Content marketing is not new. However, with the rise of social media, content produced has exploded – Facebook users alone share 2.5 million pieces of content. Every minute! Increased content publishing creates noise and a more competitive market for potential customers’ attention.

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So what is content marketing? The Content Marketing Institute provides the following definition:“Content marketing is a marketing technique of creating and distributing valuable, relevant and consistent content to attract and acquire a clearly defined audience – with the objective of driving profitable customer action.”

There are a number of successful content marketing stories and they have been around for a while: In 1895, John Deere launched a customer magazine called “the Furrow” – it now has a 1.5 million circulation in over 40 countries and the magazine has been a substantial part of its marketing efforts. The “Michelin guide”, introduced in 1900, helped drivers maintain their cars and find decent lodging, while keeping the tire manufacturer in the back of users’ minds. More recent examples of successful content marketing includes the Scandinavian farming cooperative “Arla” that introduced safety tips for families on their milk cartons, and IBM’s “Big Data and Analytics Hub” provides readers with data-centric information that is optimized for sharing (see illustrations below).

Albeit the examples above have very different content and strategies they have in common that users engage in content provided by the company without directly being pushed to buy a product. People want to consume the content rather than avoid it. Instead of pushing a product, they are trying to educate the consumer and make them spend time with their story or product.

 

            Example 2

Example 1

Content marketing is getting increasingly important for a reason. According to the Roper Public Affairs, business decision-makers are more likely to get influenced by content marketing than more traditional marketing:

  • 80 percent of business decision-makers prefer to get company information in a series of articles versus an advertisement
  • 70 percent say content marketing makes them feel closer to the sponsoring company
  • 60 percent say that company content helps them make better product decisions

So why is it so important and why do business decision-makers get so influenced by it? Because Marketing is impossible without great content. Content marketing is in fact part of a number of different marketing activities:

  • Social media marketing is dependent on having the right content that customers want to engage with
  • Searh Engine Optimization (SEO) rewards quality and consistency in content published
  • You need great content for Pay per Click (PPC) to work
  • Content is the key piece in “Inbound marketing” (marketing activities that bring visitors in rather than having to “go out” to get propects’ attention)
  • Successful PR campaigns focus on what customers care about instead of on the business – getting the content right is crucial for any PR campaign

Example 3

The competition for consumers’ attention is high for a number of reasons. There are many people creating high quality content without the purpose of using it for marketing purposes (journalists, independent bloggers, interest groups, etc.). Furthermore, the explosion in the possibilities for sharing through social media (e.g. through Twitter, Facebook or LinkedIn) leads to businesses having to compete with millions of experts and businesses that create free content for their business advantage. Moreover, editors’ role as “gatekeepers”, controlling what content that is shared with consumers, has been reduced, as so many forms of communication now exists that requires no editorial approval. These trends makes it more important than ever before to focus on good quality content to rise above the noise, as content marketing is not going away. According to experts, staying consistent and speaking to the heart of your market gives you the best chance to reach maximize the effect of your content marketing going forward.

Example 4

 

By: Fridtjof Berge


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Uber’s Dead End – Germany

The global expansion of Uber’s transportation services is unparalleled. Within few years, Uber entered multiple markets across continents and today, serves customers in 63 countries[1]. However, conflicts with national transportation regulations have caused Uber headaches in several cities. One particularly difficult market for Uber is Germany. Multiple court cases have first slowed down the German market entry before on March 18 of this year, a nationwide ban[2] on UberPop was imposed. With fines as high as 250,000 EUR (approx. 272,000 USD) per violation, did Uber reach a dead end with its expansion in Germany – a key market in Europe?

[3]Key Challenges for Uber in the German Market

1

Germany’s taxi market is well known for its luxury cars. Indeed, most of German taxis are comfortable Mercedes. Not an easy environment for a taxi service business model that builds on the idea, that private drivers with their own cars provide taxi services. Nonetheless, the attractiveness of the German taxi market is high with yearly revenues of over 4.4bn EUR. Above that, an annual growth of over 4.3%[4] over the last decade underpins the potential for new players in the passenger transportation service market. Therefore, a successful expansion in the German market is quintessential for Uber to grow in Europe. However, there are three main challenges Uber is facing in the German market.

