Brand Power

Porsche_logo.jpg

I was sat on the Eurostar on the way to a meeting in Brussels, my knees compressed by the back of the next seat ahead of me and couldn’t help but overhear a conversation of the people in front of me. There were discussing an unnamed third person and talked about how the person had bought a second-hand Porsche 911 sports car and the affect that it had had on them.

Most interesting was the change in language of the person. For instance when they were at the golf club, they were asked whether they would have enough room for a set of clubs in their car to which they replied “Yes I have enough room in the Porsche for the golf clubs”. They systematically substituted the word car for Porsche in their conversations.

Whilst they guys in front of me thought that this person was a bit of a prat, ‘being with him is like stepping back to 1986, you know like Loadsamoney’: I can’t really comment on that, I was struck by the power of the brand.

The linguistic changes showed a deep brand relationship. If someone asked me for the time, I wouldn’t say “The time by my Rolex is X o’clock.”

Yet a watch or mobile phone is a much more personal product than a car. I sleep with a watch on and my mobile phone goes everywhere with me, but its still my mobile phone despite by strong preference for Nokia handsets.

There are only three products and services that I have a relationship that is that linguistically close to the Porsche relationship described:

  • My Mac – and this is usually because the expressions PC or laptop have been considered by many people as being a Windows machine, thus presenting issues regarding compatibility with anything else that maybe needed
  • iPod – it is (probably unfairly so) the evoked set for portable entertainment appliances, in the same way that Walkman was in the 1980s
  • Google – because using the site has become such a ‘learned habit‘ that Google is the evoked set for algorithimic search

Ask For A Habit, Not A Trial

I kept an account the on Monday about the amount of times that I used Google: 30 times in one day. On top of that I use Yahoo! Search shortcuts to three currency conversions. At no time however had I used Ask.com. Why do I use Google? Its a good question, Yahoo! provides broadly comparable natural search in terms of relevance and freshness of data.

When I started in PR, I used a number of search engines: Alta Vista was my primary search site, but Hot Bot was particularly good for technology and on occasion I would Excite. And then for a long time Google has been head and shoulders above the competition. The thing of it is, if I am on a web property like the BBC, I don’t hesitate to use the search box on there and am perfectly happy with the quality of the results. But when I need to look for something in particular I nearly always go back to Google.

I don’t even think about it, using Google has become as much a learned pattern as the way I sign my name or put all my pocket contents into an aluminium tray when I return home at night.

Now there were a number of things wrong with Ask’s recent advertising campaigns in the US and UK which other people talk about elsewhere – so I won’t go on and discuss the campaign creative and execution.

With Ask’s market share being so low in the UK and US, desperate times call for desperate measures. The company needs to get cut through and it needs to encourage trial, but it also needs a specific type of engagement. Not getting the customer to try different services, bouncing them around a web property network, but instead getting the same customer to come back day-in, day-out for three weeks; long enough to form a habit….

This is one of the reasons why the social web is so much top of mind at places like my old employers Yahoo! The cheapest way to get people to come back repeatedly is to foster a sense of community like Flickr. Fostering a community in this way is as much art as science, so there are more talented engineers out there than skilled community wranglers.

However, there are also other more direct incentive techniques. If you look at a product like Yahoo! Answers continued participation is encouraged through a points and level system, together with virtual swag like branded computer desktop wallpapers.

I heard that an Asian site offered free wallpapers of J-pop artists or their equivalent to consumers who retrurned to their portal site every day for a set amount of time.

Resurgence

I met up with my friend George who writes for a number of specialist telecoms publications covering everything from back-end systems to mobile services.

He has noticed a resurgence in the telecoms sector driven by large media companies like Google. This resurgence isn’t the hype blown version of the 1990s but a comeback none the same. There is no longer a surplus of capacity from an aggregated point-of-view and where there is, it is because the fibre was laid between the wrong destinations.

Telecoms providers do face a continued problem; how to monetise this new demand and there in lies the crunch.

Will customers accept prioritised packet delivery, tiered SLAs and delivery policies based on an application analysis?

The technology from the likes of Naurus, Cisco and TopLayer Networks is already available.

Businesses that did remind us of the alternative telcos of yore that were eventually swept away with debt and failed business models are the mobile services companies. They have a number of challenges to overcome:

  • A torturous road to market, by gaining space on a carrier’s portal page
  • Relatively expensive delivery mechanism
  • Relatively high content development costs (and possible brand licensing costs), particularly games development; especially if you contrast this with the ringtones of a few years ago
  • Little to no, consumer brand awareness or loyalty
  • Hard to translate a sale into further word-of-mouth buzz in the same way that happens with physical games media

Large existing games companies like Eidos or Infogames have an advantage in that they can leverage marketing campaigns and popular franchises if they can coordinate a product launch on console, PC, portable devices and phones at the same time.

