Will the connected home be a winner-take-all world or one big happily family of interconnected devices? And where do consoles and set-top boxes shake out in these scenarios? Both extremes are represented in this first panel from Digital Media Wire’s LA Games Conference 2008.

Battle for the Digital Home: Is the Console Entertainment Hub of the Future or Fighting to Stay Alive?

Erin Turner, Sr. Director, Web Services & Publishing, Trion World Network
Steven Roberts, VP & GM, Games & Strategic Initiatives, DIRECTV
Mike Yuen, Senior Director, Gaming Group, QUALCOMM Internet Services
Josh Krane, SVP, Interactive & New Media, G4
Moderator: Ted Cohen, TAG Strategic/Chairman, Mobile Entertainment Forum Americas

Does the console die?

Josh – For consumers that would be a good thing, but it’s a question of how you’d get there. It would take a lot for set top box and PC makers to catch up to the consoles, and for consumers, they want the best gaming experience possible, which the consoles deliver.

My 15 year old has gone from Xbox 360 to PS3 to now a Dell XPS, and no longer touches the consoles saying that PC gaming is where it’s at.
Josh – As the big titles come out for the consoles I bet he’ll be back to the consoles. The titles will drive it.

Erin – There isn’t really a hub for the home; broadband has become the platform. Going forward, any device with a monitor, rendering engine and connectivity will be able to play games. That’s why we’ve focused on building server based games, where the intelligence is in the server.

Steve, your company provides set top boxes. Can you compete?

Steve – No. Set top boxes will never achieve a console or XPS experience. Can we do casual gaming with a good experience that 150K people pay for? Yes. The purpose for set top boxes is to provide content, and television content first.

But as you watch Joost, Brightcove and Veoh emerge, is there the potential for DirectTV to become disaggregated?

Steve – I don’t think so. You can’t think about people watching TV just in the context of gamers. Will the consoles be connected to TVs and bring in content, whether a movie or a TV show downloaded? Sure. But in terms of a TV provider, we are the ones who will pay $1 billion for NFL rights.

Mike – I’ll take the contrarian view, premised around emerging markets. We believe that a single hub or box will become dominant in emerging markets, like Russia. These markets may have one TV, no cable, and such a box would be a precursor to broader entertainment. It may not be a wired home, it may be wireless via 3G etc. to deliver content and conquer piracy.

Was the success of Xbox Live a surprise?

Josh – What was surprising was the speed at which they pushed it out. The only thing missing from Xbox now is the cable card slot. It’s one of the areas will Microsoft was able to bully it’s way into. It definitely extends the life and value of the consoles, to download content, communicate and connect with friends.

How do your companies utilize all this?

Erin – Our big focus is on connected games. For us it’s about content being local and intelligence being on the server, so games can evolve over time. With connected games you create enough to get started, build a feedback cycle, and then build out the game over time. It’s a different development model, and it also makes web access much more important. It changes the model from pure software to software plus service, all enabled by connectivity.

Steve – The connected home is critical for all of us. We are seeing more content and games going to broadband connected set top boxes. These components will all work together. Eventually, Xbox will become a client to our set top box within the connected home – not that far away, probably the next generation console. Today you can stream from DVRs to PCs.

How many of the audience have played the Wii Fit already, just release today? (20 or so hands in the air). What does the Wii do for the console market?

Josh – The controller changes the market for consoles, creating experiential physical gaming. The Wii Fit expands it even further, just another interface for using your body and natural motions, and will be another lift for Nintendo and for these experiential types of games.

Mike – The Wii changed the metric for gaming, let’s have fun. From an emerging market perspective, few of them have any exposure to games or have any brand preference. We think there’s a huge opportunity to introduce different types of content in emerging markets with this clean slate.

What is the future of HD in the home and gaming?

Steve – We see HD television growing faster than any other home entertainment element, and I can only believe consumers will want the same in gaming.

Josh – We also see a lot of HD owners with no HD service but with HD consoles.

Erin – The bottom line is that gamers like good graphics, and HD is great for that.

Mike – I just hope we don’t go down the path of increasing production cost and content pricing.

Coming from the music world, interoperability was a critical success element. Does the lack of interoperability hold back the success of the gaming market?

Erin – Absolutely not, if you think of a world where gaming is a service (server based) that can be delivered to any platform, where the server is common across all devices and the platform just renders the graphics.

Audience question, what do you do to keep consumers’ attention when they are multitasking with media?

Steve – That’s just the world we live in, so you build in mechanisms that will allow consumers to have a multi-tasking experience, like interactive TV elements or from a game to keep an eye on ESPN with picture-in-picture. You just have to make it flexible enough that you don’t impose it on the 60 year old woman who just wants to watch her TV programming.

At Qualcomm, how do you look at scaling experience to meet consumer expectations – so the mobile gaming experience is as rewarding as it can be given screen size limitations.

Mike – Though handsets are getting pretty powerful, they’ll never match consoles or PCs. We’ve been evangelizing cross-platform gaming. For example, rather than put a whole MMO on the handheld, you enable certain tasks that you can do on your phone.

