Nathan Parsons' Blog

An interesting article in the Province today, talking about mobile app usage and users’ willingness to pay for those apps.  I think it has become so expected that everything we consume online should be free, that when it comes down to receiving the exact same content in a different format, it still doesn’t seem right to pay for it.  The article gives a few examples of this, namely that 34% of American adults pay for some form of news on a daily basis, with the majority of these being print newspapers. 

I think it all comes down to Napster, honestly.  When you can get something for free, why pay for it?  Newspapers are hoping to stop their freefall in terms of subscription losses by replacing it with online subscription fees.  But we have seen before that this will not work.  Online content is readily available from numerous sources, and print publications will need to focus on better distribution to increase advertising revenues to make up the shortfall.  By bringing news directly to people on their mobile devices, you would think this would be enough to increase distribution, but I sense that the change in consumption medium will only make a small impact.  Publishers will need to create a stronger community as well, creating a seemless merger of all platforms from which they distribute their content in order to create the maximum effect and the greatest brand loyalty.

http://www.theprovince.com/technology/Americans+slow+local+mobile+apps/4435496/story.html

In an article posted last week on eMarketer, the importance of engaging users of social media is underlined, as they say companies are moving away from just simply being “on” the major social media platforms (Facebook, Twitter, YouTube, and blogs) to actively engaging consumers.  But wait a second, isn’t that exactly what social media was put there to do in the first place?  It is a medium for people to interact, and now that interaction is no longer just peers talking to peers, but companies having open discussions with their customers.  To look back on the fact that many companies were just setting up accounts to have a presence on Facebook or Twitter seems utterly useless.  Users are interested in content and conversation, and without those two, social media platforms look and feel just like the outbound marketing those companies think they are trying to replace.

From personal experience, I know an active online community can pay huge dividends.  My band, Louder Than Love, has been using social media since we formed in late 2009.  By providing opportunities for discussion, as well as good content, we have been able to leverage Facebook and Twitter to the point where many online and print publications are taking notice.  Our online community single-handedly voted us best band in Vancouver in the Westender two weeks ago.  The incredible support also landed us press in TV Week, Miss604 and Hummingbird604’s blogs, as well as a spot in 24 HRS this Friday.  This is exactly what they are talking about when they say flip the funnel, the evangelists are spreading the word thanks to a strong base in social media.

http://www.emarketer.com/Article.aspx?R=1008274
http://www.facebook.com/louderthanlovemusic
http://www.westender.com/articles/entry/music-a-whole-lotta-love-for-local-band/
http://hummingbird604.com/2011/02/07/an-exclusive-interview-with-louder-than-love/
http://www.tvweekonline.ca/joe_biz_blog/louder_love_hotter_ever

In an interesting deal today, Facebook hired Amin Zoufonoun, former Google executive, who is expected to run Facebook’s Mergers and Aquisitions team.  Traditionally, Facebook has focused on takeovers of small start-ups, rather than major players in the industry.  This today’s move may indicate Facebook intends to change that.  But who would their potential targets be?  Companies in freefall, like Yahoo and MySpace would likely still want far more for a takeover bid than Facebook would ever consider economically viable.  With Facebook expected to go public later this year however, expectations for growth may force their hand once the initial hysteria of its IPO wears off.  I think Facebook will continue to search for young, growing, more innovative companies, as opposed to more senior, established online firms, but at some point they will need to find more mid level companies that will provide synergies.

This begs another question: does Facebook really need to grow via acquisition right now?  Although detailed information won’t be available until the company goes public, their growth rates seem to be better than most other online companies right now.  It seems like a merger with a major player would be more detrimental to growth.  One of the few benefits I can see it providing is elimination of competition.

http://www.vancouversun.com/technology/tech-biz/Facebook+hires+Google+exec+lead+efforts/4442860/story.html

HubSpot reported recently that in North America, the average cost per lead of inbound marketing is now less than 40% of what a lead generated by outbound marketing costs.  Although both inbound and outbound lead costs increased from 2010 to 2011, outbound leads increased more.  Social media increased signficantly in terms of percentage of companies marketing budgets, while outdated outbound methods like direct mail and telemarketing decreased significantly.

