Cost and value - It's a two way thing

From Search Engine Watch

There is an ancient sales formula that even the most hapless of mathematical incompetents can understand. Cost + NO value = FAIL. It would appear that some people refuse to take notice of this formula. Exhibit A for example (see graph) is a demonstration of cost + no value in action. The Times decided they were struggling under their current business model. They changed it to suit themselves. They added no value. What is the customer gaining from this process?

A survey by KPMG has found that 81% of UK consumers don't want to pay for digital content. But that is not the interesting piece of the research. That is to be expected. A UK online consumer is used to free. Why should something offering the same service suddenly cost? To be honest, I'm surprised the figure isn't higher. No, the interesting piece of the survey was the constant referral to UK consumers being happy to give up personal data, as long as the process BENEFITED them with a more personal online service:

Cost(personal data) + value (personalised service) = Result

The valuable lesson here is that customers do not want to bend to suit your requirements. They want you to bend for them, to suit their needs. Customers are happy to pay costs providing you add value...To them, not you. It is a very simple formula. Perhaps right about now someone at the Times has just uncovered this ancient phenomena...And they're probably crying in despair.

Losing customers to make a profit? Not a model I'd want to follow

The debate rages on over the Times Online putting up their 'pay wall.' Being so strongly against the move I often entice people to come back with lines like 'they don't care how many consumers they lose, at the end of the day it's about the profit they make.' That's fine, and I can absolutely see that in the short term getting some people to pay for what used to be a free service will increase figures on a graph. But all they're doing is putting a plaster over a deep wound.

The model they are using is completely wrong, stuck in the past and not sustainable. I'm putting my neck on the line when I say this but I remain so confident of this that I'm prepared to be paraded around with a dunce hat on should I be proven wrong. Paid Content give this evaluation of how many users they're likely to lose, which I feel doesn't even touch the surface of the real impact.

No one can tell me losing 95% of your audience can possibly be a good thing long term and just think about the implications that has on advertising revenue. 'Oh, yeah guys, we've lost the majority of our consumers but you didn't want your advert to reach the masses anyway did you?' And, what exactly are the Times offering that is any different from the other newspapers? If they had a catch, a bonus that set them apart from other FREE news providers then maybe, but if, as Paidcontent suggest, 31% of online newspaper traffic is direct, how many will start going directly somewhere else where they can find content that doesn't cost a sum of money.

If you're in a newsagents and one national paper is free and one is £1 which one would you honestly pick up? Why do the more expensive Sunday newspapers feel the need to fill their weekend editions with endless free DVDs, supplements and prizes? Because they feel they need to offer more to charge more. Are the Times doing that? No.

I've said it once and I'll say it again. The model is massively flawed and lacks any creativity. It's a desperate reaction you can almost compare to that of a street vendor charging for the privilege of looking at his stuff, just because his stuff hasn't sold too well recently. In case you haven't guessed, I really, really hope this 'experiment' fails.

A case of perspective

Reading Dave Kahle's take on sales perspective this morning I became quite fascinated just how much opinion can shape an organisations stand point without anyone actually even realising.

Take this simple story from this mornings papers for example. Three very different takes could lead to a company reacting to the news in 3 very different ways:

TAKE 1) The Daily Mail

Former BP chief brought in to axe jobs in Whitehall and save taxpayers billions of pounds

Controversial former BP boss Lord Browne has been parachuted in as the Government's chief Whitehall axeman.

This to me is negative. It draws you to the point about jobs being axed and refers to Lord Browne as controversial, immediately raising doubts over the appointment.

TAKE 2) The BBC

Ex-BP boss Lord Browne to lead Whitehall reform

Former BP chief executive Lord Browne has been appointed to oversee moves to make Whitehall "more businesslike".

Very neutral, the focus is solely on the appointment and mentions nothing about making cuts or job losses.

TAKE 3) Blog Karameloo

Former BP chairman unveiled as ‘cut chief’ to save billions of pounds of taxpayers money in Whitehall

The so-called ‘Sun King’, who was Tony Blair’s favourite businessman, has been asked to use ruthless business methods to save billions of pounds of taxpayers’ money.

Very positive overall, reference to 'favourite businessman' gives him some acclaim whilst the story focuses on saving the taxpayer billions of pounds. Again no mention of axing jobs.

