Archive for July, 2007
iTunes Sells 3 Billionth Song, Stops Innovating, Gets Sued
Today, Apple (APPL) announced that its iTunes Store has sold 3 billion songs, the last 2 billion of which were sold in half the time it took to sell the first billion. That’s great news for Apple, but they’re still missing out.
Consider the numbers:
- 6 years since the iPod’s release (November, 2001)
- 4 years of iTunes Store (April 2003)
- 3 billion downloads
- 5 million songs available (as of today)
- 100k iPods sold (as of April)
- 12 songs per album
- Just over 2 albums per ‘Pod (since April ‘03)
Of course, you can upload any music you’ve bought, “borrowed,” or stolen onto an iPod, and surely there are iTunes customers who use another device. In just 4 years, iTunes has become the #1 music retailer on the Web and #3 overall, next to Wal-Mart and Best Buy. But while iTunes may be the default online music store today, they’ve done precious little to innovate.
Meanwhile, rival EMusic, the Web’s #2 music retailer — which, unlike iTunes, is not ignoring the long tail — just launched a mobile store; a coup for independent music distribution. It’s not just indies; big-name artists are fighting back. Today, multi-platinum rapper Eminem announced he’s suing Apple because of iTunes’ shady deals and slim margins. And let’s not forget that EMI and other major labels have teamed up with Amazon to compete with Apple, or that the biggest record company in the world dropped iTunes last month.
They may have “5 million” songs available today, but soon you won’t even be able to buy any U2 songs to fill your red U2 iPod.
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Written by:Robert Gorell
Google’s WiMax Bid Makes Sense — Dollars Too?
Talk to any European who’s ever paid for mobile or data coverage in the US and — once they’ve stopped laughing — it becomes painfully obvious how badly we’re getting ripped-off. “I can’t believe how slow it is over here,” they say. “We had these phones, like, three years ago,” they add. “Why do Americans allow themselves to pay $100 per month for third-world phone service?”
[Cue laughter and eye-rolling.]
Enter Google’s deal with Sprint, and its promise to bid at least $4.6 billion at the FCC’s upcoming spectrum auction for the coveted 700-megahertz range. This frequency is the ultimate sweet-spot for broadcasting, and it’s been collecting dust ever since you stopped adjusting rabbit ears on your TV.
Why such a bold move? SiliconValleyWatcher’s Tom Foremski believes Google will become a wireless telco with its own fat backbone:
Google is not interested in search. It is interested in connecting the dots in user behavior. My cell phone can tell Google a huge amount of information about my user behaviors. And as Om Malik at Business 2.0 GigaOm, rightly points out, location is a powerful thing when you are in the contextual ad business…
Still, Foremski doesn’t see WiMax as the answer. He proposes that Google change its model entirely, and morph into a telco. But the thing is, as ComputerWorld reports, Sprint’s doing it anyway…
Mobile WiMAX should provide far superior performance than the cellular operators’ 3G networks and Sprint has said it would charge less. In simple terms, mobile WiMAX would give Sprint at least a two-year lead over its competitors in terms of providing fast wireless broadband access.
Even more important, Sprint has said it would be an open network. By contrast, Sprint’s cellular competitors think the world is clamoring for walled-garden closed networks with overpriced service plans.
Meanwhile, the likes of PBS’s Robert X. Cringely have, well, cringed at the idea. “Is Google on crack?” Cringely seems to think so…
[…] what Google has done is a bold and foolish act in which it is hard to find an upside for the company. If they intended to actually win the auction, which I wish they would, then they wouldn’t have tried setting these conditions. They would just bid a truckload of money and walk away with the spectrum. But this thing they did do, what is it? It makes no sense at all, and one could argue, in fact, that is fiduciary suicide.
[…] This could be a fake, a head feint on Google’s part. By attempting to set these conditions on any eventual auction winner, Google is tacitly telling the mobile carriers that it really doesn’t intend to bid or doesn’t intend to bid above the $4.6 billion threshold. Emboldened by this the telcos, who are also arrogant and have a kind of reptilian craftiness, may decide to save their resources and only bid, say, $10 billion. But what if Google bids $20 billion? Well then it’s a whole new ballgame.
