Fundamentals of Marketing

I’ve recently re-read an introductory text of the fundamentals of marketing to take a break from the IT-related topics I’ve been studying lately, but also as a brush-up on the basics. Whenever a person or an organization seems to be headed in the wrong direction, it’s generally because they’ve overlooked some of the basic principles, so a periodic refresher is a good mental exercise.

In 1999, when the “dot-com crash” was in full swing, it was said that the reason companies failed was not because companies failed to understand technology, but because they focused so exclusively on that aspect that they neglected the fundamentals of business. And if you look at the companies that have failed over the years and consider their fatal flaws, the area in which they generally failed the worst has been marketing.

Those who have started Internet businesses or extended their operations into the channel generally get the technology right (or at least “good enough”), and the majority of them had a defensible business plan … but the area in which they failed the worst was in marketing: attracting and retaining a sufficient body of paying customers who valued the service the company was attempting to provide.

I’d go so far as to argue that this is still the reason for failure in the Internet channel. While companies tend to be more cautious and circumspect, the losers still outnumber the winners. I expect that the majority of companies aren’t so much “succeeding” as “surviving,” and suspect it’s for very much the same reason.

There is one caveat: the book is woefully outdated. Even though it was last updated in 2002, there is still scant mention of the impact of the Internet on marketing, or a correlation of existing principles to the new media, which leaves the reader to sort that out for himself. But in spite of the lack of information and the outdated nature of some of what’s there, the majority is still applicable, regardless of the channel.

Passive vs. Aggressive

I had a conversation with a headhunter who spotted my profile on LinkedIn. Because my employer monitors the Internet, I feel the need to say that it was an inbound communication (I’m not actively job-seeking) for a position that wasn’t of much interest (the firm isn’t “serious” about its Internet operations), so no worries. But that’s beside the point …

The point is that during the course of our conversation, he gave me a good grilling to gather more detailed information about my experience. And though the conversation wasn’t ultimately productive, he gave me a bit of advice about my profile: specifically, that there is a lot of information hidden behind the generic descriptions of the positions I’ve held, and that I should consider updating my resume to expose more information about specific results of my activities.

That thought stuck with me a while, and I began working offline on a more compelling profile, a task I eventually abandoned because I’m generally satisfied with my present company and am not aggressively job-seeking just now. My profile, such as it is, is just a place-holder, which reserves a seat for an unknown future time.

What occurred to me is how similar this is to the reasons I was unable to take interest in the position he was offering: the company’s Web site is merely a place-holder with some general information about its product offerings, fairly well done, but seeming to rely on prospects with an active interest to come to their site and dig for the information that would compel them to become customers. And the company doesn’t seem to have any genuine interest in changing that, as evidenced by the size of the resources they are willing to allocate.

Since then, I’ve been looking at Web sites through a different lens, which I’m sure will wear off after a while and I’ll go back to the usual routine, but while it lasts, I think it’s important to record this observation: the majority of companies online seem to have Web sites that engage in this same form of passive marketing, as if they’re waiting for a highly motivated prospects to show up and dig around for the information that will convert them to customers. And it could well be that, with a little work, they can re-tool their messaging to significantly improve their conversion rates.

But perhaps, like me, they are generally satisfied with their current customer base, feel they are making as much income as they really need, and aren’t really interested in aggressive growth. Though I doubt that many of their executives would say as much, their actions speak louder than words.

On Line, On Time, On Budget

I've added reading notes about Mark Kozak-Holland's book On Line, On Time, On Budget - which has nothing to do with developing projects under the constraints of time and budget, but is nonetheless a good resource on a different topic: practices for mitigating the risk in online projects (and the systems they create) and dealing with problems in the production environment.

While this adds to the cost and time required in projects, the author (rightly) asserts that the investment is justified by the reduction of risk of disasters that can cripple, and even sink, a business that moves mission-critical operations to the online environment.

With that in mind, it's a worthwhile read ... if you skip the first couple of chapters in which the author attempts to provide an overview of project management and focus on the material in which he writes in the greatest length, detail, and (presumably) authority.

Your Loyalty is Worth $3.60

AdWeek recently republished that the value of a "Fan" on Facebook is about $3.60 - which is a number that's going to cause a lot of people a great deal of grief, as some decision makers will invariably (mis)interpret the number to mean real dollars and pressure their marketing staff to drum up its "fan" base or use the value of Facebook fandom to decrease their advertising budget for more productive channels.

The calculations were done by a social media consulting firm, whose interests lie in pumping up the value of fandom as a way of getting businesses to hire them, but even so, they seem fairly reasonable: they consider the value of a "fan" to be equivalent to the cost of buying advertising that reaches the same number of people. So this "value" represents the amount the company would have paid if it had bought conventional advertising to reach the same number of people.

I don't see an inherent value of being listed on a person's profile as something they're a "fan" of: many users' profiles are cluttered with "fan" references to a lot of inane things. However, if the company uses social media in a less frivolous manner, each "fan" receives a stream of news and updates that add to the brand experience and may serve to bolster customer loyalty and word-of-mouth appeal ... so there's certainly some value there.

And naturally, accounting-minded types compulsively want to assign a dollar-and-cent amount to anything that has "value" - so this calculation will fill a void and give an appearance of specificity to something that is only vaguely understood.

