What business is the Holiday Inn in?

Greetings from the Holiday Inn Express in Hammersmith - in the twilight zone between living in London and living in New York. Flat is packed, bags are bulging & Heathrow beckons. But I couldn't pass an Internet connection without asking the question - what business is Holiday Inn in?

I think it's the "affordable business travellers" market. The problem is that a customer segment is not an experience. The Internet connection here provides the example. They have a plug in cable, but the browser the opens up a page asking that you enter in your credit card details and address in order to pay £15 for 24hrs access. That experience is terrible - they do not even allow you to bill to your room.

The hotel have outsourced Internet provision to an intermediary as they don't think they're in that game. Nothing else is obviously outsourced - hot water, bed and food are considered core. Sure, go ahead and price discriminate for movies or the mini bar (or the Internet) if you must, but make it as simple as typing in your room number on the screen or just grabbing a bottle. an easy and integrated Internet experience is not a fundamental requirement of today's travelling business exec on a budget, I don't know what is.

Man, I wonder how much they'd be making without that pesky Internet?

The current issue of Booz Allen's Strategy & Business magazine contains some interesting data points - salutory reading for those who might think that the web has dismembered industry as we know it:

Companies are sitting on mountains of cash, much more than they need. Holdings
at NYSE- and Nasdaq-listed companies topped a record $2.7 trillion in 2005, and
they are growing at 24 percent annually. By industry, the largest cash increases
in the past decade were in media (1,700 percent), utilities (1,360 percent), and
telecommunications (1,300 percent).

From advertising to a direct dialogue with customers. Are you ready?

This note is aimed at brand owners, frustrated by the increasingly expensive and ineffectual advertising spending on traditional media and wondering how best they can get their message out. It suggests that today's disrupted media business is too frail to support the demands of brands wanting to advertise. This is no bad thing in itself because the advertising business itself is bloated, inefficient and outdated, and companies would be better off figuring out how to interact with and delight their current customers, rather than wasting money on trying to reach and influence non-customers.

Advertising heal thyself
Today’s advertising business is suffering from (at least) two major flaws. The first is the industry that the traditional media business can no longer offer an economically viable channel to allow brands to deliver their messages to a sizable captive audience. The second - bigger - challenge is that the concept of advertising is becoming less relevant in today's flat-earth world.

Challenge one: the advertising industry is overly reliant on a lame and enfeebled media business
The “traditional” media industry is fragmented, broken, confused and failing to deliver on one of its major tasks - to help brands reach people. (If you don't agree with this, read Bob Garfield's Chaos Scenario before reading on.) The media machine that is pulling the advertising load is to put it bluntly, knackered. Reaching non-customers is getting harder due to a proliferation of alternative media channels and consumer-side filters. Cheap tools and the Web as a distribution platform for connecting people allows anyone to be a broadcaster (or podcaster) resulting in massive fragmentation. Reaching 80% of US TV viewers used to require placing adverts on just four shows in the 1960s, today it would take over 100. Those who are 'formerly known as consumers' employ both hardware (e.g. DVR) and software (e.g. RSS) filters to give them control. Forrester says that 92% of people skip ads on DVRs, and half of US households are expected to have them by 2010. Ironically, brands have until recently been forced into paying ever more for in "upfront" fees for broadcast slots on US TV networks, simply because there was no other place for them to put their money. No wonder P&G's Jim Stengell says, "I truly believe, and I know many of you do, that today's marketing model is broken."

Further complicating the picture is the reality of “media multitasking” – no more the whole family sitting rapt around a television set or radio – today’s audience (kids in particular) will be IM-ing and gaming at the same time as watching TV and listening to the radio or podcasts. This plays havoc with those already creaky viewer figures. The result of this is that some brands are getting desperate, and “outsourcing” their brand to celebrities of various ilks, but these can be crushingly expensive and more importantly, unpredictable and prone to embarrassing PR gaffes.

Beware the siren calls of the search engines

So if traditional media is broken, how about the new media experience? Internet advertising is growing rapidly as advertisers move their money towards where people are spending their time. UK ad spending – up 40% year on year, now accounts for 10% of total advertising spend, and is typical of the trends here. Several flagship advertisers are now massively increasingly their online spending this year and scaling back TV spend. And happily for the brands looking for simplicity, Google, Yahoo and Microsoft account for a lot of the internet traffic, and claim the vast majority (appx 80%) of online ad spending.

