Tuesday, April 29, 2014

Could Subscriptions Fix Facebook's Ad Problem?

Mark Zuckerberg, CEO of Facebook
Photo: Facebook/Flickr
It's no secret that organic reach on Facebook is heading towards zero, and the social network is behaving more like a television network these days - a huge reach, compelling content, and all paid for by advertisers.

If your feed is anything like mine, this switch isn't welcome. I used to get ads from brands I liked. Now I get ads for hair replacement products, retirement planning, politicians who live in other states, and gyms (such is the depressing reality of being a thirty-something on Facebook).

Facebook needs to serve up ads to make money. But could the whole experience be better? Yes, by allowing me to pay to opt out.

Facebook should move to a subscription model that allows me to have a delightfully ad-free experience for a small monthly fee. It's puzzling why the big social networks haven't already moved to a freemium model; it's used by almost everyone else. And it could be a big business.

It's also unlikely it would annoy too many advertisers. Younger users probably won't pay, ensuring that brands still have access to the teens and young adults craved by marketers. Facebook could also dial up organic reach to compensate for the loss of a certain chunk of older users behind the paywall.

So Facebook, I'm ready to pay. What do you say?

Sunday, April 27, 2014

What's Next For LinkedIn?

Photo: Coletivo Mambembe/Flickr
On May 1, LinkedIn will report Q1 2014 earnings.

The stock price is 30% off its all-time high, and since 2011 the network has experienced slower growth in membership, page views, unique visitors, and revenue. Pressure from Facebook, Twitter, and Google is intensifying, and niche competitors are gaining fast.

What LinkedIn Is Doing Well

  • LinkedIn's content offerings continue to impress. Many professionals I know view LinkedIn as a de facto morning paper and read it often (if not daily).
  • Pulse, which decouples content from the main app, reinforces this behavior (expect more standalone apps to come).
  • The visual design of the site continues to be, in my opinion, the best of all the major social networks. It's intuitive, stable, and useful.
  • Product showcase pages for marketers are a welcome evolution and stunning.
What LinkedIn Needs To Do Better
  • Paid products for marketers (and the data that comes with them) are slow to mature. The most successful paid product is the follower acquisition module, which must be a declining revenue stream as brands no longer prioritize follower acquisition (fully expecting to be charged to reach these folks later). LinkedIn's data offering trails far behind Facebook data.
  • LinkedIn's membership of influencers makes it especially attractive to PR shops, a potential market and relationship base LinkedIn has failed to develop. 
  • Speaking of PR, communications teams spend a ton of money on influencer/blogger outreach programs, and LinkedIn could act as an influencer broker - especially with its stable of influencer contributors.
  • On the UX side, a full-featured inbox would be nice, and I've found myself wishing for a chat function more and more. I often want to have a quick conversation with a professional contact, but don't feel comfortable adding them to Facebook (which I reserve for true, bona fide, real life friends).

I love LinkedIn. It's my favorite daily habit. And I feel like folks I know are more willing than ever to switch up their preferred network. Hopefully LinkedIn sees the opportunity.

Thursday, April 24, 2014

The Upside Of Anger: The ROI Of Telling Some Customers To Shove It

Sometimes, it pays to tell some customers to shove it.
Photo: Jelle/Flickr
In the last six months, the internet has exploded with positive, affirming depictions of America's rich social, cultural, and racial diversity. The internet has also simmered with negative reactions to those ads, with invective and vitriol flying at brands on social media.

Some brands, like Honey Maid and Chevrolet (below), owned it. For others, bravery is more elusive.

Damage control tends to focus on how to calm the angry, on how to make sure they aren't so mad that they stop buying.

But how many customers might a brand gain by effectively telling some customers to just shove it? Is there an "upside of anger"?

Quantifying The Upside
During the Sochi 2014 Opening Ceremonies, Chevrolet ran a commercial for the new Chevy Traverse that featured gay dads, among other diverse couples. Predictably, the company came in for some vocal criticism on social media and blogs.

According to Pew, as of March 2014, 54% of Americans are in favor of same-sex marriage and 39% oppose it (the rest don't know/have an opinion).

But the distribution of that support is very uneven: 68% of millennials (18-33) are in favor of gay marriage (including 61% of young Republicans), 55% of Generation X (34-49), 48% of Baby Boomers (50-68) and 38% of the so-called Silent Generation (69-86).

But generation size matters a lot. After all, how many people is this? 

In America, there are about 79 million Millennials, 70 million are Generation X, and 79 million Baby Boomers (source). Almost all of these folks are still alive. The "Silent Generation", those 50 million "lucky few" born during the Great Depression, are approaching, or at the end of, life expectancy. About 41 million of this generation are still alive.

