Looking at subscriber and free churn rates

I was recently asked to look into churn rates for subscription models. I found it tricky to find real industry numbers, but here are the fruits of my digging.

First of all, how we define churn:

Total Subscribers = (Total Subscribers * Loss Rate) + Acquisitions

To get a churn rate, you need to compare your total subscribers from one period with the amount of change within the base.

Of course, you have to be able to know when a customer leaves. For the purposes of this post, I'm talking about specific subscribers to a paid service. Churn on a free service is, I believe, harder, because you have to decide on some activity rate beyond which you feel that user is gone. Could a week, month, two months, three months...

Second, some things that affect churn:

Your rate of acquiring customers is obviously affected by how viral your service is, and your marketing and promotional efforts. Your subscriber cancellations will always be a percentage of your total user base, and that percentage will be affected by things like the quality of your service, how easy it is to cancel, the competitive situation and so forth.

Getting beyond point of no return

At some point, your customer growth flattens because you can't add subscribers fast enough to counteract the number of customers leaving. That's when a focus on customer acquisition and churn reduction is critical, and/or you have to spend more to keep growing at the same historical rate.

Some churn rates I found are below. Naturally some are audited and some are not; some are free and some are not! So take it for what it's worth!

Company	Churn Rate	Source / Reference
Sprint / Nextel	$2.18% - 2.05%	wikiinvest
AT&T	1.17% - 1.69%	ZDNet
MySpace	30%	Nielsen, April 2009
Facebook	30%	Nielsen, April 2009
Twitter	60%	Nielsen, April 2009
Mobile video services	22%	Nielsen, Sept 2009
SiriusXM (in car service)	60%	TheFool
Netflix	4.2%	Mainstreet Blog, reporting TheStreet.com

Is the elevator pitch outmoded?

Michael Port seems to think so. He believes it's all about the conversation. Showing your passion with a back and a forth. But I have heard so, so many people totally fail at answering the question "so what does your company do?" in a way that's brief and coherent, I still think it's critically important to have that simple, reliable statement.

If you, or anyone in your company, can't communicate your value proposition instantly, quickly, and correctly, you're in trouble.

OTOH, Michael's list of what you should be able to answer is good:

1. Who you serve (your target market)
2. What they need and desire (problems they have and things they want)
3. What solutions you offer (products and services)
4. The big, bad result they get from your products and services (the money shot)
5. The deep-rooted core benefits they get from that result (financial, emotional, physical or spiritual ROI)

Thanks, Michael. That list I like. But I'm still going to try to stick with an elevator statement at the beginning. It's a good forcing discipline.

I want to get me one of these

I can't wait for the Apple's tablet. Sorry, Amazon. I have a Kindle. I just don't like it. For a start, I keep poking the screen trying to navigate. I hate the flash as it moves through pages. I hate the keyboard. (Anyone remember the 80s Peanut chicklets? It's worse.) I hate the searching. Sorry, but I just don't like any of it.

Now, this. This looks tasty:


Could Apple save the magazine and newspaper industry too? Is there no end to its awesomeness?

And Apple is clearly feeding the frenzy of speculation with leaks about how Apple users would pay almost anything for the tablet. Errmm. That might include me too.

Plenty of room for non-games in top iPhone spots

Looking today at the top 100 grossing apps for the iPhone. You can see them yourself here. (Will launch iTunes.)

Of the top 100, 68 are games. 32 are various productivity or travel helping apps, including smattering of adult stuff and one recipe app. (Well done, Jamie!). Plenty of room for interesting things that aren't games in the top 100! I wonder how the line up will change this time next year.

Here's the list:

• #2 MobileNavigator North American $89.99
  
• #3 RedLaser tag reader $1.99
  
• #18 DocumentsToGo for taking docs $9.99
• #25 Truth or Dare Dating $1.99
• #26 MotionX GPS Drive $2.99
  
• #27 Textfree Unlimited, send SMS messages $5.99
• #29 Jamie Oliver 20 minute meals $7.99
  
• #30 TomTom US and Canada $99.99
• #31 LogMein Ignition remote control of Macs and PCs $29.99
  
• #32 ColorSplash photo editor $1.99
  
• #33 Awesome Note and ToDo $3.99
  
• #36 iFitness $1.99
• #44 Police Radio $0.99
  
• #45 Zagat To Go $9.99
• #46 Japanese English Dictionary $19.99
  
• #48 Tweetie Twitter Client $2.99
• #50 Air Mouse Pro for turning iPod/Touch into remote for Mac
  
• #52 Flight Track $4.99
  
• #53 CNN Mobile $1.99
  
• #57 The Weather Channel $3.99
• #60 Quickoffice Mobile Office $9.99
• #64 Midomi Music Identifer $4.99
• #72 Scanner911 $0.99
• #72 WunderRadio $6.99
• #73 CoPilot Live North America $34.99
  
• #75 Naughtie Hotties Video $0.99
• #75 Documentstogo $14.99
• #88 ReelDirector video editing $7.99
• #92 TVUPlayer TV player $4.99
  
• #97 Pocket Informant organizer $12.99
• #99 FlightTrack Pro $9.99
• #100 BeatMaker - $19.99

Of course this list is for top grossing apps -- so those expensive GPS apps skew their numbers. If we look at the list for top paid apps, there is a larger proportion of low-priced games.

Update Oct 27: Google's app store. Opportunity to catch the wave early? I don't underestimate Google. And with their mutual board members leaving each other's boards, they are clearly getting closer to a head to head each day. I just want to make sure that I'm on the winning side! And sorry, that won't be Palm.

How much is too much to pay for a customer?

Been working with a client recently on the gnarly problems around how much to pay to acquire a customer. Thought it would be useful to share this nifty calculation with represents one way to look at the issue.

Traditionally, companies look at a marketing/sales expenditure to be 15-20% of each revenue dollar. But you may have different models. And, frankly, with almost all the companies I work with, there's only a very slim marketing budget available. So let's look at it from the perspective of the lifetime value of a customer:

Lifetime Value equation:

LTV = (Frequency of Purchase) X (Duration of Loyalty) X (Gross Profit)

- How frequently does your customer buy? (say, 12 times a year with a monthly renewal plan)
- How long does your customer stay with you? (let's say 1 year for argument's sake)
- What is your profit? (let's say $5 a month)

Take the average for each of these three questions and plug that into the LTV equation and you have your Lifetime Gross Profit contribution of a customer.

From there you can answer the question “How much can you afford to acquire a new customer?”

A traditional rule states 1/3 of the LTV can be spent to acquire a new customer. Using the numbers above, here's how the equation plays out:

(12 x 1) x ($5) : one third equals $20 to acquire each new customer.

This assumes you have a retention rate within normal ranges—most companies experience 20-25% attrition of customers each year. If it’s more, then there's a different problem — no brand loyalty.

I'd be curious to know your feedback and experience in similar equation models.

A great corporate story: Zappos

Zappos is a marketer's dream. They have a story. And the story is fun to tell! I have learned a huge amount from watching them tell their story. And their story is not just about being an online shoe retailer. (I know. I know. For people with a shoe fetish, that's enough. But for everyone else, this story is so much fun to tell.)

Here's a link to a video of their CEO Tony Hsieh revealing what took his company to $1B in sales from scratch. Before Zappos, Tony Hsieh sold his first company LinkExchange, because it started being, frankly, no fun to work there. Even though it was successful and profitable, with about a million different Web sites using their network, and 100 employees, he still decided to sell the company to Microsoft. He says he'd just stopped thinking about company culture. He had hired people with the right skill sets, but with the wrong company culture. After LinkExchange, he started a company called Venture Frogs that invested in other companies. One of those companies was Zappos.

If you listen to the presentation, listen to how often he says "we" and "our." Not "me" and "mine." I think this guy is the real thing!

If you don't listen to the presentation (and I encourage you to do so) here are my notes.

Company Culture

At Zappos, everything starts with the company culture. Tony wanted Zappos to be a fun place to work. His #1 concern was with building great customer service, and a great customer experience.

Customer service is how they think of themselves. Not just as an online shoe company. But a great customer service company. They believe that 10 years from now, no one will remember they started with shoes. (Interesting to note, this is how Nordstroms started too. They pride themselves on customer service too.) Incidentally, Zappos is moving beyond shoes into apparel, bags, cookware and other goods. Because they have such great service, he says their customers ask them to start an airline or run the IRS! (Not in their business plan immediately, but won't be ruled out.)

An example of a company they love: Virgin! They love how Virgin clearly aspires to be hip and cool in whatever of the many businesses they're in. In the same way, Zappos aspires to be the best in customer service, whatever business they're in.

