(Updated) Um, Facebook, This isn’t Great

Engagement with brand content is evidently dropping  pretty dramatically. As a guy that went all in on Facebook when i was in a seat to influence a lot of media spend, this is concerning. For brands, it’s obviously bad. For consumers, it’s probably a win of sorts.

These numbers are even more striking when you consider engagement is significantly down even though brands are almost certainly spending more money to promote their posts to combat plummeting organic reach. Facebook’s ad revenue reached $2.27 billion in Q1 2014, up 82 percent from Q1 2013.For brands on Facebook, these are dark days. They can choose to spend more money to reach fans they had already accumulated in the past, but Facebook will likely decrease branded reach even further.

But, this also speaks to challenges in the FB ad model from the brand perspective. It seems like Facebook is  resorting to limiting organic impression supply (by tweaking the algorythm to lessen brand reach), making it more important for brands to pay to get the exposure.  The main reason i believed Facebook was a great platform was the  combination of organic and efficient paid reach. With the constant tweaks to the organic reach black box, that mix (of organic and paid) gets less attractive and FB becomes just another paid ad platform.

UPDATE 6/18/14: I think i buried the lede here. The point i was REALLY trying to make is that it looks like Facebook is losing one of the aspects that made it so attractive in the first place: It enable brands to build deeper relationships (that’s good) while also building a more modern media mix, one that delivered a beneficial combination of owned and earned media and paid. The less organic reach a brand can generate, the more they have to pay to get the reach, the less attractive the original value proposition is.

via New Report Reveals Just How Drastically Brand Engagement is Plummeting on Facebook | The Content Strategist, by Contently.

The BlockChain is the Beauty Inside Bitcoin

I need to come back and write up a clear article on this, but i’ve been digging deep into Bitcoin. Not the cryptocurrency part, but the actual protocol behind it. The think i’m curious about: What else could we apply the blockchain concept to. That is, what kind of decentralization can happen when there is a secure, transparent, open, scriptable, public ledger holding the system together.

Lots more to think about,  but here’s a couple important articles for my own future reference:

 

Lessons For Marketers in the NYT’s Leaked Innovation Report

The New York Times 2014 Innovation Report is an extraordinary document. Extraordinary in that it  exists at all, for one thing. But, also extraordinary for the honesty and candor in the analysis provided by the authors.

We’ve all watched the news business getting transformed over the years by blogs, the web, Google, etc. Now we can read the report from inside a pre-eminent news organization, written by a handpicked group of leaders given the mandate to tell the truth to power (well, their bosses).

But, at the same time, it’s an exceptionally useful document for marketing leaders who are struggling to thrive in a time of rapid, seismic changes. Digital, however you want to define it, is creating almost unlimited opportunities to create new growth, reach new audiences, and work in different ways. Call it creative destruction, transformational innovation, or just reinvention; we’re all going to have to deal with it. The news business is at the front of many of these changes, but eventually all business, from cars to cereal will have to deal with them. So, we can learn a lot about what to do (and what NOT to do) by reading this report carefully.

While it was unfortunate that this document was leaked, we nonetheless have it as a story of a great organization at the mid-point of a life-or-death struggle. Here are just a few lessons  brand builders can take away.

Be Honest With Yourself, First – One of the more remarkable things about this document is that it doesn’t seem to hold many punches. It calls out specific projects, departments, etc. Its a seemingly honest assessment of what’s working and not working. Not self-flagellating, but also not overly optimistic about what’s really going on. Marketing leaders should take on this kind of assessment every other year, at least. A hard look, done by trusted mid-level leaders, those with enough understanding of how things really work on the execution level but also have a broader strategic sense about what the organization can be and needs to get there.

Understanding how Disruption Works is the First Step to Disrupting Yourself - With everyone talking about innovation all the time, you’d assume everyone understands what “Innovation” really is. But, wisely, the writers spend a couple pages outlining Clay Christensen’s Disruptive Innovation process. And, they even provide a cheat sheet for their new competitors. As leaders, we should understand that disruptive innovation actually is kind of predictable and it will hit every industry at some point. Get your teams to understand this, and it’s the first step to creating the kind of innovations that disrupt the business on your terms vs. waiting for someone else to do it to you.

Reconsider What You’ve Always Taken For Granted – The report advocates a recommitment to audience development strategy, to re-examine how they are getting the news in front of people.  For generations, the Times could assume an audience existed, was reachable in a predictable way, and cared about the product. But, that audience is easily swayed, distractible, and, in the end, not so easy to reach. Now, the Times has to re-learn how to reach it’s audience, weaving a news set of skill into the newsroom. All leaders should be rethinking the parts of the model they’ve always taken for granted.