This means that gay marriage is supported today by about 54 million Millennials, 39 million of Generation X, 38 million Baby Boomers, and by about 15.5 million of the Silent Generation. In other words, same-sex marriage is supported by roughly 147 million adult Americans, 89% of whom are still working.

Of the about 123 million Americans who oppose gay marriage, more than 25 million are effectively retired. Just 98 million (or about 80%) are still working and buying cars. But of those still working, some 41 million - or 42% - are Baby Boomers, who are themselves at or nearing retirement. Just 32 million are of Generation X, and only 25 million are Millennials. 

This means that within 20 years, the vast majority of those currently opposed to gay marriage will be out of the labor force.

The Math Is Clear
Americans buy about 10 new cars in their lifetime. So, assuming you get your first new car at 16, that works out to something like one new car every six years. 

Taking the mid-point of each generation, it's fairly safe to assume that Millennials will buy nine more cars in their lifetime, Generation X will buy another six, Baby Boomers might purchase three, and the Silent Generation will buy only, at most, one more new car. 

This means that those opposed to gay marriage today will probably buy no more than 565 million new cars. 

But those in favor of gay marriage today can conservatively be expected to buy about 850 million new cars over their lifetime - 50% more than the anti-gay marriage group.

Where brands should stand on same-sex marriage should now be obvious.

So, What About Chevrolet?
But isn't it better to anger no one, and sell cars to as many people as possible? Certainly, but emotions cut both ways. What angers one customer, might entice another.

In 2013, carmakers sold 15 million cars new in the United States.

Now, for the sake of our argument, let's say that Chevrolet's Traverse ad angered a huge proportion of the population opposed to gay marriage - say 5% of the total, car-shopping population -  and made them so angry that they refused to consider a Chevy this year. That works out to about 750,000 vehicles not sold by a Chevy dealer near you (this assumes that every one of these people would have eventually bought a Chevy, which is, of course, unrealistic).

But of those 750,000 cars, about 157,500 would have been bought by people buying their last car, and another 247,500 by Baby Boomers buying one of their last three new cars. Generation X car buyers could be expected to buy 195,000, and Millennials just 150,000. Assuming these people are so mad that they never consider Chevy again, this ad resulted in Chevrolet forfeiting a maximum of about 3.42 million potential future lifetime sales.

Now let's assume that the ad caused 4% of car shoppers to consider a Chevy (remember, 8% of Americans - and car shoppers-  are LGBT). That's 600,000 potential sales that are a net gain from the ad.

Statistically, about 222,000 of these sales would be to young Millennials, 162,000 to Generation X customers, 156,000 would be to Boomers, and just 66,000 to the Silent group. Projecting into the future, this means that the ad generated a maximum of 3.50 million potential future lifetime sales.

Then There's History
So, based on our (very conservative, very broad) set of assumptions, brands have everything to gain and nothing to lose by embracing diversity. The immediate sales impact is effectively a wash (actually slightly positive), and the long-term gain is undeniable. Also:
  • Those most opposed to same-sex marriage are quickly moving into a low consumption phase of life, and there's no reason to assume that the generation following Millennials will be anything less than totally accepting of same-sex marriage. 
  • The widespread legalization of gay marriage, which looks likely to happen within this generation, will mean that depictions of gay couples in ads will be non-controversial. However, this also means that these depictions won't generate much positive consideration in the future either. It will just be the way it is.
  • Boycotts have a very poor track record of success, so my assumption of 5% negative reaction is probably very high. It's even less likely that a young customer would maintain this boycott over their entire lifetime.
  • It's also hard to maintain a boycott when every brand angers you. It's easy to fathom a future when all car brands (and all brands) actively court LGBT customers. 
  • On the other hand, there is strong evidence that people buy from brands that align with their values and reflect their families in advertising. Gay and lesbian Americans are estimated to make up 8% of the population (and thus 8% of car buyers in any given year), so a positive 4% consideration might be low. 
In closing, some of the most powerful, endearing ads ever created put a stake in the ground and speak to brands' core values. You're going to make the ad anyway. Be brave.

Saturday, April 19, 2014

Should Nike Kill The FuelBand?

The Nike FuelBand
Photo: Nike, Inc.
This morning TechCrunch reported that Nike was killing the FuelBand after 70+ layoffs on the FuelBand team. This afternoon, they unreported it, and instead said that Nike is planning to double down on the investment.

But should Nike pull the plug?