Happy Customers = Repeat Customers

Zappos clearly shows that happy customers encourage word of mouth recommendations. Repeat customers spend more money. Zappos does have offline and online advertising budgets. But, when they look at their marketing spend, they believe that if it pays for itself in the first order, then great. Otherwise, most of the money they would have spent in paid advertising they have they put back into customer service instead of in marketing.

What Makes Great Service?

• free shipping both ways
• surprise upgrades so customers get their orders sooner
  
• they run their warehouses in Kentucky 24/7, even though that's not efficient!
  
• 365-day return policy
• 1 800 number clearly displayed on every Web page
  

Let's talk about that 800 number.

Tony notes that it's often hard to find an 800# on many Web sites. Zappos, however, wants to talk to their customers. They get about 5,000 calls a day and rather than looking at it as an expense, they look at it as a marketing opportunity. It's a way to brand themselves as "above and beyond" with customer service.

Zappos has about 500 people in the call center. They run their center without using the 'average call time' model so commonly used. Agents do not get "written up" if they spend too long with a customer. And they don't have sales/performance goals. They're just required to go 'above and beyond.' Their agents can spend an hour with a customer and that's OK.

So for example, if they don't have the precise shoes in the right size that the customer wants, they are trained to look on competitor sites and refer the customer over to those competitive sites! Customers remember that. They come back.

What do Customers Experience?

What customers experience is very important. Fast and accurate shipping is the first quality indicator.

Originally, in 1999, Zappos main idea wasn't customer service. It had a drop ship model. Manufacturers would drop ship for them, so Zappos wouldn't have to carry inventory. Looked good on paper. But the problem was that the manufacturers were not accurate, and weren't fast. And that reflected poorly on Zappos. After that, they had a hybrid drop ship/inventory model for a time, and drop-ship accounted for 25% of the business.

They realized they had to be brave and give up the drop ship revenue. This was hard. They weren't profitable. But they were brave. They took control. They became true to their brand. It was both the hardest and easiest decision to make.

Since then, decisions became easier. Everything is decided through the prism of customer service and company culture.

Zappos is now on track for over $1B in annual sales.

Train the Staff

It's important that everyone in the company understands the company culture. Every single person that's hired -- lawyer, accountant, warehouse person -- goes through five weeks of customer loyalty training. They have to be on the phone for two weeks with customers. They have to go to the warehouse to see what goes on there.

Only after those five weeks do the employees start their real job for which they were hired! Employees must make that five week commitment, or they are let go.

When they are hired, there are two sets of interviews: the standard set with the hiring manager and team going over their skill sets. The second interview with the HR department to see if they are a cultural fit. Performance reviews are judged according to 50% fit with company culture, ane 50% on job performance. People are rewarded for inspiring culture with others.

A Customer Story

Tony tells a story about a woman who bought shoes for her husband. They fit. They were fine. But the husband was killed shortly after the purchase in a car accident. The woman called about the return policy and got her money back. The agent then took it upon herself to send flowers to the funeral. Everyone at the funeral heard about it. A great word of mouth story. There was no standard operating procedure for this circumstance. She just knew it was the right thing to do. She didn't even need to check with her supervisor. She just went ahead and did it.

(A sidenote: would I be worrying about returning a pair of shoes the day after my husband got run over? I think not. But that's beside the point.)

Another Customer Story

A woman ordered a wallet at Zappos. She didn't like it and returned it. But she'd accidentally left $150 in cash inside the wallet. The minimum wage warehouse worker returned the money to her. Again, another opportunity for the woman to tell others her story.

The Vision Thing

Building a company vision is critical. Here's Tony's advice about vision:

• Whatever you're thinking, think bigger
• Does your vision have meaning?
• Chase the vision, not the money
  

Think of a vision that you'd be excited about, even if it made no money at all!

When you're small, you can experiment and find out what it takes to get customers to come back again and again. You can really focus on getting conversions right, getting service right, getting the product right. Once you have that right, the rest of the stuff comes easier.

People and Core Values

Find people you trust with decision making. Force yourself to invest in teaching your people to do the things you may do better initially. It takes longer, but works in the long term.

But even with all the right people, those people must buy into the culture. Zappos has a "culture book" they put out. Every single employee writes something about what Zappos means to them. It's unedited, except typos are fixed. Anyone can get a copy of that book. It's clearly part of marketing the Zappos story.

What are Zappos' core values?

1. Deliver WOW through service
2. Embrace and drive change
3. Create fun and a little weirdness
4. Be adventurous, creative and open minded
5. Build open and honest relationships with communication
6. Build a positive team and family spirit
7. Do more with less
8. Be passionate and determined
9. Be humble

Having a list like this is really important when you're small, because it saves you heartache and headache later.

Tour Zappos: Learn What You Need!

You can get your own free tour of the Zappos offices in Las Vegas. Just write to tony@zappos.com. Recently, they hosted Southwest Airlines and Legos. In particlar, both companies wanted to get the in-depth tour of their phone center. Southwest also wanted to hear about their HR hiring practices. Zappos is happy to share what they've learned with others. They are open about their experiences.

I hope these notes helped you. Zappos has courage and chutzpah. I love telling their story.

(And yes, I've spent multiple hundreds of dollars on their site too!)

(And another thing? I'd beg for an interview to work at Zappos in a nanosecond. If they weren't based in Las Vegas. I'm not a Las Vegas person I'm afraid.)

Who's making money on Facebook? And how?

In the early days of the Facebook application platform release, I was seriously underwhelmed by the applications on display. They were, and in many cases continue to be, dumb, spammy and boring. No, I really don't particularly care if your pigs are running, well hog wild in Farmville. But it's OK that you do.

In many cases, none of these apps were making a cent. They may have been popular, but where was the money to support them? Just as regular Web sites have had to start diversifying beyond purely ad-based models, apps couldn't just rely on ads on canvas pages to sustain their development.

With the explosion of virtual goods, application developers are finding new ways to help themselves to a little of your money at a time.

Virtual goods have a long way to go in the United States. They are a mature market in Asia. According to Virtual Goods News, Asia's total annual virtual goods economy might be worth more than $4 billion, which is about 25 times larger than the market in the United States, currently purportedly valued at $200 million.

Facebook Virtual Goods Games

Take the games from the Chinese developer Reeko for example. (Tagline: "play with friends.") According to an interview with their CEO Patrick Liu, monetization on Facebook has been higher than on other Reeko platforms. Their game Sunshine Ranch has 1,162,511 active monthly users as of today. You can play Sunshine Ranch for free, or buy coins for a range of $5 to $50 or more using Visa, Paypal, MasterCard or Amex. Coins let you buy carrots, pumpkins, fertilizers and more.

A similar game, Farmville, is at the #2 spot on the hot games list at Inside Facebook. You buy coins to let you plow more fields and, well, do other farmy things.

In fact, the majority of the games on this list are monetized through a free to play virtual goods model. You can play for free, but if you want to really pimp up the game, you need to buy stuff. If you don't want to buy using real money, you can participate in advertiser-financed offers through companies like Super Rewards and Trial Pay.

Facebook Celebrity Virtual Goods

Lots of news about the Britney Spears gifts now available on her page. She has 2 million fans, and presumably she believes that at least some of them will spend $1 to $2 to send a little itty bitty pic of her to their friends.

Other celebrities, Harry Potter for example, allow you to share branded gifts for free. Hoping of course that it spreads the word about Harry's latest movie offering.

Getting Real: Real Life Facebook Gifts

Also new, developers can now integrate real gifts into the Facebook Gift Shop, alongside virtual gifts. So you could actually physically arrange to have red roses sent to the one you admire, instead of just an icon. When users select a physical gift, they'll be asked to enter a delivery address just like a traditional online shopping experience. You can already see Britney Spears gifts on offer, and other branded gifts. I don't know how much of a slice Facebook gets from these gifts, but it's all good for them.

The Pay with Facebook Option

Facebook itself wants to get into the stream of money moving around, with their new "Pay with Facebook" option. It remains to be seen whether this new feature will become a ubiquitious method of payment. But regardless of that, virtual goods apparently represent a minority but decent chunk of Facebook's revenue. Social Media Today provides these (unsubstantiated) estimates:

• $125 million from brand ads
• $150 million from the ad deal with Microsoft
• $75 million from virtual goods
• $200 million from self-service ads

Total: $550 million

To read more about Facebook Virtual Goods, go to that section of the mighty fine Inside Facebook site.

What makes a great marketing campaign?