I hope that is Google’s plan, but I fear that it isn’t.
Like Cringely, Marketing Pilgrim’s Andy Beal thinks Google might be bluffing…
[…] Threatening to become a wireless carrier is one sure way to get the attention of those already in the mobile space. Surely the likes of Verizon and AT&T would be willing to accommodate Google’s partnership ambitions, just so long as the company stays out of their business.
Perhaps. Time will tell if it really is a bluff, but a Sprint/Google network would work. Google provides the ads while Sprint manages the network. Why is this such a stretch? Beal’s skepticism seems healthy, but Cringely’s is way overblown.
Google isn’t on drugs. Google is the drug.
Google’s Objective: Organize All the World’s Information
But to what end?
By organizing, cataloging, delivering, and analyzing the intentions and behavior of people, they’ve learned how to make lots of money. Google has always been more focused on distribution and delivery than they have been on advertising. Sure, the ads are where Google’s revenue comes from, but it’s a symptom — not the cause — of their current distribution model: search.
Now, close your eyes for a moment (or at least squint so you can still read this) and picture network that doesn’t require you going to Google.com or using a freaking browser toolbar to get table-scrap ads shoved in your face — highly relevant ones at that. Who’s searching now?
So, now for my own spectrum speculation:
- Google will bid as much as it takes to win the auction.
- A revenue share with Sprint will allow advertising to pay for the whole enchilada.
- Pure-play broadband providers will continue to distinguish themselves with premium “last-mile” delivery, but they’ll have to get real about pricing. (Gen Y doesn’t fear an open network.)
- Other wireless carriers won’t take long to flirt with Google.
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Written by:Robert Gorell
Marketing Jewelry to Women
Every piece of jewelry tells a story. Ask any woman about a piece of jewelry she’s wearing and you’ll hear a tale of romance, travel, adventure, friendship, celebration or personal epiphany.
I got this in St. Martin. I looked at it in the store and I loved it. My husband snuck back the next day and bought it as a surprise.
Jack bought this for me when he was in Asia. It’s Burmese jade. It’s a really powerful stone. The ancient Chinese believed it provided protection and could even make you immortal.
This charm is an angel’s wings. My sister gave it to me before she moved to the west coast to let me know she’d always be looking out for me.
My parents got this for me as a graduation gift. I was the first person in my family to graduate from college.
I bought this for myself the day I found out I was cancer-free.
I found this in a tiny little shop in Nantucket and thought it was the most beautiful shade of blue I’d ever seen. Every time I touch it, it reminds me of walking along the shore and staring out into that beautiful sea.
So I wasn’t surprised to read Roy Williams’s Monday Morning Memo reciting the story of a jeweler who gave away 500 free charm bracelets. The people around him said he was crazy, and that he’d lose money on the deal. But this jeweler knew better.
Sure enough, after giving away 500 free charm bracelets, he sold $100,000 in beads and charms. Only 28 people who took a bracelet failed to buy a charm for it.
Jewelry is about relationships; relationships with our spouses, our new loves, our family, our friends, and ourselves. The jewelry we wear speaks volumes about who we are. Women love talking about their jewelry. But I would argue that it’s less about bragging and more about communicating; communicating something about who they are and what’s important to them. Yes, sometimes what they’re communicating is “He spent a lot of money on me,” or “This is one expensive piece,” or “I have fabulous taste.”
But there’s much more to it than that.
So, please, enough with these ads showing fashion models with pouty looks on their faces. Show me some jewelry ads that focus on what the jewelry’s communicating. Close-ups of the piece of jewelry are nice so you can see what the jewelry looks like, but what does it mean to the person wearing it?
Perhaps more jewelery designers should take note of Di Modolo’s success promoting not just their jewelry, but insight into a woman who wears it.
