Throwback gadget: shareware

Back before the internet became ubiquitous, software was distributed by bulletin boards. It was expensive to dial into a board, so magazines uses to have storage media pre-loaded with applications on the front of them.

For much of the late 1990s and early 2000s my parents used to use MacFormat magazine CDs and floppy disks as coffee coasters. One disk may come with bloatware such as the installation software for AOL, Demon or Claranet. The other disk would be full of free or paid for software.

The paid for software was often written by a single developer. It was a labour of love / cottage industry hybrid. Often the developers wrote the software to deal with a real need that they had, it was then passed on as they thought others would benefit as well.

Open source software the way we understand it now was only in its infancy in terms of public awareness. Packaged software was big money. As recent as 2000, Microsoft Office for the Mac would have cost you £235. Quark Xpress – the Adobe Indesign of its day would have cost in the region of £700+ VAT.

Into the gap sprung two types of software: freeware and shareware.

Freeware was usually provided as is, there was little expectation of application support. It would become orphaned when the developer moved on to other things

ChocoFlop Shareware Style

 

Shareware usually had different mechanisms to allow you to try it, if you could see the benefit then you paid a fee. This unlocked new features, or got rid of nag screens (like the one from image editing app Chocoflop).

In return you also got support if there was any problems with the app. Shareware hasn’t died out, but has become less visible in the world of app stores. One that I have been using on and off for over 20 years is GraphicConvertor by Lemke Software. It handles any kind of arcane graphic file you can throw at it and converts it into something useable.

Kagi Software were one of the first people to provide programmers with a way of handling payments and software activation. Kagi provided an onscreen form to fill out, print, and mail along with their payment. it was pre-internet e-commerce.

I can’t remember exactly what utility programme I first bought for my college PowerBook, but I do remember that I sent the printed form and cheque to a developer in Glasgow. I got a letter back with an activation code and a postcard (I’ve now lost) from the Kelvingrove Art Gallery and Museum.

Later on, Kagi were one of the first online payment processors.

From the late 1990s FTP sites and the likes of download.com began to replace the magazine disk mount covers. Last year Kagi died, making life a little more difficult for the worldwide cottage industry of small software developers. it was inconvenient, but now with PayPal developers have an easy way to process payments and there are various key management options.

It’s time that we talk about micro-influencers

Much of the social marketing today for consumer brand is done through what is called influencer marketing. For a number of these influencers who have a large social following, working with brand has become very lucrative. But one of the hottest tickets at the moment within communications agencies are ‘micro-influencers’; Edelman Digital lists it as a key area in Digital Trends Report . There is widely cited research by Marketly that claims there is an engagement ceiling (at least on Instagram). Once a follower count gets beyond that, engagement rates decline. This micro-influencer sweet spot is apparently 1,000 – 100,000 followers.

What are micro-influencers?

Brown & Fiorella (2013) described micro influencers

Adequately identifying prospective customers, and further segmenting them based on situations and situational factors enables us to identify the people and businesses – or technologies an channels that are closest to them in each scenario. We call these micro-influencers and see them as the business’s opportunity to exert true influence over the customer’s decision-making process as opposed to macro-influencers who simply broadcast to a wider, more general audience.

Brown & Fiorella wanted to focus on formal prospect detail capture and conversion. It sounds like an adjunct to integrating marketing automation from the likes of Hubspot and Marketo into a public relations campaign.

This approach is more likely to work in certain circumstances:

  • Low barrier to conversion (e-tailing)
  • Business-to-business marketing – for instance Quocirca did some interesting research back in 2006 that showed endorsements by a finance directors peers at other companies was likely to have a positive effect on a prospective supplier

Brown & Fiorella’s thinking tends to fall down, when you deploy their approach to:

  • Consumer marketing
  • Mature product sectors
  • Mature brands

Brand preference and purchase is much more dependent on reach and repetition to build familiarity and being ‘top-of-mind’ as a product.

Most money in influence marketing is spent in the consumer space as B2B marketing tends to struggle with:

  • Reach
  • Volume of conversation interaction

(At least outside of the US).

Brown and Fiorella are 180 degrees away from the approach of consumer marketing maven Byron Sharp and his ‘smart’ mass marketing approach. This means that PR and social agencies are often out-of-step with the thinking of marketing clients, their media planners and other agency partners.

Engagement matters less than reach or repetition of brand message for mature sectors or brands. For many consumer brands the drop off in engagement amongst macro-influencers is a non-issue, a red herring.

The only part of the engagement measure that I would be concerned about in that case would be content propagation amongst my defined target audience – how widely had it been repeatedly shared as this would affect total reach.

If the client and planner are using Sharp’s thinking then this audience would be wide, but a certain amount of the propagation would be wasted – for instance outside targeted geographies.

From the perspective of communications agencies I can understand the obsession with engagement being part of their DNA. These businesses are in the offline world are engagement agencies; whether its politicians, regulators, fashion stylists, movie set designers, editors, journalists, TV producers or DJs.

Why are micro-influencers a hot topic now?