Is it a formula? Luck? Rohit Bhargava's "Influential Marketing Blog" describes the winner of the International Cannes Film Festival's award for a great marketing campaign: a marketing campaign called "The Best Job in the World" for a little-known island off the Great Barrier Reef. It's a good story, and worth reading.

He whittles the successful components to a great marketing campaign down to the following key items:

1. Make it believable
2. It's not about how much you spend
3. Focus on content, not traffic
4. Create an inherent reason for people to share
5. Don't underestimate the power of content creators
6. Give your promotion a shelf life
   

Read his blog post. It's worthwhile, and the list is one that I'll think about when I put together my next campaign.

The CPM Gap -- what does this mean?

Everything that Seth Godin writes gives me pause. Make sure he's a staple of your media diet. Just read "The CPM Gap." He believes advertisers consider their targets as victims to be interrupted. That doesn't feel good.

Advertising on the Internet is still too much like ads in a glossy magazine. Not relevant to the context. Something you have to flip beyond to reach the rest of the story. Occasionally attractive to look at, but not the reason you came to the magazine. (Unless, of course, it's Vogue magazine -- which is basically a magazine of ads.)

Tomorrow's advertising will be entertaining, educational, relevant, honest and content-rich. It will be integrated into a site's user experience in a way that doesn't distract the user and doesn't make them beg for a close box. How much do I hate the ads that float across my screen? A very great deal. I hate them so much that to click on them would be an anathema. And to consider buying the product they promote? Never. Ever. Ever.

It's time for a fresh new look, GM

Driving back from the Revenue Boot Camp this afternoon, I listened to an interview on NPR.Org with GM's Vice Chairman, Bill Lutz. He said it was his job to convince 300 million Americans that GM wasn't all about building gas guzzling cars with lame, tacky interiors. And he's been in sales and marketing in the auto industry since 1963!

I seriously don't wish to disrespect Bill Lutz. But let's get real. Surely you knew that your audience perceived you as a maker of gas guzzling cars with lame, tacky interiors a year or so ago? Well, actually a decade or so ago? Didn't you even talk to your users outside Grand Rapids or Flint? And you're NOW going to be the man to fix it?

Bill Lutz also said that they were going to 'experiment' with selling cars on eBay. eBay?!?! Errrmmm. Welcome to web 1.0, General Motors.

Someone needs to turn GM upside down and shake all the crumbly old men out of the corners. It's a new world. The creators of the old world ain't going to fix GM's image.

More information about YouSendIt's Freemium offering

Thank you to Guillaume Cohen of Veodia.com for providing me some more details about YouSendIt's freemium conversion rates. See this link on Gigaom from 2006 that indicates that YouSendIt has 2.5M registered users, and around 9M visitors per month. It expects $1M in revenue this year, based on advertising and has 12,000 paying users. Mr Cohen provided me this link to Bambi Francisco's video comment about YouSendIt as a good acquisition target for FedEx. Mr. Cohen estimates that YouSendIt has 9M registered users in 2009, with 100K paid subscribers and around $1M in revenue per month.

Looking at "Freemium" business models

I'm looking forward to participating in the Garage Technology Ventures' "Revenue Bootcamp" on July 10th, discussing, amongst other things, freemium business models, digital goods, and affiliate programs.

What is Freemium?
A business model where a company combines both free and paid services. The free can be:

1. A feature-limited version of the site, with a feature-rich version available for upgrade
2. A "try before you buy" version of a product, with a required time-period to buy the product
3. A customer-type limited version of a product, where certain customers qualify for a free version, and others must pay
4. A seat-limited version of a product, where a certain number get the product for free and over that number, payment is required
   

Examples in the real world:

1. Feature limited, versus premium: Photobucket, Flickr, LinkedIn, YouSendIt and many, many others.
2. Trial version: Quicken.com, Audible.com, Rhapsody.com, Pandora.com
3. Customer-type limited: BizSpark from Microsoft
4. Seat-limited: SocialText free for up to 50 users
   

I’m going to focus here on the first type of freemium. That’s the one I’m most familiar with, and the model adopted at Photobucket.

In my experience at Photobucket, having a free offering, and a super-simple, quick registration process, allowed the company to welcome tens of thousands of new users every day, day-after-day. This large registered user powered a terrific network effect. The free offering at Photobucket is subsidized by advertising and print services.

When does freemium work?
A freemium business model can work when the following conditions are true:

• You have a free service that offers enough real value that you build a large, active user base of free users that you can market to
• You have a good balance between free and paid features. (As Josh Kopelman of First Round Capital says “Too many freemium models have too much free and not enough mium.” So watch out for this!
  
• The price point you choose for paid features match the willingness your target premium user segment are willing to pay (see “What to charge for premium” below).
• You practice good marketing techniques at every decision point to convert free users to paid users -- it’s like a friendly “bait and switch.” Hook them for free but work hard to ‘sell up’ to paid.
  

Some advantages of a freemium model:

• There’s a reduced risk for the buy – it’s free! Users will try it because it’s easy to commit.
• Free has shown to be a great way to get lots of customers in the door! Photobucket has over 80 million registered users for their freemium service – that’s a big base to market to!
• The free service becomes a fantastic test-bed for new features and building a better product – early on, users have a high-tolerance for bugs if they know it’s free. However, conversely, when a free product becomes mature (certainly in the case of Photobucket) high standards are expected by users. At Photobucket, we used a totally different site – www.tinypic.com -- as a feature test-bed site. Photobucket had become so mature that our users didn’t want to be experimented upon too much. So we tried things out on Tinypic, and, if they worked there, moved the code to Photobucket.
  

Evaluating freemium: Revenue
It’s mandatory to clearly calculated advertising revenue to your free base, to your other sources of revenue. Some calculations to make:

• Active user rate, or the percentage of your registered user base active in a month.
• ARPU (Average Revenue Per User). To get your average monthly net revenue per free and paid subscriber, divide your net revenue in that period by the average number of subscribers in that period.
• Churn, or how many users you are losing in a period. To get your churn rate, divide the number of subscription terminations by the total subscribers at the beginning of the period. For example, if you get 10,000 subscribers on January 1st, with 100 terminating in that month, your churn is 1%.
• Your advertising revenue/user, compared to premium. For example: Your site has $1.00 CPM. That's $0.001 revenue for each user's visit. Say a user visits an average of 4 times/month (or 48 times/year). That's $0.048 in revenue/user/year from advertising.
  

Once you have these numbers, look at your active user rate as a percentage of your overall users Then estimate upgrading 1-2% of your active users to premium as a start, and model the result.

Evaluating Freemium: cost
Do you have a break-even, or close to break-even model for your free users? In other words, is your advertising revenue pretty much offsetting the costs of offering your free service to your users? You have to know this. It’s healthy when you are pretty much keeping your marginal costs close to zero (costs are offset by advertising) because then you can really focus on your premium services as your money-maker.

If your marginal costs are significantly above zero (it costs more to offer the free service than is offset by advertising), then you have to look at your free service as one big marketing funnel to drive people into the premium service. In this scenario, you may look at free service more as a cost of acquisition, and a cheaper cost than other methods. This can also be healthy, but it’s critical that you focus major efforts on pushing people up to premium.

Expected conversion rates
Historically, people have considered getting 1% of your installed base to upgrade has been healthy. But many companies are seeing much higher percentages of upgrade. Longtail.com reports these interesting numbers:

• Club Penguin: 25% monthly uniques pay, $5/mo per paying user
• Habbo: 10% monthly players pay, $10.30/mo per paying user
• Runescape: 16.6% monthly uniques pay, $5/mo per paying user
• Puzzle Pirates: 22% monthly players pay, $7.95/mo per paying user
• Flickr: 5-10% monthly users pay, $29.95/year
• Ning: 3% of its 500,000 social network creators pay for premium
• Xing: 8% of its 748M user base upgrades to premium services (see Xing profile below)
• Shareware: typically less than 0.5% of users pay
  

Encouraging upgrade to premium

• Don't make the "free" version too rich
• Survey your most active users, and find out the features they find most valuable on the site
• Get in front of users and talk to them! Any way you can. In person. Via Twitter. On profiles. Ask them what they'd pay for.
• Be up front, and explain why some things are charged for. Most users understand that free can't include everything. You'll lose some users who will never, ever pay. But you'll endear yourselves to those users who are willing to cough up a buck or two if they understand why.
  
• At every decision point -- even at first registration, educate on the fact that there's an upgraded, premium service and what's in that service
  
• Testing, adjust, test again to find out the messaging that is working -- do your users want to be identified as a premium user to the world, do they just want the feature, or both? Keep iterating.
  
