Data is Free

For my money one of the best apps on the market is Nike+. It simply has it all:

1. It does something useful - it tracks how far you ran and how fast you ran it.
2. It launched with a built in user base of millions of iPod users.
3. It drives sales - when you finish your run and plug it into your computer it takes you to Nike.com where you can buy more shoes.
4. It is fun to use, and aesthetically beautiful.
5. Because it is fun to use, and because it sets goals, it encourages you to run more. And if you keep running it probably means you are going to need a new pair of shoes.
   
6. It is generative: users can set their own goals and blog on the site.
7. Finally, Nike must be getting crazy amounts of data from the app. Given the data Nike is gathering, the valuation of the app has to be the value of the sales generated by the service plus the value of the data on the users. Though Nike is limited in how they can monetize that data beyond the site, I'd still ballpark that value in the neighborhood of $5 to $10 per user.

According to ContentNext the NY Times Online needs 1.2 billion page views a month for the company to survive (on the strength of an estimated $300 million per quarter.)

The problem is that the Times only gets about 173 million page views per month while sites like Yahoo News and AOL News get nearly 1 billion page views per month.

The question then is, how can the Times get an extra 800 million page views per month. Isn't the answer to open up to the Times and get bloggers and citizen journalists writing under the banner of the Times.

The more people they can get reporting and telling their stores, the most page views that Times will attract.

There has been a ton written about what I'll call "Generative Marketing." What is it?

Generative marketing is when a brand opens itself up to feedback, interaction, and cultivation of its "tribe." What is a tribe? For a company a tribe is a group of customers who so identify with a product or service that their loyalty and enthusiasm can propel the company to new heights or new depths.

Paul Dunay makes a good point that traditional media is completely broken as a means of building a brand:

There is just too much noise out there to shout at people. No consumer brand has been built on the back of traditional media for a while now. TV certainly isn’t working for the creation of new consumer or B2B brands.

Which means your only option is to define your brand in a way that is open to a dialog and in a way that is narrow enough to start or tap into a “movement”.

The goal for marketers is to harness the power of social marketing to reach its tribe directly. Twitter, Facebook, and other social marketing tools permit brands (and even small companies) to reach their customers directly.

Seth Godwin's new book, Tribes, address this issue directly. Here a presentation he gave last October. I particularly like the message on one slide: Connect, Create Meaning, Make a Difference, Be Noticed, Matter, Be Missed

A new report by Nielsen says that convergence (in the non-traditional sense) has arrived.

Nielsen found that nearly 31 percent of in-home Internet activity takes place while the user is watching television, demonstrating that there is a significant amount of simultaneous Internet and television usage.

There is a serious point to be made here, and it correlates with one of John Battelle's main thesis which is that search and brand go hand in hand.

If 31 percent of Internet activity is taking place while watching TV, then cross-media ad campaigns are more important than ever.

Bill McCabe at A. Eicoff published an article at Advertising Age that I completely agree with. The basic premise is that, in ten years, we'll see far more direct response commercials.

This evolution will be driven, he contends, by new technology (convergence) and the traditional advantages that television commercials have always had in terms of being kinetic and driving telemarketing.

Bill is 100% right. Direct Response gets a bad rap because the commercials are cheesy and the products can be odd. Yet, imagine a future where the production values and the products themselves are high quality.

Imagine commercials where Ford is marketing their cars with the offer of calling right then to arrange a visit with a dealer, and that visit would include a $100 gift card to the restaurant of your choice. Suddenly the Ford dealers will be flooded with potential customers, and the Ford CMO knows exactly how much revenue his DR commercial drove.

Neat.

This acquisition boils down to one thing: data. The ability to understand and predict consumer purchases is the new coin of the realm. Microsoft valued Ciao's 26.5 million monthly uniques at $18.34 each.

To put that into some perspective let's look at what wireless providers have paid for subscribers (and the monthly cash they spin out).

• In July 2007, Verizon paid $2.67 billion for Rural Cellular's 700,000 subs: $3,800 per sub
  
• In August 2007, T-Mobile paid $2.4 billion for SunCom's 1.1 million subs: $2,100 per sub
  
• In November 2008, ATT Wireless paid $944 million for Centennial's 1.1 million subs: $858 per sub

In my next post we'll look at the value of these subs given some fairly reasonable assumptions regarding churn, lifetime customer value, and the operating margin of the businesses. The goal is to see who made the better deal.

• 
  

• Google's value proposition - to bring measurement to television adverstising - works in theory.
• Through Project Canoe the cable and satellite operators who own the inventory are already working on a competing product.
• Google has adopted its model from measuring clicks to tracking which ads were viewed and which ones skipped - the mouse has been replaced by the remote. This means the value of the ad is - for now - reduced to knowing if the ad is being watched or not
• Google plans to ultimately combine additional data to track purchase behavior back to an ad.
  

Regardless of who ultimately prevails in the race to own TV advertising the system that emerges will pose interesting problems for marketers.

• Though TV advertising does need to be tracked, if we are measuring value only by tracking who is watching and who isn't then the pressure to develop "entertaining" ads will only grow. A likely outcome is that commercials will gravitate towards much longer formats. We'll see 2 minute commercials that tell a story, or even commercials that run like a series. Think about a 13-week series of commercials that run every week, and debut on a particular show.

• The other issue is that the pressure on marketers to develop commercials that sell will only grow. If I were running marketing for a big consumer company I would seriously consider 2 minute commercials that feature a 1-800 number. Think Nike doing two minute spots during the Olympics, with a 1-800 number at the end encouraging people to call in to buy shoes and get a special offer to join a Nike sponsored running club in their area.
  

So, build the brand and prove to the CEO the direct connection between buying an ad and registering a sale.