Being Peter Kim

Why Facebook $2 billion is absurd - a rough calculation

OK - apparently under the radar screen, teen media holding company Alloy acquired Sconex, a.k.a. Facebook for high schoolers.  Ironic that real dollars were being exchanged and totally overshadowed by the Facebook $2 billion buzz.

So let's do some back of the envelope calculations.

Using registered users as the unit of currency - after all, social networks are like soylent green - its people!  How else are you going to monetize those page views?

• July 19, 2005:  News Corp+Myspace.  $580 million for 67 million registered users = $8.66 per registered user.
• March 28, 2006:  Alloy+Sconex.  $8.7 million for 500,000 registered users = $17.40 per registered user.
• Speculation:  tbd+Facebook.  $2 billion for 9 million registered users = $220.75 per registered user.

How did I get 9 million?  This post pegs Facebook at 5+ million registered users on 10/27/2005, with 20,000 new users daily.  It's been 153 days since then.  Let's make 5+ = 6 and 153 * 20k = 3 million.

The knock on myspace is that only a small percentage of users are active.  OK so reduce myspace by 82% and you get 12 million users, for a cost of $48.09 each.  Still a bargain.

So if you want to look at your Facebook on myspace terms, we're talking roughly $78.5 million.  I still say Facebook should take the money and run - if it's still on the table.  Look - if I had more time I would construct a proper DCF model and post it here - but that's not my job and I have some other interesting research I'm taking a break from writing right now.  If you have any links to a model let me know and I'll post.

(btw I ran across this article at Reuters while looking up figures - I think you have to use a different figure for Sconex b/c the stock is reported as guaranteed.)

I haven't heard any buzz about LinkedIn - which seems pretty successful with a corporate user base.  Lots of potential - how much would it be worth on the block?

And considering that social networks are made of people - when are they going to revolt and realize they're the ones creating the value and being sold out?  My guess is that the execs will say "let them eat cake."

Tags: facebook, for sale, sconex, alloy, myspace, news corp Add to del.icio.us

Why coffee at conventions tastes bad

Have you ever wondered why the coffee you get at conferences and conventions usually tastes a bit off?  The night I flew in to Vegas, I read an article at USA Today about a taste test between Burger King, Dunkin Donuts, McDonald's, 7-11, and Starbucks - which reminded me of a WSJ article from last year.

Any of the brands tested would be an improvement over the usual catered fare.  why?  Hotels and conventions typically make their coffee from concentrate.   Although concentrate costs about $0.10 to make vs. $0.05 for fresh brewed, there is no waste with concentrate - and over 1,000 cups an hour can be produced.  That's a lot of coffee.

Tags:  convention coffee, conference coffee  ::  Add to del.icio.us

2nd Annual Interactive Promotion Summit

I'm in Las Vegas for the 2nd Annual Interactive Promotion Summit.  I'll be on a panel discussion later this morning called "The Future of Marketing and Promotion" and have my magic 8-ball with me.  The program kicked off yesterday morning with a keynote from Seth Godin.  His best advice was career tips to marketers:

You only get this gig once.  It goes on your resume and into your personal and professional DNA.  If you are doing something that is boring - stop.  Make something worth talking about.  Figure out a way to make it interesting or leave.  You'll be happy you did.

Check out some free knowledge at squidoo.com/seth.

Tags:  promotion summit, career advice :: Add to del.icio.us

Facebook for sale - $2 billion

Business Week reports that Facebook is up for sale, looking for $2 billion.

Some colleagues and I had a briefing with Facebook last week under the premise of "to provide details on an upcoming announcement in late March regarding a key expansion of their services."  We discussed an expansion of search and profile capabilities, whereby Facebook was positioning itself to be more generic, in addition to expanding high school targeting.

The funny thing is the last question I asked:  "when are you going to merge with another social networking site?  I can't see the differentiation between you and other sites now...sounds like the time is right for consolidation."  The response was that Mark fully intended to build the business as a standalone.

Which is technically the truth, just that he wants $2 billion and someone else's agenda to drive Facebook forward.  Not a bad idea, if you can make it happen!  Especially because most of the cool kids migrated to myspace a while ago - but a bunch of investment bankers and other assorted suits may not pick up on that until they've inked the deal.

Congratulations Mark - and if you want my advice - as Kenny Rogers said, you gotta know when to hold 'em and know when to fold 'em.  Don't hold out too long or else you're going to be stuck - because the game of musical chairs is starting for Web 2.0 and the losers will be determined by how long the music plays - the longer it goes, the more likely it will be that owners, then VCs, then individual investors will find themselves without a chair.

Tags:  facebook, for sale :: Add to del.icio.us

An idea on how to make ads work again

Nice article on AdAge called "The Growing Sophistication Of Popular Entertainment."  Could have also been called "An idea for making ads work again."  The author says advertisers should take a lesson from Steven Berlin Johnson's Everything Bad Is Good For You and realize that ads can wise up just like good TV has.