The most obvious reason is that more popular ‘macro-influencers’ are well informed about their commercial value which has been driven up to a point where they look expensive in terms of cost, even if you charitably look at it on a ‘per follower’ basis.

On the supply side of the equation influencer representation benefit from having more ‘inventory’ that can be sold at various price points to marketers.

Challenges in influencer marketing

From a marketing perspective there are a number of issues in influencer marketing – these factors are either unknown data points or represent an issue with the brand experience

  • Quality of brand placement
  • Cost per reach
  • Consistency of reach (how confident is the media planner that the influencer will achieve a certain level of reach)
  • Message repetition amongst the audience that I want to reach

Which makes it harder to factor into an econometric model that would help justify the investment in influencer marketing as a contribution to sales.

Let’s have a look at data around a campaign for a smartphone manufacturer that has been touted as successful by the agency involved. We don’t know the cost as its likely to be client confidential.

  • 2 million YouTube views (we don’t know how many of these were driven by advertising)

  • 75,000 likes

  • 13,587,159 impressions driven by 6 influencers

  • 10,689 clicks from 90 posts

  • 10 million impressions for the promotion of a colour variant of the smartphone model and 92,320 engaged

  • 4.6% engagement rate (which we’re assured is 41% higher than the industry average for branded content)

What this doesn’t tell us:

  • Reach amongst target audience
  • Repetition amongst target audience

Which could then be used to provide an estimate of its contributory factor to sales if you had an econometrics model. You can’t access how it works next to other tactics and there are limited outtakes for the learning marketing organisation.

Quality of brand placement

Many brands have struggled to get their brand in the influencers content in a way that:

  • Represents it in a meaningful way (for example beyond unboxing videos, one smartphone looks rather like another)
  • Doesn’t feel ad-hoc or awkward

Some luxury brands have managed to get around this by keeping control of the content; a good example of this is De Grisogono – a family-run high jewellery and luxury watch brand. They work with fashion bloggers that meet their high standards and invite them to events. (It’s obviously an oversight on their part that I haven’t had an invite yet.)

De Grisogono provides them with high-quality photography of its pieces and the event. They get the best of both worlds: influencer marketing but with a high standard of brand presentation which raises the quality of the achieved reach.

There is a school of thought that micro-influencers will be easier to manage in order to assure quality of brand placement. However, micro-influencers are likely to be aspiring macro-influencers and each will have a clear line of demarcation in their own head that they won’t cross. The reality is one of complexity dependent on:

  • Brand power
  • Relationships
  • Credibility of proposed idea
  • Impact on aspirations – could they get more followers by taking a stand and strategically burning a brand?

Cost per reach

Influencers tend to talk about themselves in terms of the number of followers that they have. However many followers seldom engage with the influencers content. This happens for a number of reasons:

  • The follow button is often used as a book mark or a like button
  • Algorithmic changes to social platforms and the volume of the social firehouse itself drown out brands (and these influencers are all about the brand of ‘me’). Whatley and Manson’s research at Ogilvy on the decline of organic reach in Facebook pages  is worthwhile having a look at

Followers as a data point is not the straight analogue of reach that the industry and influencers would have you believe based on how they present their data.

Reach numbers that are presented are often not that much more useful:

follower

(Data via Golin, TapInfluence and Marriott)

Consistency of reach

So influencers may give us follower numbers or ‘total reach’ calculations but how do we know what reach their brand placement content is likely to achieve? At the moment, I don’t know how consistent influencers are, I have a ‘personal time’ data project currently in progress on it. More on that hopefully in a later post. There isn’t off-the-peg data that I know of, so I am pulling together a data set.

Message repetition

Until we understand the ‘quality of brand placement’ we wouldn’t be able to understand whether a piece of influencer content was a point of content delivery. We’d also need to know do audiences of influencer A also look at media channels or other influencers that we have in our overall media plan. There often isn’t an overall media plan and there often isn’t sufficient quality of audience data for influencers.

More information
Edelman Digital Trends Report – (PDF) makes some interesting reading
Instagram Marketing: Does Influencer Size Matter? | Markerly Blog
Influence Marketing: How to Create, Manage and Measure Brand Influencers in Social Media Marketing by Danny Brown & Sam Fiorella ISBN-13: 978-0789751041 (2013)
Facebook Zero: Considering Life After the Demise of Organic Reach

Belated Christmas Gift: updated set of marketing data slides

I started pulling together and publishing different data sets focused on online marketing from social platforms to the size of mobile screens. I think that it might be useful for strategists and planners. Feel free to use. If you do find them useful drop me a note. You can scroll through the embedded version below and download the PowerPoint version here.

Why Amazon wins?

Much has been written about how Amazon has:

  • Amazing data and uses it as a way to try and better understand intent
  • It has access to large amounts of capital so it can scale internationally and defeat local e-tailing champions
  • Amazing logistics foot print to satisfy consumer needs quickly

But one of the biggest factors in Amazon’s success is the quality of competition that it often faces.

Let me give you an example that happened to me this week. I have kept the vendor’s name anonymous because they are no worse than many other e-tailers – and they make damn fine iPhone cases.