These are interesting stats, but what does it mean for the world of marketing?  Obviously social media will continue to rise as a means of generating revenue, as companies start to see the cost benefits.  But with social media in its hayday, and SEO growing to adulthood, where do we go from here?  Is greater adoption of social media and fewer mass marketing campaigns really the answer?  Unfortunately this study was unable to quantify any of these numbers into actual revenue. 

 Only time will tell whether inbound-only strategies will work for large consumer product companies, who have traditionally relied mostly on mass marketing.  With such companies, inbound and outbound marketing activities support each other, and it is doubtful that inbound marketing would do nearly as well without massive outbound exposure.  This study may be misleading, as it gives the impression that inbound marketing is the only way to go because it is cheaper.  Every company and every industry is different, so perhaps a more careful appoach should have been taken with this report.

http://www.emarketer.com/Article.aspx?R=1008268

Future Shop, Canada’s leader in home electronics announced that it will be opening a store-within-a-store in West Vancouver, where it will sell musical instruments.  These products will also be offered online through futureshop.ca.  It seems curious that they would opt for such a move, considering the market they are targeting is the low end, beginners instrument market.  If there is one thing to be said for beginner musicians, it is that they don’t stay beginners for long.  Guitar players, who seem to be the major target for Future Shop, will either quickly give up, or will start to develop increasingly rich tastes in instruments.  This begs the question, why is Future Shop trying to build a community of musicians that are going to outgrow their products?  Customer acquisition costs appear to be far too high, and the whole “flipping the funnel” model is completely lost.  Brand evangelists will be few, and Future Shop will need to focus their marketing efforts on the mass market, those who currently do not play instruments but are considering taking it up.  Companies such as Long & McQuade, Canada’s largest instrument retailer, rely on building long term relationships with customers, offering beginner instruments, but focusing greater effort on the high-end products that developing musicians eventually demand.  The result of Future Shop’s online instrument sales will be interesting, as none of the major Canadian music retailers currently have established positions in online sales.  Future Shop has already established itself as a leader in e-commerce.

http://www.futureshop.ca/en-CA/press/future-shop-opens-its-first-musical-instruments-shop-in-vancouver/pc8119.aspx?path=2fc45e8454e69ab92d05c7b3106aef54en08

Does anyone out there still use MySpace?  It has slowly been fading into oblivion, but it did have one thing going for it, until recently.  Most independent artists have a MySpace page, as it allows you to showcase songs, live videos, as well as photos etc. but Facebook has been the place where you take your band’s online community to get people interacting and talking about your group.  Now it seems as though Facebook will completely erase MySpace from the universe with the introduction of BandPage.  It looks, feels and even smells like MySpace’s artist pages, the only difference is you can’t input coding to really customize the look and feel as much as maybe some users would like.  It just goes to show that the biggest, baddest websites will beat up on the little guys until there is no more beating to be done.  It will be better for artists, as they will be able to both promote community as well as their music in one location, as opposed to having to use both formats.  A good move by Facebook, too bad for MySpace.

Most internet or technology companies think that R&D spending is key to long term success.  Google is no different, as it devoted 12% of its revenues to developing new products.  Although AdWords and AdSense make up the largest portions of its revenue, it is products like Google Docs, Google Analytics and Google Earth that have kept the company in the mainstream as far as being the number one resource on the web.  But these products do little to generate direct revenue.  It appears their strategy is to dominate the web first, and let the advertising revenue flow after.

Revenue growth has been what would be considered as unsustainably high in any other industry, but it has still been able to maintain consistant quarterly growth between 24% and 26%.  Earnings growth is following a similar pace, coming in between 21% and 31% per quarter over the past year.  So how is it going to be possible to maintain such high growth over the long term?  R&D will yield some products that will contribute directly or indirectly to revenue growth, but with almost $35 Billion in cash and short term investments, paired with no long term debt, Google must surely be fixing to make a deal that will ensure it continues to grow and dominate the web. 