 

  1. Regulatory challenges:

The basis for transportation services is the ‘PBefG’ law in Germany. It regulates the taxi market and requires multiple safety and quality standards from taxi drivers. In the final court ruling (Frankfurt district court) in March 2015, the presiding judge declared[5] Uber violates the passenger transport law, and thus distorts competition. The main argument is that Uber drivers operate without necessary licenses as well as insurance levels to cover Uber’s services are not sufficient. As a consequence, Uber had to cease its UberPop service in the following weeks after the court ruling.

 

  1. Competition from Uber clones[6]2

Regulatory hurdles are not the only challenge for Uber in the German market. In fact, there exists a very strong competitor, mytaxi, which allows customers to call and pay taxis via an app. Mytaxi positions itself as the worldwide first taxi-app. They work only together with licensed taxi drivers and thus, circumvent the regulatory dead end Uber faces. Mytaxi claims to have 10m registered users and a network of 45,000[7] taxis. Thereby, they have a strong focus on business customers and also have partnerships with loyalty programs such as Miles & More. The functionality is quite alike Uber’s: one can see the available drivers in the neighborhood, book a trip, see the rote, and pay with the app. However, a distinctive difference – there is no surge pricing. German’s appear to prefer reliability and no surprises. A nice add-on of mytaxi is the option to request specific drivers.

 

  1. Traditional competitors beefing up:

3

Also the traditional taxi players become aware of the opportunities digitalization offers. Meanwhile, many larger regional taxi companies have launched their own apps. Apparently, the network effects of these apps are limited as they are bound to drivers of the same network. Thus, they are at a disadvantage compared to a mytaxi, who has taxis in every major city and across different taxi companies in the network. As the prices are the same, there is no real incentive for customers to choose a company specific app vs. apps that connect different taxi networks.

 

 

 

Key Learnings for Uber: Learn How Germans Think

First of all, Uber’s dogma ‘rather ask for forgiveness than for permission’ did not work out at all and heavily damaged the image / branding of Uber in Germany. My advice: ‘rather ask for permission than for forgiveness’, because Germans simply not good at forgiving mistakes. Secondly, proactively regulate oneself. Uber can offer an adjusted service that complies with German regulation. Similarly to mytaxi, Uber needs to partner up with licensed taxi drivers. The challenge will be to be more attractive for drivers than mytaxi. Uber could leverage its size to offer special services to drivers (e.g. better rates at car dealers, repair shops, or car washes) and aggressively offer bonuses when joining Uber as a driver (similarly to the 500 USD bonus in the US). Finally, Uber needs to step up to the high expectations of the German market. Linking Uber with Miles & More, the leading loyalty program in Germany, is quintessential (not only SPG as in the US). Moreover, Germans are accustomed to the option to request regular drivers as well as order taxis in advance. The latter option is particularly important for business travelers.

[1] https://www.uber.com/cities

[2] http://fortune.com/2015/03/18/german-court-ban-uber/

[3] http://www.autobild.de/bilder/taxis-aus-aller-welt-3500104.html

[4] Own calculation, based on numbers from: Deutscher Taxi- und Mietwagenverband; BMVI; Deutscher Taxi- und Mietwagenverband – Geschäftsbericht 2014/2015, Seite 113

[5] http://www.bbc.com/news/technology-31942997

[6] http://upload-magazin.de/blog/7859-mobilitaet/mytaxi/

[7] https://de.mytaxi.com/index.html

By: Frederic Rupprecht


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Over the past semester we have identified successful mobilization for new lines of business in tech incorporate backwards compatibility, complements that may be generated by third party developers or by the core business itself, and solutions to customer pain points with significant barriers to entry.  At the same time, core product offerings can provide stand-alone value to customers through simply streamlining the interface between software users and the data they use. While many large companies have adopted software to improve productivity of individual enterprise activities, it is the recent push towards integrating business technologies onto one platform in enterprise marketing software suites (EMSS) that unlocks the opportunities inherent in holistic marketing solutions. [1]

The beginning of the twenty-first century witnessed a revolutionary incorporation of the internet with everyday communications and transactions.  This in turn generated an unprecedented volume of information, or “big data”, encompassing how consumers make decisions and how businesses operate more efficiently.   Big data analytics now facilitate myriad entrepreneurial ventures that leverage niche markets and long-tail consumer demand into viable business models.  Consequently, traditional companies in established markets have had to redesign and streamline how they serve their customers to match changes in consumer demand and increased global competition.  Enterprise software has emerged as an answer for these established companies to utilize big data analytics to guide their business strategies.  EMSS  aim to integrate a diverse range of activities including management of ad campaigns, digital assets, web content, marketing and lead resources, as well as predictive modeling. [2]  