Imagine if you're tasked with delivering this news within an organisation. Of course, people can think for themselves, but by simply collecting the news from one source, are you getting the full perspective on the story? Because ultimately you're consuming a journalist's opinion. Automating the search means you have the time to view the article from several stand points, analysing in greater detail the implications of the news. It's another advantage to saving hours of daily time hunting down information. With everything delivered to you, it becomes detail to ponder over, rather than detail to find.

How is social media best served? A platform to shout from or a chance to hear the crowd

It's no secret that many industry sectors are still plotting ways to get the best out of social media. Whilst many view it as a way of promoting themselves to a big audience the opposite side of the story is it allows the audience direct access to your dressing room after the show (so to speak). Whilst performing in front of millions is one thing, gaining crucial feedback after the set is just as vital.

The problem is it's difficult to take all the feedback. Look at the England team for example. Some fans can probably offer some genuine insight into where they went wrong. Most fans would probably just offer some expletives. Sieving through this has always been a problem but imagine the power in the hands of a pharmaceutical company, or a retail giant, if they could get valuable feedback directly from clients without the need to set up workshops or expensive market research projects.

With automated media monitoring sieving becomes possible and therefore so does listening to the consumer, as opposed to just yelling things at them from the rooftop. Being able to search quite literally for a needle in a haystack without any of the manual work is quite simply a priceless tool. Imagine the power of spotting a few complaints of side affects after taking a drug, early after release, or finding out a crucial component of the product you sell doesn't seem to work, before losing millions on the production line. So, as a platform for exposing your company, yes, social media is powerful. But as a platform to listen from, and to put yourself in direct contact with the consumer, social media is invaluable.

Another one bites the dust

Watching the screen flash up this morning to one of my most frequently visited news sources telling me that they too had decided to hide behind a pay wall was extremely disappointing. What I don't like at all, is the way we're being made to feel like we were stealing before, shamelessly consuming content and offering nothing in return.

I'm sorry though, that simply isn't the case. A pay wall, in my opinion is an absolute cop out of a solution to a problem that has been rumbling on for some time now. Yes, I know that papers are struggling to survive on advertising revenue alone and yes, I appreciate that without changes there could be nothing at all, but simply barricading yourself up behind a pay wall and hoping for the best lacks creativity and goes against everything the Internet stands for. It's the free and vast information on the web that has made it such a glorious success.

It gives consumers a negative vibe to your product, it seems desperate and most importantly it gets regular viewers looking around for alternatives. That's certainly what I'll be doing for the aforementioned site. We need to be really careful what road we're going down here. Everyone seems to have started jumping together and quite simply, where does it end?

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The priority is not to find the customer, but to find the customer's opinion

In a world where 'interacting with the customer' has supposedly never been so easy it's amazing how many companies still have absolutely no idea how to handle feedback and discussion on the mass scale of the social media filled web. It's all too easy for someone to say go track Facebook, or Twitter, or the blog network but just because these things are there and available doesn't necessarily make them easy to navigate. 8 million people walk around London everyday. You wouldn't ask someone to go out and gather insight from all of them would you?

The social networks are platforms for people to communicate opinion, but ultimately you're only interested if it's opinion on your product. Joe Bloggs might only ever make one comment on your product, but it might be a very valuable one. Problem is, you can't manually track Joe Bloggs forever, waiting for that moment of user feedback.

The sheer scale of content like this is giving organisations a big incentive to use automated media monitoring software. In an ever increasing space finding your customer will become a pivotal tool for companies looking to respond to user feedback. Yes, you can set up places for people to share their views but that means they have to come to you first. By simply using automated spiders able to detect key content at key times you're going directly to your customer's insight. That is very, very powerful indeed.

Ipad sales highlights hunger for online news

This is hands down the least technical quote that'll you probably ever hear on this blog (you can hold me to that) but I recently asked an Ipad buyer the advantages of the new Apple device and their exact quote was 'well, it's just like a big Iphone isn't it.'

Make no mistake, if the draw of an I-PHONE was to make phone calls, bigger would certainly not be better. Apps are compatible for the Iphone, and are therefore easy to use, so that's not the 'needs to be bigger' issue. So that leaves web access being the key reason as to why bigger is better in this respect. Using the Internet on the Iphone has always been clunky and the IPad provides a greater platform on which to browse whilst on the move.