With the expectation that Facebook will go public when it is required to disclose financial information in 2011, perhaps look for Google to make a similar move that Goldman Sachs made to snap up a large share of one of the fastest growing internet companies.

http://www.google.com/finance?q=NASDAQ:GOOG&fstype=ii
http://www.investors.com/Education/DailyStockAnalysis.aspx?id=562727

It has always been hard for the little fish to compete in a sea of much larger, much richer fish, but the Internet was supposed to change all of that.  The restaurant industry has made modest use of the Internet to this point, but many small, family-owned restaurants still don’t have websites.  Enter the solution: urbanspoon.com. 

Of course most people reading this have been to urbanspoon, and it’s definitely not something new.  But the interest lies in what the growing urbanspoon community now provides to customers.  There are really only three things a restaurant needs on its own website: menu, pictures, and contact information.  With urbanspoon now providing menu information for many small restaurants that don’t have their own websites, the question is do these restaurants really need to spend the money to develop their own websites now?  If your brand ambassadors are strong, and with urbanspoon ranking high on Google when you search any type of restaurant, this type of website provides more rich, more accessable information than a website typically would.

Complicated branding and e-commerce such as online ordering will still require that restaurants have their own website, but the gap between family-owned restaurants and larger chain restaurants is shrinking.  It just goes to show that food is something many people are passionate about, and the development of a solid group of repeat customers and brand ambassadors is now, more than ever, the biggest key to any restaurant’s success.

http://www.urbanspoon.com/c/14/Vancouver-restaurants.html

With all the talk about mobile apps and marketing, it seems right now as if things are getting blown out of porportion in terms of the expected returns for marketers.  But let’s take a closer look at the long term outlook and opportunities for companies.  First of all, 5 billion people currently carry a mobile phone, which is a much larger number than the number of people who have Internet access.  The future of phones leads towards more smartphones, and thus greater access that marketers will have to you.

So when is it a good time to invest in mobile marketing?  Internet marketing has already developed significantly, but mobile marketing is still in its infant state, which most would argue started with the release of the iPhone in 2007.  The mobile app market has seen increadible growth in 2010, and is expected to grow further.  So is this the way of the future?  The benefits to both consumers and marketers are increasing as the capabilities of mobile devices improves, and marketers should at the very least be researching their target markets to see if mobile advertising is a good fit. 

Not everyone will benefit from releasing a mobile app, but it seems as time passes and we become more and more reliant on our phones for information, not having a mobile marketing strategy will be like not having a website today.  The shift is on, and people’s demand for instant information is growing.  The question companies must ask themselves is when, not whether they should implement a mobile marketing strategy.

http://www.forms.techvibes.com/blog/preparing-for-the-mobile-marketing-revolution-2011-01-30

With the increased ability of both computers and mobile devices to stream music from the internet, questions have started to arise about the future of music and music ownership.  iTunes is currently the dominant online force in music sales, with the 1o-billion song milestone being reached Feb 24, 2010.  But even with iTunes’ increasing sales volumes, the trend seems ot be shifting away from owning music and more towards streaming.  This will inevidably cause a shift in revenue model for an already drastically changed music industry, with expectations that advertising revenue will overtake music purchases in the not-so-distant future. 

We can already see the changes when viewing music videos on YouTube or other sites, where you are forced to watch a 15 second ad before the video will play.  VEVO, one of the largest music websites alongside MTV.com, went live with its Android phone app this month, clearly demonstrating that big business is interested in the ad revenues created by music streaming.  VEVO currently has licensing agreements with three or the “Big 4” record labels (Sony, EMI and Universal), and is attracting major corporate advertisers such as McDonald’s. 

MTV.com has entered into a partnership with lone remaining Big 4 member,  Warner Music Group, and overtook VEVO as the most popular music website in September 2010.  With all the ongoing changes regarding music ownership and copyright infringement, it seems as though the major labels are finally getting smart.  You will pay for your music in the future, but likely it will be large corporate advertisers making you pay for it with your time.

http://www.billboard.biz/bbbiz/content_display/industry/news/e3i831a0b575c6cd1c6931ba669cb544f9d
http://www.wired.com/epicenter/2009/04/social-networks/