Digital First is Much More than a Buzzphrase - For the times, it’s a flip from “a newspaper that also produces a rich and impressive digital product” to “A digital publication that also produces a rich and impressive newspaper”. That’s over-simplified, but that mental model flip is one that most marketing organizations need to make if they haven’t already made. A mobile, digital way of building the brand that is amplified at scale by traditional media is  “digital first” for most marketers.

Culture Change is a Mofo - This is really a document describing wrenching culture change in slow motion. The capabilities, the technology, the tools will all be relatively easy to update. But, the talent, the leadership, the skills, the mindset needed to thrive in a digital-first world at the Times will be incredibly difficult to weave into the organization. The leaders will have to remake their culture from the inside without losing the best of what got them there.

Finally, the real story here is that the leaders of this organization recognized they were out of synch with their times and they turned to 8 trusted insiders to figure it out. That’s courage. We can all learn from them.

There are dozens and dozens of smaller nuggets in the document. It’s so rare for a business leader to get a peek into another organizations’ strategy development process that i imagine this will be a document i go back to and re-read multiple times.

Here are a couple other great writeups:

Managing Startups: Best Blog Posts of 2013 | Platforms and Networks

Managing Startups: Best Blog Posts of 2013 | Platforms and Networks.

This is about everything you need toread for the next couple weeks. Tremendous resource for anyone thinking about working in a “lean”, “agile”, “fast”, “iterative” or whatever mode.

Meta comment: Eisenmann’s blog is a great, living reminder of the power of blogs. With all the focus on shorter, faster, more ephemeral media (i’m looking at you Snapchat, instagram, Twitter), it’s very worthwhile to reflect on the core idea behind blogs, blogging, great posts and the whole concept of publishing for an audience.

 

Why Didn’t Honeywell Invent Nest? The Value of Purpose

Evidently, Nest is worth a couple billion dollars in the minds of investors. That company didn’t really exist a couple years ago, but investors see the potential and Nest is a good example of how a purpose-lead company can spark new growth by reimagining old businesses.

But there are higher risks, of course, with hardware-focused products like Nest, compared to software-only investments, due to the more costly ramp up for such products. But said one investor, “This is a company that could change how we live our everyday lives,” noting the tight integration with mobile phones was a key step in the evolution of such devices.

via Nest Raising Huge New Round From DST, Valuing Smart Home Startup at Upwards of $2 Billion | Re/code.

Why didn’t Honeywell invent Nest? There is no doubt the halls of Honeywell are filled with incredible technologists. They have installs in god knows how many homes in the US and around the globe. Is it because their business model is so heavily focused on resellers and contractors? Is it because they forgot what business they are really in (e.g. “we’re in the comfort business” vs. “we’re in the thermostat and electronics business”). Is it because the actual product would have cannibalized the rest of the line? Perhaps the actual Nest product wouldn’t have been a big enough opportunity for a 72Billion dollar company. Finally, perhaps the leaders at Honeywell have a really healthy and profitable thermostat business already in place and didn’t see a chance for a significant change in their growth curve from real innovation from their core products.

Here’s a clue,  from Nests “about us” page that reveals how purpose guides their approach: 

About_us___Nest

Simple. Beautiful. Thoughtful. They’re focused on “unloved” things. They know no one loves their thermostat.  But, their purpose is to make things you’ll reconsider and then fall in love with. It’s a design approach and a laser focus on the consumer mindset. They are an end user oriented company that has empathy as their core lens. Tech, coding, sales, marketing and everything else come afterwards. Rethinking old problems to help consumers is core to their culture.

Now, check out Honeywell’s “About us” page (actually, there are a number of Honeywell “About us” pages. This one is for their consumer products):

About_Us_-_yourhome.honeywell.com

While it’s great that they are customer focused, it’s pretty clear that their customers are NOT consumers. They’re focused on resellers, builders, etc. They are designing products they know their real customers will buy, not products consumers are going to fall in love with.

Business school students will be reading case studies about Nest for years to come. It’s going to be interesting watching Honeywell’s response. Not only do they have a product challenge, but they are going to have a business culture problem, as well. They can compete on technology, but will they be able to get over the internal cultural barriers that will make it difficult to truly put the consumer needs first? Will they be able to reconnect with their core purpose as a way to re-orient their product and marketing efforts?

A little glimpse into the Future of Brand Building

I was part of an interview that AdFed did w/GoKart Labs for their year end wrap up. I’m really excited about where this GoKart team can take brands. We’ve got the talent, the ideas, and the capability to make a real difference for brands. Should be a great 2014!

 

We are excited about modern brands that are moving beyond simple “messaging” (i.e. ads) to actually making apps, services, platforms and utilities that create deeper connections with their current fans in more useful, relevant and participatory ways. New users, new buyers, will become aware of brands and business through the things their friends do *with* these platforms and the content. These investments in useful content and services create organic growth for brands, whether its deeper loyalty, sharing or even offline word of mouth.

via AdFed – Made for those who make.