So surely search engine marketing provides salvation for brands fed up with the old media offerings? Well, not really for a number of reasons. First, there's a long way to go before the demographics overlap - PC penetration is not TV penetration, in particular in the key markets of China and India. Second, the model itself has flaws – industry experts suggest that click fraud can account for up to 30% of revenues. Third, bidding on competitors’ keywords is now rampant and resulting in spiralling costs (though this practice is probably one class-action suit away from being history). And fourth, just when brands had been extracting themselves from a reliance on an expensive media middleman, the emergence of search engine as intermediary will cost them dear. Overall however, is the issue that search engines are still intended to deliver advertising messages to non-customers and attract them to become customers. Here’s the second major flaw in the advertising industry's model:

Challenge two: advertising itself is an increasingly outmoded concept
The second major challenge facing the industry is that advertising itself is an increasingly outdated concept in today’s transparent and connected marketplace. Influencing prospective customers is ever harder; people are increasingly immune and sceptical to the battering of thousands of commercial messages. Typical of the ennui in the market, the ad agency WPP found that nearly a quarter of US ‘baby-boomers’ are insulted by the advertising messages that companies are sending them. The emerging Generation C reject marketing gimmicks (and can smell astroturfing a mile away). They make purchase decisions based on their trusted advisors and require transparency from the companies they deal with. People it seems, now generally prefer word of mouth to word of the Man.

Consider how Barrons defines advertising: a “paid form of a nonpersonal message communicated through the various media by industry, business firms, nonprofit organizations, or individuals.” These concepts seem outdated – advertising, we are told, should be about a bunch of things which the web is making redundant: in particular paying intermediaries a lot of money for the job that you could be doing better yourself. The new opportunities of free, personalized two-way communication delivered directly to users sounds more like blogs and community forums. As Bob Garfield points out, the head marketer at P&G puts it like this: "What we really need is a mind-set shift, a mind-set shift that will make us relevant to today's consumers, a mind-set shift from 'telling and selling' to building relationships."

Forget non-customers – turn existing customers into your new sales force
So with the advertising channel broken, and the approach itself increasingly irrelevant, where next for brands trying to get the message out about their products? At issue is the need to refocus attention from advertising to non-customers to serving current customers better. Sounds obvious? If so, why aren’t more companies doing it? Making great products, informing, interacting with and delighting their existing customers, rather than prospecting for hard to reach non-customers should be the new priorities. In an increasingly confused consumer maelstrom, advertising to people who are not your customer still serves some purposes – brand recognition, credibility (wow, that startup can afford a SuperBowl ad!?) and general feel good.

Fine, but when it comes to shifting products off the shelves, getting product feedback and innovation suggestions, the relationship of business value to customer intimacy is I would propose, strongly positive, something like this:

The key here is how to meet the needs of a more engaged customer base without incurring massive costs or raising expectations. Creating and fostering an open dialogue with customers is a daunting but necessary exercise. This is one of my pet topics, and there's not enough room to expand at length here, but at a high level, I'd suggest the following elements to achieve this within a reasonable time and cost scale (presuming that you've already got a great product to get excited about):

• Make every employee an ambassador. This requires creating a mindset within the company that emphasizes openness, collaboration, speed and employee problem-ownership (presuming they're the relevant experts). It's also about installing tools such as wikis (shameless plug...) so that individuals not only feel empowered but are empowered to collaborate with others and take the initiative themseles. All the better for reacting when you...
• Engage in direct dialogue with customers. Interacting with customers directly, for example allowing them to subscribe to web-based feeds of product news and releases. The use of syndication (RSS, Atom etc) makes dialogue an asynchronous and therefore more manageable process - this is not about giving the CEO's mobile number out to every customer. Well managed, honest external blogs are useful tools for smooth information dissemination that arguably fulfills the role of what advertising used to do. An even easier way to foster dialogue is then to...
• Facilitate customer-to-customer dialogue. Forums and chat rooms are great examples here - apparently over 30% of HP Europe's customer queries are answered by the Q&A from message boards. Being a fly on the wall to these discussions is important, even if they're not on your own sites - tools such as technorati allow Dell to search for phrases such as Dell Hell on blogs and join the discussion if necessary.

These activities are now pretty much table stakes in the move from being a company that just doesn't get it to one engaged and benefitting from a richer dialogue with current customers. Of course, there will always be room for some old world advertising - somebody has to spend the expense accounts after all. But it may be a worthwhile exercise to look at your company and ask where along the scale between "advertising to non-customers" or "conversations with current customers" they're sitting, and whether they're moving in the right direction.