Josh – I think that’s a brilliant idea (the approach Mike described). As a content provider, we also try to do something similar, push the use of multiple platforms. We’ve gone toward trying to be sure that we are on as many platforms as possible, enabling the ability to do a certain function for example on mobile that will bring you back to the TV. For example, with Championship Gaming, we’ll take snippets of the TV content and push it out via WAP and via the browser on the PS3, Wii, or Xbox Live, and using the web for interactivity and voting. We’d also want to push out that interactivity to the set top box during broadcast as well.

Erin – The same opportunity we discussed for gaming on mobile – doing a specific task – can apply to TV as well, like checking sports scores.

Steve – Summarizing around the question, interconnectivity across multiple platforms is not holding gaming back, it’s creating opportunities.

From DirectTV’s perspective, is there anything about the Xbox that’s scary?

Steve – No. Like any other competitor, it makes us better, to create a set top box that allows us to bring VOD content via broadband right into our DVR. In the end it helps the consumer get what they want. We just did a research study. We now have a 300 GB DVR. Whether you have a DVR or not, 50% of consumers say no, we need more content.

What do you think about the future of microtransactions in the console world?

Erin – Microsoft is a closed world. Sony is a more open platform, and PC is completely open. If you look at Asia, the majority of PC gaming business models there is microtransactions.

Seems that the carriers are in a good position to manage that?

Mike – From the mobile perspective in the US, some of the operators don’t understand it and are reluctant to adopt and drive a $20 support call for a $0.20 transaction. A question is whether there will be a big currency exchange across Xbox, PS3, etc.

The media center PC has had surprising staying power. Does the media center PC with console capabilities become disruptive to the console business.

Steve – First let’s look at media PCs. The people who own them are not using the media functions that Microsoft intended. In terms of capability, I think you’ll see amazing functionality on these boxes over the next 12 months. Over time, you’re going to see companies embrace one another’s capabilities to allow the consumer to fully utilize those functions across the home. You’re never going to stop advancement, and we feel secure that for our 17 million homes we can deliver a better entertainment experience.

So you don’t have to be in the hardware business, just the service business?

Steve – If we didn’t have to build set top boxes, we wouldn’t. It’s a necessary evil but not a high margin business. We went into the business for the ability to control the consumer’s experience, as well as for economies of scale. For Microsoft and Sony, like us, it’s a loss leader for selling software and content.

Mike – On the issue of the media center PC not taking hold, the limiting factor has been ease of use. The PC still has the stigma on being a PC. Will it take an Apple to get this right? I don’t think they’ll give up after the initial failure of the Apple TV.

We’re on PS3 now. Will there be a PS5 or will there be a death of the console?

Josh – I think there will be a PS5. Sony has been open that they see the platform as a ten-year platform. We’ll see a PS4. The 5 may have many more capabilities than a console today, but I think we’ll see one. All these devices are missing linear TV. I think they’ll work that out and we’ll see a 5, not sure about a 6.

I know Steve will hate me, but again, with an Xbox or a PlayStation, do you need DirectTV?

Steve – We get over 100 million customer service calls a year, “I can’t find channel 202”. If you think about those types of questions and the complexity of using a console to get linear programming in multiple rooms in the house, and extend that over the 120 million TV homes in the US, you are not going to displace DirectTV or Comcast so easily. We’re built for the mass market. And while the consoles evolve, we’ll be evolving as well.

[tag]LA Games Conference 2008, Connected Home, Set Top Box, Game Consoles[/tag]

Charlene Li is an Analyst at Forrester Research and co-author of the new book, Groundswell: Winning in a World Transformed by Social Technologies, which she wrote with Josh Bernoff. Charlene is one of the leading voices in the area of Social Computing and Web 2.0.

I briefly caught up with Charlene Li after hearing her speak at Forrester Research’s Marketing Forum 2008 in Los Angeles.

In this podcast, Charlene talks about getting the book written, and her and Josh’s goals of helping marketers understand the wild world of social media and engage with consumers in the groundswell.

Charlene also describes how marketing is evolving from highly controlled one-way messaging to a much less controlled process of creating relationships with consumers. In particular, she outlines how one of the best-known and most successful consumer tech brands, Apple, breaks the rules for engaging the groundswell, and the risks that other brands face if they follow Apple’s lead.

 

 Digital Podcast 48 [7:12m]: Play Now | Play in Popup | Download

[tags]Forrester 2008 Marketing Forum, Forrester Research, Charlene Li, Groundswell, Apple[/tags]

Andrew and Alex covered Forrester Research’s Marketing Forum 2008. During the forum, Charlene Li and Josh Bernoff presented material from their new book, Groundswell: Winning in a World Transformed by Social Technologies.

Charlene and Josh quickly overviewed their POST framework for using social networks and shared a number of bite-sized case studies of how brands like Procter & Gamble, Ernst & Young, and Loblaws effectively use social media to talk with and energize their customers. They also used Dell to illustrate the importance of tackling social media one application at a time, with high level executive support, and getting it right before moving on to the next initiative.

In addition to covering the presentation at the conference, Andrew also interviewed Charlene later in the day.