Over at MicroPersuasion Steve Rubel is wondering whether the vibrant nightlife in San Francisco is sign of another bubble.

I’m not inclined to think so, at least not on the same scale anyway. I think that Rubel is right in that we will see a lot of failures. In fact, Silicon Valley has been built on the bones of failures and will continue to be, for instance General Magic, Be Inc., Xerox PARC, Digital Research and NeXT. I also agree that there will be a market correction, but I don’t think that it will be on the same kind of scale as the dot com bubble:

  • Sarbanes Oxley means that the IPO is no longer a realistic out for many businesses that it was. However the LSE AIM market may offer the option to European businesses and already there has been a mini-burst in the online gambling sector when US gaming law changed the dynamics of the market in favour of domestic offerings
  • Funding: most businesses don’t need a lot of it. LAMP (Linux, Apache, MySQL, PHP), development tools like Ruby and Amazon’s S3 service mean that a start-up can be funded by scraping around with a couple of credit cards and family loans. This also means a lower barrier to entry for competitors and a lower resale value. Hence VC money required is an order of magnitude less and the level of reward is substantially smaller
  • Fast-failure approach: take Bing as an example. This was a five-man start-up. After they did an alpha test of their product that was luke-warm and after some additional research, they shut up shop and returned the capital to their investors. Contrast that with web 1.0 where bad companies were merged to make them more of the sum of their parts and VCs not having to write their investment value off
  • The competitive advantage in many sites is not in the code but more in the art of community management. As media companies have proven, building a social media site is not hard, building a vibrant community is the challenge.
  • Hotter areas: green and healthcare are both more capital intensive sectors with the promise of a big pay-day for VCs (so they don’t have to refund the unspent money and their management fee to their investors)


Innovators dilemma

Mike Lynch has a high profile in the UK as one of our few technology success stories, he is CEO of a company called Autonomy which provides knowledge management solutions for enterprises, government organisations like the NSA and search engine Blinkx.

The secret sauce of Autonomy is based on statistical analysis: a technique called Bayes Theory.

Put in layman’s terms Bayes Theory essentially means that the probability of something happening can be estimated from how often it has happened in the past.

This technique has its merits, Lynch is head of a successful company and companies like Microsoft’s research arm and Google put a lot of store in it as approximation technique.

However with the continued proliferation of data, sorting it into information requires a greater degree of semantic understanding. Let’s do a thought experiment; if you have an approximation that returns documents based on an input.

For a total repository of different sizes, where 0.01 per cent are deemed relevant by a Bayesian agent:

  • 100,000 – that’s a list of 10 documents
  • 1,000,000 – that’s 100 documents
  • 20,000,000,000 (according to Stephen Taylor (the European head of Yahoo!’s new Audience group speaking at the Blogging4Business conference last Wednesday, its about the size of the company’s search index) – that’s 2,000,000 documents

Within an enterprise, Bayes theory is perfectly acceptable, but in a more open environment like the internet, an additional semantic filter is required to find the content that you would want amongst the 2,000,000 documents returned because that 2,000,000 is an approximation – so there may be only a few documents you may want in there – or none at all.

That semantic filter is proving difficult to provide which is the reason why Google has stayed out in front on search for so long, any progress that is being made is baby steps. Crystal Semantics a small company based in Holyhead, used the brute force of linguists to plot all the phrase clusters (called lexemes) in the English language – though it may not work for technical or company-specific language without a great deal of additional work, whilst they have met with most of the major players in search, none of them have adopted their technology for search results.

Businesses currently in start-up mode like Numenta and Powerset may offer a paradigm shift that will change the game.

Instead companies like Yahoo! have fallen back on human computing in the form of tagging, in an interview with Tom Foremski of Silicon Valley Watcher ‘Autonomy CEO says tags don’t work’ Lynch points out the very human failings of laziness and inconsistency as a major pitfall in the usefulness of tagging.

Lynch does have a point, humans fail, however they are also a great source of massive parallel processing and particularly good at the kind of ambiguous problems that technology isn’t.