The final point, which takes us beyond table stakes and into the realms of the Truly Interesting, relates to the eventual primacy of the mobile rather than the PC as the way to interact with the web. I would dearly like to see a new mobile marketing paradigm that allows the mobile to be the platform to allow companies to carry out ongoing conversations with their customers. Mobile devices are the natural interfaces for receiving filtered and tailored customized subscription information from companies that interest then. Note, this is not advertising as we currently understand it; it does not involve any use of the hackneyed “30 cents off a Starbucks” cliché. And it certainly is not about unsolicited spam. It would be a foolish company that abuses extraordinarily intimate relationship that the mobile device can deliver.

No, this is marketing, or more accurately – business as usual. We used to talk about ‘Internet companies’ – but that now seems quaint, as we recognize that the Internet is embedded into every facet of a company’s operations and their customers similarly expect to use the web to carry on conversations with the company. I’m looking forward to a time when brands are able to dramatically improve the quality of service they deliver to their customers rather than wasting money on inefficient advertising campaigns, and they incidentally will use an internet-enabled mobile device as the mechanism for this.

So, in summary, the media business is in turmoil, but the future for brands is not to simply take their old advertising approach over to the Internet. Instead, the smart companies will recognize the need to shift their focus from non customers to current customers, and harness the power of the Web to deliver a personalized, direct interactive dialogue with customers, and then to start thinking about what that personalized, intimate experience would look like on the mobile platform.

Well, I never. It looks like we may well be becoming an "Internet company" after all...

I've just returned from what what should have by rights been a tedious day, holed up in a subterranean convention bunker on the outskirts of a blizzard ensconced Helsinki, participating in a strategy meeting of our HR group. This kind of stuff, I thought to myself through gritted teeth, was what I get paid to do. Fair 'nuff.

However, after a 13 hour day brimming with powerpoints I've returned bounding with renewed energy for my job, and belief in this very Finnish, very unique company. The day was dominated by discussions around the transformation that our CEO has, with his characteristic bluntness put as "we're a mobility company, now we're also going to become an Internet company". (As to what this means exactly, for our purposes it is closely tied up with the shift to services, and in general, like porn, you know it when you see it.) The fact that Internet issues pervaded our discussions is no great surprise - what gave me the shot in the arm was the universally positive attitude in the room of appx. 100 people - almost by definition not the early technology adopters in the company - that major change was inevitable, we were going to deal with it like we had dealt with other major issues in the past, and we were going to do it damn well.

Letting go of control, embracing uncertainty, welcoming failure, sharing not hoarding, external openness, beta-level iteration, understanding and innovating together with end-users: these were all alien concepts to this company when I joined 3 years ago, and I felt out of place in an environment of highly skilled, disciplined, telecom enginneers, who designed complex solutions to complex problems. Before this gig, I had been coordinating trade policy networks in Brussels where the only way to get things done was informal collaboration, and I knew nothing of telco technologies (and, as a edge-ist didn't want to learn). Now, even in the 12 months that I've been working on these 2.0 and innovation related issues I've seen a major change of approach, both at the top and increasingly in the all-important middle layer. And today I felt on the same wavelength as most of the HR management, who have their tentacles in every nook of the company, and hold the levers to change that all important 'mindset'.

So, will it work? Who knows. It's certainly going to be a long journey as we start to roll out our consumer internet services and explore new business models and partnerships. However, the real sense I've got from today is that we're reached the crest of an uphill struggle for hearts and minds to focus on this issue, and the long winding road of Internet transformation is now looking that bit less daunting. Am looking forward to sharing more specifics as they emerge.

Imity: through a looking glass darkly

Are you the same person online as you are in real life? I'm not talking about the 43 year old geek guy pretending to be a 15 year old girl, but the more subtle question about whether you use the web to support or substititute for real life. This post won't be relevant for the latter category. And in fact, it might give you pause for thought: soon, everyone will know you're a dog.

Nokia's Sensor app is/was a rather cute bluetooth-only social networking solution. People liked it but commented how much better it would be with an online component too. Well, thanks to a chat with Nikolaj at DLD, it seems that the team at imity (as in proximity) have done pretty much that: take the sensor concept to the next level, and allow you to interact with people whether they are in the real world, or your online world.

So, what does it do? It combines blueetooth scanning with online social networking, so it can tell you if there's someone in the same room as you who reads your blog or other online site. Or you can see if there's someone visiting your blog who you were with in that bar last night. Here's a deck from last year's Reboot when they were still closed beta. The new site's only be open to registrations for a week or two.