I got an iPhone 7 Plus when the phone first came out and ordered a protective case from my usual preferred case manufacturer. I ordered direct because Amazon hadn’t got it in stock at the time. The supplier sent me two cases instead of one – probably an order fulfilment error.

I then get an email from this week:

Keep your Pixel and Pixel XL protected and pristine. XXXX Certified XXXX Protection

Protect your Google Pixel and Google Pixel XL with XXXX Certified XXXX Protection.

Commute with Confidence with our Commuter Series or choose Rugged Daily Defence with our Defender Series.

Shop Google Pixel Shop Google Pixel XL

Let’s think about this for a moment. They have me buying a cover for an iPhone 7 Plus. The average consumer replaces their phone probably on a two to three year cycle

Citigroup estimates the phone-replacement cycle will stretch to 29 months for the first half of 2016, up from 28 months in the fourth quarter of 2015 and the typical range of 24 to 26 months seen during the two prior years.

(Wall Street Journal – Americans Keep Their Cellphones Longer)

They have a number of pieces of information about me:

  • Date of purchase
  • Model of phone that I purchased a case for
  • Colour combination that I selected
  • Gender (based on my title)
  • Address
  • Email

They will also know information about the phone model itself since they make an Apple certified product:

  • Dimensions
  • Date of release

They also know based on previous Apple launches that this handset is likely to be in the product line for two years, one year as the flag ship product and the next as a cheaper line.

So why did they decide to send me the Google Pixel email?

I can think of three likely hypothesises:

  1. The company’s email marketers don’t have access to information that could be used for targeting – good for privacy, not so good for successful email marketing campaigns
  2. The email marketers had the data but didn’t bother to use it – poor work
  3. The email marketers viewed the Pixel as a much buy device and considered me a likely purchaser – their opinion would be at odds with reviews of the Pixel

Using Occam’s razor the answer is likely to be one or two. It’s not that hard for Amazon to win with competition like this.

Pre Black Friday email marketing

I started receiving ‘Black Friday’ emails since the beginning of November. I eventually gave in and opened Apple’s email which arrived on the Tuesday morning.

Here’s what it looked like on mobile (iPhone 7 Plus)
Black Friday mobile email
Here is what it looked like on desktop email
Black Friday Desktop Email
Here is what the landing page looked like
Black Friday landing page

The call to action was to come back on Friday for great deals. There was a missed opportunity there was no reminder mechanism, no suggestion to bookmark the page and no way to build a list of things to purchase on the Friday.

Judging by the artwork, Apple wants the big push to be around the Apple Watch 2. Given the overall performance of smart watches as a sector this might be a bit ambitious, or indicate a supply chain imbalance in other product lines like the iPhone 7 and the new MacBook Pro?

If it was about lower price points, I would have thought that there would be more of a push on stocking fillers like the Airport Extreme or Apple TV to build buzz and store traffic?

The language was quite interesting

Our one-day shopping event will be here before you know it. Come back this Friday to tick everyone off your list

‘Tick everyone off’ in British English also means – annoy everyone or make them upset. Perhaps the copywriting could do with some finessing, given how that this is likely to be viewed at a glance if Apple is lucky by many consumers.

The internet of hacking or WTF is happening with my smart home?

Mirai – is a bot network that is powered by a range of devices including infected home routers and remote camera systems. It took over these systems by using their default passwords. The network of compromised machines is then targeted to overload a target network or service. Last week the Dyn DNS service was targeted which restricted access to lots of other services for users on the east coast of the US.

DNS is like a telephone directory of internet destinations, if no one knows where to go it becomes a lot harder to get in touch.

DDoSing
Mirai didn’t spring miraculously out of thin air. It finds its history in passionate gamers who used distributed denial of service (DDoS) attacks to slow down or even kick opponents off online gaming platforms. Eventually the gaming companies got hip to it and went after the cheaters, not to be outdone the cheaters went after the gaming companies.

Taking a service offline using DDoS became a source of extortion against online banking and e-commerce services. Attacks can be used as a form of ‘digital hit’ to take out opponents or critics like online security commentator Brian Krebs.

Computing
Moore’s Law meant that computing power has become so small and plentiful that it is surprising what we often have in the palms of our hands. The first Cisco router was built on the circuit board of a Sun Microsystems workstation. Home routers now are basically small computers running Linux. A CCTV camera box or a DVR are both basic PCs complete with hard drives.

Back in 2007, BlackBerry co-founder Mike Lazaridis described the iPhone as

“They’ve put a Mac in this thing…”

The implication being that the power of a sophisticated PC was essentially in the palm of one’s hand. The downside of this is that your thermostat is dependent on a good broadband connection and Google based cloud services and your television can get malware in a similar manner to your PC.

Security
For a range of Chinese products that have been acknowledged as part of the botnet; the manufacturer acknowledged that they were secured with a default admin password. They fixed the problem in a later version of the firmware on the device. Resetting the default password is now part of the original device set-up the first time you use it.