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Written by:Holly Buchanan
Google AdWords Optimizer: Consulting In a Box
Google announced a new ad performance tool called Campaign Optimizer that you can find once you log into your Google AdWords account. Google’s Campaign Optimizer tool analyzes your campaign budget, keywords, and landing page to see what settings have or haven’t worked well for you recently. It then generates a customized proposal of ideas for your campaign aimed at improving your advertising return on investment. You can then select which of the ideas you want to implement by clicking on a check box. It’s most effective on campaigns with at least two weeks of history.
The Campaign Optimizer may propose any combination of the following changes:
- Change daily budget.
- Add new keywords.
- Delete keywords.
- Change keyword matching options.
- Adjust keyword cost-per-click (CPC) bids.
This is certainly going to help many of the people who set their AdWords account and have left them on autopilot, hoping to get a great return. Google acknowledges that they want to continue to increase the capabilities of the Campaign Optimizer. Of course, GrokDotCom readers know optimizing your ad spend is only half the battle. Once you get them to click on your Google AdWord, you need to provide them with the proper scent and persuasive experience in order to get them to take the action you want them to take. Very few businesses — other than Google — make money by getting people to just click on the ads.
This is another step in the right direction for Google.
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Written by:Bryan Eisenberg
Do You Know How to Showcase Your Data?
One of the key elements of becoming a great web analyst is knowing how to best present your data.
Take a crack at the Graph Design IQ test and let us know how you did in the comments. What other resources like these have you used to learn about presenting data?
(By the way, anyone who has this responsibility should take Edward Tufte’s Presenting Data and Information course.)
Update: Anil asks are Pixels the new Pie Charts?
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Written by:Bryan Eisenberg
Amazon Still Dominates e-Commerce for a Reason
When they started out, Amazon.com (AMZN) promised us “Everything from A to Z.” A decade later, that’s almost true. Unless you’re looking for enriched uranium at a discount price, they’ve likely got you covered.
Thanks to the vision of founder/CEO Jeff Bezos, Amazon showed early on that they distribution, fulfillment, and an amazing customer experience — online and offline — were the way to win.
That hasn’t changed.
While the likes of eBay (EBAY) and Best Buy (BBY) suffer, USA Today writes that “Amazon won’t go down with the ship” — they won’t ditch free shipping, that is…
“Wall Street hates it when we lower prices, give away free shipping, and offer Amazon Prime,” Bezos said in an e-mail interview. “But we know in our bones that siding with the customer pays off for everyone in the end.”
But for now, all cylinders seem to be firing. During the normally sleepy April-to-June quarter, Amazon’s sales zoomed 35% higher than the year-earlier period. That came after a 32% first-quarter jump, preceded by a 34% year-over-year spike in last year’s fourth quarter — the holiday shopping season.
[…] Amazon’s sales of consumer electronics and general merchandize grew 55% to $970 million, in this year’s second quarter. The company projects 2007 sales of $13.8 billion to $14.3 billion, which would be a 29% to 34% improvement over 2006.
“It’s a pretty interesting dynamic,” Munarriz says. “There’s no back-to-school reason to buy a new computer, no holiday gifts to give, and yet Amazon has begun landing the sales these other companies aren’t.“
Without divulging specifics, the company alludes to Prime playing a larger role in boosting sales. “Once customers try Amazon Prime, it changes the way they shop with us,” Bezos says. “They love taking advantage of unlimited two-day shipping for a flat fee, and they shop across more categories.”
Why Jeff Bezos is rarely mentioned along with digerati Steve Jobs or Bill Gates is beyond me (and others, apparently*). Still, a better comparison might be made between Bezos and Wal-Mart founding father Sam Walton; both understood the power of creating value for the customer and infused it in their respective companies’ DNA.
Maybe Jeff Bezos isn’t sweating it because he knows we’re still early in the game. (If you’ve got 18 minutes, this presentation is worth its weight in gold.)
[*Another blogger, whose post I can’t find at the moment, said the same thing over the weekend in a different context. Wish I remembered who it was so I could give you credit.]
