February 8th, 2010 by Michael
I witnessed history last night – live! It was a great game with both teams in it to the near end, and the true and deserved champions were crowned. That was the action on the field, but what gets lost watching on television is the incredible camaraderie shared by all fans – Colts or Saints. Maybe it is the event, or the fact history was being made, or the general attitudes of the states represented by the two teams, but I was struck by how gracious the Saints fans were in triumph and the Colts fans were in defeat. While the Colts fans were filing out of the stadium, even though disappointed, they showed a remarkable ability to forget their woes and extend their hands of congratulations to the Saints fans. This is what I’ll remember most about attending my first Super Bowl.
January 30th, 2010 by Michael
…its me. You’ve been great; there when I needed you, always ready with something new, and with you in my hand, I always received a lot of attention. You opened my world to a whole new way, but I think we should start seeing other people.
Apple’s announcement about the iPad this week changes the game. Again. The blogosphere was lit up and the prognostications & criticisms were flying, but one of the most perceptive came from one of our own, Brenton Lyle (Integrated Casual Computing on the Apple iPad). I encourage you to read his entire comment as seen on Zak Kirchner’s new blog, www.thedigitalanalyst.com, but the gist is, don’t focus on what the technology is, focus on how the technology will be used.
As researchers and analysts, what intrigues us (at least me) the most are the unintended consequences of business strategies, technologies and content. Apple has shown us this before – when iTunes was launched to support the iPod, at the time, 1 out of 3 iTunes users did not own an iPod! With the launch of the iPhone and the App Store, we’ve seen a wave of development – some innovative, some not so much – that has expanded the way consumers approach and use their phone.
Apple changed the model by opening up the platform and welcomed both pro and non-pro developers – study any technology and you’ll see that when price and accessibility are such that the price of failure is minimal that is when true innovation happens. The only limitation to date has been the size of the screen. That won’t be the case with iPad.
This is what I’m anticipating most with iPad – the next wave of innovation – and why my Kindle and I may be rethinking our relationship. I’ll have more to say on the matter in future posts.
January 30th, 2010 by Michael
After a short hiatus due to several very time-consuming distractions, I’m back to my musings.
September 24th, 2009 by Michael
Today, we released a study that looks at purchase drivers behind smartphones (“Does This Handset Make Me Look Smart?”), which shows that despite the success of the iPhone, any phone that is perceived to be Smart (intelligent, adept), Cool (hip, trendy), and Productive (efficient, organized) has a chance with consumers. If you follow the link above or this one you’ll be able to see a copy of the study.
September 22nd, 2009 by Michael
Imagine if traditional tv advertising was held to the same exacting measurement standards as emerging media?
Television is for the most part evaluated using a rating metric delivered by the Nielsen Co. which measures the reach and frequency a particular show delivers to an advertiser. It is essentially the “opportunity to see” an ad that television offers, and that its associated metric quantifies. Reach metrics can be viewed in several ways – but boiled down to the basics, it defines the total audience or the ”share” of audience reached. Total audience is just that, how many of a particular demographic had the opportunity to see, or be exposed to, an ad. Share is a measure of “media weight” in that it represents the percentage of all households viewing television that are tuned into a program. Frequency measures the amount of times an ad is exposed. One other way television is measured is through what’s referred to as a GRP. GRP, or Gross Rating Point, is a neat little mathematical metric the industry created that contemplates the combination of frequency and effective (or wasted) reach. GRP is calculated by taking frequency multiplied by the percentage of the target audience reached by a particular program. So, an ad that is exposed 5 times and reaches 25% of the target audience (e.g. 18-34 year olds) would have a GRP of 125 (5 x 25). This metric assumes, of course, that reach and frequency should be weighted evenly, but that’s for another discussion.
The first “emerging” medium, cable television, didn’t face the same challenges confronting today’s emerging media types. Once a cable network secured carriage in a critical mass of households through MSOs (multiple system operators) and satellite providers, it was welcomed on to the playing field and measured through a tv rating. As most cable networks were not able to deliver the same level of reach as a broadcast network, they sold themselves as targeted media that could deliver key demographic segments. The pitch was that broadcast networks were “under-delivering” key consumer targets, while cable could “over-deliver” them, providing advertisers with a much more efficient media spend. The argument carried weight and many cable networks have seen tremendous success in justifying premium ad rates as a result (look no further than MTV or Lifetime as prime examples).
Today’s emerging media – mobile advertising, in-game advertising, online video – are being held to a different standard of measurement, due in part to the reach limitations of these emerging media and the intense competition for media dollars among an increasingly fragmented media landscape. If a medium can’t be measured in the usual fashion, i.e. through GRPs or similar rating metrics, it needs to be able to justify its uniqueness through other means. The result has been a more stringent set of measurement criteria.
