the companies' inner desire to serve their shareholders and not the user. That being said, these companies are not going anywhere.

But that nasty long tail keeps whipping the head of big business. Those NYU students might create another niche in the market with small, personalized, topicized social networking sites. Ning would not be where the are today without a demand for these sites.

The Semantic Web, or some version of it, is coming whether users like it or not. It is already coming to Facebook. What will probably happen? Users will continued to use Facebook for certain things and move on to newer, more gated, social applications for other needs. It is the nature of Web 2.0 and 3.0 to rise to user demand.

Friday, April 23, 2010

Retension and The Long Tail

Why is it that I know enough about the Rocky Horror Picture Show to know that I never want to see the Rocky Horror Picture Show?

Answer: Retention and the Long Tail

The Rocky Horror Picture show is a brand that knows how to keep and replenish its base. It is largely kept alive by the fan base, however the fan base doesn't have any control over whether it will stop circulating on DVD or in Theaters or in special big screen releases. 20th Century Fox has the call on that, and as long as they keep making money (as long as there is still a demand), they will continue to supply.

Compared to other movies produced recently, the Rocky Horror Picture Show ranks toward the bottom of the list in overall revenue. Its fan base/followers are a niche group. So why does 20th Century Fox waste their time. Because they are turning a profit. The Rocky Horror Picture show exists somewhere in the Long Tail, a term popularized by Chris Anderson, author of The Long Tail. He says "if you combine enough of the non-hits, you've actually established a market that rivals the hits" (22). So, if the Rocky Horror Picture was the only niche product they had, 20th Century Fox might have had to cut the ropes long ago. But in combination with its other niche, non-hits, Rocky Horror Picture Show is part of a market tap that runs long. For instance, Anderson explains that 1/4 of Amazon's book sales come from books that are not in the top 100,000 titles. 45% of Rhapsodies purchases come from outside of their top titles (Anderson, 23).

Retaining these niche groups is becoming of vital importance to companies. Anderson explains that The Long tail can be attributed to lower production, shipping, and storage costs along with rises in demand. But, it can also be attributed to social media. These niche groups tend form around an idea or some brand identity like the Rocky Horror Picture Show or some obscure indie rapper. These groups use Facebook, blogs, wikis, YouTube, Twitter and other social platforms to organize and ultimately make purchasing decisions. As long as this group maintains its size in relation to other groups in the Long Tail, then the companies who supply these niche groups will continue to turn a profit. That means that members have to remain involved or be replaced if they become inactive.

So when Jeremy Richardson of Mixpanel, Inc. said in his Mashable post that Retention should be a greater Analytical concern than virality, he may have had a point. He says that virality is measured in three factors:

"It’s computed by multiplying the percentage of current users who invite other people (X), the average number of people who are invited per user (Y), and the percentage of invited people who accept an invitation (Z). Many companies use this –- and only this — to determine the success of a product" (Richardson). This equation is known as the K-Factor. The problem is that Y is the middle man in this this equation.

As Richardson puts it . . .

The first and last numbers, X and Z, are conversion rates. By definition, they are always going to have a finite limit –- 100% engagement. While having perfect conversion rates would be amazing, it wouldn’t really mean much if Y, the number of people invited, was only one.

So, if conversion rates are maxed out, then the only thing left to tweak is the number of invites sent out. There are two main contributors to this:

Invite Rate: The frequency with which users send out invites

Engagement Period: The duration that users actively use a product


By determining the Invitation Rate and Period of Engagement, a social media analyst can determine how well a product, video, idea, application, game, etc. retains consumer demand. Richardson argues that by tracking retention rates, an analyst can determine why consumer demand is decreasing or why users are not sharing at high frequencies.