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Written by:Robert Gorell
Copy Perspective Monday: #5, Style vs. Substance
Perspective #5* really isn’t an “either/or” proposition so much as it is a continuum; not a question of one-or-the-other but of which one will dominate, and to what degree.
Here are some things to consider:
1) Persuasive copy should always have style.
Remember how even intellectual ads should affect emotions? Well, regardless of how substantive the message, you need to use drama as an essential part of the copy.
The question isn’t whether to use stylistic elements to make your points persuasive — you always should (read Made to Stick if you don’t believe me) — but whether Style will be a key selling-point.
2) Can you get away with featuring style as a (primary) selling-point?
Notice that I wrote “a selling-point,” not “the selling-point”. Unless you’re dealing with fashion items — e.g., clothing, shoes — style can’t be the selling point. But it had better be a selling-point, if not a primary one.
Take the Mini Cooper for example; a car that’s had smashing success based primarily on a style-heavy advertising and marketing campaign.
Yet style wasn’t a choice forced onto the product by its advertising. Style was a copy/advertising choice made possible by the nature of the product. The Mini is, and was, an icon of style and design. This is a main selling-point for a car, simply because it’s wildly more stylish than anything else in the low-$20k price class.
Given a higher price bracket, a style-heavy advertising message would be disastrous, as exemplified by Nissan’s early 90’s GI Joe/Barbie ad for the 300ZX.
The ad was a hit, but sales of the car disappointed. At $33k (USD), the car would be roughly equivalent to $50k in 2007 dollars. Style and performance aren’t really competitive advantages at $50k; they’re more like prerequisites for entering the price category. And advertising a prerequisite in lieu of a value proposition is never a good idea.
Again, a couple of questions remain: Can you get away with going for style over substance in your messaging? Will the product support such a choice?
3) Use style-heavy copy and messaging to convey intangible (or sensory) qualities.
In Call to Action, Bryan and Jeffrey take on the e-commerce myth that you can’t sell items on the Web that you need to smell, touch, or taste to appreciate — the old, “if you can’t smell it, you can’t sell it” adage.
In other words, use evocative language to help your customers create vivid mental images of themselves enjoying the benefits of your product/service.
This is where style-heavy copy and creative really shine. Here’s an example from the J. Peterman site:
I was browsing in a Paris antique shop one winter afternoon when a fitted leather train case caught my eye.
It contained silver-handled brushes, boot hooks, a straight razor, several silver-stoppered glass bottles…
One bottle was different. Encased in yew-wood, with a handwritten date: 1903.
Inside the bottle, there was still the faint, intriguing aroma of a gentleman’s cologne. A “prescription” cologne, custom-made for a rich traveler a century ago.
Curiosity was eating at me
I bought the case (the price was shocking) and sent the bottle to a laboratory for analysis. They broke down the residue by gas chromatography. Identified its fingerprint through spectro-photometry.
The report said: an “old woody fougère.” Clean citrus notes, bergamot, “green notes.” The middle notes: clary sage…cardamom. The dry-down: leather notes, smoky labdanum…elemi, tabac, frankincense.
The detective work was impressive.
So is the thing itself.
Women like the way it smells on a man. Like a symphony that begins loudly, then soon slides into subtle, entangling developments that grow on them.
Or so I’ve been told.
The syle of the copy creates the atmosphere for the right images and associations to flourish, and the intense sensory descriptions help the reader to almost smell the sophistication of the product. The website isn’t so great, but the copy makes all the difference.
Another fine example is this Honda Civic ad that uses style-heavy creative in an entirely different fashion than the Mini print campaign.
Remember that the Civic already “owns” substance in the mind of the consumer, so they can afford a style-heavy ad or two — especially one that evokes the physical sensation of driving their new car. But since the whole put-the-audience-in-the-driver’s-seat approach has been done to death, this ad uses a stylistic and creative twist to capture the audience’s attention and imagination. Viewers are struck by the chorus’s ability to reproduce the actual sounds, causing them to focus on the very sensations the ad hopes to convey.