Harnessing Social Technologies to Energize Sales
Charlene Li, Analyst, Forrester Research
Josh Bernoff, Analyst, Forrester Research

POST Framework

The biggest problem with the use of social networks is that companies are trying things without a strategy. You need to have a process, start with the desired customer relationships, not the technologies, then decide what technologies to use the enable those relationships.

We call our methodology the “POST” process:

• People – What are your customers’ social activities?
• Objectives  – What do you want to accomplish?
• Strategy – Plan for how relationships with customers will change?
• Technology – Which technologies will help you achieve those objectives?

Within POST we break Objectives into five pieces:

• Research – listening to your customers;
• Marketing – talking to your customers;
• Sales – energizing your customers to advocate;
• Support – responding to your customers’ needs;
• Developing – embracing your customers.

Today’s Focus: Talking and Energizing (Marketing and Sales)

Talking. Talking is about two-way conversations, not just shouting, which is analogous to traditional one-way advertising. It’s critical to accompany these conversations with the use of metrics to track activity to sales.

Blendtec is a great example. They sell commercial grade blenders, and their decision to make videos began when the marketing executive saw the CEO trying to blend 2×4s to test out the blenders and decided he should record it. So they spent a few thousand dollars buying stuff to blend and then creating videos. The videos have become a YouTube hit with over 7 million views and 20+% sales growth. (See also Digital Podcast’s Are Ads as Content the Future of Advertising?)

Another example is Johnson & Johnson. J&J created a blog, opened it up for comments but incorporated a very strict comment screening policy to avoid liability, and made those guidelines explicit to consumers to avoid any will. They are a good example of how you can try things even within a strict regulatory oversight environment.

Ernst & Young is doing a great job of interacting with people on Facebook for recruiting. E&Y needs to recruit 3,500 college students each year, so within Facebook, they include information about recruiting and a wall for posting. In one post a student asked E&Y why they are not recruiting on their campus, and Dan Black, the head of North American campus recruitment, answered personally with suggestions for how to get in touch with E&Y. This kind of dialog has a viral effect on campuses.

Procter & Gamble had a problem trying to connect with teenage girls regarding tampons, which is not something that’s openly discussed. P&G created beinggirl.com, which includes discussions and Q&A about life as a teenage girl and Tampax and Always branding but no direct marketing. They are achieving a 4X return relative to traditional advertising, using their own internal metrics, and have rolled out the approach globally.

Energizing. Energizing is about finding and motivating enthusiastic customers to talk about your customers. Example efforts include brand ambassador programs, communities, and embeddable widgets.

Ratings and reviews are one of the most interesting ways for interacting with customers, especially for customers who wouldn’t otherwise be engaged. Loblaws, a supermarket chain, encourages shoppers to rate products online and share the ratings in the store aisles and advertisements. If customers complain about a product they’ll fix it, like when the added more eggplant to the eggplant mousaka that customers told them were under-eggplanted.

Fiskars, a scissors and craft supplies maker, created the Fisk-A-Teers website, an ambassador program. These are deeply passionate customers, but when surveyed, were very neutral about the Fiskars brand (when asked what food Fiskars would be, customers said Saltines). They made the Fisk-A-Teers site somewhat of a hot commodity by restricting membership to invitation-only after the site was seeded. They have 4,000 Fisk-A-Teers, and the number of positive mentions on the internet went up many-fold after the site launched. Fisk-A-Teers go to stores to give demonstrations, and when they do triple sales in the store on those days.

Brides.com energizes its fans through the use of widgets. They understand that brides and their friends are the ones who care about weddings, and created a countdown clock widget that brides can put on their own MySpace page.

How should companies get started?

It’s very easy for marketers to look at these social media efforts and get intimidated. Do not start by trying to move social applications into everything you do in your company. Pick one place, one application, make that’s successful and only then move on. Put metrics in place to make sure the success is measurable and can be replicated.

Dell jumped into social networking when Dells started catching on fire, literally. They had Lionel Menchaca be the lead spokesperson  he had the technical background, product review PR experience, and was well connected throughout the company.

Unfortunately, Lionel’s first efforts were too stiff and too company-focused. The blog was getting criticized, but despite these setbacks Michael Dell threw his support behind Lionel. It’s critical to have this kind of high-up support for social applications as these efforts always some ruffle feathers along the way.

Lionel put up a post titled ‘Flaming Notebook’ directly addressing the issue, including a link to pictures. He described in detail what Dell was doing about it and their investigations. Dell got wide praise for its directness and as a result were well ahead solving the problem and getting replacements before other laptop makers.

Dell didn’t stop there. The next thing they tried was IdeaStorm, a social application for generating ideas from customers. The first suggestion was a PC running Linux. They asked customers what form of Linux, what type of support, and conceived and shipped the product in 2 months vs. 9 months for the typical Dell product.

Next came DellShares, a Dell investor-focused blog. In many ways, this was really a means for distributing to individual investors answers they were already providing to the institutional investor community. They engaged with Legal first to identify and agree to necessary safeguards, ensuring that DellShares made it through to release versus being roadblocked. In this case, the Legal department devised a disclaimer that needs to be agreed to and clicked through before gaining access to the site.