The problems that Lynch can be seen to be addressed in various products:

  • A common nomenclature: my MyWeb accout suggests existing tags to me when I bookmark a new item as I start typing as does Flickr, at the Blogging4Business conference attendees agreed on a common tag of B4B2007
  • Incentivising people: this is less about the hard technology that Lynch gets and more the community management and social engineering pioneered by the likes of Caterina Fake and Heather Champ at Flickr. In building a community carefully its constituents see the collective benefits of tags and are willing to contribute. Granted most people who use these products are consumers of information, but in that respect it probably mirrors the kind of systems that Lynch is more experienced with. A second way of doing this is making the human interpretation fun, a classic example of this is Luis von Ahn of Carnegie Mellon University who created the ESP game. Google has been using this technique to further enhance its own image search via the Google Image Labeler. Now I realise that this probably won’t be possible with items in a finance department or a library of whitepapers, but it does demonstrate the power of social engineering
  • Not all information will be tagged: knowledge management system users are constantly looking to sort out information that is useful and useless, this provides a motivation to tag useful content and let the less relevant content submerge over time in a sea of tags

On a related note: information capture is a far bigger issue, Jeff Weiner used to present a thought experiment where he came up with a ridiculously low percentage of human knowledge was not online, I can’t remember it exactly, but the gist of it is below.

Lets exclude all the countless recordings, books and video that haven’t been digitised and never will be. Now lets make some assumptions:

On average the 6.5 billion people in the world each know a 1,000 distinct things, be it a family cake recipe that was passed down from their parent or the best particular domain knowledge like the tricks of the trade that my Dad has developed in his 40 years as a mechanical fitter, who is the best quality wholesale butcher in Mansfield or the ins and out of the housing market in St Helens.

In reality, that 1,000 pieces of distinct knowledge is probably a conservative estimate even allowing for the amount of children in the world’s population. That is roughly 325 times as much knowledge as indexed by Yahoo! Search (allowing for spam and discounting repetition in the index this number would rocket higher).

Tags aren’t part of a rigid taxonomy, but a folksonomy so you can have several tags some of which may hit the mark, its the reason why I have found that am more likely to find a picture that suits a blog post on flickr than I am on Google Image Search. Or why I would also look for items on the Blogging4Business conference with similar tags like B4B and Blogging4Business, as well as B4B2007.

In an ironic twist on the Silicon Valley Watcher story, one of the reasons why Mr Lynch was doing media outreach was the launch of Autonomy’s Virage ACID product, Virage was a video search start-up acquired by Autonomy.

Virage was founded by Bradley Horowitz, now vice president of product strategy at Yahoo! and one of the most vigorous champions of social search through tagging.

Brand: FCKD?

When the Motorola RAZR launched it was considered to have placed Motorola as the phone manufacturer with the finger on the pulse. It was a combination of classy and clever engineering that looked great. It was well marketed and developed the same kind of style icon status as the iPod. There was clever seeding of the device amongst style influencers as well as the usual celebrity hoards.

In real life the RAZR isn’t quite as hot as the magazine adverts would have you believe. The felt too wide in my hand and it still has the same Motorola UI as the rest of the range so was a bit challenging to use. The battery life got tiresome and the camera wasn’t that good.

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Worst of all, there wasn’t as much innovation to follow up. Ok there was the candy bar version the SLVR and a couple of colour changes, but to the average consumer what was the benefit? Motorola plugged the gap by allowing the phone to move downmarket without other handsets to come in at the top, hence the pictures taken off the LIDL website last week of SLVR and RAZR handsets at bargain prices.

The KRZR recently launched providing the RAZR experience in a narrower (nicer to hold format), but the iconic status as been lost since the it is playing catch up rather than being a leader.

It was like as if the RAZR was an end point rather than a journey. I saw a similar parallel working on the Palm account in 2000, where CEO Carl Yankowski thought that he could buck convergence and pent up customer demand just on the strength of the Palm brand and celebrity limited edition models in association with Michael Jordan and Claudia Schiffer. There is my name on a press release, buried behind a paidwall announcing the Claudia Schiffer device which was a Palm Vx in anodised blue with a couple of extra applications included.

Meanwhile Nokia was developing the smartphone and Microsoft was pushing on with the PocketPC, mostly in partnership with Compaq. In the end, Palm purchased Handspring because it was bereft of any breakthrough products and the PalmOS has died a long lingering undignified death. Whether it will be resurrected in a emulation layer of Access Linux has yet to be seen. Much of the innovators baton has passed from Palm to smaller licencees like QOOL Labs QDA 700 and GSpda’s Xplore range of devices, these companies were constrained in western markets only by their lack of distribution.

Motorola have been innovating with a new form factor in the MOTORIZR Z8, which features a ‘banana’ form factor a la the Nokia 8110 phone in The Matrix and the UIQ smartphone interface that Sony-Ericsson uses. How long will it take to bring this phone to market, is this too little too late and how can they pull together a sustainable pace of product innovation to compete with Nokia, Sony-Ericsson and Samsung?