But in the end, it isn't "real" money in terms of profit (or even revenue), nor is it even a cost savings, unless the company (unwisely) decides to reduce its advertising budget by a corresponding amount and rest on the assumption that a "fan" on facebook is as good as a paid promotion to a well-targeted audience .... which is the specious and unfounded assumption upon which these calculations are based.

Additional Content

I found another cache of reading notes in a backup folder, and posted them to my site:

Contemporary Issues in Ethics and Information Technology

This book discusses of "practical ethics" in the information technology industry. As with any treatment of ethics, I'm not in complete agreement with the author's theories of what is moral or ethical, but it's an interesting perspective to consider nonetheless.

Introduction to Mobile Advertising

The author is attempting to launch a preemptive strike by providing advice to marketers who are looking to leverage the mobile channel as an advertising medium, hopefully without polluting the well (as they have done with e-mail).

The Laws of Simplicity

Ten principles that are geared toward eliminating the unnecessary complexity and clutter in product design, which are mostly general enough to apply to any instance of practical design (such as Web design). It's a bit overly simplistic, but an interesting topic for rumination.

Corporate Politics for IT Managers

The authors attempt to spin "politics" as a positive factor in corporate structures and sell the concept to individuals with an IT background. While that seems a bit farfetched, they make a good point: people with an IT background expect things to be logical and emotionless, and have a great deal of difficulty dealing with human beings who are neither.

Web Metrics

I've posted notes on a book called Web Metrics: Proven Methods for Measuring Web Site Success to my research notes, but with some degree of reluctance. It's not a very good book, in that the author skims the surface and doesn't really get into the kinds of detail I was looking for; and my notes themselves are not very good, either, in that I did a lot more interpretation and editorializing than I prefer.

And so, I had been lukewarm on the idea of putting the notes online, but I've been goofing with an Web log analysis program with an eye toward getting it online (a task that is still on hold), so metrics have been much on my mind lately, and I've been gathering wool with an eye toward developing an original article on the topic.

So in the meantime, these reading notes address the topic from another perspective - even if it is one with which I am not entirely in agreement.

When Games Invade Real Life

I just watched Jesse Schell's presentation "When Games Invade Real Life" from DICE 2010. It caught my attention because I recognized the name, having read his book on game design, and because a number of comments and responses were from people who either dismissed him as a paranoid nut, or joined in the chorus of panic at the dystopian vision he presented.

If you can spare half an hour, the presentation is available online at http://g4tv.com/videos/44277/dice-2010-design-outside-the-box-presentation/

If you can't, the thrust of it was this: that more and more, companies are using "point" and "reward" systems as a method to motivate behavior, and Schell spoke of a future vision where technology, though use of sensors, enables commercial and political entities to monitor the behavior of the average citizen in detail and provide "points" as a way to motivate behavior.

In the end, I'd agree that it's a dystopian vision - but it's based on a handful of misconceptions:

• First, using the promise of rewards to motivate behavior didn't originate in computer gaming. The concept is central to virtually every human relationship, but technology merely provides a more precise method for monitoring the behavior and keeping score. I'd even go so far as to suggest that a more obvious and systematic method for rewarding behavior might be a good thing in the end, as compared to the vague and subjective way it is typically done.

• Second, Schell seems to assume that people will get lost in the game - that they are so motivated to earn points that they will fail to consider whether what they're being asked to do is worth the effort, inconvenience, and abdication of autonomy that is demanded in return. It's rather a dim view of humanity that doesn't hold much water, given that marketing efforts based on this premise have been dismal failures (S&H Green Stamps, frequent flyer miles, Camel Cash, etc. did not alter behavior to an appreciable degree, but merely rewarded existing behavior).

• Third, and most important of all, is that in any situation in which reward is offered for behavior, the individual or institution offering the reward is in a disempowered position. If they had power over the other party, they would not need to resort to offering rewards, but would merely command obedience. It is only because they have no power that they must offer the other party something in exchange for their voluntary cooperation.

Those things considered, I have the sense that Schell is onto something here, though perhaps he presents his ideas in a manner that is too exaggerated and silly to get his point across. But at the same time, I can't entirely agree with his detractors either: the desire of institutions to control behavior is real, and the tactics he describes are not at all unreasonable (again, it's applying technology to "improve" a practice that's as old as humanity itself) ... but there is little likelihood that people, in large numbers, will abdicate autonomy and self-interest to earn "points" toward some trivial credit or reward.

Social Media Marketing Handbook

I've added reading notes on Social Media Marketing Handbook to my site. It's a topic I approached with some trepidation, as it's a very trendy idea (in both the sense of being largely untried and possibly faddish) and it seems an ill-conceived notion to me: the marketers who haunt social media sites tend to behave like a salesman at a cocktail party, approaching people with disingenuous charm in order to catch them off-guard with a sales pitch, and I figure it's a matter of time before they do for social media what they did for e-mail - spam until they've putrified it.

For what it's worth, the authors of the book seem to acknowledge the potential problem, and the advice they provide seems fairly well-reasoned toward the side of leveraging social media for brand marketing and public relations rather than sales promotion. In some instances, they cross the line between establishing a relationship with the customer and abusing their attention at a time when they aren't interested in being marketed, but I suppose it's a matter of opinion where that line is to be drawn.

And so, it's probably a good read for marketers who are willing to take a softer approach to building reputation, for developers who maintain social media sites and need to recognize and prevent predatory tactics, and for the individuals who use social media and should be clear on what to expect as commercial interests attempt to invade yet another facet of private life.