It’s not often you’ll hear someone ask whether a television ad was “effective”. Effectiveness on television has largely been measured by a program’s ability to deliver a target audience. However, in today’s fragmented media environment, the definition of effectiveness has evolved to include a broader set of engagement and persusasion metrics. The hurdle for new media is much higher – requiring it to demonstrate tangible lifts against awarness, recall, persuasion and engagment metrics. New media can still leverage the value pitch of being able to “over-deliver” key audience segments, but it isn’t enough to compel media buyers to shift dollars away from traditional media. Instead, new media need to demonstrate an ability to not only reach, but also ”influence” consumers through the inherent uniqueness of the medium. Take online video as an example. According to a study conducted by the Online Video Engagment Consortium (a group of companies including us, Yahoo, Hulu, PHD, Havas Digital, formed to study the impact of online video), a third of online video viewers shared the last video they watched with others. Moreover, videos that were considered “engaging” were significantly more likely to impact consumer behavior. Or, take in-game advertising as another example, which offers a virtual environment in which a brand can be relevantly exposed and interacted with – having a gamer use a brand or product to further progress through the game environment has proven to be extraordinarily effective. So much so, that dollars are already beginning to shift away from other media.
With 8 minutes of advertising per a half hour show and 18 minutes per an hour show, television doesn’t want to be held to more stringent measurement. If it were, the results would undoubtedly show the negative effects of clutter. So, back to the question that started this post – imagine if advertisers demanded that television provide data on whether someone shared a show with a friend or whether the brand was considered relevant to the viewing experience or whether the show was viewed through to completion?
September 15th, 2009 by Michael
There has been a lot of discussion about business models for online video recently. What’s the right model – is it advertising, paid, a mix of both? Left out of the dialogue, however, is one key piece of information – no one gives enough credit to Hulu for figuring out the right consumer experience for advertiser-supported content. Without that, there is no debate about how much money can be made. Until Hulu came along with a fantastic technology, an elegant and easy to use interface and a growing slate of free advertiser-supported content, there was nothing that provided the consumer a quality choice for programming online. The debate seemed mired in technology – streamed or downloaded? Hulu blew right past that debate and gave the consumer what they wanted – who cared whether it was streamed or downloaded, as long as it worked.
No, there isn’t a ton of money to be made with advertising around online video today, but the reach is increasing as more and more people make it a part of their everyday lives. In fact, over the past year, the amount of people watching video online has increased by 50%. Hulu is delivering what consumers expect, all the while conditioning them to consider Hulu as their “go-to” for advertiser-supported online video. That puts Hulu in a strong position to rollout paid services at a pace consumers can easily digest.
Not to take anything away from iTunes – they have developed an amazing online marketplace for paid content. However, to my knowledge, they haven’t signaled any intention to provide content for free through an advertiser-supported model. This further positions Hulu as a multi-layered provider of content to consumers. It is still early and no one really knows who will win, but at this stage of the game, you have to admit, Hulu has played the game deftly.
September 14th, 2009 by Michael
Well, it’s a great idea for brands. Twitter recently decided to change its terms of service to allow advertising. It’s still unclear what model of advertising they will choose, but what is clear is that Twitter users are much more engaged consumers. According to our very own Zak Kirchner:
“the fastest growing social network of 2009, Twitter is giving customers a voice like they’ve never had on the Internet before. It’s time we started listening too, as Twitter users are twice as likely to review or rate products online, visit company profiles and click on advertisements or sponsors as those who only belong to traditional social networking websites like Facebook and MySpace.” – Interpret LLC Social Media OverView™ Report August 2009
Facebook and MySpace have been making serious efforts to develop a successful advertising model – it is debatable whether they have struck the right approach. What Zak’s analysis of our New Media Measure™ data shows is that given the real-time nature of thoughts being expressed, Twitter provides a unique opportunity for brands and advertisers to engage consumers in ways currently untapped by the leading social networks.
Social networks are very much about “me” and how I want to present myself to the world through my pictures, associations, likes/dislikes, etc. Twitter is also about “me” in that I’m able to express my thoughts and ideas, but there is a subtle difference that makes Twitter a better potential medium for ad exposure – Twitter is really about “what”. What am I doing, what am I seeing, what am I feeling, what am I thinking. For advertisers, this is extremely valuable insight into the consumer psyche. How Twitter helps brands tap that flow of information without alienating consumers is a big challenge, but one that could be very lucrative indeed.
September 10th, 2009 by Michael
Have you seen the new release of iTunes? I was compelled to check it out when I read a post on Gartenblog.net about Michael’s Gartenberg’s initial thoughts on the software update. I was most intrigued by Michael’s review of Home Sharing. So, I downloaded it on my wife’s and my computer and must concur with Michael’s assessment. It’s a fantastic addition and solved a problem I was very frustrated about - now, I can share the music my wife has downloaded (who has much better taste in music – score one for me).
