I feel constantly chased. Every single day of my life I feel chased by thousands of companies that are trying to invade my privacy using every different mean. I have reached a point that I try to remember the names of the companies that disturb my peace to never buy anything from them again. They target you (that could be ok), but they end up flooding you with thousands of references of different products and services  in which you might have no interest at all… and this drives me mad.

I’m having a hard time in understanding how all these companies have not realized how harmful this might be for them in the long run.

In a digitalized world where everyday a bigger stake of their potential customers is connected to the net, the real opportunity relies in putting all their efforts in making sure the one that wants to reach them (or might want to) finds them, rather than disturbing the other 99% with their inconvenient ads.

Instead of constantly chasing everyone, make yourself smartly visible, so they get to you when the time is right. People is searching more and more in the internet prior buying a product, and when they are looking for you is when they have to find you.

And that works also for awakening or even creating a need and brand awareness on the ones more likely become customers, by binding yourself to the related content they might be looking for at a certain point.

Thus, you should use your marketing budgets to generate useful content to the users, so they end up happy to get the content they were looking for. Conversion rate is much higher at that point and finding relevant information increases customer satisfaction. Although this strategy would suit better for some specific companies, most of the business should devote more efforts delivering more value to their customers, instead of spending billions of dollars annoying them.

Harvesting data is not such an appealing business any more… We have to create genuine content!

This year Google introduced some modifications in its search engine algorithm launching the Panda version which penalizes duplicated content, hence making data harvesting practice not so effective and appealing. Some businesses hired dozens of people overnight to rewrite the content in order to make it “genuine”. Others, that either had an insane volume of harvested data or just didn’t have the resources, experienced a huge drop in traffic coming from Google.  Genuine content it is more valuable than ever (which in my opinion it is totally fair), and every online business should try to figure out how to be able to create content in a very effective way.

Having said that, it is also critical not to forget that our most important readers are search engines, so if the content is generated within the company, some SEO skills are required. Some experts in the field advocate that we should write 70% thinking on the readers and 30% on the search engines.

Once we have the costumers in the website is time to choose the appropriate call for action. A page without a specific suggestion it’s a missed opportunity.

by Iñigo de Pascual Basterra


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Creation or Curation?

It’s a big web out there. Original content can set companies apart. But increasingly, people are relying on trusted sources – friends, family, brands, experts – to help keep informed and entertained. With so much data available at your fingertips, are content creators being eclipsed by content curators?

There appears to be a big and growing role for curation as a value-added service. To be clear, curation is not merely the aggregation of select information. Curation is the mixing and re-packaging of content to create things that are partially or wholly new. And it is not unique to the Internet. Many traditional publishing companies, such as Bloomberg, have been created tremendous value by understanding a specific audience and packaging created content in a digestible manner.  As data continues to flood in at rates never seen before as a result of greater access to customer data and web-gathering tools, companies have to offer more than information; they have to provide their customers with tools to manipulate the information and provide analysis and insight.

Curators play 4 central roles:

1. Simplify the glut of content online:

Social platforms such as Facebook, Twitter and Google+ incorporate the element of social discovery to their sites by filtering the web through the lens of your friends. However, as your list of online friends grow, the attention you pay to a “Like” on facebook attached to a news article, brand or product will diminish.

This social overload suggests the necessity of curation by human experts that offer more credibility that the random notions of your friends. The Huffington Post is a prime example. Beginning as an aggregation website for news on politics, celebrities and media, articles are now repackaged, re-headlined and organized into relevant verticals. Curating the best content from across the web has generated both buzz and revenues for the Huffington Post.

While the Huffington Post is a curator of news, Gilt is a curator of consumer products. While initially marketed as a flash sale site for high-end clothes, Gilt has broadened its offerings to include Gilt City and Jetsetter, a curated daily deal site for services and travel experiences respectively. Gilt has gained a competitive advantage over its numerous competitors by targeting the richer customer and being consistent to its brand.

2. Build trust within their community:

Orderwithme.com, offering discount group buying for small businesses, recently won the TechCrunch Disrupt China. The site connects small businesses in the US with manufacturers in China. This service is dominated by the phenomenally successful Alibaba.com, a B2B marketplace for small businesses. However, Alibaba.com came under fire earlier this year when numerous fraudulent accounts in China were exposed, rocking the confidence of small businesses who relied on Alibaba.com for their procurement needs. Orderwithme has distinguished itself by offering a team to do the legwork of hand picking on-trend products from trusted manufacturers in China. By giving small retailers assurance of quality and service, Orderwithme has been able to cater to an underserved niche.