In summary, to succeed with the use of social marketing:
(1) Focus on relationships, not the technologies.
(2) Find and nurture your revolutionaries.
(3) Start small with individual applications, but think big.

Q&A Discussion

How do you engineer the creation of viral video? It’s really hard to create something that goes viral, and it’s even harder to create one that communicates the message you want for the brand. For example, Delta put up a safety video featuring “Deltalina”, a take-off on Angelina. They at least thought about this enough to show consumers that they “get-it”, and there’s a lot more they could do to engage fans around the video. Forrester is going to do a video in support of the book about how to use data. It won’t be BlendTec-scale success, but we expect some pass-around

How critical are these techniques to driving business and marketing peripheral or the meat? It depends on how big your company is. BeingGirl.com is not what made Tampax and Always successful, but it’s a nice addition to a marketing plan. On the other hand, BlendTec had no consumer market before the videos, now they do. ConstantContact doubled their business with customer involvement. It goes back to marketing mix – never put all your eggs in one basket. You never know what will work with your audience.

How do you feel secure about what you’re creating? You don’t start with coming up with a brilliant idea, you start with who are your customers and what do they want. The BlendTech guys started by spending $50 with no real risk involved. Make it safe to fail, and encourage your team to try a lot of different things.

How do you tackle efforts to create very rich customer experiences with a very small number of people? If you look at the classical value of lifetime value, look at purchase amount, frequency, and viral value. Count the number of people they are actually touching and the value that drives. It’s not nearly as expensive as TV too. You have to start small to prove out the concept and see what works before trying to move it to the next level; once they get going these things scale very well.

More resources are available at www.forrester.com/Groundswell

[tags]Forrester 2008 Marketing Forum, Forrester Research, Charlene Li, Josh Bernoff, Groundswell, Social Marketing[/tags]

Saturday’s NY Times Television story, You’ve Seen the YouTube Video; Now Try the Documentary, describes a viral video’s journey from YouTube to National Geographic Channel.  It’s an extraordinary video of a herd of buffalo fighting off a pride of lions and a croc to save one of its calves, and the video’s adventure is almost as fascinating as the battle footage, with its viral popularity and National Geographic’s interest triggered by an incidental upload to YouTube because it was cheaper and easier than burning a DVD and mailing via USPS.

Battle at Kruger – YouTube Video

The New York Times story speaks to the growing power and influence of the internet and YouTube relative to broadcast television.  But there’s also a meta-story that reinforces the challenge that traditional media companies face as they come to terms with the internet.

The print world has been forced to open up its content to the online world.  Readers who want online news content will find it, and the print ad revenue those readers used to bring with them is being replaced by smaller online ad revenues.  The only choice for newspapers has been to keep at least the online ad revenue by opening up their content and maximizing monetization, or to let their competitors take all the revenue from them.

So nytimes.com, the only way I read that paper, carries the full story online, accompanied by beautiful hires images and an unfortunately no longer functioning link to the original YouTube post.  Someone in nytimes.com’s ad sales department did a great job too, as the article is surrounded by banner ads for the National Geographic Channel episode.  Or also likely, the article and the advertising were planned together – in a world where content is free, content and advertising are increasingly one and the same. Either way, there is no doubt that those well-targeted ads are maximizing the revenue potential for this particular story.

Click on any of those banner ads and you’ll get a stark reminder that television and print are still in very different worlds.

The National Geographic Channel has a well-constructed mini-site for Caught on Safari: Battle at Kruger, featuring the next prime time airing and accompanied by a video short/promo, the full YouTube clip, photos, information about Kruger, and related stories.  But you won’t find the the hourlong episode online.  The “real” content can only be accessed through your cable or satellite feed, where Newscorp and National Geographic, who jointly run National Geographic Channel, ring the cash register.

Print, and more profoundly, music, were the first media for which the internet could deliver a competitive and over time superior audience experience at a lower distribution cost.  As described above, the only response available to most outlets has been to cannibalize themselves or be killed.  No surprise that shares in The New York Times Company (NYT), at $19.67, are down 57% over a five year period; other major papers are in the same boat.

The internet does not yet deliver a super audience experience at a lower distribution cost compared to television.  Not yet.  Most streaming, YouTube in particular, is nowhere near standard broadcast quality, let alone HD, but there are an increasing number of exceptions.  It’s still pretty expensive to stream high quality video.  Getting internet video into the living room is costly, kludgy and not ready for the mass market, but then again, I also prefer reading a physical newspaper over breakfast than catching up on the news with my laptop.

So the networks have benefited from the luxury of time and insight from print and music as they experiment with online content and monetization.  They can still keep their highest value content available through broadcast only, where most of the money is, and use online as a tool for promotion and viewer engagement, selectively releasing episodes where doing so reinforces that dynamic.  Investors aren’t betting against the networks; shares in News Corp. (NWS), at $19.35, are up 33% over their price five years ago.