It's interesting that the digital traces we leave as we meander around the web (e.g. MyBlogLog) are becoming real world. So, think twice before you write that rude blog comment; you might find yourself on the sharp end of a non-virtual fist.

I imagine before long they will extend the model to the other dimension: to allow you to trace the shadows of your Second Life pesona and their respective interactions with others. In fact, they ask for a SL name on sign up, so this is probably already underway if it's not out yet. I hope they allow you to automate the meta-matching, so that as you / your avatar / your online surfer passes others, you can tell whether they share your taste in music / movies / books / locations etc. with federated output data of lastFM / Netflix / Amazon / Plazes etc.

As a rather boring 'supplementer' I find the collision of these worlds very exciting. In its current format, it probably won't be that attractive to those who want to maintain the shroud of alternate reality. I'm looking forward to a S60 3.0 version, a critical mass of local users to make the bluetooth scanning work, and the surfacing of many really interesting questions and services that we've not even begun to think of yet.

DLD social networking panel to mobiles: Sorry, you're not invited

One of the ironies of today's social networking services is that the device that can deliver these services directly to the users wherever they are, and has access to the kind of information that could be Royal Jelly to the providers, is shunned and relegated to a poor relation. Not to my surprise, today's high-profile panel on social networking had little to say on the subject, but contained some interesting tidbits nonetheless. The panel was moderated by Jamba-founder and one of Germany's entrepreneur-wizz kid brothers Oliver Samwer, and consisted of Matt Cohler, Strategy VP at Facebook, Lars Hinnrich, founder of Xing (formerly OpenBC), Erik Wachtmeister, founder of aSmallWorld (aSW), and an old-world-business model legend, Arend Oetker.

Mobile industry: need not apply
The only reference to mobile was made mid-way through by the eminent Dr. Oetker, who seemed to say that 'handys' were obviously not compatible with these kinds of service, because emotion was so important and emotion was clearly impossible on the small screen. Cue my rant from yesterday about not even needing screens, although to be fair Dr O. was the self-styled non-technologist on the panel. The deafening silence on the subject of mobile throughout the rest of the session was a telling indictement of our industry's ability to reach out and enable these services in a more meaningful way than basic WAP links. The lack of a great mobile client for aSW seems particularly problematic for the users (given their openness for real-world interactions), and something like an updated version of the bluetooth-optimized Sensor could make a whole lot of sense for them. Time ran out before I was able to ask the question about 'what is stopping you from having great mobile experiences of your services', but I'm sure the answer would have been the same as when I asked it during the social networking panel in last year's Next Web Conference. The answer then was high and non-transparent charges, which I expect is still gripe #1.

No new business models
There weren't many breakthrough insights re business models (nor were we expecting any). Business models were generally advertising subscription fees or commissions on ecommerce (aSW has 265 yachts on sale, together with thousands of job listings, though no detail was given of the amount of fees charged). Admittedly, Xing noted that they had revenues from day 1, and have recently been floated (valued at $160m). At this stage, Dr. Oetker's baby-food-and-things-you-can-touch business model is looking the healthiest.

aSmallWorld: real world exclusivity brings real value to members
It was interesting to listen to Erik W. in person - he's clearly a bit of a legend for the 100,000 aSWers whose glitzy lives he has helped make glitzier. As a proud member (though not one of the glitzy ones) I can attest to the value of the site - it provided the chance to meet some fascinating and friendly locals during recent trips to Morocco and Miami, providing a much richer experience for the itinerant traveller. That kind of welcome wouldn't have been likely by trying to connect with MySpace members (yikes), and is testimony to its focus on real-world, trusted social relationships. aSW is unique among these services in terms of its rather paternalistic approach - 6 webmasters moderate the community, and can ban misbehaving members (sending them to aBigWorld) for such crimes as trying to 'conect' with cute Swedish women you don't actually know (this is dubbed the 'Italian syndrome'). Erik's presence here seems indicative of a new activities brewing: he announced they may bring in subscription charging soon and will be bringing out a new version of the software to allow groups.

Helping people make the web more manageable, and real.
One interesting idea was Erik's response to the 'next big thing' question. He said there will be lots of opportunities for helping people bring order to the chaotic nature of the web (one of his major USPs for aSW). This theme is echoed in a piece in yesterday's NYT:

Get ready for a lot of opportunities to join all kinds of networks — and, one hopes, some appropriately Webby new way to politely say, “No, thank you.”

This alludes to the Danah-esque annoyance with these clumsy social structures - the inability to bring the same nuance to online social networks that we can use in real life (for example, feigning that you've forgotten your business card / have an important telephone call or are stricken with a tremendously debilating and infectious disease).