The current best advice for internet of things security is protecting the network with a firewall at the edge. The reality is that most home networks have a firewall on the connected PCs if you were lucky. The average consumer doesn’t have a dedicated security appliance on the edge of the home network.

Modern enterprises no longer rely on only security at the edge, they have a ‘depth in defence’ approach that takes a layered approach to security.

That would be a range of technology including:

  • At least one firewall at the edge
  • Intrusion detection software as part of a network management suite
  • A firewall on each device
  • Profile based permissions across the system (if you work in HR, you have access to the HR systems, but not customer records
  • Decoy honey post systems
  • All file systems encrypted by default so if data is stolen it still can’t be read

Processes:

  • Updating software as soon as it becomes available
  • Hard passwords
  • Two-factor authentication

Depth in defence is complex in nature, which makes it hard to pull off for the average family. IoT products are usually made to a price point. These are products as appliances, so it is hard for manufacturers to have a security eco-system. The likelihood of anti-virus and firewall software for light bulbs or thermostats is probably small to non-existent.

The Shenzhen eco-system
Shenzhen, just across the border from Hong Kong has been the centre of assembly for consumer electronics over the past 20 years. Although this is changing, for instance Apple devices are now assembled across China. Shenzhen has expanded into design, development and engineering. A key part of this process has been a unique open source development process. Specifications and designs are shared informally under legally ambiguous conditions – this shares development costs across manufacturers and allows for iterative improvements.

There is a thriving maker community that allows for blurring between hobbyists and engineers. A hobbyists passion can quickly become a prototype and then into production . Shenzhen manufacturers can go to market so fast that they harvest ideas from Kickstarter and can have them in market before the idea has been funded on the crowdsourcing platform.

All of these factors would seem to favour the ability to get good security technologies engineered directly into the products by sharing the load.

China
The European Union were reported to be looking at regulating security into the IoT eco-system, but in the past regulation hasn’t improved the security of related products such as DSL routers. Regulation is only likely to be effective if it is driven out of China. China does have a strong incentive to do this.

The government has a strong design to increase the value of Chinese manufacturing beyond low value assembly and have local products seen as being high quality. President Xi has expressed frustration that the way Chinese manufacturing appears to be sophisticated, yet cannot make a good ballpoint pen.

Insecurity in IoT products is rather like that pain point of poor quality pens. It is a win-win for both customers, the Chinese manufacturing sector and by extension the Party.

More Information
WSJ City – Massive Internet Attack Stemmed From Game Tactics
Your brilliant Kickstarter idea could be on sale in China before you’ve even finished funding it | Quartz
Asus lawsuit puts entire industry on notice over shoddy router security | Ars Technica
Europe to Push New Security Rules Amid IoT Mess — Krebs on Security
Why can’t China make a good ballpoint pen? | Marketplace.org

According to Google, PR and SEO are no longer earned media-only disciplines

Back in August Google started to roll out changes to its Keyword Planner tool. Users who did not have an active AdWords campaign running on there account would no longer get search volume data. Instead an indicative range appeared.
Crippled version of Google Keyword Planner
Information that isn’t particularly useful.

Search volume as a directional metric is important for both online and offline communications:

  • Public relations and branding specialists to understand the language of the customer. PRs would use it to help hone key messages. Branding specialists would use it to help the brand lexicon or editorial guide
  • SEO specialists use this information as part of their process to pick the most important key words for a web page or website

Now PR people and branding specialists need to have access to an account with a continuous advertising spend running. Even if they aren’t doing any online-related work themselves.

The road to paid media only access has been a long one: KeyWord Planner had been announced in 2013, a result of Google rationalising some of the existing tools into one. Keyword Tool and Traffic estimator merged. KeyWord Planner was notable for requiring an AdWords account, this was a noticeable change and not too subtle hint from Google.

Unlike other product changes this latest ‘enhancement’ was not announced on any of the Google product blogs like Inside AdWords, but instead was acknowledged retrospectively by a Google spokesperson answering a question from Search Engine Land. It has been up to the community to explore the full implications.

One aspect is that if you reduce your Google advertising spend, you lose access to the data. So, PR, branding and SEO become inextricably linked with PPC advertising.  Critics could accuse Google of abusing its market power with 95%+ share of search in Europe; but Google would argue that it has had to move this way because of bad actors. Secondly, since the service had been provided for free since it was launched at the end of 2008, there is never any guarantee that it would be free to use.

Google now has antitrust investigations coming at it in markets around the world, they probably just don’t care any more and its all about profit maximisation. If one looks at the Alphabet Group overall, Google is the obvious cash cow.

However it is ironic now that Russian search engine Yandex via its Wordstat tool provides better free information on search volumes than Google.

More information
What the heck is going on with Google Keyword Planner? | Search Engine Journal
Introducing Keyword Planner: combining the Keyword Tool and Traffic Estimator into One | Google Inside AdWords blog
Announcing the Search-based Keyword Tool | Google Inside AdWords blog
Yandex Wordstat

The Yahoo! Data Breach Post

Yahoo! had a data breach in 2014, it declared the breach to consumers on September 22. This isn’t the first large data breach breach that Yahoo! has had over the past few years just the largest.