In the meantime, internet video is beginning to breach the walls of the living room, and the quality / cost tradeoff of internet video distribution continues to progress along the path suggested by Moore’s law.  The networks have some more time to work out how to maximize online monetization, but they don’t have forever.  And while they have a big leg up on the newspapers and music labels in this game, it’s sobering to bear in mind that investors weren’t betting against those players either five years ago.

[tags]Battle at Kruger, National Geographic Channel, New York Times, News Corp[/tags]

You’ve seen the scantily clad cocktail waitresses in the casinos.  The sexy woman posed on the hood of a car.  We know that sex gets men’s attention.

But does sex actually sell?

A new research study by Brian Knutson of Stanford suggests the answer is yes; at least, that heterosexual men are more likely to take financial risks after being subjected to positive emotional stimuli—in the case of the study, erotic photos of a man and woman.

Why should digital marketers and publishers care?

As digital content and advertising become increasingly intertwined (here’s one of many posts on that topic), and marketers and publishers get better about measuring the effectiveness of their efforts (read more in our mini-eBook on social media performance management), we can expect the trend toward sex in advertising to be further invigorated (pun intended), at least in advertising that targets men.

And as social media becomes an increasingly effective marketing tool, we can also expect more of the digital equivalent of those cocktail waitresses.  The Stanford study alluded to the particular relevance in online gaming (gambling) businesses, and I noticed the effect firsthand when checking out XuQa.com, an online casual gaming community co-founded by Murtaza Hussain, co-founder and CEO of PeanutLabs and the subject of a recent DigitalPodcast interview.  Many of the most popular gaming rooms in XuQa are hosted by very attractive women (or at least hosts with photos of very attractive women), and the formula seems to be quite successful there.

By the way, for our female readers (my wife included) who by now are gloating over the superiority of your half of the species, beware:  Mr. Knutson is planning to test women’s responses in the future.

[tags]Brian Knutson, Erotic Content, Stanford University, Sex[/tags]

Andrew and Alex joined Forrester for its 2008 Marketing Forum, which focused on the challenge of customer engagement in a digital media world.  This second series of articles focuses on case studies of companies using interactive applications as the hook for building communities of superfans.

Creating Brand Advocates at Nike’s Jordan Brand
Emmanuel Brown, Director of Digital and Content, Nike’s Jordan Brand

Nike’s Jordan Brand has developed a couple of immersive experiences for highly engaged fans.  The experiences start with deep insight into these “superfan” needs, and build intense community engagement for these hardcore fans, but are small scale communities relative to the scope of the Jordan Brand.  Which raises the question, are these high ROI applications for engaging and activating superfans, or are they so focused on the hard core that they are failing to engage the brand’s mass market?  Read on and share your opinion…

Emmanuel began by sharing background on Nike, whose headquarters in Beaverton, Oregon is like a Disneyland for adults, and its Jordan Brand division, where Michael Jordan (MJ) still deeply interacts with the brand, the same way that he was engaged with the game of basketball.

Mentally, or digitally, cut to a stirring, inspiring Michael Jordan video (videos can be found at Nike’s site for the Jordan Brand, Jumpman23).

The Jordan Brand.  Nike approached Michael Jordan in 1984 to have a signature shoe built around him, a completely novel concept at the time.  In 1996, the Jordan Brand was born as a division within Nike.  The brand has 110 people versus the Tiger Woods Brand’s 400 people, and both brands support the same amount of revenue.  Nine out of ten people own (or have owned) Air Jordans, and the Jordan Brand is the second in the market behind Nike itself.

The Jordan Brand’s primary consumer is the core urban male 15-20 year old, highly competitive, a leader of the team.  These guys often know what the brand is doing before the news is made public.  The secondary consumer is 12-24 year old males and females, urban and suburban, not necessarily competitive.  Their consumers’ mind space includes social media, television, and the video game space.  The Jordan Brand does a lot of marketing through video games – with them, kids can see the entire line-up.  Most kids know what products they want before they get to the store.

The engagement philosophy for the brand is (1) to engage with consumers where and when they want (online!); (2) product and service together are critical to delivering a greater experience and engagement; and finally (3) the consumer decides.

The Jordan Breakfast Club.  A key platform for engagement is the Jordan Breakfast Club.  The challenge was to establish an authentic position for Jordan in the training marketplace.  Every morning, MJ and his teammates used to wake up and complete a workout regiment before he got to eat his four course breakfast.  So the Jordan Brand went after an unmet need of the target customer around training – everyone says that training is important, but no one tells kids how to train.  The Breakfast Club includes a simple peer-based assessment and a custom designed workout program that can be printed out or downloaded onto an iPod as videos for a huge number of possible workouts.  The Jordan Breakfast Club has 20,000 plus engaged users, and tens of thousands additional views on YouTube.  The Club also did a 10-city summer tour to reach thousands more at day long training camps.  The program won a 2007 Forrester Groundswell Award.