1) The wearable technology market promises to be huge. IHS estimates that 180 million wearable tech units will ship per year by 2017.

2) But the space is already crowded, and getting more so. FitBit makes an exceptional (and exceptionally reliable) product that already comes in an array of colors. Samsung has a huge in-built base with Galaxy, as will Apple when they enter the fray. Not to mention established players like Garmin making specialty gear (such as swim watches).

3) Nike makes great shoes. Hardware, not so much. I was an early adopter of FuelBand and bought a first generation band at SXSW the year it launched. It broke within a year. My second one lasted about 7 months. My third one less than 4 months. I finally gave up and chucked it in a desk drawer, where it sits today. I've been a FitBit fanatic ever since.

4) Nike could focus on software. Tim Cook sits on the Nike board, so Nike could focus on making software for Apple devices. But there's already tons of free (or nearly free) fitness software too. MapMyRun, MapMyRide, and MapMyDogWalk to name just three offerings from one company (download them right now - they are excellent products). And explaining (or even really understanding) "Nike Fuel" has been almost impossible.

Nike is incredibly inventive, and a push into wearable tech makes sense for a company devoted to fitness and the outdoors. But Nike isn't a tech company, and I'm not sure they can compete technically or for talent to make a better product than an established player like Apple, Google, Samsung, or even Garmin.

I'll wager Nike considers an acquisition or strategic partnership in the not too distant future, and the layoffs on the existing Fuel team could signal that day isn't too far in the future.

Friday, April 18, 2014

Is This The World's Worst Ad?

This advertisement is (was) on a Berlin subway (U-Bahn) platform. Is this the worst ad in the world? Or does it have a certain, delicious Dexter/Six Feet Under sense of humor? Social media seems to be split. What do you think?

Berlin subway ad
Courtesy: IFuckingLoveScience

Tuesday, April 15, 2014

Death and Taxes

Death and taxesIt's tax day in the USA, the one day where 317 million Americans get to collectively grumble.

But is our tax burden really so high?

Not so much.

According to the Tax Foundation, for a family making an inflation adjusted $50,000 per year, the effective federal tax rate in 2012 was the lowest it's been since 1942.

The highest marginal tax rates ever - 90% - were in force from the mid-1940's until the early1960's.

Over at Quartz, they built an awesome slider that lets you look at your tax burden over time.

So cheer up America. It used to be worse.

Saturday, April 12, 2014

The RFP Process Is Broken. Here's How To Fix It.

The reality of the RFP.How we select partners is broken. I am constantly dismayed at how the whole process is often optimized to create a sub-par experience for brands and partners alike.

Here are five tips to make the process better for both sides:

1) Set realistic timelines. No one does their best work with a gun to their head. Brilliant work requires time, and your future partner can't do that if the timeline is impossibly short. Ample, realistic timelines will get you better work.

2) Don't run a beauty pageant. There's no reason for 30 agencies to be part of a review. It's exhausting for your future partner, and wastes a lot of everyone's time. In almost all cases, there are a handful of leading shops or technologies, so focus your time on those top candidates. If you must do an RFI, use your expertise to create a shortlist of ten. From those, choose no more than five finalists.

3) Pay the finalists. Paying a small sum to 3-5 finalist partners (I usually spring for $5,000 per finalist) to respond to an RFP signals that you're serious about the project and the process. It also ensures that agencies will put great talent on your proposal. So a small cash outlay upfront can pay big quality dividends later. There's also one more benefit: if you see great ideas from agencies that don't make the cut, and you've paid the agency for the presentation, you're ethically in the clear to use those ideas.

4) Take Charge. Procurement is usually focused on getting the most service for the least cost, and IT is often focused solely on the technology. But you're not choosing just "the agency", you're choosing a partner. You want that partner to be professionally and emotionally invested in your success and be in it for the long haul. Sure, there's money involved, and often technology. But just as important are trust, gut feeling, and chemistry. It's your project, your reputation, and your career. You make the call.

5) Debrief the losers. Partner selection is a process, and someone has to lose. Take the time to hold a debrief call and tell the agency/company why they didn't make the cut. No relationship lasts forever, and doing your part to make products and services better for everyone is not only karmically good, it helps ensure that next time you have an even richer set of choices.

Wednesday, April 9, 2014

Why Is San Francisco So Expensive?

I plan to write a lot about San Francisco's housing woes and stratospheric cost of living, but I thought I would kick off with a tale of two photos.

This is the Castro in San Francisco, one of that city's most highly sought after neighborhoods:

The Castro, San Francisco

This is 8th Avenue in Manhattan:

8th Avenue, Manhattan

San Francisco's current predicament is highly complex. But, if you want a simple answer to why it's so expensive, that answer is: lack of density.