In 2012, there was a breach of 450,000+ identities back in 2012. Millions of identity records were apparently being sold by hackers in August 2016 that the media initially linked to the 2012 breach. It would be speculative to assume that the records for sale in August was part of the 2014 raid.

The facts so far:

  • 500 million records were stolen by the hackers. Based on the latest active email account numbers disclosed for Yahoo! many of these accounts are inactive or forgotten
  • Some of the data was stored unencrypted
  • Yahoo! believes that it was a state sponsored actor, but it has offered no evidence to support this hypothesis. It would be a bigger reputational issue if it was ‘normal’ hackers or an organised crime group
  • There are wider security implications because the data included personal security questions

The questions

Vermont senator asked the following questions in a letter to Yahoo!:

  • When and how did Yahoo first learn that its users’ information may have been compromised?
  • Please provide a timeline detailing the nature of the breach, when and how it was discovered, when Yahoo notified law enforcement or other government authorities about the breach, and when Yahoo notified its customers. Press reports indicate the breach first occurred in 2014, but was not discovered until August of this year. If this is accurate, how could such a large intrusion of Yahoo’s systems have gone undetected?
  • What Yahoo accounts, services, or sister sites have been affected?
  • How many total users are affected? How were these users notified? What protection is Yahoo providing the 500 million Yahoo customers whose identities and personal information are now compromised?
  • What steps can consumers take to best protect the information that may have been compromised in the Yahoo breach?
  • What is Yahoo doing to prevent another breach in the future?
  • Has Yahoo changed its security protocols, and in what manner?
  • Did anyone in the U.S. government warn Yahoo of a possible hacking attempt by state-sponsored hackers or other bad actors? When was this warning issued?

Added to this, shareholders and Verizon are likely to want to know:

  • Chain of events / timing on the discovery on the hack?
  • Has Yahoo! declared what it knew at the appropriate time?
  • Could Yahoo! be found negligent in their security precautions?
  • How will this impact the ongoing attrition in Yahoo! user numbers?

Additional questions:

  • How does Yahoo! know that it was a state sponsored actor?
  • Was there really Yahoo! web being sold on the dark web in August?
  • Was that data from the 2014 cache?
  • How did they get in?

More information
An Important Message About Yahoo User Security | Yahoo – Yahoo!’s official announcement
UK Man Involved in 2012 Yahoo Hack Sentenced to Prison | Security Week
Congressional Leaders Demand Answers on Yahoo Breach | Threat Post

Fixing email the Apple way

Despite millennials and social networks email is still the killer app of the web. But all is not good with email. I look at friends home screens and see thousands of unread emails in their inbox. They use search to find what they need.
Email bankruptcy
It gives me heart palpitations just looking at the photo above. It was apparent for years that something needed to be done for email. Identity for e-commerce and social platforms still hinges on email addresses. For networks like Quora and LinkedIn, much of your interaction is driven in response to email prompts.

Email is a mature technology that works across a range of platforms and generally does a good job. It’s searchable, it has a permanence. Alongside the address book app, its a database to many aspects of your life from concert tickets, friend’s news or interaction with the government.

There has been a renaissance in quality email newsletters such as Azeem’s The Exponential View or The Hustle. Email marketing continues to be an effective marketing channel for e-commerce businesses.

Apple’s iOS 10 and MacOS Sierra have tweaked the email experience on their default mail.app.
Ios10
Apple has managed to detect the unsubscribe function in many email newsletters and give users control over their subscription at the top of each email.

Using the beta version of Sierra and iOS10 I found that I unsubscribed from many marketing emails. This seems to hold out in some of the anecdotal feedback I’ve heard from friends as email campaigns have reported a surge in unsubscribes since it rolled out from beta to general availability. This has been the same on both b2b and b2c clients.

However many of these people will be unengaged subscribers who hadn’t gained sufficient momentum to cancel without Apple’s assistance. Google takes a different approach, Gmail masks these emails in a separate folder – out of sight, out of mind.

A second part of this was that I found I was prepared to take a chance on new interesting newsletter subscriptions. The content that I did have, I engaged with more because it was easier to get rid of meh content.

I think this is an exciting development, it is a palette cleanser, an opportunity for email marketers to raise the quality of content and engagement. An opportunity to get direct immediate feedback through subscriptions and cancellations. A confident email reading consumers is a fantastic opportunity for agencies and progressive clients. However this will only happen if they chose to look beyond the dip.

Technology companies, we have to talk about China

Uber has been cited as an example of how US technology companies can’t succeed in China, but the wrong lessons are being learned. Let’s look at a couple of examples.

Facebook

Facebook is viewed as having ‘failed’ in China. There are two parts to this. First of all lets talk about Facebook’s business model, simply put it monetises consumers attention by selling advertising and related services to businesses.  In order to get consumers in a relevant market, it has to comply with local laws. In the EU it has a relatively easy ride as it is policed by the Irish government for compliance with EU regulations.