The Jordan Flight Club.  After building the Breakfast Club, the brand started getting more information about its consumers, and next started the Flight Club.  The Jordan brand has a huge “sneaker-head” following, and the Flight Club is about limited edition, one-at-a-time, high demand products for fiercely loyal customers who are willing to pay a very high price and avoid the disappointment of trying to get limited products through retail.  The brand got a lot of feedback from consumers in designing how the Breakfast Club would work.  Members of jumpman23.com got membership offers and the opportunity to invite two more friends – in others words, an “insider” offer for loyal customers only.  Demand went through the roof, with people selling their free invitations on eBay, and over 40,000 members joining in the first 45 days.

Emmanuel’s summary:  (1) create relevant experiences beyond the product, (2) service complementary needs of the consumer, (3) empower engaged consumers to be brand advocates, and (3) create and own communities where they are relevant and authentic.  The Jordan Brand’s next big challenge is to take these opportunities in the digital space and migrate them to the physical space, like the Jordan Breakfast Club tour.

Q&A Discussion

How do you share learning from the Jordan Brand throughout Nike?  We do case studies.  Things may work differently for us versus golf, and we use best practices.

The 15-20 year old market is refreshed every 5 years, so how do you target for the future, and specifically do you market to even younger (under 15) generations?  We try to communicate in a simplified format, keep MJ’s story relevant, and make great products.  We don’t market to the younger kids, but do try to emphasize success through working hard.

What do you mean that you’ve learned the hard way about ignoring customers?  We created a website where consumers could buy one-off products, and only created 6,000 units of a product that 1.6 million consumers tried to buy, crashing the site and generating hate mail.  We use sales data and forecasting to ensure that problem is not repeated going forward.  We’d rather overstock and deal with excess inventory than to have too little product and anger consumers.

For limited editions, doesn’t it help the brand to sell out so fast?  You have to appreciate the global effect of our brand.  Kids in Australia were getting their hands on US-only products; we responded to make the products available there.   We’re pushing to think more globally and satisfy demand, offering limited products in all parts of the world.

The Breakfast Club concept sounds great, but how are you measuring the true impact?  We’re not measuring the financials, but we do track the ongoing activities of the kids who sign up.  One of the Pro teams we visited adopted the philosophy as their primary means of training!

Andrew and Alex joined Forrester Research for its 2008 Marketing Forum. This article is the second in our series from the forum focused on customer engagement in a digital media world.

Realizing Your Return on Empathy (ROE)

Steve Kerho, VP Analytics, Organic
Mark Kingdon, CEO, Organic
Creating effective online (and offline) marketing solutions starts with a deep, emotional understanding of your customer segments and their needs – in other words, “empathy” for your customer “personas”. This empathy serves as a critical guide in designing online and other touchpoints, and the personas also support breaking down how you measure and respond to online performance.

Mark led off the sessions with the observation that as marketers, we have a lot of data about customers, but we need to get beyond the data to “touch” our customers.

He then solicited audience feedback on the importance of understanding customers in marketing through a uniquely engaging technique. When we sat down in the conference room, a pad and a branded pen were keeping each of our seats warm. The pens were laser pointers, and Mark gave us a brief tutorial on turning them on and aiming them without blinding our neighbors.

Mark walked us through a series of slides filled with questions and multiple choice “answer” targets; the volume of laser points bouncing around each target quickly illuminated audience response. The survey responses told us that collectively, we thought it important to find an edge in our marketing and to develop and understand customer personas to refine marketing approaches, but that we had a way to go in implementing these techniques.

Organic believes that getting to personas is so fundamental to their work that each year they send staff down to Vegas for “persona work”. The group breaks down into seven teams that are each assigned one of seven sins. Each team is tasked with observing people indulging in their target sin, and then developing a campaign for that persona. The exercise is all about getting to empathy, getting everyone on the same song sheet around what’s driving the consumer, their behavior and their needs.

Organic sees four steps in order to take advantage of empathy:

(1) Know your consumers well enough to develop detailed personas,
(2) Design web experiences around those personas,
(3) Tailor all media and touchpoints to these personas, and
(4) Know and optimize against “Return on Empathy”.

To get to step 4, marketing needs to secure management commitment to overcoming the challenges of siloed organizations, to develop a process for optimizing efforts, and to connect campaign objectives to metrics.

Why go through all this effort? Because empathy pays off, as Steve demonstrated with three case studies:

Jeep Patriot. The business objectives were to create familiarity and purchase intent for this all new vehicle in a crowded segment, targeting younger, internet saavy buyers. The solution was a very interactive online experience, where they shot 40 or so minute-long video segments for about the cost of a traditional 30 second spot. These segments comprise an interactive film, which viewers could enter and then steer their experience and outcome. Consumers were introduced to the story starting with a TV broadcast spot, then rich online ads, targeted emails, and theatrical trailers. In total their was about an hour of content, and the vehicle and its features appear in every scene. Their campaign had great results – Jeep more than doubled its target for unique visitors, with 80% of them new to the Jeep brand, enjoying an average viewing time of 5 minutes with 40% of visitors staying for over 10 minutes.

Bank of America’s No Fee Mortgage Plus product. The business objectives were to create familiarity, awareness and sell-through. They identified one persona familiar with the mortgage process, and another unfamiliar with it, and customized the site experience accordingly after three very simple multiple choice pre-qualifying questions.