3.  Online marketing and branding

Small businesses find it difficult to navigate and have their voice hear in the crowded social media space. Building an online presence is largely a numbers game: the more people comment, review and “Like” your product or service, the greater your credibility and reputation. With limited resources and time, how does a marketer establish themselves online? Aggregating and curating rather than creating content can quickly build an online presence and demonstrate expertise without spending a lot of money to create high quality conetnt. Anyone can start as a curator. Being a source of information that people can rely on and refer to can be a powerful base from which you can begin drawing in an audience.

4. Adding the human touch

Perhaps most importantly, unlike an algorithmic search, curators play the role of adding the human element to the mass of impersonal information online.  As people become desensitized to digital advertising, they will increasingly only pay attention to the information that resonates with them.

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Connecting to Customers in the Social Era

It has become fairly popular that we hear of companies executing “Social Media Strategies” in order to attract new users and connect to their existing customers. In this article I discuss the foundations of this approach and attempt to figure out what’s next to come.

 In a recent Digital Marketing conference, Yossi Hebert, President of Oxford Hills Partners suggested a three-step framework for building relationships with users through Social Media – Engagement, Participation and Advocating. As a first step, it’s important to create an experience that will allow potential customers to engage with your product, for instance, introducing a mobile application or attracting users with free trials. In less than 24 hours, Living Social’s Amazon gift card campaign attracted more than 1.3M users, enabling them to practically enjoy free money. Gatorade used its Facebook page to create a branded user experience for the athletic segment when presenting the G series.  In various cases similar to this one, social media’s competitive edge is the minimal time required to increase brand awareness.

The second stage of this process is to interact with users, giving them a chance to be active with regards to a firm’s offering. Starbucks for example, built its community around user-generated videos to display the realness of its coffee. Squishable.com, an online store for fuzzy stuffed animals, asked its users to pick colors for the next series of produce. In this phase, social efforts are directed to build the commitment and share some of the ownership with customers. This is critical for higher retention rates.

The final part of this framework, and this is where the value proposition is tested, is the REAL social effect that is extracted form users advocating for a service/product. Groupon’s attractive offers for instance, may be advertised “for free” in users social circles. Youtube videos of excited customers receiving a Birchbox.com package are another great example of this phenomenon. 

Nowadays that these strategies are already known and used, what does the future look like for social media as a marketing tool? I recently attended a talk by Grady Burnett, Facebook’s VP of Global Sales & Operations who clearly emphasized that companies should focus on “baking social embedded in the user experience” to better connect the online and the physical worlds. Levis learned this when a facebook promotion increased store’s foot traffic by 4X. 

Despite the fact that social media is already widely used, it seems there is much room for innovation and creativity.

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An interesting statistic – about 50% of people in the US have written online reviews at least once in their life. Yes, that’s right. Over the half of population has generated reviews on whatever products/service they experienced (or not), which I find amazing. But wait a minute…. what about the other half? – People who have never written any reviews? Why do only half write something online about whether they liked the products? Why not 70, 80% or even 100%? Of course, we have to exclude some people who don’t have much access on internet or don’t care about technology etc…. But still there is a significant big portion of people who never write reviews online. Why? I can think of a couple of hypotheses here:

The first hypothesis is that the ‘this other half of population’ are simply different people from those who write reviews online. Some people nowadays point out that there is certain motivation to make people write online reviews; 1) monetary and non-monetary (loyalty scheme) incentives, 2) status in the community, 3) ego factor (looks good, intelligent among peers), 4) incentives to help others from their reviews etc… There would be more things to motivate people to write online reviews but something we can draw from this is that some just don’t react on these factors or the current level of incentives is just not enough for them. For example, monetary/non-monetary incentives people get from writing reviews such as some kind of reward points could be just nothing to some people. Community status such as Yelp Elite may be completely uninteresting to some.