China has taken much more of hands on regulatory approach to the internet, like all media. Much of this is down to keeping a ‘harmonious’ society. You might not like the way they do it, but the party views internal pressures in a similar way to Western views on terrorism. Whether that terrorism in the name of Islam or black bloc anarchists.

China has an extensive censorship mechanism, it is a part of doing business there. Whilst the content maybe different, it is similar to the censorship structure for the UK in many respects:

  • Government steered industry practice
  • Legislation

One of the big differences in the UK is site blocking to protect commercial rather than government interests such as sporting event rights. Facebook chose not to implement systems that would make it compliant in China – so it isn’t available to ordinary Chinese consumers. Facebook does sell advertising in China to companies who want to reach western consumers. It has been successful in its advertising sales, sometimes to the detriment of western consumers. State-owned enterprise (SOE) Air China features as a case study for Facebook’s advertising business. San Francisco-based Papaya Mobile has built a successful business providing an online portal that allows Chinese businesses to target Facebook users abroad. I’d argue that Facebook isn’t failing in China.

If Facebook wanted to get Chinese consumers on board it had three market entry routes:

  • Build a separate Chinese product. This is something that US companies generally don’t do, they may localise the product but they avoid forking the product
  • Build infrastructure that complies with Chinese regulations. Google had done this in the past, before they chose not to
  • Have a local partner do the relevant work. Skype successfully entered the Chinese market with Chinese partner TOM. The Chinese client of Skype is known to allow government listening and weaker encryption. But in a post-Snowden world that shouldn’t be too surprising, the Chinese lack the subtlety of other countries security apparatus in their implementation but the goals are similar

Facebook somewhere along the line decided that they didn’t want to enter the Chinese market for consumers as is; but may do in the future if market dynamics change.

It is notable that Facebook’s growth in both Korea and Japan was slower than comparable western countries. Local platforms addressed the market better (KakaoTalk) and social norms of ‘nick name’ identities allowed to Twitter to become a comparative success in Japan.

Google

Google had entered China in 2005. They hired a local executive to run the business who had previously worked at Microsoft. Four years later they were third in the market behind local firms Baidu and Soso (Tencent subsidiary). Google had an estimated 29% market share.

So Google was in third place before it had legal issues in China. Why was it in third place? Google is thought to have under-estimated the growth rate in terms of number of web pages of the Chinese internet. In the same way that Yahoo! and Bing under-indexed the western web and paid for it by losing market share to Google, Google lost out to Baidu. This was about localisation and agility rather than the system being gamed against it. Google hasn’t indexed non-Roman languages as well as English, French etc.

Google was particularly beloved of those Chinese who had a more international life; scientific researchers, journalists, bankers, marketers and the more cosmopolitan members of the middle class. But for the average Chinese consumer, other search engines did a better job.

Google services ran into trouble with a YouTube video showing security forces and protestors in Tibet. Google took action in the Chinese market when Chinese dissidents had their Gmail accounts hacked. Again in a post-Snowden world this isn’t the shocking scandal it would have once been. Complaints in the US together with this incident meant that Google was prepared to give up on Chinese consumers. The business still has an R&D team in China and works with manufacturers on Android.

So why do American companies succeed elsewhere?

The simple answer is one of scale. The US is a single country with largely the same regulatory framework, a single language, good infrastructure and access to large amounts of capital. It is a market for approximately 324 million people. This allows businesses to grow rapidly to a scale that is internationally competitive.

By comparison although the EU has an addressable population of just over 510 million people, you have different legal systems (though it is becoming more harmonised by the EU). You have 24 languages, a common currency but diverse banking systems.

This comparative lack of scale in EU technology start-ups has two effects:

  • They are harder to grow as there isn’t a comparable domestic market to incubate businesses. If they do grow, the better access of capital allows an EU start-up to be bought out. Look at last.fm, DeepMind or ARM as examples of this.  Some businesses have managed to break like Spotify as they tapped into US funding. It is also pertinent to point out that Spotify isn’t make money
  • With some noticeable exceptions like Spotify, getting capital to grow a business internationally is much harder. It isn’t realistic for a European start-up to pursue the Amazon / Uber model of betting against competition by assuming that they will always have access to cheap plentiful capital

This has meant that Facebook, Google and the like have risen largely unopposed in Europe. They have found it so easy that they’ve gained monopoly levels of market share. This is unlikely to change anytime soon. At best Europe acts like a ‘feeder team’ of talent and IP to US start-ups. Where Europe is successful is largely based on past dominance in legacy industry sectors like vehicle manufacture and pharmaceuticals. This also partly explains Europe’s stagnant growth.

China is different

China is the polar opposite of Europe. It has an addressable market for 1.4 billion people. Whilst there are many dialects in China the party railroaded Mandarin as the lingua franca and simplified Chinese as a common written language.  Live and incomes in the tier one cities would be comparable to parts of Europe. Economic growth has slowed to 6 per cent a year, but the economy is still flush with capital.

A huge population means a huge pool of qualified staff. You combine this with a large amount of capital and you have a business than can out-Uber Uber.