Can this be done in the existing 30-second format?  If TV shows can do it in 30 minutes, why not commercials in 30 seconds?

Here's how to do it - integrated serial marketing campaigns.  Recognize that consumers are multi-channel and make it happen.  Why not add a serial approach?  And not this old, "reveal one letter each week" where savvy consumers will guess by week two or three.  Give your campaign a storyline and make people want to tune in and seek out more.

Tags:  advertising, 30 second spot

Why the PhDs about MBAs?

Every so often, I hear why an MBA is useless.  Friends and colleagues tell me why the degree is unnecessary and why they will not pursue one.  Every so often, there's press about the MBA degree being worth little or nothing.  During the dot-com boom, a lot of people talked about getting a degree from the school of life.  Recently, there was a free eBook that Seth Godin cited.

Just so you know, I have a MBA from Darden, the graduate school of business at the University of Virginia.  I consider it one of the best investments I ever made.

Have you ever heard the one about medical school?  What do you call the person who graduates last in their med school class?

> Doctor.

But not all MBAs are created equal, just as not all MDs are not created equal.

AdAge published an article titled "MBAs May Be A Marketing Liability."  The critical mistake that this article supports lies in a simple statistics lesson - one that I learned from the late Professor Dana Clyman.

> Correlation does not confirm causation.

The AdAge article presents so many half-baked conclusions that it might be actually an early April Fool's joke.  E.g. any masters degree other than an MBA is worth something.  Underperforming marketers respond to more surveys.  Out-performing companies are meritocracies while underperformers are mired in politics.

Incidentally, I visited the survey sponsor's site, Coogan & Partners, and it doesn't appear that any of the principals have a MBA.  Maybe some of those skills would have helped them develop better arguments.

Certainly a MBA degree isn't the right path for everyone.  I realize that many entrepreneurs find great success without undergraduate degrees as well.  You can get the same results - education, network, debt - in many different ways.  If you're considering whether or not to pursue a MBA, the key is to, as the Greeks say, know yourself.

If you haven't heard, the marketing world is changing.  CMOs and CEOs are not on the same page, because marketers don't speak the language.  This is something that b-school can teach.  "Can" because not everyone needs an MBA to succeed and not everyone with an MBA will succeed.

The common factor I find amongst those who pan MBAs as worthless:  they do not have an MBA.  Which I propose drives their adoption of a PhD instead - "player hater degree" if you're unfamiliar with the term.  Now there's the causation behind the correlation.

Tags:  marketing, mba, darden, uva, AdAge, b school

Super Bowl fine upheld - we lose

The FCC upheld the $550,000 fine levied against CBS for the 2004 Super Bowl halftime incident.

Two years later, what's the fallout?  Well, the Super Bowl ads definitely changed and were pretty widely panned by everyone for the past couple of years.

I took a quick look at Blogpulse and compared the buzz on Justin, Janet, and Kanye West, who's in a similar space.  His spike happens around the 2006 Grammys.  Justin and Janet are pretty much flatlining.

Not too many people will remember that the Patriots won the 2004 Super Bowl.  There are many more losers - CBS, Janet, Justin, and consumers, who must suffer through mediocre ads for the forseeable future.

Tags: cbs fine, advertising

Strange and ironic: hyperlinking gone wrong

This is odd.  A colleague sent me a link to this article, about the fact that big name advertisers and their media buyers are avoiding social networking sites, due to the risk of being associated with objectionable content.

But speaking of bad associations, check out the first hyperlink in the article:  murdered.  It currently links to an article about a Playboy spread on MySpace.   (image at right shows link on mouseover)  A veiled social commentary, perhaps?

Interesting article, though.

Tags:  mediapost

It's good to be The King

Speaking of the which, it's good to be The King - especially on sprong [sic] break.  No stealth marketing here.

But why you ask?  Looks like the promo intends to add a little turbo-boost to BK Joe coffee as the QSR coffee war heats up.

Tags:  bk joe, burger king

Remember "evil beaver"?

Looks like Burger King has a new ad running, with a guy in a chicken suit running around a farm.  It's somewhat amusing, but nowhere near as funny as the old "evil beaver" commercial from Miller Lite.

Do you remember the evil beaver commercial?  It was a great ad from 1998 - I remember laughing for days afterwards.   You can watch and laugh again at the Traktor site.

Is there nothing new under the sun?

Tags:  advertising, evil beaver

Google search results - new format

Looks like the Google search results page has been changed to deliver more traffic to different search types.  If you go to the page and search, links to other search types have shifted from text-only labels at top to a left-hand nav with a page rank-style feature.

This is what the old search results page looked like.

Smart thinking, Google.  This will lock in additional loyalty as users find Google search more useful - and also drive more traffic to local, the holy grail of search.

UPDATE:  Seems like they've been testing since 3/10 and for me, this format comes up consistently in Firefox, but never in IE 6.0...!