• In lists of features and functions, try 'greying out' the features that are unavailable to free users -- they see the feature, but they can't 'get at them' without upgrading
• Make sure users know when they've reached their limits, or are close to reaching limits; at Photobucket, if bandwidth is exceeded, then all images posted on other sites are replaced by a "bandwidth exceeded; upgrade now" message. Harsh, but effective.
  

What to charge for premium?
Here are some simple ways to start the decision-making process:

• Review your competitors, as well as products in adjacent spaces; compare pricing models
• Consider opportunities for more than one tier of offering; can you do three-level price point? That may be complex enough for a start: free, medium, and high-end. Give yourself the flexibility to move features around as you measure your user behavior and feedback
• If you already have free users, conduct a survey of those users. Pricing surveys can set you back tens of thousands of dollars -- hard to swallow for a small startup -- or even a large one. Take a look at some of the templates available through Mineful, or SurveyMonkey and try them out.
  

Bloodhound tracking … sniff out every metric that makes sense
The article here “The metrics we track and report: example for freemium products” by BuzzGain is a good place to look at the kind of metrics you should consider tracking. This should become a monthly published dashboard of its own. (See post in this blog “What’s on your dashboard?”)

Profile: YouSendIt
YouSendIt has been successfully marketing with a Freemium model since 2006, and claims 100,000 paid subscriber. In this interesting case study of their freemium model provided by Andrew Chen, they provide the following advice:

• Adopt the freemium model wholesale and focus on it success. Don't just consider your model a free service with an 'optional' premium offering. Devote your energies to pushing users up the funnel.
• Users may call you a 'sell out' if they're never prepared to pay. Users who are willing to pay will likely encourage similar users -- a healthy thing.
• Measure everything you can! See metrics section in this post.
• Work on your pricing model. See what to charge section in this pot.
• Look for lots of 1% conversion lifts. They're easier to find than 10% conversion lifts!
  

Profile: Xing
Xing is a European competitor to LinkedIn, and a public company. So we can look at their reported results. In Q1 2009, they reported revenues of 10.8M EUROS, with their number of Premium users counted as 8% of their user base of 7.48M users (600K premium users).
They have the following revenue streams: upgraded premium accounts, Xing job services, and advertising. While their advertising revenues suffered the same decline almost everyone is feeling, other revenues grew for the company. Job seeking is big business in a down economy!

Profile: LinkedIn
As they are not (yet!) publicly traded, it’s harder to get validated figures about LinkedIn, though a number of articles put their revenue at a profitable $100M, with revenue approximately equally divided between their three revenue streams: upgraded premium accounts, hiring services, and advertising.

You can see how they compare features for free on their site. They clearly focus on making sure connecting is unlimited (thus growing the user base), but if you want to really lean on the email and messaging features, you have to pay for it.

Profile: Socialtext
SocialText, now free for up to 50 users. Press release: (June 23 2009). Their new free offering aimed at mainstream user for up to 50 people in an organization to collaborate using Socialtext’s social software platform.

Turning Generosity into Profits

Reading "Favor Enhancement: Real gratitude can be profitable. How, then, to create it?" in the New York Times magazine. In this article, the author Rob Walker highlights a new program by Hyatt Hotels whereby staff members 'randomly' perform acts of generosity towards their customers. Hyatt may pick up your bar tab. Or your massage bill. Or maybe your super-expensive, but much needed late night Snickers bar.

The idea behind this marketing campaign is that customers who feel you have been unusually generous will become loyal, repeat customers.

I have had this experience personally. A un-asked for act of generosity by British Airways made me a lifelong customer. I was in a terrible car wreck on my honeymoon in Italy (not a brilliant start to married life). After a wobbly few days in Venice, I called BA sobbing "I want to go home now!" They not only changed our flights for no fee, they also upgraded us to first class, and the airline staff were unusually gracious. I was hooked as a customer, and have been ever since.

Robert Palmatier, an associate professor of marketing at the University of Washington and author of a coming paper in the Journal of Marketing tells us that making a customer feel truly grateful directly correlates to opening their wallets. For me, I've spent thousands and thousands of dollars on flights with BA in the 16 years since my honeymoon, flying my family of five back and forth between San Francisco and London.

In what ways can you make your customers feel grateful?

• Do you know their birthday? Send them a virtual gift, a coupon or even a card.
• Do you see a customer with a problem on their blog, or on Twitter? Answer. Respond. Fix it. Give them their money back. Without being asked.
• Do you ship goods to your customers? Include a little freebie or two. I buy product from a Yon-Ka retailer who always includes goodie samples; I go back time and again to the same retailer so I can get those teeny-tiny free goodies that are perfect for two-day business trips.
  

Could Hyatt's program backfire? What if someone hears about the program, and their bar tab isn't picked up? Will they feel that's unfair? I think not. I would like to think doing the right thing, being generous, and taking care of your customer on a personal level will generate goodwill and good word-of-mouth of the best kind.

Update on July 24, 2009: OMG, I'm loving this story about Triscuits: "How to create a culture of buzz" by John Jantsch. What's your equivalent of sending Triscuits to Fiji? That's what I'm talking about! In the "old days" such acts of generosity wouldn't have gone far beyond Suva. But today, your generosity could be talked about anywhere in the world.

What social media sites should you take a look at?

Just reading "50 Social Sites That Every Business Needs a Presence On." Just in case there's any doubt that you really need full-time staff -- even if you are small -- to manage your social presence, this article should convince you that yes, it is a very full-time job. This article offers a great check-list of places to check out. But you don't need them all initially. Pick the big ones, measure and understand, and then keep adding. And wherever you can, use aggregators like PixelPipe to help update multiple sites simultaneously.

How one crazy guy becomes a movement

Oh heavens, how I love this. A perfect example how one crazy out-there dude becomes a movement. The video is the perfect embodiment of how trends take off! See this post from Seth Godin.

Postscript April 2010: Check out this video at TED about how this same video is used as an example of how one guy starts a movement.

How much cooler could Flip get?

I have to admit it. I'm biased. Not just because my life-so-far-partner Peter Winer is the lead engineer on the new Flip Channels product. But because I think the Flip video camera is just the perfect juxtaposition of cool and functional. It's like the iPod of video cameras. (I'm presuming they wouldn't mind me saying that.)

This past winter, I took my Flip camera up to Kirkwood, and managed to take great ski videos without taking off my ski gloves. That's enough for me! It fit in my ski pants pocket and turned on in a couple of seconds.

Well done on the release of Flip Channels, Pure Digital! How cool is that!

Marketing your business with your blog

Most sensible advice from Darren Rowse "13 Tips for Marketing Your Business With Your Blog." Easy, simple, obvious advice. But if it were really obvious, more companies would do it. So I guess it's not that obvious. Thanks, Darren.

Do you know who your real friends are?

Reading the New York Times' piece "What Do Friends Mean."

Quote: "Today’s idea: The rise of social media and the downturn in the economy have people thinking long and hard about the value and meaning of friends — psychologically, socially and economically. Upshot: confusion."

I am pleased that I can categorize my friends on Facebook, and that I can hide people who are purportedly my friends and those who, frankly, are not. They litter up my newsfeed with blather and froth and nonsense. But I do occasionally want to stalk them.

Both my teenage children have had experiences where they have built friendships from passing acquaintances in "real" life, to closer friendships in "online" life. And then when they come to connect with those friends in real life it all goes completely pear-shaped.

It's what bingly-bongly parents call a "teaching moment." (Ick.) But it is vitally worthwhile to talk and think about. Don't mistake or confuse relationships in your social graph for those real, real friends in real, real life. There is simply no substitute for the nuanced choreography of a conversation. The facial and hand expressions. The voice inflection. The choice of words you use ... in sentences very frequently in my case (as I am often teased about) of way more than 140 characters.

On the other hand, having social network "relationships" with my work colleagues has opened up new avenues of connection that would otherwise have been impossible. Many of the people I work with are hundreds of miles away. I see them only rarely. But I connect with them daily on Facebook. I see their families, their hobbies, their frustrations. That I like. It's human.

But my real, real friends, in real, real life? I almost never talk to them online. They are strictly for face-to-face secrets and gossip. And that's never going online for me.

What's on your dashboard?

One of the most useful things marketers can do is help colleagues measure the activity and behavior of our users. To that end, two monthly dashboards are recommended: a financial dashboard and a marketing activities dashboard. Both should be put out as close to the beginning of the month as possible, measuring the previous month.

Apart from all the usual, expected measurement metrics about logins, activity, upgrades, and so forth, it's very interesting to also try to combine social conversation metrics in combination with more traditional metrics.