Apple yesterday announced 2 million unit sales since the launch of the IPad. And that's before it's released in many countries. That doesn't bode well for print media. The message here is that people are happy to consume web news on the go and with automated web search now able to hone in on news relevant to the user, this trend is only going to go one way.

Local Press gaining real momemtum from content overload

I took a headline today, from the BBC news site that read 'German approval for euro rescue '. I copied it into a Google news search to find 6532 sources reporting the same story. That doesn't include blogs or the endless user generated response to the news. The web is saturated with news like this. Major sources have to cover it, quite simply because everybody else is and they can't be seen to be falling behind.

This has really left a door of opportunity open for local papers, especially in the business media monitoring field. Because local papers offer real insight into localised issues that will most likely be missed by the nationals completely, or, at best, be covered later or when the story picks up momentum. This means the locals have somehow found themselves in a prime position to report important stories first, before the headline grabbing nationals are interested in getting hold of them.

If you think about how many local papers there are in the UK alone, you can imagine the power of technology automating search within them. From a five minute morning scan you can literally be in the heart of the action in every town UK wide. Before the nationals get wind of the story. Before the bloggers and social networkers start alerting the World Wide Web to them. Before competitors pick up their papers. The local press is fast becoming an invaluable source.

Time flies when you're on the Internet

Did anyone notice just how quickly Lord Triesman resigned from his post as head of England's 2018 World Cup bid yesterday? The Sunday Mail broke the rather unfortunate Triesman story (thanks a lot for backing the bid Sunday Mail) on Sunday Morning and Lord Triesman was already clearing his desk at about half one in the afternoon. A few years ago a scandal like this would've taken at least a week to play out.

But scandal spreads like wildfire now. Stars of the globe must live in constant fear that they are 5 minutes away from trending on Twitter or having the whole population of Facebook sharing a link to their latest PR disaster. Gossip is travelling faster than the speed of light.

For business this means reacting with the reflex of a Jedi ninja. There is no longer time to spend weighing up options in endless round tables. If you're not aware quickly, and you don't react swiftly, then the stable door has already been open for too long. To have any chance of keeping up, you've got to be on board the train. Those not embracing the online surveillance technology available are lagging behind further and further by the day.

The advantages of media monitoring

Once you've read a story, would you ever click on the same news produced from a different source? My guess is probably not. If it's a developing story you might follow it's progress, reading updates and follow ups. Perhaps you might even dig into the background of the story. But reading exactly the SAME breaking news from a different source? It's probably less likely.

I laugh every morning at the national paper's alternative stance towards a news item. What the Telegraph might report as 'Business lending down' will be seen in the Daily Mail as 'business crisis as stingy banks hoard money for secret holidays to the Maldives!...Oh, and you're going to die.'

But in terms of content, differing sources can rely on differing leads, thus highlighting crucial information others may have missed. For example, recently a company won a key contract in the North of England. Most nationals covered it, most locals covered it and most industry journals covered it. But only one article out of the whole bunch mentioned a plucky protester who planned to launch an appeal against the contract. ONE local article that could have quite easily been overlooked.

That is the advantage of automated media monitoring. Being alerted to crucial bits of information that a human eye can miss. If you really want to cover all angles, it has to be automated.

Strong evidence of the online shift

This may just be my crazy cogs churning early on a Monday morning but last week I blogged about Online advertising spend taking over television for the first time ever. And this week sees the convenient announcement that the World cup qualifier between England and Ukraine will be the first of it's kind to broadcast exclusively online...hmmmm

Is this a sign of things to come? For years, key football match ups have been a high source of advertising funds for the likes of ITV and Channel 5, this shift is not likely to be a coincidence. Perhaps more interestingly, anyone wishing to view the match will have to pay the hosting web site £4.99 for the pleasure. Could this be further evidence that Rupert Murdock has well and truly set the ball rolling in regards to chargeable online content?

Although early consumer reaction does not appear positive, it will certainly be worthwhile tracking how successful the model is, because this will be a landmark case. Spectators are used to live matches on television provided by their TV license fee. If they can get used to this transition expect the trend to continue, and rapidly.