In a market driven by non-hits, retention becomes vital to the bottom line. Niche groups gather around a product, movement, idea, etc. because they strongly identify with it in some way. If the consumer is not able to act on that feeling, then there goes the business. By analyzing why videos are not being shared, a social media analyst could respond by redeveloping the social media strategy to maintain the community of consumers. That means building strategies for retention and building strategies for virality are both separate and interwoven tasks. Different calculations are applied to determining both, but both are applied for the same goal: positive Returns on Engagement

Wednesday, April 7, 2010

Return on Engagement (Investment)

The other day, I was asked if I could name two companies: one that uses social media well and one that does not use social media well. I have been asked this question before, I don't believe I ever answered it in the way that it deserves to be answered. So here it goes:

A good company fosters a good return on engagement (ROE) and a bad company does not.

I define Return on Engagement as data that shows the effort a business puts into social media versus the amount of exposure their brand and products generate through social media (the increased fans on Facebook, Retweets on Twitter, traffic on the website and microsites, reviews on Yelp, Posts through foursquare, etc).

But what does a good social media strategy look like? What elements of a social media strategy foster a positive ROE?

There are two companies that do this particularly well and one company that is struggling in the age of transparency and conversation.

Effective Social Media Strategies: Starbucks and Toyota

Wetpaint and Altimeter keep rankings on the most socially engaged companies. They call it the Engagement Database. In their rankings, Starbucks (ranked #1) and Toyota (ranked #21) have two of the most effective social media strategies among the ranked companies. There is an interesting correlations between these companies. Their social media strategies are very similar, and both have high levels of ROE.

Strategy 1: Social Media is a Company Wide Effort

Both Starbucks and Toyota are limited in their social media teams; Starbucks has six people on their team, and Toyota has three people on theirs. In addition, I doubt anyone on the Starbucks team can make a Frappuccino or anyone on the Toyota team can explain how the sticking accelerator is being fixed. But each company has employees that are experts in these areas.

So, when Starbucks created MyStarbucksidea.com, the social media team wasn't creating content and responding to ideas posted by customers. Instead, "Starbucks set out to ensure the departments impacted by the site (which includes practically every department) had a representative who was responsible for being the liaison" (from Engagement Database Report found on the website). The Mini-Starbucks Card was actually a customer idea that made its way to Chuck Davidson, an employee at Starbucks. He traced the comments, wrote a proposal, and put it into action.

Toyota has as similar breakdown in roles:

"Take a look at the Twitter account and you’ll see that in addition to DeYager, three public relations specialists from sales, environment/safety, and public affairs/community outreach contribute posts. The Toyota Twitter team uses monitoring software to identify tweets mentioning Toyota, then responds from a respective area of expertise using technology from CoTweet to manage multiple authors on the single Twitter account. This same mode is utilized on Toyota’s Facebook pages — response requests are sent out and come back from around the company, depending on the topic" (from Engagement Database Report found on the website)

Clay Shirky talks about how standard company hierarchies are breaking down due to social media, but existent companies are finding ways of incorporating it into their standing organizations. Building through ways to company experts is the beginning of an effective social media strategy with positive ROE.

Strategy 2: Choosing Platforms Requires Effort

Besides being good at spreading social media through the company, Starbucks and Toyota are also picky about which platforms they use to engage. For instance, Starbucks discovered that for every three person that interacted with a particular news item on their Facebook Page, three of their friends joined the page. Facebook enhanced their ROE.

The social media team at Toyota wanted to blog. But organizing it would have been a logistical nightmare. In addition, the higher ups were not so keen on being that transparent. But the team knew that breaking into social media was necessary if they wanted to see the sort of results that Starbucks was getting. So, they began with a YouTube Channel and uploaded pre-made content from Toyota PR. After that, the higher ups became comfortable with the idea of a Twitter feed. They also work with an independent blog, priuschat.com.

Reasons for Social Media Strategies: Dasani.

My last post explained how bottled water companies are coming under fire due to social media. But Dasani has no social brand identity. They have no social way to engage customers. This is a bad decision because the customers are already talking about their brand (once again, see my previous post) on social platforms. They may still engage customers in traditional modes, but customers are no longer engaging them there.