The complexity associated with integrating diverse marketing software solutions has left EMSS development to big software players such as Salesforce.com and Adobe. In fact, the magnitude of the opportunity to create value in this space is demonstrated by the “…$3.5 billion shopping bill as it positions Salesforce as a one-stop-shop for all its customers from the sales department to, now even more importantly, the CMO’s office.”[3]   Expected benefits from EMSS consolidation of current disparate marketing and tracking software are improved visibility and collaboration between all marketing channels resulting in clear resource efficiencies and reduced total costs of strategy implementation.  Additionally, strategy development should be of higher quality and larger impact due to improved ability to create holistic solutions aligning company offerings with customer expectations. As of yet, it seems that no one EMSS incorporates both best-in-class software and seamless integration [4].  It will be interesting  to watch how the current digital marketing integration leaders discussed above shape the convergence of real-time data analytics and holistic marketing strategies to transform online and mobile commerce as they further penetrate our global economy.

1. Teradata http://applications.teradata.com/Big-Data-Hero-eBook/Landing/.ashx (October 30, 2014)

2.  Teradata http://applications.teradata.com/Big-Data-Hero-eBook/Landing/.ashx (October 30, 2014)

3. Salagar, Serge, “Salesforce’s Reinvention as a Marketing Behemoth”, http://techcrunch.com/2014/10/29/salesforces-reinvention-as-a-marketing-behemoth/  (October 29, 2014)

4. Munbach and Warner,  “Forrester Wave: Enterprise Marketing Software Suites, Q4 2014” http://www.adobe.com/solutions/digital-marketing.html   (October 21, 2014)


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When I arrived at HBS more than a year ago, I had only vaguely heard of Yelp. By now, I’m a fan, using Yelp to find restaurants, check the quality of dry-cleaners and even to evaluate tourist tours for visiting friends. So while working in London this summer, I almost instinctively went to Yelp.co.uk. However, what I found out is that Yelp’s clout on the Old Continent is not yet as strong as in the US. Instead, I discovered some local competitors of which one stood out: Qype.

With Yelp aggressively expanding in Europe these days (already five new country openings in 2012), I started wondering: is Yelp wasting its money trying to grow organically or should Qype head for the exit? After some thinking, I came to realize: Yelp should try to buy Qype, rather than waste time growing organically.

Yelp (78 million average monthly visitors) is on a global level more than three times as large as Qype (25 million average monthly visitors). In Europe however, Qype claims the top dog status with having almost 5 times as many reviews and 6 times as many mobile app downloads in Europe than Yelp. [1] Qype has entered most of its European markets in 2006-2009; while Yelp has been mostly expanding since 2010. [2] [3]

As below graph indicates, Yelp is trying to copy its US success model in Europe, by investing in Community Managers who contact local businesses and thereby aim to drive exponential growth in user reviews.

This will be a challenging task in Europe however.  I believe that the online user review business is a winner-takes-all model, driven by strong cross-side network effects between local businesses and users and high multi-homing costs for local businesses to advertise on multiple user review platforms. Currently, in most European markets, Qype is the dominant player which seems to be best positioned to take everything.

Let’s look at which levers Yelp can pull to expand organically.

A first possible approach is to pick European markets where Qype is not yet active or very strong. Traditionally, Yelp has lagged Qype in entering the largest European markets (e.g. Germany, France, Spain, Italy). As a result, it had to go head-to-head against Qype as incumbent player in those markets. In 2012 however, Yelp has entered the four Scandinavian (Sweden, Norway, Denmark, Finland) and Belgian markets, where Qype was not yet officially present. This strategy could give Yelp the leading position in those markets, but won’t move the needle on the overall front as the mentioned countries only represent ~5% of the European population. Yelp, cash-rich after a successful IPO in early 2012, could also try to outspend Qype in a generally growing market. Yelp indicated plans to spend USD 15 million on international expansion. [4] This amount has to be shared however across Asia, Latin America and Europe. As a result, Qype will likely be able to keep up on spending, even though it has collected a much smaller amount of total funding (USD 22.5 million) since its founding in 2005 than Yelp did. [1]