It’s audible farfugnugen, baby! (Way better than “Born from jets“.)
That’s what I mean by using style-based messaging as a tactical method for conveying intangible, sensory qualities.
So, where on the style/substance continuum is your copy?
[*Editor’s note: Fans of Copy Perspective Monday may notice that the would-be final installment, #6, came before #5. To understand the madness to his method — or is that the other way around? — stay tuned next week as Jeff Sexton, Future Now copywriting instructor and Persuasion Architect, guides us through Copy Perspective #4, “Time vs. Money” (an all-time favorite). You can also learn from Jeff first-hand on September 17th at our Persuasive Online Copywriting seminar in New York.]
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Written by:Jeff Sexton
Discounting Your Discounts in Customers’ Minds
For Sale! Prices Slashed!! Marked Down!!!
People have used many of the same tactics for centuries to focus potential customers on the value they’d receive if they were to buy now. But here is a question for you:
Would your customers rather a product be marked down from $203 to $192, or would they prefer a markdown from $199 to $188?
Either way you slice it, they get an $11 price reduction. For you, it changes your final price from $188 to $192. Four dollars more for you sounds better and, believe it or not, customers perceive they’re getting a larger discount at the $192 price point. This is definitely an area that many more retailers need to test regularly.
A recent Journal of Consumer Research paper examined the notion that responses to pricing differs based on the right-hand digits in sale price figures. In fact, participants reacted as though low digits were farther apart than higher ones as well as they were about 20 percent more likely to actually buy.
Are you slashing prices so low that it is “insane“? Are you not getting the best possible effect from your discounting? Do something about it.
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Written by:Bryan Eisenberg
Facebook Follies and LinkedIn Lure
Michael Eisenberg (no relation), a partner and blogger at Benchmark Capital, is in need of a new name for his blog, Six Kids and a Full Time Job, now that a 7th has arrived — talk about a full-time job! — shares his experiences with FaceBook and LinkedIn.
LinkedIn is valuable and connects me to many entrepreneurs and potential recruits but, anecdotally, the “senior staff” is hanging out on Facebook and searching for contacts!
Jeffrey and I have been doing some similar experimentation. Jeffrey’s been focused on LinkedIn (here’s his profile) and I’ve been frolicking on Facebook (here’s my profile). GrokDotCom readers should feel free to befriend either one or both of us.
While LinkedIn currently has a greater volume (in numbers) of our “friends,” the velocity of requests on Facebook has been much greater as of late.
Are you on either one?
Many are thinking differenty about Facebook than they do about LinkedIn. Others are concerned with how much time they waste and how to manage it. According to the Telegraph, over 70% of businesses in the U.K. have blocked Facebook from within their company.
What’s your experience with both? Have you used either one successfully in your business? What do you think the future holds for either one?
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Written by:Bryan Eisenberg
Online Advertising is Floating in “Space”
On his Publishing 2.o blog, Scott Karp reckons that “Online Publishers Need to Stop Selling Space“. According to Karp, the old media mindset is clouding publishers’ ability to sell advertising.
It’s a simple question with infinite answers: Why sell “space” on a “page” when both are illusions, and the “worldwide” Web is really a universe?
Scarcity creates value, and that won’t change anytime soon. Karp’s advice to advertisers? Refine and focus on geographic locations rather than virtual ones. It’s a great point, and it compliments Bryan’s account of what advertisers should measure.
Shocking, isn’t it, that online advertising might somehow be different than TV or print? The old media crowd seems surprised.
Meanwhile, unlike major publishers, the big ad networks are stronger than ever. Still, that doesn’t say much for what happens after a person clicks-through. Time to start planning conversion paths…
TV is one channel. Print is another. But the Web consists of infinite channels. And so long as this multi-channel universe expands, banner ads and landing pages with no gravitational core will be floating in space, not occupying it.
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Written by:Robert Gorell