In addition, the report from the producers of the Engagement database charts another reason to engage customers on Social Media.



The chart above shows that the more engaged companies have a better bottom line. This the point at which ROE turns into ROI.

Tuesday, March 30, 2010

A Social Market



The video above has had 1,373 Tweets over the course of its existence. The average number of followers for any given Twitter account is 126. After some multiplication, "The History of Bottled Water" could potentially be seen by 172,998 people. All of which have the option to Retweet this video.

This video's point is clear: Bottled water is a large environmental risk, and bottle water companies are doing nothing about it.

However, the negative affects of bottled water are not directly connected to these companies. That doesn't mean that they lack responsibility in an ethical and environmental sense, but it does mean they are not legally responsible for the problems in water bottles being downcycled (being turned into lower grade plastics that get tossed out anyway), the mountains of plastics bottles thrown out each year, or the large amounts of money people spend on bottled water when tap water comes at a fraction of the cost.

In the business world, these are called Externalities, indirect affects of the functioning of a business or organization. And previously, these externalities were easily ignored or snuffed out (Not all externalities are negative: adding a competing product to the market may drive down prices of that product across the market--a positive for the consumer). However, in a Web 2.0 economy, externalites go from small problems to potential threats to a company's market share.

In an article by Christopher Meyer and Julia Kirby, "Leadership in the Age of Transparency" published in the April 2010 edition of the Harvard Business Review, three main factors are cited for this change: Scale, Sensors, and Sensibilities.

Scale: Many small problems became very large very quickly. For instance, as more water bottles were used, those mountains of plastic grew larger and larger. In a word, they became harder for consumers to ignore or for companies to hide.

That brings us to Sensors: These problems are increasingly harder to hide because information on pollution, campaign finance, or drinking habits are tracked, logged, and published instantly somewhere online. For instance, the EPA makes its statistics readily available for free.

Finally, Sensibilities: Now that consumers and stakeholders have this information, what are they going to do with it? They take action. That is what Meyer and Kirby said: "The effect of instantaneous communications has been a rising sense of global connectedness and responsibility" (42). Sharing information is extraordinarily easy. Coalescing under a single cause for a very specific action is extraordinarily easy. All due to social tools like Facebook, Twitter, or YouTube.

This means that there is a change in cost. Previously, it cost companies little to hide and ignore externalities. Today, it cost to much. Meyer and Kirby are merely pointing out that businesses have no choice but to internalize externalities. In a word, businesses have to become less institutional and more social. That might explains Dasani's new "Plant Bottle"--made of 30% plant matter. This costs Dasani more then their previous bottle design. I don't now how much environmental impact this is having, but they are addressing an externality through internal policy.

Saturday, March 20, 2010

Missing Social Opportunities

http://itunes.apple.com/us/app/ballpark-envi/id318129329?mt=8&ign-mpt=uo%3D6

The above is a link to a baseball lover's app. Ballpark Envi brings Major League Ballpark images to your iPhone or iPod Touch complete past and present parks and information about each. So, for $0.99, you can buy a really bad book on Major League Ball Parks. It's apps like this that miss the social potential of the iPhone. Just to be clear, social capital is invalualbe in today's information driven economy.

Let's go through a user scenario: Imagine you want to buy tickets quickly. The Yankee's are coming in town and Cliff Lee is pitching. You learned this while sitting at your surfing your iPhone while your boss was talking about his daughter's recital somewhere in between the red and your pension. But you want to see the game from just anywhere. You wanna be in the seats where you can feel the wind from Yankee bats as the make increasing feeble attempts to hit the ball. You want to see the dugout so you can watch the Yankees wait for Lee to tire. So, you open your Stadium App. Click on your hometown team. And click in the section you want to sit in. Up pops reviews from fans who sat in those seats, organized by row. A lot of good reviews for the first base line. You click on "view" to see a picture of the stadiums from those seats. You like what you see so, you select seats there. You click on "buy the tickets." In 10 minutes, the weekend begins, and you have tickets to the biggest game your team will have in a month.