September 9th, 2009 by Michael
Interpret’s very own, Desiree Davis, has an answer to that question: approximately $171. In July’s version of Interpret’s Mobile Devices and Platforms OverView Report, entitled “Getting the Price Right – Navigating the Mobile Phone Price Ceiling”, Desiree explored the question of pricing for mobile phones. The catalyst for the research was to understand how consumers’ expectations have/have not changed as a result of the explosive increase in features and capabilities available today on smartphones.
As part of the research, Desiree also gauged what consumers expect to pay for their next mobile phone. At $111, that is a $60 differential, which suggests someone will need to make up the difference in price. Consumers have come to expect subsidies when purchasing a cell phone and seem to have accepted the need to commit to plans. As Michael Gartenberg, our VP, Strategy & Analysis says about consumers locking into monthly data plans, “It seems that it’s not that big an issue to consumers. It’s almost as if they expect the 2-year contract and monthly plan as table stakes.”
With more expensive phones coming to market – more than the $171 price consumers are willing to pay – will carriers and handset manufacturers partner to make the phones more accessible? As Desiree says, “removing subsidies from the mobile phone retail price has the strong potential to stifle the competitive landscape that has driven the past two years of technological advancement and consumer fervor.” For my sake, I hope that doesn’t happen.
August 22nd, 2009 by Michael
Rumors have been circulating for months about Apple releasing a tablet PC. Recently, those rumors have included the launch of two devices – one, a larger more laptop sized tablet, and the other, a smaller (say 6″ screen) option, which would be the perfect size for e-reading (see one of the rumor sites here).The universe must be in the mood to discuss e-readers because recently it’s been coming up in conversations everywhere I go - with potential investors, business partners, analysts, friends and family members. For me, it’s become the Great Kindle debate. I must admit, it’s been a very interesting dialogue, especially seeing it from all these different angles. Disclosure: I am a Kindle owner, own both the first and second version (not the DX one, though) and am avid reader with the device.
The investor I recently spoke to about this sees e-reading as a disruptive catalyst essentially turning the book industry on its ear. His focus is in understanding how this will impact the key business stakeholders – publishers and retailers. It is fascinating to play out the various scenarios on these businesses should e-reading become mainstream. As one example, what happens to Amazon? While Amazon has diversified its portfolio of products, its brand was built on book retailing. Clearly, with the Kindle, they have thrown more than ante into the pot betting on e-reading, but at what cost?
This is where the discussion turns to the business model implications. Over coffee at Starbucks the other day with Michael Gartenberg (one of our top analysts, check out his blog), I got a completely different, but complementary perspective. For Michael (and he can expound on this much more elegantly than I am about to here) the big issue is how well will the new business models and consumer expectations mesh? In other words, as consumer behavior shifts from physical to e-reading, will the evolving business models reflect what consumers have long been conditioned to expect?
It is still early in the lifecycle of this market, but we are seeing signs of trouble already, and when consumers get caught in the crossfire, look out! Recently, Amazon experienced a strategic blunder when it was forced to remotely delete unauthorized versions of books from many Kindle owners’ devices. This created a hailstorm of commentary about the definition of ownership and about Amazon’s big brotheresque reach into our homes. Overnight, consumers were awoken to the realization that Amazon was/is capable of physically deleting something consumers believed to be their personal asset. Not only were they capable of doing it, they actually did it. Conspiracy theorists rejoice!
However, as the smoke clears on the most sensationalistic aspects of this story (i.e. big brother), what remains is the tougher question for Amazon to answer. Namely, what are the bounds of digital rights for books? In the absence of any other legitimate e-reader, this is not a question Amazon has had to face. However, as people like me amass large libraries of books on the Kindle device, what happens if I choose to switch to the Apple iTablet or the Sony eReader or some other device being built in a garage? When I buy a different bookshelf at home to store my books, I don’t need to rebuy all those books to move them, so my expectation is that I won’t need to when I switch my digital bookshelf either.
Sony recently announced that they will support EPUB, which is the open book publishing that nearly everyone supports. Nearly everyone, except Amazon, of course. It says a lot when Sony adopts an open standard so early in the game. They may not have had a choice considering Amazon’s lead with the Kindle, but it does pose an interesting quandary for Amazon. Can they continue to hold firm on a proprietary Kindle format? If they win, they strengthen their de-facto standard status. If they lose, well, talk to the Betamax guys at Sony. Does Amazon really need to own the hardware? Or, do they really care and is this more a brilliant ploy on their part to seed the market and then own it through the best merchandising and distribution?
Regardless of who you talk to – an investor, a fellow e-reader, a tried-and-true physical book reader, a pundit – the issue really boils down to how the key stakeholders address the rights consumers have come to expect and enjoy with intellectual property. Whichever of the players in this market appreciate and understand that the best will win. Look no further than Apple as an analog. Their consumer-centric approach to an already crowded MP3 player marketplace leapfrogged them over the competition. Pay attention, Amazon.