Coach. The business objective was to increase the sales of bags online. The empathy process highlighted a key “persona” issue around women’s discomfort buying bags unless they are sure that they fit. The solution was to create an online bag “sizer” that drove a substantial increase in sales and reduction in returns.

After the case studies, Steve walked us through an example of metrics supporting “ROE” on site design. The example showed how the measures were built up, and demonstrated the differential impact on return against identified personas versus non-personas.

The session was running late so there wasn’t much time to discuss the ROI calculations, below.  Deeper reflection reveals a number of interesting questions, for example, why calculate ROI based on revenue rather than contribution margin, why only amortize the redesign over one quarter, and whether the redesign impacted other drivers of value such as new customer acquisition and retention rates.  You might choose a different set of assumptions for your business, but in any case, the persona-level analysis of differential site performance provides an important basis for objectively evaluating ROI.

The bottom line: executed well, empathy pays.

Q&A Discussion

You mentioned that the Jeep example exceeded traffic goals, but how does one go about establishing those goals? You end up in the forecasting business, and need to use historical performance offline and online as the baseline that you are trying to meet or exceed, for example CPM through traditional media (even though may be lower engagement, more eyeballs) You can also look at search traffic and value as another baseline for the value of the consumers you bring in.

How difficult is it to sell-in the work of building personas to clients? Actually, doing so in increasingly easy, and we have had some clients asking only for personas, not the follow-on work.

What is the role of customers in participating in site design? Customers are an increasingly important part of the process. In fact, we are working with a client now to involve customers in their core product development process.

How are you developing personas beyond traditional observations? We have deliberately selected low-tech workshops versus high tech means to develop personas, which surprises many because so much of what we do is high tech. That approach may evolve over time.

Does all this work to actually increase sales? Our clients have realized a high correlation between engagement, purchase intent, and buying behavior.

Digital Podcast joined Forrester for its 2008 Marketing Forum, which focused heavily on the challenge of customer engagement in a digital media world. We’ll be writing about the conference over the next two weeks. Our first series of articles, like the conference, is focused on the topic of engagement. This article covers the first two presentations of the conference.

Setting the Stage
Harley Manning, Vice President, Research Director, Forrester

Harley introduces the conference’s theme by emphasizing that the imperative for marketing success going forward is customer engagement, and previews three case studies on the subject.

Traditional channels are shrinking – the 30 second spot is declining in reach and importance – yet the new channels, like YouTube, hold risk for marketers. The challenge and opportunity is to engage with customers and in return they’ll engage with your brand.

Harley shared three quick case studies of engagement:

Jordan’s Furniture: Is it a furniture store or an amusement park? Complete with a trapeze school, water display, café, IMAX theatre, and the backing of Berkshire Hathaway, Jordan’s engaged customers stroll past “finished room” furniture displays to get to lots of the good stuff. Along the way, they seem to buy a lot of furniture

Nike Running website: Articles, splashy photos, and aspirational content motivated Harley to drop a wad of cash on Nike’s best running shoes, begin running again after a lengthy hiatus, and then drop more cash on Nike apparel. Is Harley buying shoes or buying into a lifestyle?

LeapFrog: Toys that engage Harley’s son’s brain while he’s too busy having fun to notice that he is learning too. No wonder these toys sell like hotcakes.

Engagement: A New Approach To Understanding Your Customers
Brian Haven, Senior Analyst, Forrester

Two brands, two superfans, two very different reactions – one shove, and one embrace. If you want your fans to keep loving your brand, try hugging them back!

The Ikea Superfan

Brian starts by sharing a story of true engagement, and how gazing into the eyes of superfan love be hard for some corporations. Jen is an Ikea superfan from Ohio, and she singlehandedly started a movement to bring Ikea to her corner of Ohio. She started a website, scouted retail locations, and worked tirelessly to drum up support for Ikea to move in. How did Ikea management react? They warned her to stop using their trademark, were concerned when her Google rank approached that of the brand, and after actually building a store in her neck of the woods, Ikea didn’t even respond to her job application. While Ikea is a great brand that does many things right, they could have handled this superfan in a more enlightened manner.

What can we learn from Jen’s story? The traditional marketing funnel and message control is a thing of the past. Consumers can now chase down a spaghetti maze of paths to your brand, and marketers risk drowning in a sea of metrics – too often we don’t know which matter, what to do with them, and even if we did, how to track them technologically and across channels.

Even overcoming all these hurdles, the next challenge is how to make “engagement” actionable. What does engagement mean?

In simple terms, engagement is a person’s participation with a brand, regardless of channel, where they call the shots. Brian defines engagement as the 4 I’s, the level of Involvement, Interaction, Intimacy and Influence that a person has with a brand over time:

• Involvement: A person’s presence at brand touchpoints
• Interactions: A person’s actions while at the touchpoints
• Intimacy: A person’s affection for a brand
• Influence: A person’s advocacy for a brand

The Alli Superfan

Brian shares a contrasting example – Laura, who tries out GlaxoSmithKline’s “alli” weight loss system and community website. The system and site effectively engage Laura:

• Involvement through community tracking, forum tracking, registration data
• Interaction through product purchases, diet diaries, fridge photos, food journals
• Intimacy through product feedback, online ad opinions and shopping experience
• Influence through tools for advocacy.