Faithful to their customers or their community / market segment?
Esther Dyson asked the best question (as she generally does) to Facebook: Are you going to mature your service offering as your customers grow, e.g. graduate from college and become young professionals. The answer was a bit vague, but this is a fascinating issue. What proportion of sites are designed to facilitate better interaction of predefined communities (e.g. golf club, company networking tools) rather than individuals (with aSW and MySpace being clear examples)? And what attributes should a community-focused network have compared to an individual-focused network?

From real-world communities to online, rather than vice versa
Although not really dicussed in this session, I'd suggest that the natural evolution of things seems to be taking us down the Long Tail - more niche communities created to align with existing real world communities. And I'd doubt whether any of the existing mass networks are the place to start for this. For example, I'd love to have a more powerful online community component to my sailing club, but it's unlikely that any one of these networks will have critical mass in these real world communities to be feasibe (MySpace is not big in Suffolk). The real-world community itself will determine the technology connectedness of its members, and 99% of real world communities have no internet presence. So, presumably there's a viable business opportunity for a multi-platform community-service provider offering community services to these communities. If I was a betting man, I'd suggest that enabling these communities will be the next disruption to the bloated mass market social networks that are already showing signs of churn.

The web's next trick: to disappear?

Am in Munich at the DLD Conference and will try to do some posts from what is shaping up to be an interesting - and heavily oversubscribed - event. One of the comments in the opening future-orientated session (by Caterina Fake) alluded to the concept that I've been mulling over a while. She said we're going to see the end of the web as we know it - in short (my summary of her comment) a shift away from the traditional PC experience, and portals in particular, towards more modular web-services broken up and delivered to the user in whatever way is convenient to them, whether it's on the mobile, the TV or wherever. Conversation then moved on, but this idea of a disappearing web seems worth exploring. In a nutshell, I guess it refers to mobilization of the access layer with 'deportalization' at the services layer. This stuff is bread and butter for most Mobile2.0 advocates, and visionaries such as Rajesh Jain, but I'd interested to hear about how others have structured this, and whether these elements hang together.

This is a story about enabling innovation at the services level, rather than the display level. It would suggest that AJAX, gorgeous multi-touch UIs and the browser itself are less important than figuring out how to get semantic, federated data working on any internet accessible device. And, while it's an impressive technological feat that we have a fully featured, best in class web browser on our devices, this line of thought would make that mute. Of course we need to offer the best experience of browsing today's old 2-dimensional web pages, but this would be just 'hygiene'; context rather than core. The disappearing web is a fragmented, modular, data-centric place, in which RSS and widgets rules supreme. Btw this post from the ever-sharp software abstractions blog has more about RSS aggregation and filtering, deportalization and semantic web as top disruptive technologies for 2007.

I would like to think that we could do away with the browser alltogether and the need to navigate portals on either the mobile or PC, because it is a fairly clumsy analogy of a reference library. Please technologists, don't ask me to dive into a strange other dimension that you call the web but looks to me like just links. I want the web to wrap itself around me, a warm blanket of comforting connectivity. And like all good blankets, I want it to be seamless, easy to understand, effective at simply delivering what it promises, and no sharp, bulky edges.

Hence my frustration with people who ask me how on earth a mobile device with a small screen can possibly be an effective Internet device. Gosh darnit, if the next version of the web was any good, you wouldn't even need a screen. I don't want the distractions and infinite choices presented to me by services that abdicate their ability to serve, constantly nagging at me for my input to dumb questions that it really should have the answers to already. I want answers to problems that I either have or am about to have, delivered as pure signal, no noise. I want my phone to buzz silently when I'm in a meeting to indicate that the London flat I've been looking for comes on the market at the right price. I want it to send a painful electric shock when I'm about to eat that sticky donut that, according to my health-care provider who knows my medical and consumption history, will prove fatal with 99% probability given my current heart condition. I want a very subtle glowing icon to indicate that one of my trusted contacts is driving past my house on the way to the airport, meaning I could save a £50 taxi fare by hitching a ride. None of these involve big screens; just smart signals delivered in a multi-sensory way that makes sense to the particular context. All of these require interoperability at the data layer (the semantic stuff), but it's the business and social interoperability (getting companies to open their processes, and for consumers to trust them) that's the harder task. These require a realization that human experiences and the applications and services that serve them live in three dimensions. And the data from these three dimensions deliver vastly more opportunities for service innovation, rendering many of today's 2-dimensional portal-based web experiences outdated, if not redundant.