Monday, April 7, 2014

Brendan Eich's Resignation Is Why We Need ENDA

Brendan Eich, Ex-Mozilla CEO
Brendan Eich
Last week's resignation of Brendan Eich as CEO of Mozilla marked the end of an important and earnest conversation about the role of politics in the workplace. As someone who takes great pride in both my work and my political voice, I followed the controversy with interest.

Brendan Eich co-founded the Mozilla Project, and previously served as the organization's CTO. By all accounts he's a brilliant engineer, and never made his political or social beliefs an issue at work. In 2008, Eich made a $1,000 donation to help pass Proposition 8 in California, a piece of legislation that denied more than 10% of Americans (and probably a far higher percentage of LGBT Americans) the freedom to marry the person they loved.

Eich's donation has been known since 2012, when it caused a minor stir. Two years later, in an environment in which the Supreme Court has ruled laws like Prop 8 not just unconstitutional, but a healthy majority of Americans also find them immoral, it cost him his job.

With the exception of legally protected classes such as race, gender, national origin, and age, most people in most places can be fired for almost anything. In an at-will or right-to-work state you can be terminated for having red hair, driving the wrong kind of car, or supporting the wrong team in the Super Bowl. In most places, your boss can fire you just because he doesn't like you. And you can definitely be fired for being gay. Or for supporting Proposition 8.

Brendan Eich holds increasingly unpopular beliefs about marriage equality, and he was clearly harassed and drummed out of his job because of it (although Mozilla says Eich was not asked to resign).

This is wrong.

Chief executive officers are, and should be, held to a higher standard. They are the face of their employers, and can cause real, irreparable harm to the brands they run if they misstep. And they set a tone for the workplace that should always be beyond reproach. While in hindsight Eich's contribution to the Prop 8 campaign was probably unwise, he is by all accounts a great, fair, and passionate leader.

He also doesn't  shouldn't have to check his freedom of speech at the Mozilla front door. As long as it's not a workplace matter, it's as fine for someone to oppose same-sex marriage as to support it.

It's impossible to demand ideological unanimity of America's CEOs. But we can demand that they treat all of their employees with fairness and respect, and that goes for the gay ones, the straight ones, and the transgendered ones. The Employment Non-Discrimination Act (ENDA), currently before Congress, would do just that. It protects us all against arbitrary termination for our sexual orientation or gender identity. Congress should pass it, and make the personal beliefs of business leaders irrelevant.

Wednesday, April 2, 2014

Why We Need a Larger Congress

With Congress' approval rating hovering at around 15%, Americans clearly think that the legislative branch is not pulling its weight. Or, even worse, that it's irrelevant. The House of Representatives is seemingly more interested in politicking than policy. It's also short staffed.

With the exception of gigantic India, members of Congress represent more people (about 700,000) than any other country. Members of Parliament in the UK look after about 75,000 people each. In Germany, it's about 131,000. It wasn't always this way.

The original gerrymander, Massachusetts
The original "Gerrymander"
In 1800, each Congressman had about 50,000 constituents. That number steadily grew along with the population, and Congress expanded the size of the House with the addition of new states. The Reapportionment Act of 1929 limited the number of seats to 435 (the number of members at the time from the then 48 states), and the system we have today was born. That year there were about 121 million Americans. Today, there are 317 million, and the number of people represented by a member of Congress has similarly ballooned - from 278,000 in 1929 to almost three quarters of a million in 2014.

But that doesn't even tell the real story. Because of how seats are currently allotted, Montana's lone congressional district has about 450,000 more people than the lone Member representing Wyoming next door. This disparity is even greater when comparing the most populous state (California) with the least populous (Wyoming). Because every state must have at least one representative, and because the membership of the House is capped at 435, California is underrepresented by about 13 seats (California has 66 times as many people as Wyoming, but only 53 times as many seats). The implications of this for the Electoral College are obvious.

The so-called "Wyoming Rule" would change this imbalance permanently. Under the Rule, each district is pegged to the size of the smallest district (currently the aforementioned Wyoming). As the smallest district grows, so would the average population in each district after the decennial census.

If we implemented the Wyoming Rule today, the House would have about 563 members (this isn't exact because each state still must have at least one representative, but it's roughly accurate). That would put us more broadly in line with other democracies, and would permanently correct the Electoral College imbalance. California would end up with about 66 seats, and Texas would net about 45. Wyoming, of course, would still have just 1.

And we'd hopefully all get better representation.

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