For example, if a new feature announcement announcement includes blog posts, email blasts, and press releases, try counting the Twitter mentions, influencer blog mentions and Facebook posts right alongside the click through rates on email and ad campaigns. Also measure the increase in numbers of followers, friends, and blog comments.

In addition, one should obviously try to cross reference those measurements against the increase in the number of people actually using the newly announced feature. This all helps to provide a more insightful picture of the success of that feature release, as well as how it is being received in the user community.

A note of caution though: all this requires a lot of work, and a dedicated, experienced resource. Don't under-estimate the amount of time needed to measure a 'hit' on any of these networks. Your results may not hold up perfectly well under close scrutiny -- there's always a bit of a fudge factor in how things are measured. But they are worthwhile nonetheless, and as measurements on these platforms improve, your actionable insights will improve too.

Social conversations -- the shock of the new

I have learned more from being the official Photobucket tweeter (http://twitter.com/photobucket) in the past few months, then over two years of watching customer service reports, following Yahoo Answers, searching blogs for our brand and more. The immediacy of reply, and the "stalker appeal" of just searching for my brand's name is captivating and not just a little bit addictive.

But when I come to report back to colleagues and management the results of what I've found in listening to the Internet pulse, I find it very hard to quantify the data I found. Where's the formality in my approach to collecting, analyzing and reporting on what I hear? What can I judge it against?

The Dizzying Speed of Social Conversations
The volumes of customer conversation is so huge, and so fast, it can be a bewildering task to uncover the trends and commonalities in customer sentiment. Some are easy to spot and shoot up over night -- look at the Motrin debacle. But some are much harder because the come and go, or might not be spotted immediately. Plus, marketers have to combine and analyze those more subtle responses and trends in social conversations and measure them against the data they are collecting from site visits, site behaviors, transactional data and other sources into a meaningful analysis that can be relied upon.

The Shock of the New
When I was a history student in 1980, I studied Robert Hughes "The Shock of the New" -- a series and book that changed the way people think about modern art, its relationship to speed and change in modern society, and the worship of anything that's "new" for the sake of being new.

Sound familiar? I feel parallels to that story today as a marketer in a social media world, with all kinds of shiny new tools and widgets at my disposal every day. Will these shiny new toys hold up to the cruel light of history? Will they be considered worthy and important 6 months, a year, or even 5 years from now?

One of the problems I see is that the new social media marketing platforms are so new that there are few touchstones we can use to judge the quality of the results we see. If I see 5 tweets a day on the same topic about a brand and 10 posts on Facebook a month on the same topic, is that a lot, or not? I need to compare it over at least a year. And I need to be able to measure it as I go along. Do I count them up as I go?!

As I said. Bewildering.

But not hopeless. The tools will catch up. The benchmarks will form as social networking matures and brands build some historical data online. New job roles are already forming, with expertise in the measurement of social conversations and brand tracking. It cannot be ignored, or sub-contracted off to an agency. The best marketing groups will have this expertise in-house, and their results should be watched, respected and acted upon.

Which brands get it right (and wrong) when trying to reach youth

Here are some interesting live insights taken from a panel of 8 teenagers at the YPulse Conference, watching advertisements and giving their feedback live. The teenagers were diverse in ethnicity and interests, and came from different parts of America.

Refresh Everything by Pepsi
The ad shows a variety of scenes from different ages, drinking pepsi, to the tune of "Talkin' 'Bout My Generation." It links to the site www.refresheverything.com. It uses a development of the Pepsi logo that recalls the Obama campaign logo.
Watch it here.

Responses:

• Seen it before; the tune is old news; nothing that's going to make them drink a pepsi.
• I feel catered to, don't do that.
• Pepsi isn't being consistent with their logo usage.
  
• Portrays youth as party people, and they're more than that. Add some social activism in there.
• Pepsi should come up with something that's theirs; not just take Obama's logo and re-use it. You're not going to get youth by borrowing Obama's logo. Be unique.
• Berlin Wall coming down, and flower power people didn't resonate with this panel.
• This looked like a re-hash of older commercials, like Britney's old Superbowl advertisement.
• One panel member liked the invitation to be a part of the new story.

Happiness Factory by Coke
Shows the journey of a coke bottle through an imaginary world that looks very Pixar-like.
Watch it here.

Responses:

• Looks like Pixar made a tool video. They aren't trying to be relevant. They're trying to be fun. They aren't trying as hard as Pepsi.
• Creepy and disturbing. A little to acid trippy.
• Fun, but would like to watch the commercial again. He found the Pepsi commercial more realistic, but he would watch this commercial again.
• Feels it's like a depressing version of Willy Wonka and the Chocolate Factory.
• The gamer panel member didn't understand the gaming aspect of the commercial.

Overall the group felt Pepsi won, but neither ad appeared to make the panel want to drink either Coke or Pepsi.

Mac Versus PC Advertisement by Apple
Showing the team the ad about customer care and the Apple versus the PC guys.
Watch it here.

Responses:

• Loves ad series, but not sure the message holds true. Doesn't think the Genius Bar is any help at all.
  
• It's not diverse ... two white guys doesn't appeal.
• Hates this campaign altogether, and feels that this is really bad for Apple.
  
• Doesn't like that the young Mac guy is too cocky, and is pandering to youth.
• Thinks the ads is funny, but doesn't like playing on someone's weaknesses rather than their own strengths.
• Generally all very "down" on the ad series.
  

I'm a PC by Microsoft
Many different people, using PCs in different ways, all over the world, with the phrase "I'm a PC."
Watch it here.

Responses:

• Loved the diversity. Not making fun of Apple.
• Felt it was mature of Microsoft to do this.
• Didn't feel the commercial affected them. Didn't know what the ad was about, unless you knew about the Apple ad. Didn't give any special information about why to get a Windows PC.
• Thought they got it. They took pride in taking a PC.
• Connected more to lower income individuals, because they are a diverse range of individuals. A PC is for everyone, and liked that.

Candie's, for Teen Pregnancy Foundation (PSA)
Shows two teenagers making out in a car. They're told to stop and think. They're handed a baby by Jenny McCarthy through the window and told "welcome to reality."
Watch it here. (Click on Jenny McCarthy ad.)

• Felt it was just talking to girls, and not to boys.
  
• Didn't talk to boys as participating in the decision making.
• The baby came way too fast. This isn't realistic.
  
• Uses a celebrity in the ad, and they didn't notice who it was.

Above the Influence, Partnership for a Drug Free America
Shows a teen schoolboy fitting or not fitting into cardboard cutouts.
Watch it here. (See "Fitting in" ad.)

• Really liked it, because it was human tetris, but didn't think it was effective
• Does not have any impact about drugs
• Had no message at all; just walls falling down; they're always hearing about not smoking pot; but there was no message here.
• Showed fun imagery, but totally irrelevant -- there was no message about smoking pot here. You're labeling people, and not helping.
• It's not always about teenagers fitting in. There's more to it than that.
• Not an effective anti-drug message to talk about 'fitting in' only.
• Doesn't feel the message connects, but there are other abovetheinfluence.com messages that are better ... for example, the talking dog is much more effective. (See "Dog" ad.) They should address risk levels.

What struck me in particular about these teens is that they are very sophisticated about how they are being sold to, they see what brands are trying to do, and are frequently derisively dismissive of the messaging. Don't talk down to teens. They know what you are doing! Be honest, authentic and real and these teens will believe you more.

Corporate responsibility affects teen purchasing decisions

Things are changing for teens with regard to purchasing decisions. Teens have lost the abundance of discretionary income. Teens are going to be smarter shoppers, and they are going to really question how much they need the item. New versus used? Upgrades and updates?

Teens might love a particular brand, but there are other associations that help decision making. For example, corporate responsibility and social cause awareness are added into consideration mix. Corporate malfeasance is an issue. Teens will know if a company is not behaving ethically with regard to their products and workforce.

This information courtesy of Jacqui Lane at SurveyU. I worked with Jacqui when she was at C&R Research. Lots of energy, and lots of enthusiasm for her subject.

An immersive marketing program for Partnership for a Drug-Free America

How do you get teens involved when you want to show them something they don't want to hear about, and aren't really interested in?

This was Premise Immersive Marketing's issue when working with a Partnership for a Drug-Free America. The Partnership works hard on research-based educational programs, and their focus has historically been on parent education. They have now launched a youth program, including programs such as Time to Talk.org.

Teens weight two attitudes towards drug use: the perception of risk, weighed against social approval. If there's a high risk, and high disapproval, use goes down.