The culture of China is different. Chinese consumers like to go to Starbucks and KFC, use Apple products and wear luxury fashion brands; but only because these fit into Chinese cultural constructs. That means that products need to be optimised for the local market.

China has been through huge change since the rise of the party, which means that the owner executives of these companies have have a greater desire for risk to capitalise on ‘the now’.

This means that most of the advantages Silicon Valley has: agility of action, talent and capital are negated in their competition in China. In addition, since they committed to an approach that already works, adaptation to local market needs are limited. This is interpreted by the Chinese counterparts as hubris; the reality is more subtle.

China does have strategic interests which means that it regulates ‘state secrets’ very carefully. Mapping technology is carefully controlled. It has tried to use its size to benefit its businesses. In the same way that the EU through ETSI defined the GSM standard, the Chinese government tried to do the same with TD-CDMA. The reality is that favoured companies like Huawei have managed to allow their clients to get cheap funding for purchases via Chinese state-owned banks.

Like the US government, the Chinese government uses research funding and infrastructure spending to direct some aspects of technological development. Since the administration of Hu Jintao, the Internet of Things (IoT) has been a government focus.

The danger of the invincible China myth

Whilst China wants to have a world-beating successful technology sector. There are problems that comes with a perception of invisibility, China will find it hard to keep open markets. Trade negotiations will become intractable as the other party sees no upsides to working with China. An eco-system where foreigners have a modicum of success is a better outcome for the Chinese government.

Uber’s problems were entirely of their own making, their choice to go into China was likely their first error. Not because it is excessively gained against them, but because they didn’t have any comparative advantages over Didi.

More information
Uber has destroyed the Western myth that companies can grow huge in China without being Chinese
Content filtering by UK ISPs | Open Rights Group Wiki
Facebook “Will Do Everything We Can” To Address Shady Dress Retailers | Buzzfeed News
Facebook for Business | Air China
Papaya Shoptimize | Papaya Mobile
China listening in on Skype – Microsoft assumes you approve | GreatFire.org
Spotify financial results show struggle to make streaming music profitable – The Guardian

Throwback gadget: SnapperMail

At the end of 2001, I started to prepare of leaving my job at Edelman. This meant upgrading my home IT set up. I picked up an iBook. The iBook was Apple’s consumer-orientated laptop made from 1999 to 2006. Mine was a second generation ‘Snow’ laptop with a G3 processor, dual USB sockets and a combo drive which allowed me to watch DVDs and burn  CDs.

I used the move to go on the first version of OSX. The move also meant that I got a new email account, my default account to date. It had two key attributes:

No adverts, so it looked professional in comparison to having a Yahoo! or Hotmail email address and it wasn’t tied to an ISP.

IMAP support which allowed me to use my email account across different devices that all sync across the devices. POP3 downloads the  emails from the server to the device

My iBook was my only source of email access whilst I left Edelman and then eventually joined Pirate Communications. My first smartphone was a Nokia 6600, which I used alongside a Palm  PDA – l got this sometime around the end of 2003. The 6600 supported IMAP out of the gate, it was slow, but I was connected.

The 6600 was eclipsed by Palm’s Treo devices which were a better device. I moved from the 6600 and a Palm Tungsten T3 combo to a Treo 600 smartphone in January 2005.

The process wasn’t smooth. The Treo was sufficiently fragile that I got a translucent silicon jacket that worked surprisingly well with the keyboard and screen protector to look after the touchscreen. Software wise the Treo 600 was a step back from the Tungsten T3 PDA. The screen was smaller and the software felt sluggish in comparison. I had deliberately chosen the 600 over the 650 because I had previously worked agency side on the Palm account and been a long-suffering device owner so knew how crap they were at bug fixes.
snapperfish limited
Unfortunately Palm had not been as progressive in comparison to Nokia with its default email client. The software didn’t support IMAP. Fortunately I used to follow Mitch Kapor’s blog and he had recommended an app from a small New Zealand company SnapperFish.

SnapperMail was a compact modern email client. It has a number of features that we would expect now:

  • It supported IMAP
  • It supported SSL client to mail box encryption*
  • it was really easy to use
  • You could work with attachments including zipped files**
  • There was no restriction on the file size of attachments, the only restriction was your email account rather than your email client

This looks like the kind of technology you would have thought Palm should have done. At the this time Palm were competing against Microsoft Windows Mobile 2003, BlackBerry 6200 series, 7100 series and early 8700 series. Yet the default email client was back in the 1990s.

*The full-fat application cost US$39.99

**SnapperMail came bundled with HandZipper Lite which handled the compressed files and JPEGWatch Lite image viewer

I used this alongside MetrO – a public transit directions app and QuickOffice Pro – to read Office documents as part of my modern smartphone experience. It wasn’t just me that loved SnapperMail, it was praised by Walt Mossberg back when he wrote at the Wall Street Journal.

SnapperMail won two Palm Source (Palm’s software licence business) Powered Up awards in 2003. It was recognised as Best Productivity and Best of the Best Solution.