Another approach is to offer a differentiated offering or focus on a niche of users. For example, Yelp currently cooperates with OpenTable to complement its reviews with restaurant reservations. [5] Qype could easily copy this offering however, for example by tying up with Livebookings, Europe’s largest restaurant booking platform and OpenTable’s key competitor in Europe. [6]. Yelp could also leverage its Yelp Deals (Groupon-like coupon service) offering, but recent results seem to indicate Yelp Deals is not taking off as planned and Qype has a similar QypeDeals offering already. [7]

None of these approaches seem seems particularly convincing. Instead, Yelp could leverage the one certainty of VC-backed ventures: investors want to see cash returning at some point. As Qype is venture-backed since 2005 and has had its latest VC-round in 2010, an exit to a strategic buyer could be one of the best options at this point. Yelp could also look at one of its American peers to get inspiration: eBay tried to grow bottom-up in the late ‘90s in Europe but only became the key player in the online auction marketplace arena after acquiring pan-European iBazar in 2001. [8] Last but not least, Yelp might have to hurry up, as Qype might be more willing to sell itself to almighty Google than Yelp was willing to do so in 2009. [9]

[1] http://techcrunch.com/2012/05/11/qype-the-yelp-of-europe-reaches-860000-places-reviewed-and-expands-its-daily-deals-service/

[2] http://www.sec.gov/Archives/edgar/data/1345016/000119312511315562/d245328ds1.htm

[3] http://techcrunch.com/2012/10/04/anything-qype-can-do-we-can-do-four-years-later-yelp-enters-poland/

[4] http://online.wsj.com/article/SB10001424052970203611404577044412496187308.html

[5] http://bits.blogs.nytimes.com/2010/06/03/yelp-and-opentable-join-forces/

[6] http://techcrunch.com/2012/05/13/europes-opentable-livebookings-eats-up-another-24m-from-balderton-wellington-ekstranda/

[7] http://money.cnn.com/2012/03/02/technology/yelp_ipo/index.htm

[8] http://www.macnewsworld.com/story/7676.html

[9] http://techcrunch.com/2009/12/20/yelp-walks-away-from-google-deal-and-half-a-billion-dollars/


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Facebook Fall

 

Clayton Christensen, the Robert and Jane Cizik Professor of Business Administration at Harvard business school, describes in his oft discussed theory on disruptive innovation a cycle within businesses that causes incumbents within an industry to continually pursue the creation of higher performance products.  The idea is that incumbents generally focus their efforts on the high-end of the market where margins are the greatest.  They continue to pursue innovations that incrementally improve their product, “sustaining innovations” in the rhetoric of the theory, in order to satisfy their highest-end customers.  In this process, they create a situation where the low end of their market is highly over served.  This situation allows new entrants to compete for low-end customers who do not require the highest performance on the basis of convenience and price.   The incumbents see this competition in their lowest margin business as little threat to their core, which is the high performance, high margin segment.  As the disruptive entrant improves its product offering, the incumbent will pull out of the low end to focus even more on the high end.  This provides the new entrant greater market share, greater scale, and more opportunities to improve which eventually leads them to the next level of customers/market.  The rate of improvement for these disruptive companies is far greater than the incumbents allowing them to overtake the incumbent in the long run.

Diagram of disruptive innovation

I believe we can apply this theory to identify how Facebook and other digital giants may falter if not careful.  While the focus on larger monetary margins does not apply to services that are free to users like Facebook, I do believe there is a different type of capital that these companies obsess over.  Credibility capital seems to be the driver for sustaining innovations at these digital media companies.  Because most credibility in the tech world comes from early adopters and tech geeks, Facebook feels obligated to continually add cutting edge features to capture this credibility.  This pursuit of the cutting edge satisfies their most discerning users but produces a performance surplus at the low end of their customer base.  This over serving is most obvious during the extreme customer backlash that Facebook experiences after any redesign or new feature release.  The over served portion of their customer base does not need more features and would rather maintain a cleaner, simpler experience.

This is exactly where I think Facebook and other major digital media products will have the most likelihood of being challenged.  Potential competitors will not be able to immediately produce a more feature filled product, they can however produce a simpler, more streamlined, narrowly focused product that serves the bottom of the market by competing on convenience and ease of use.  Once they are able to get this foothold they will be able to quickly pick up speed and innovate more nimbly than the incumbents.  I plan to test this theory by trying to disrupt Evite and Facebook with products that compete with a narrow portion of their market on the low end.  Look out for Invitesy.com and Groupary.com in the coming months to see how this hypothesis plays out.

invitesy.comgroupary.com

 


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