The Partnership needed a youth marketing program designed by an organization that really understood youth, including youth that never used, used occasionally, and used frequently.

Youth don't respond to being preached, especially by adults. Peer-to-peer communication is ideal. It's the #1 source of trusted information. It's important to understand different learning styles too: auditory, visual, by reading and writing, and kinesthetic.

The program devised by Premise Immersive Marketing involved:

• 10 min video that appeals to visual learners; created in partnership with A&E and interviews real teens with real stories
  
• Card game appeals to kinesthetic learner; the goal is to facilitate a conversation in a group; four outcomes of the game: checked, wrecked, checked your friends, and intervention. The winner is the last player standing. So for example the group is asked if they'd take a pain killer prescribed for someone else. The answer is discussed.
  
• Group discussion for people that read/write to learn using the online resource. The Check Yourself web site allows the teens to follow up and get advice, for themselves and for their friends.

The results:

• Gets people involved, in engaging and talking
• Authentic and relevant to their lives
• It's easy for an adult facilitator to use

The Web site is: http://www.checkyourself.org.

Is your perception about what works for teens accurate?

Study by Fuse Marketing's Bill Carter: "Teen Advertising Study" May 2009.

Teens were asked these questions. The percentage represents the number of teens who confirm that belief:

1. TV is the best way to reach them -- 75% agree
2. "Friended" a brand on a social network -- 30% agree
3. Think in-game ads work and are effective -- 10% agree
   
4. Approve of text messaging by brands -- 10% agree
5. Think magazine ads are effective way to reach them -- 50% agree
   
6. Think use of celebrities/athletes is an appealing way to reach them -- 20% agree

Sometimes your belief about brands can be inaccurate when you actually talk to what teenagers are saying.

The last question about celebrities is interesting.

Teens want to see ads that include "people that look like me." They don't want to see celebrities and athletes. The Verizon "can you hear me now?" guy has been a very effective ad since 2002. That character, and those commercials, ranks as the #1 most effective ad that teens say works for them in the mobile category. (My thought: maybe the celebrity distracts from the message? Do you look at beautiful Catherine Zeta-Jones, or think about the message of the ad she features? She is mightily distractingly beautiful.)

Bill believes that the teens think the use of celebrities maybe too excessive. Maybe they think they are too cool for that. More study needs to be done as to why celebrities in ads apparently turn off the teens.

Please, please, BBC and Google.... make it so

Read this on the Telegraph today: BBC and Google in talks to launch international iPlayer site.

Please say it's so. The BBC has the best content ever, and we could all benefit from it. Once again, the BBC leads the way. They were one of the first, serious, grown-up news organizations to adopt RSS. They really do get it.

See my post in March "I want my BBC." Do you think they're listening?!

Josh Shipp, Advice Slinger, HeyJosh.com at #ypulse2009 Conference

Here's a summary of his talk.

1. Teenagers do not give a crap about your brand
They're not thinking about you, your next product, your next app, your next innovation. You have to make yourself distinguishable and authentic. This gives you the right to be heard. Josh says to his teenage audiences: "if your life sucks, it's because you suck."

2. What matters to teens:

• Dating
• Parents
• Friends
• Identify

3. Be as skeptical as a 15-year old.
What do I buy into? What is corny? Use that mind as a filter. The best products for the teenager were made by older people, but shaped by skeptical 15-year olds. You need to have a skeptical 15-year old on your payroll? If you don't, you should. Do you have the right to talk to me? What irritates this audience is that they tell you how to make your product better, and you do nothing about it.

4. Be realistic
Try something. You may fail. It'll suck and it'll cost you time and money. But you'll learn and be better.

5. What do teens care about?
They care about your story. They connect, relate and trust a story. They don't trust companies. They trust stories and individuals. They like the Jonas Brothers, but not Columbia Music. They care about their iPod, but not Apple, Inc. Does your brand have a story? And is it worth re-telling? Does it have a story that I'd put in my Facebook status? Does your product make me look funny, stupid, smarter, more beautiful? Because if it does, your audience will tell your story for you. Your audience will market for you.

6. What if your brand isn't interesting?
Even if you think your brand isn't interesting or dynamic, or you believe it isn't, you can be successful. You need to build a story that people can relate to. You need to see your problems as an opportunity. Your biggest problem may be your greatest asset.

7. When your audience is engaged with you, they are listening
So perhaps they are laughing at you. But they are listening too. What will you say? You should add value to your audience's lives. If you don't add value to your audience, you should not exist. Your audience should trust you, and they will if you add value. Help teenagers with their aspirations and dreams.

8. Some knowledge biscuits:

1. Free stuff rules
2. My email address is dead. Have a plan for mobile phones.
3. When all else fails, don't underestimate the power of girls and free cookies

http://www.heyjosh.com/ypulse. This site includes a free book that you can download.

10 tips for building brand communities

Excellent article. 10 Tips for Building Brand Communities. It really underscores how communications in marketing is no longer just top down -- it's a dialog. Twitter has taught us so much about this in a really short space of time, and it's a truly exciting time for a brand to build a brand community and learn from their users. There has been no time when the tools have been so readily available to brands. The only thing standing between a brand and embracing this wave is their readiness -- and their courage -- to do so.

Nerds Rule -- for this teen

I am fascinated that the Vlogbrothers are one of my 13-year old daughter's favorite channels on YouTube. These guys are seriously nerdy. She falls over laughing watching them. You never can tell, can you? Love it.

Social media marketing showing growth and optimism

According to this eMarketer article "Will Digital Marketing Prove Profitable," the economy is driving marketers to show measurable ROI for their marketing efforts, and is also driving them online to social media marketing tactics. Marketers believe that social media marketing will show better ROI than more traditional tactics -- outdoors, TV, radio, print. 22% of the marketers surveyed said they'd be moving dollars online.


See eMarketer for more information. (Subscription required for in depth reports.)

"I've heard of them" -- the value of being well-known name

Reading Seth Godin's blog post "On becoming a household name." So much of what we try to do in marketing is to build brand awareness so that when a user comes to the decision-making point, they say "I'll go with the one I've heard of." I think the idea of running banner ad campaigns that are all about pushing your name, and not necessary about getting clicks, is intriguing and worth testing.

eMarketer: How people share online video

Just finished reading a report from eMarketer about future of sharing video online. You can find the full article here: http://www.emarketer.com. (Subscription required. (c) eMarketer Inc.)

The study cited statistics that indicate that online video in the US is now as big as network TV.

The study notes that the age of online video viewers trends younger: 82% of teens (16-to-17-year-olds) and young adults (18 to 24) streamed video, compared with 73% of Generation X (25 to 34) and 65% of older boomers (55 to 64) who said they watched.

Younger people will educate older generations how to watch, where to watch, and what's worth watching online. The day is coming soon when my family will look at our television as merely a big screen monitor attached to our computer. We already use it that way a great deal.

"Only" 8% of teens watch TV online" Only?

Just finished reading this report from The Hollywood Reporter: a survey about teen TV watching habits you can read here. The report states that "only" 8% of teens say they watch TV online." But I honestly think this summary of the report is weirdly skewed to send a "calm down, TV industry" message. TV watching online is an inevitable tsunami of behavior, and saying it's going to happen slowly is flying in the face of everything we've all seen in Internet behavior over the past 10 years.

Here's a quote:

About 8% of respondents who watch repurposed TV online (18% among teens) said they watch TV less often. Indeed, just 3% of adults (compared to 4% last year) said they would consider disconnecting their TV service to watch exclusively online.

It seems to me that's a notably significant portion of this audience who is watching TV less often. I need to get my hands on the report, because this summary appears contradictory and confusing.

Update to this post: see my second post about how online TV just as big as network TV. Don't bury your head in the sands, network TV. This is coming!

Need a seriously good belly laugh?

I just love podcasts. And the BBC, I think, has some of the best out there. A new one I just 'discovered' is Friday Night Comedy Night. You can discover it here: http://www.bbc.co.uk/podcasts/series/fricomedy.

Do yourself a favor and subscribe. You may miss some of the jokes in America, due to the references to such delightful political clowns as Boris Johnson and (better known) Gordon Brown. But nonetheless, it's worth it. It's the kind of show that the creakingly un-funny "Wait, wait ... don't tell me" on NPR tries to be, and fails hopelessly.

Last night as I drove home down 280, I seriously needed cheering up. I listened to the latest show and was actually roaring with laughter. Thank you Sandi Toksvig.

Are you tweeting too hard?

... then you may appear on this site: http://tweetingtoohard.com.