More information
SnapperMail Has Solid Software For Savvy Mobile E-Mail Users | WSJ
QuickOffice
MetrO – open source mass transit application
PalmSource Welcomes Developers with Awards, New Tools; Announces New Licensees | PalmSource press room

I/O and Google’s viewpoint on technology

Google I/O happened on May, 18 – 20.  There had been a lot of pieces of coverage about the different products and services released. But I wanted to spend a bit of time reflecting on what I/O tells us about Google’s viewpoint on technology.

Giving apps a second chance

Google knows as well as anyone that the app moves towards a maturity model where consumers stick with the core apps that they want and then don’t go any further.
apps
Data shows that consumers use their top five apps 88 per cent of the time. So why would Google care when it knows that 60 percent of the top apps on the Android platform?

The reasons for an expanded app usage include:

  • A proportion of Google’s advertising (like Facebook) is derived from the promotion of app downloads
  • Android devices are reaching market maturity in many markets, growth is likely to come from new uses – at least some of which will be derived from third party platforms
  • Google has staked its ambition in the PC sector on its Chrome operating system being able to run apps from the Android eco-system. In order for that to happen there needs to be a healthy community of developers
  • In the same way that DoubleClick’s ad network greatly expanded the inventory of Google’s advertising business, third party applications offer Google an additional source of usage for its own services. If you want to see the future of Google Apps look at the the way the likes of Baidu and Tencent allow third-party integration with their own tools

Streaming or ‘instant’ apps is part of Google’s efforts to encourage consumer trial of new apps and enhance relationships with developers. Firebase, it’s new analytics platform for mobile developers helps them have a better relationship with their installed user base allowing them to use data to target notifications and campaigns.

More faith in wider area networks (WANs) than personal area networks (PANs)

Android Wear’s updates were interesting. Put simply Google has more faith in data being delivered in a timely manner over cellular or wi-fi networks than it does for inter device transfers over variants of Bluetooth. Both the Apple Watch and Android Wear products suffered from performance lags when the watch was a thin client of a phone. Having a cellular radio on board the phone presents challenges with battery life, but speeds up real world performance.

The original design failure wasn’t down to network performance, but is likely to have implications for personal area network technology like Bluetooth in its different variants or ZigBee. These technologies are all about scale, lose a scale advantage and it poses a problem for future adoption by others. This can happen in a virtuous way. Apple’s adoption of USB benefited the standard greatly and drove interest in peripheral development for both Mac and PC. Apple’s abandonment of FireWire and the 3.5″ diskette marked their decline.

Lots to be concerned about from a privacy point of view?

Google Home moved yet another pair of Android powered ears into our environment. It was obvious from Google’s description of services that a paid marketing model to be the ‘car booking’ or equivalent service of Home could be very lucrative for the search giant. How this device could be used for market research, tracking brand mentions or government surveillance also poses some conundrums moving beyond smartphones to brown goods.

Android N features file based encryption rather than treating the whole device as an encrypted disk. This raises questions around the comparative ease of access from a privacy perspective. Secondly, SafetyNet allows Google to reach into a phone to remove pre-existing applications without user permission. There is no explanation if they also have write privileges to the phone as well. If so, expect law enforcement and intellectual property owner interest. From the way it reads this would affect apps and content that have been side loaded as well as got from an app store.

Android is giving the high ground to Apple on privacy presumably because it considers its own customers don’t care about it that much.

Reference designs in VR to drive adoption and commoditisation 

Google’s Daydream project looks to provide standardisation in hardware. By going down this route, Google hopes to spur on the sensor market required for improved AR experience and drive uptake. These will likely be a very different experience to the computer workstation powered Occulus Rift. Driving this technology into the smartphone market may combat the current stagnation in phone sales growth.

More information
Google I/O 2016 event page
A16hz on Google I/O 2016
Everything Google just announced at its I/O conference
Palm, Apple, Google and the whole mobile device thing
The Limits of Google
If Google’s right about AI, that’s a problem for Apple – Marco.org
ISIS’s Mobile App Developers Are in Crisis Mode | Motherboard

Facebook and the top publishers

I managed to get hold of some data about the 10 most shared sites on Facebook and it made some interesting graphs. From a media perspective Facebook has become less social.

For the past year or so there has been a steady decline in the amount of content shared.
Facebook top ten content domains shared (june 2015 - april 2016)
This is even more striking when I compared it with 12 months of data from January 2014 to January 2015.
domains shared (January 2014 - January 2015)
This partly explains media’s push into other channels like SnapChat, especially given that Twitter has hit a natural ceiling in its subscriber base.

Secondly there has been a big push into video content, particularly live video content. Video is more expensive to produce, yet monetisation is difficult. Viewability of video ads is lower than display ads.
Viewability

Ad fraud or ‘invalid traffic’ is higher on video advertising inventory solid via programmatic platforms – which are the hot new thing. Both of which are issues of concern to marketers and publishers alike.
programmatic

Mary Meeker’s annual state of the internet presentation

Mary Meeker’s annual presentation on internet trends is a tradition within the technology sector. Here is the latest iteration for 2016