The second hypothesis is that experiential factors would matter to ‘this other half of population’. Humans naturally have both the hesitancy as well as the curiosity to try out new things. Hence, to some people, they can’t write online reviews because they never tried. It sounds ironic but many people have experienced this kind of conversation; “Why don’t you try out this new hobby (or whatever it is)?” “I can’t. I’ve never done it before”. “Man, just try out. I will show how easy it is.” “Hm… But I guess it is easy for you because you’ve done it before already”. You see the point here? On many occasions, the mental cost of trying out something for the first time is much higher than cost of doing it again. It is applicable to writing online reviews for the first time as well.

The last hypothesis is about online identities. Even very opinionate people offline are not interested in writing their opinions online because they don’t think they have to be consistent on their behavior between online and offline.  Actually in reality, we sometimes find that very active online reviewers are actually very shy people offline and vice-versa. What does this mean? Don’t we think very opinionate people offline should be similarly opinionated online as well? Why is there a gap between their online and offline behaviors? Generally anonymous environments help people write reviews freely. But maybe for certain people, disclosing their identity on online would be helpful to push themselves to match their online behaviors to offline behaviors; if certain people are very active in offline, they may want to be very active in online in this condition to keep their identity consistent.

We can find some implications from these hypotheses. If you want to convert the ‘other half of the population’ to write online reviews, you may want to 1) rethink about what can actually incentivize these people to write reviews and how to customize this incentive 2) consider how to create an environment and infrastructure to facilitate first time  reviews3) in some occasions, disclosure of offline identity to push people to be more active online.

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Monetising Heroes of Newerth

As a self-proclaimed addicted gamer, I recently received a notification from S2Games, an independent game developer (started by a serial entrepreneur) that developed Heroes of Newerth (HoN).  HoN is a team-based hit and slash game that took the popular Warcraft 3 custom map concept Defense of the Ancients (DoTA) to a new and enhanced level.  The company has turned the $30 per copy game into a free-to-play model.

This got me thinking, how profitable has this game been for the founder? Frankly, I would love to see more independent game developers succeeding in this world dominated by big players.

So I did some quick research on the company and the good old back-of-the-envelope calculations (though, to be frank, it was a ‘back-of-the-Excel’ calculation…).  

The story starts with the short lifecycle nature of video games.  Having started HoN in early 2010, it has been over 1 year on the pay-per-copy model.  Like all video games, sales peak early and then goes through a steady decline.  The home site recorded a spike when the post-beta full version of game was released in the 2nd quarter of 2010 (see Chart 1, sourced from Alexa.com), but since then have underwent steady decline.  Given ~60% of the web traffic on the site are directed to game forum, I suspect new customer acquisition has declined towards near zero by early 2011. 

This may appear to be a sad story for the company, but wait – let’s turn on our thinking caps.  If we believe what Wikipedia is saying about HoN, there are 400,000 paid copies floating out there.  At a price of $30 per copy, it means revenue of ~$12m.  How much does the game cost? That is unclear. But looking on S2 Games website, the company boasts a workforce of 42 staff (covering everything from founder programmers, game design, operations, sound and visual art).  Assuming an average cost of $70,000 per staff, the annual running cost is ~$3m.  Let’s say it takes the company 2 years to develop the game, we can estimate a healthy profit of $6m.  Even after adding the server and hosting costs, it feels like the venture is making a handy return on investment, just from copies sold.

However, there is more to be had. The latest change to free-to-play is a fantastic strategy to further monetise this enterprise. Instead of charging for a copy of the game, the company has gone for charging for virtual game assets (virtual ‘gold coins’).  These include early access to heroes that others cannot use yet, alt avatars, account vanity (flags, account icons), game vanity (taunts, announcers), and stat resets. 

In an environment of declining user acquisition, this allows S2 Games to extract more revenue from existing players.  This plays upon the one upmanship, coolness, and eagerness factors.  And to manage the perception of legacy players like myself, S2 has restricted the free accounts to playing a rotating set of 15 heroes.  What’s more, this will further encourage uptake by removing the payment barrier. So the idea goes that now you can invite your friends to join the game for free. This is evident in the Alexa chart again (see the spike in Aug 2011).  Assuming 5% of the 230k users per day is spending $60 on gold coins in a year, that’s roughly $0.7m revenue.

So what do we take from all this? It is comforting to know in the world of blockbuster games, independent game developers can score success.  I do hope the subsequent creative monetisation can prolong the profit model far into the future. 

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