I spent an amused 15 minutes trolling the site. What a lot of self-important people there are out there. Can't you hear yourselves?!

Note to self: humility is a good thing.

Trouble with the site is that even if you log in, you can't enter your own tweets. I have a couple of Tweeters in mind that I'd dearly love to submit. Crushingly disappointed I can't!

Seth Godin Rocks!

I was first introduced to Seth Godin's work by one of my all-time-favorite people Guy Kawasaki. (I know. I'm not alone in that crowd.) I read his book Permission Marketing : Turning Strangers Into Friends And Friends Into Customers. He has many other books, and when I have time (yeah right) I'll read others.

I read his blog when I can. Today I read a truly winning article that made me laugh and made me think. What a great combination. Called "Can You Change Anything?" it offers a list of 45 things you can do to get out of your rut. Awesome.

His list reminded me of a very interesting management team exercise I experienced a few years back. The company I worked for a few years back was in something of a mental rut. We felt we needed to rethink how we were approaching the market for our product. So we embarked on a day-long exercise with small group breakouts, large wall post-its and lots of healthy debate.

Two exercises stick in my mind:

1. What strategies and tactics would you employ if you had unlimited budget? Sometimes you find that released from the burden of thinking about what it'll cost, great ideas that actually don't cost much show up unexpectedly.
   
2. Turn everything upside down. (e.g., global vs. local; or older demographics vs. younger demographics) So whatever you're doing now, consider the polar opposite approach.

Both exercises yielded worthwhile results.

Effective versus Measurable: Evaluating Marketing Tactics

I work in very budget constrained times. I am constantly looking for new ways to get the word out that are low cost, but remain effective. But sometimes the easy, cheap methods of getting the word out are really hard to measure. And the ones that cost money are measurable. Tricky situation. But just because something is hard to measure, it should not be a reason to devalue its effectiveness and thus ignore it. Sometimes you just have to do it.

In the 'old days' marketing was much more 'top down.' You used direct mail, paid advertising, email marketing and later paid search to get the word out. But life isn't top down any more. Thankfully. It's much more fun being a marketer now! Everyone is an influencer. You need to give them the tools to get your message out there.

But before you embark on any of these tactics, ensure that your strategy is totally solid. Now is not the time to experiment in the dark. Segment your audience so you understand the most valuable and profitable targets. Use the data you have available to understand what's worked in the past, and what hasn't. Study your competition and learn from their weaknesses and mistakes. In all your tactics, be completely clear of your goal, your audience, your message. Be consistent and stick with it until you can clearly measure results. Then, tweak and adjust to fine-tune.

1. Advertising
Clearly this is highly measurable and target-able. But network advertising doesn't offer the creativity and effectiveness that we're looking for. It's not inviting your audience to be a part of your conversation. However, see another post here about ideas for using advertising not to build clicks, but to build brand recognition.

2. Press releases
These aren't exactly cheap. Well, I guess that depends on your budget perspective. But you obviously have to pay an agency/writer, get the release on the wire, and target your follow up. It's not easy to measure results, but you can certainly measure the hits you get on the various search engines, and thus calculate potential readers. Don't, however, be lured into the 'spray and pray' method of press outreach. Target the writers who speak to the audience you are reaching. Use your press release merely as your news hook. The real value is in the conversation you'll have with that writer one-on-one.

3. Social network profiles
You can measure your friends, the visits to your social network profiles, the numbers of discussions and comments. If you're clever with your parameter tracking in something like Google Analytics you can measure clicks from specific posts or articles. But the real measurements are hard to quantify. Regardless, having a lively, personal, interesting and regularly updating social network profile on MySpace and Facebook is vitally important to ensuring your brand is effectively represented. Ensure that anyone who goes to your social network profile will learn something new about you and your brand. Something they'll want to share.

4. SEO campaigns
Both measurable and effective. Measurable in the sense that you should clearly be able to see changes in your traffic to your site if you have decent tracking at your end of the clickstream. Effective because if you do a good job of ensuring your site content is well indexed and follows all the plethora of SEO rules, then someone looking for what you offer should be easily able to find you. During our recent campaign with the wondrous Lady GaGa, searching for "lady gaga photos" during the campaign resulted in Photobucket as the #2 result in Google, right after Google's own image search (which was also full of Photobucket images). Great traffic spikes resulted.

5. Corporate blog
A well documented corporate blog is highly effective: the press find you, and read backgrounds on you and your stories. The terms in your blog should be well indexed through SEO. However, if it's hard to measure effectiveness. Even if you only get a few thousand visitors to your corporate blog a day, those are still a few thousand people who are getting a back story, and who can potentially pass along what they have found.

6. Schmoozing the blogosphere and twitosphere
In an ideal world, you have a full time community manager whose job it is to continually engage bloggers and tweeters who may be interested in your proposition. Each tweeter or blogger who tells their audience about you and your product has a huge multiple effect. Even if it's hard to measure it is a highly effective way to get the word out at low cost.

Awkward Family Photos -- fabulously viral

I have had this site shared with me five or six times in the past two weeks. It's hysterical and weirdly compelling. Take a look. http://www.awkwardfamilyphotos.com.

Driving traffic and building awareness in budget-challenged times

I seem a lot of this in my job. How to do more with less. Without hundreds of thousands of dollars, or even a small percentage of that, to fill the awareness/consideration end of the marketing funnel, how do you introduce new people to your service?

Traditional Marketing Funnel

(I am not trying to analyze the appropriateness of a traditional marketing funnel in the social media world. That's the subject of a separate post, to come. But suffice to say that we have to drive awareness and consideration of your product or service, regardless.)

Here are some of the strategies and tactics I have employed in budget-challenged times that reap results:

Marketing Value Trades

If you have something to offer, trade. Trade promotional units, emails, blog posts, your technology, know how for promotion in return. At Photobucket, we have been promoted by #1 air time radio hosts, FOX TV shows, many music bands, even the Presidential Inaugural Committee for Barack Obama. Build a tiered trade system that you can measure. Estimate what it would cost to have your value sponsored or sold, and get value in kind.

Partner Placements

Partner programs, where you trade what you have for promotion on your partner sites, even if no money changes hands work. If partners integrate with your technology or content, work with them to promote it to their users, do PR outreach, and share the love. If they have marketing dollars to spend, so much the better. Leverage their budget to your mutual benefit.

Viral Promotions

Many blog words have been spent trying to unlock the key to what makes something viral. If you have the approach to build viral-sharing into your property from the very beginning, you're in with a better chance. But it's very hard to know what's going to take off. We all have viral envy. I often look at viral campaigns and think how easy it looks, and how hard it actually is to do. But keep trying. No one will fault you for trying, and failing. Just keep trying. But do look a the failed campaigns that uncovered the PR or Ad Agency schills, and avoid the most obvious pitfalls. See another blog post here, "what makes a message viral?" and "what do great viral videos have in common?"

Word of Mouth

Build word-of-mouth into everything from the beginning. "Share this with a friend" options should always be part of your site. Look to see what people are talking about, and if it's absolutely relevant to your product, join the conversation. (If you're not relevant, you'll be outed as @spam right away.) Build conversations wherever you go. If you can build forums, even crowd-sourced ones, do so. Respond to blog comments. Build your Twitter presence. All these help. They sometimes feel slow to get going, but get going they will.

How to choose the right PR firm for your company

I have learned a little over the past years about how to go about selecting a PR firm. I thought it would be useful to myself, and possibly others, to outline what I have learned.

1. Set Goals

Without PR goals for yourself, how on earth do you expect to choose a firm?

Before you do anything else, agree on your goals for PR. Do you want your PR to:

• Build awareness among a specific audience -- be sure to clearly define that audience (customers, partners, brands, developers, business leaders)
  
• Drive traffic to your site (same question as above -- for what audience?)
  
• Get developers to build apps on your platform
  
• Get partners to integrate with your site, technology, API
  
• Get acquired by someone bigger and richer than you
• and so on....

The PR strategy you build with a goal to get acquired is a wholly and utterly different strategy than the one designed to drive customer traffic to your site. So be clear up front. This is particularly important when selling up your PR budget to management. When you come to deliver results, they should be measured against the goal established and agreed upon.

Some firms are good at real business/old fashioned journalism. Others specialize in consumer social media outreach and blogs. There are many specialities. Consider firms that specialize in areas related to your goals. It's highly probable that your goals year one are different than your goals year three, in which case a new firm is likely to be needed. But remember the speciality needs to match your goal.