If you want more suggestions than the posted reviews, the app can run twitter. The stream consists post about people's experience in that particular stadium. So, say you want to travel with your team. You can follow the feed of that home team's stadium to see what people are saying. For information, you can always send the message via Twitter or through the Facebook Connect feature on the app.

Now, doesn't that sound more useful.

Sunday, March 14, 2010

Thursday, March 4, 2010

Google tries again in search personalization

Google tries again in search personalization: "People were skittish about elevating or deleting search results using Google's SearchWiki. Instead, they can now personalize results with stars.

Originally posted at Deep Tech



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Thursday, February 25, 2010

Tuesday, February 16, 2010

Charlie Bit My Finger Again



This video just keeps popping up. On ViralVideoChart.com, "Charlie Bit My Finger" is the 16th most viral video of the last 24 hours and the 18th most viral video of all time. 18th is not as impressive as the first 17, but this video has a quality that others do not: repetition. Some how, Charlie and his biting baby brother continually go through a resurgence in the rate at which the video is shared. It will disappear for a while and then come back again. Unlike most of the videos ranked on the Viral Video Chart, Charlie appears through MySpace's video sharing platform and not YouTube. Even though 97% of 165,244,739 recorded views were through YouTube, where it is still consistently getting comments. Viral Video Chart describes the video in this way:

"There is some enjoyment that comes from watching a child who put his fingers in the baby's mouth scream in pain when the said baby cannibalizes the child's finger. A sadistic enjoyment maybe, but an enjoyment nonetheless. The video comes from a long line of home videos which portray cute/irritating children/animals being exploited (and in this case, bitten), for the benefit of their parents/owners YouTube view count."

Sadistic or not, it's getting results. And I just added to them.

Monday, February 1, 2010

News Story Metadata

Saturday, January 9, 2010

Web 2.0 Suicide

Evan Ratliff, a reporter from Wired Magazine, attempted to disappear.  He packed up and disappeared with expectation that he would be found.  It was part of a contest promoted by Wired that prompted readers to find Ratliff using various Social Media.  Ratliff would leave clues to his whereabouts by Tweeting or upload images to Facebook.  He didn't make it easy.  He created accounts under pseudonyms and fostered posting in a deliberate attempt to throw friends and followers alike of his trail.  The winner would receive $5,000 for finding Ratliff.  A true Twitterverse Master.  

This whole gag was prompted on the idea that one can't just disappear anymore.  There are too many ways for any teenager with a MySpace account to track you down.  It is now to diffcult to simply vanish.  

Anytime a difficulty arises, it creates a marketable product  Take a look at Web 2.0 Suicide Machine

 The place to go when you want to virtually kill yourself.   It's sole purpose is to help you eradicate your online profiles and your connections.  It promises are return to your "real" life.  We could be seeing the marketing of a potential mass exodous of social slaves to the promise land of "real" life.  

Highly unlikely.  Not mention, it is not total death.  Your "real" friends are still going to be posting pictures and videos of you.  To completely die online means to eradicate your Amazon and Ebay accounts.  But the Web 2.0 Suicide Machine doesn't let help you with that.  When someone dies, there are pictures, videos, bills all left behind, and each record has present and real impact.  With these social media tools, you can't avoid getting published in some way, whether you are in control or not.  

So, this is a warning to all unborn children out there.  If you don't want to personified on the social webs, make sure to run away as soon as you get out of the womb.  Then again, if someone just saw a new born pick up and run off, you know they are going to post that on Twitter.  And the teenage kid with the camera phone is surely going to upload your escape on YouTube.  It seems the greatest effort to stay of the grid may make you the most viral entity on the internet.