As Laura worked with the system and the website (and lost a lot of weight!), GlaxoSmithKline decided to feature Laura, one of their most engaged customers, on the web site. This highly engaging system realized a very successful launch – in just the first six weeks, 1 million people tried product, and they rang up $155 million in sales on a $150 million ad budget.

Brian then discussed some of the steps for defining and measuring engagement (understand existing and outside data and metrics) and encouraging engagement (provide content, facilitate conversations, give customers a reason for sharing information). Engagement involves a fundamentally different relationship with customers.

And he reminded marketers to engage, embrace, and encourage the Jen’s of the world.

Q & A Discussion with Brian

How to address the fact that companies have many different departments involved in “engagement” and many different metrics are used? The marketing team needs to take lead with other parts of the company to share the vision of engagement, provide value to those groups, and bring the company together on goals and associated metrics.

How to identify and scale Superfans like Jen? Online is a great place to start. There are brand monitoring services, even Google search can be used to find the bloggers. To scale this group, first nail the customer insight, who the customers are, what they care about. Then the best way to attract, encourage and track them will depend on the answer to those questions.

How can companies engage around intangible, infrequent purchases such as insurance or other financial services? The purchase may be infrequent, but there is ongoing usage data that you can track and monitor. These customers may not be engaged Superfans like Jen, but the same principles apply.

How should Ikea have treated Jen? Not to pick on Ikea, but Jen wasn’t doing anything bad, everything she communicated about Ikea was positive. Ikea should have leaked her information about the store in advance, given her access to better technology to support the blog, talked about her on their own website. Reach out, embrace, and help your superfans! Very simple things would have meant the world to Jen, and would encourage others like her.

Are there examples where pursuing engagement has backfired? There is nothing negative about understanding who your customers are and what they care about. Overall there are negative things that can happen, but remember we’re in a different world now, and we don’t have the same control. We have to stop being scared of our customers.

What do you do about people who are negatively engaged with the brand? We call this disengagement, and it will happen whether you like it or not. The question is do you want it to happen where you can see and influence it, or spread out beyond your reach. Ultimately, brands need to pay attention to the reasons for disengagement and make their products better!

This panel at the Future of Television conference focused on the state of Mobile TV and its chances for success.   How is it doing?  What is needed for breakout success?

Panelists
Bill Sanders, VP Mobile Programming & Digital Development, Sony Pictures Television
Derek Broes, SVP Worldwide Business Development, Paramount Pictures
Steve Smith, Managing Director, Playboy TV International
Douglas Craig, SVP Digital Media Operations, Discovery Communications
Seamus McAteer, Chief Product Architect & Senior Analyst, Media Metrics
Moderator: Ted Cohen, Managing Partner, TAG Strategic

What are the gating factors for Mobile TV acceptance?

Hasn’t been an overwhelming response for adopting Mobile TV.  Insufficient marketing to consumers; marketing is not the carriers’ core competence, just as software development is not the core competence of studios.  The numbers are still small – one or two percent – of the mobile phone market in US and Europe, but it’s meaningful, and five to ten percent of the addressable market of video-capable handsets.  The combination of flat rate data with increasing video capable handset and YouTube-like free video should be powerful drivers of adoption.  If it’s free, everyone will try it at least once.

What are the major content and user interface issues?

Need to build products and services in the way that our kids want, not based on the constraints that we place on them.  Examples of limitations: content deleted after 24 hours, inability to pause and come back to content later.  Short form is performing better than long form, of course.  Foreign language is an issue – need dubbing, subtitles don’t work on mobile (Sony does subtitle, though).  Every panelist is doing a combination of repurposing existing and developing original content.

Whether long or short form, it’s about building habit — people returning to the brand again and again.  For example, Sony did 200 Ripley Believe It or Not clips.  Traditional carrier approach, put them all out there on the shelf and let them die a quiet death.  Bill is pushing to go back to original comic strip format, thirty seconds every day with a shelf life.  Perishability is important to drive habit building.  On YouTube, you want to be the person who discovers the clip and forwards it to your friends.  This is something that we should have learned from traditional media.

On digital rights, the most important lesson is that the consumer will do what’s convenient whether it’s legal or not; we need to get in front of the needs and offer what consumers want legally.  Should you ask for permission first or forgiveness later?  With talent, ask for permission.  In other cases, bias toward asking for forgiveness.

What will make Mobile TV prime-time, with DVR- and HD-like uptake?

Forcing the issue on studios and other content owners by device users figuring out how to get the content on the devices.  These mobile devices increasingly have the capability of PCs, access to broadband networks, and the ability to sync with PCs.

What about the opportunity for direct-to-consumer, internet / browser based mobile portals, bypassing operators?

Hard to market and reach consumers without carrier support.  However, YouTube has some success in mobile.  Operators are very concerned about this, want to stay well ahead of it.  Also, trying to convince carriers that they can be “smart pipes” without being the programmer, e.g. billing relationship.