2. Snoop the ecosystem

Who is always getting press? Who is doing it well? Find out who their firm is! If they are your competition, you may likely run into conflicts of interest. But still try. If they are a larger firm, they may be able to support you by separating your team from your competitor's team. Though that doesn't always work. If they are a smaller firm, they will not be able to support you honestly.

If you can find a company that's getting great press from a related, and complementary product then it's a win. When I selected Lewis PR for Photobucket's early days, I liked how they were handling press for Second Life, at that time a huge Internet darling. I hadn't heard of Lewis PR, but I certainly had heard of this particular client of theirs, and that was a good recommendation.

3. List your goals for PR

Related to (1) above, but in more detail. Define at least 5 top goals for your first year of engagement with your PR firm. Think: if you can achieve these goals within the first year of engagement, I'll be a happy client.

Some goals may be very specific: get on the back page of the "USA Today Money section", and "Get read about by Rupert Murdoch."

Or they may be slightly less specific: get into the "how to column" of 6 major national Sunday papers, or get a detailed article on the top 10 mommy blogs.

Whatever you choose, your PR firm will love that you are being specific, not vague.

And by the way, I gave those two goals (USA Today and Rupert Murdoch, among others) to Lewis PR for Photobucket when I hired them. They delivered. I was happy.

4. Cold call, or write to the PR firms you have shortlisted in (2) above.

Unbelievably, some firms don't call back. Strike one. Actually, strike OUT. If you know someone who can introduce you, great. But frankly, they should have their act together enough to call and email you back promptly even if you're not introduced and don't know anyone there.

5. Telephone interview (brief)

Just see if there's a conflict of interest, and see if you like their general reaction to you. Also check that they could potentially take on your workload. Some of the smaller firms may be too busy to give you the love you deserve. Though in today's climate, that's highly unlikely.

6. Write to the PR firms that make it through (4) and (5) with your goals

As listed in (3) above. Then set up a longer phone interview to discuss those goals. This is a killer step: if they don't speak to your goals, don't bother seeing them face-to-face. I recall specifically stating in goals that I was not interested in guerrilla PR marketing ploys. I was then regaled with exactly that. Did you not read my email? Again, using the Lewis PR example, Morgan McClintock of Lewis PR not only talked to my goals, but offered insights I hadn't thought of. I learned something about my company from talking to him. Joy.

Don't be lead down the budget path yet. They don't yet need to know your budget. You need to know how, and if, they can meet your goals.

7. Finally, face-to-face

Hopefully you're down to three firms by this time. Only now do you need to spend face-to-face time. Here are some deal breakers:

• Are they willing to come to your space? They should be.
  
• Do they bring 100 people? You only need to meet the people who will work directly on your account
• Do they speak to your goals? At this point, you should expect a preliminary idea of how they'd approach reaching the goals you have generously outlined for them; if they don't, and they haven't done their homework, they don't care and should be thrown out.
  
• They should also look to help you define a reasonable budget, with what would be included and excluded
  

8. Decision time

Finally, don't choose a firm without specifically meeting your potential account representative. Don't be taken in by the 'bait and switch.' The bait and switch is where you meet the fabulous PR guru at the top who can do all the name-dropping, fall in love, and then get a 22-year old school leaver on your account. Sorry. That doesn't work.

The person dialing for you needs to know their stuff, and you should be able to ask for someone good. You should know in advance who is going to be calling journalists on your behalf.

Find out how often they would meet you face-to-face and on the phone. I think weekly status calls is great, and at least a one month face-to-face. At that point, I'm happy to go to their space. I want them to spend their hourly time working for me, not driving to see me.

9. Budget planning

Before you finally marry the firm, make some agreements:

• 30-day opt out ideal; not every PR firm likes this
  
• agree how they spend your retainer; I caution against weekly clippings. Do that yourself with Google Alerts. Spend your money on something real, not gathering of weekly emails
• I also caution against expensive blog monitors too. Unless of course you have lots of money to spend. But who does?

I am sure I'll add to this blog post as I consider further what it takes to make a great PR marriage. Be brave and be firm. You are in a PR buyer's market right now. And firms are hungry for your business, so you can choose to be picky.

tweetmeme -- what's popular when

tweetmeme is my new toy for watching what's going on in the Twitosphere. http://tweetmeme.com/. It allows you to watch for any terms and get stats for the last day, week and month. I particularly like the categories, where you can see which Twitter topics are recently popular.

If you search for something like #RPattz -- a recent trending topic as today is the boy's 23rd birthday -- you can find out which of the millions of inane tweets about Robert Pattinson were the most popular. This is the most useful feature, I think, of the site.

What do the top tweeters tweet about?

If you're interested in finding out what the top tweeters tweet, go here: http://100twt.com/. Dave Winer of Scripting News wrote this app that shows you just what they're tweeting. It's a very mixed bag. Stephen Fry is still my favorite (@stephenfry). Maybe because he makes me nostalgic for England. What a sap I am.

Are Twitter celebrities "real"?

Here's a site, just dedicated to figuring out if Twitter, MySpace, Facebook, etc. celebrities are real. Or not. http://valebrity.com/.

The site has rather a lengthy procedure you have to go through to make sure that you're "real." See it here: http://valebrity.com/tag/getadded/. So now you can find out if you're really talking to that beautiful Brazilian model, or some kid in middle America typing on her behalf. Creepy.

Jeez. You just don't know what's real any more do you?

What makes a message viral?

My favorite part of this article is the reference to NOLS, as I'm sending my daughter to NOLS this summer.

What makes a message viral? It's an opportunity to share something cool, interesting, money saving, life saving, fun, funny. It makes the messenger feel useful, knowledgeable, powerful.

What message can your brand share that will make your brand messengers feel that way?

Getting starting with corporate social media marketing

There are dozens, no hundreds, and probably thousands of decent articles about how corporate brands should get started with social media marketing. This article may, or may not, bring you something new. For me, it reflects a little of what I have learned about how brands can start thinking about managing their marketing funnel online through social media.

Your social media marketing strategy is different to, or rather an adjunct of, your general integrated marketing strategy. The latter is about awareness building and demand generation and likely involves time-limited specific campaigns like product launches or specific awareness campaigns.

Your social media marketing strategy is an umbrella strategy. It should be included as a part of all the integrated marketing campaigns you do, and it should be an on-going evergreen strategy.

Here are some discussion points.

1. All brands can be social

How can you be social? Start a conversation with your customers. Do it through a blog, a Twitter, an online forum, a social marketing page. Make sure it's staffed by YOUR staff. Not your agency staff. You need to learn this stuff.

2. Start with Twitter and expand from there

Twitter is an easy way to get started. And get started you must. I have another post on this blog about how to get started with Twitter. Commit to being on there every single day -- including weekends. Choose one, or two, people as the official Tweeters and have them agree from the start on their approach, voice, strategy and the most interesting things to tweet about with your brand.

3. Be clear about your message

What is the message you want shared about your brand? Be clear from the start, and be consistent. Your message is not only your brand's core value, but also your brand's personality. Are you fun, irreverent, serious, youthful, crazy, honest? And what is the cornerstone message you want to keep coming back to?

4. Determine your investment in your social marketing program

You can spend a fortune on an agency to help you. Or, you can kick it off by getting out there and getting started yourself.

Bring in an agency when you don't have the resources to manage and implement your campaign. But don't leave all the strategy and key learnings to your agency. You have to have formed an opinion yourself and determined a good approach yourself. Don't pay the agency for this work up front. They are there to validate, fine-tune, and reflect.

I strongly recommend at least one in-house staff person having hands-on involvement in all aspects of your social media presence. That way you are investing in your own corporate knowledgebase, not in your agency's knowledgebase. Don't abdicate all these important tasks to an agency. If you feel you don't know enough, hire a knowledgeable person to teach you and do the work. Much more valuable in the long term.

Don't start with 'what will it cost?' Start with what you want to achieve, how you can measure it, how you can get your feet wet with little or no cost.

Remember, there is a risk to being outside the conversation. Jump in and learn to swim.

5. Selling up to management

How do you convince management to participate when they may not have a clue what social media marketing is? Further reason to get started internally first and gain key learnings. "We wouldn't have known this without having done that." Show value and engagement in small ways, and then extrapolate value beyond that initial engagement.

Show off what your competition is doing in this area. Or, if they haven't arrived there, show off cool things that related brands are doing. These things are very hard to measure in terms of strict ROI. It'll take months to get something off the ground. If your management is very reticent, try to kick off with things that are low-risk and low-cost. There is no fee to start a Facebook fan page and a Twitter stream, so that's a good place to start. Begin writing your own corporate blog, without publishing it, to show what posts might look like. Again, with a tool like Blogger there is no cost to get started.