UPDATED UPDATE:  Barry Schwartz from Search Engine Watch says that the test is about "a month or so old."  I guess that's what I get for writing about something not in my core coverage area!  So when's it going to move out of beta and into production?  BTW I ran the same search (red sox) on Yahoo! and got an even more useful set of results - scores and schedules.  Nice.

PPPS:  Here's a link on how to make the results show up in your browser, from Google Blogoscoped.

Tags:  google search, new google search, local search

Do TV ads work? A quick test.

24 is one of my favorite shows.  I've been watching since season one and almost always catch it real-time.  This week, I've been thinking a lot about TV ads in preparation for the ANA TV Advertising Forum next week in New York.  So instead of flipping over to ESPN during the commercial breaks as I'd usually do (I'm not that into the WBC), I watched the commercials.  Here's what I saw:

1. Taco Bell, Chicken Caesar Burrito.  Toga jokes.
2. Universal Pictures, Inside Man.  Denzel's new movie.
3. AT&T + SBC.  We rule the world.
4. Nissan Titan.  You are inadequate unless you buy this big truck.
5. Lowe's, John Deere mowers.
6. Old Spice.  Gyrating, sweaty woman pitching deodorant.
7. Lenovo, Thinkpad tablet.
8. Mazda, sales event.  Lab coat guys.
9. Mercury, Milan sedan.
10. BMW, xDrive, x3 lease.
11. Cingular video.  Watch Hank Hill on your mobile.
12. Ford, big truck.  Buy a big truck and go emergency braking in the desert.
13. AMEX, M. Night Shyamalan. (60")
14. A History of Violence.  Now on DVD.  Ed Harris with scary glass eye.
15. Home Depot.  Install new floors so your parents don't scold you like a kid.
16. Dodge, Ram 1500.  Dumb & dumber.
17. Energizer, Lithium.
18. Minwax.  I hope they didn't just stain that table they're eating on.
19. Old Navy, stripes.
20. Nissan Titan.  Less about the inadequate thing.
21. Comcast, cable internet service.  Talking turtles.
22. Mercedes, 2006 M-Class.
23. Budweiser select.
24. Citizens bank.  Home equity loan app on the snowplow.
25. Diet Pepsi, Poker.  I don't recognize these guys from the WSoP, but I haven't watched for a few years.
26. Lenovo, Thinkpad X60.  Not sure what they're trying to say here.
27. Ford, F150.

That's a lot of commercials advertising a lot of different stuff.  I may not be the core audience, but for that menagerie of products and services, is anybody?  Here's my count by category:

• Automotive:  9 (5 featuring big macho trucks)
• Telecom:  3
• Home/improvement: 3
• Beverage: 2
• Movies:  2
• Computers: 2
• Financial services: 2 (although 1 was probably local)
• Personal care: 1
• QSR: 1
• CP: 1
• Apparel: 1

Look, some of this stuff may actually go together.  If we go with the "wisdom of the crowd" then let's assume that the 24 audience are core big truck drivers.  So some of the other spots, at least the creative, fit well - like the sweaty woman, poker, and King of the Hill.  But how, for example, is Old Navy relevant?  In 14 paid minutes of a 60 minute show (not to mention the in-show product placements), what do you think most regular people actually did?

1. Changed the channel
2. Skipped the ads because they were watching 24 time-shifted
3. Paid more attention to another media source they were multi-tasking with already
4. Intensely watched the commercials

Tags:  tv, advertising

WPP to acquire M80

The LA Times is reporting that word-of-mouth marketing firm M80 and WPP are about to hook up.  Makes sense.  In a recent Forrester research piece, I wrote that WOM is a channel that fits into existing campaign strategy.  More validation for BzzAgent's media channel model as well.

Who's next?  I've always had a lot of respect for Cornerstone out of NYC, back from the days when I used to get their samplers as a DJ in college.

Tags:  m80, wpp, wom, word of mouth

"Poor man's first class" gets legit

This isn't surprising - in consulting, we always referred to the exit rows as "poor man's first class."  So now that Northwest is charging for the seats, the phrase is justified.  This obviously has potential to get quite out of hand - as Jackie Huba states, "...but really, what's next? Inserting quarters to keep the overhead light on?" 

The management consultants are hard at work again at the legacy carriers, first removing blankets and pillows to speed boarding and free up space - then introducing fees for crappy headsets and 7-11 quality snacks - moving into "zone boarding" that's thwarted by all of the frequent flyers who get on early anyway - disallowing families with infants to pre-board - and eliminating stand-bys.

Why can't airlines try to improve profitability by improving customer experience?  Rather than taking things away, figure out how to make things better!  Last time I flew somewhere (Delta, ATL/BOS) - I was definitely an optimized revenue mile...as a thin profit margin hurtling through the atmosphere in a metal tube.  Contrast that with JetBlue, where I've almost always had a great experience - even when a flight was delayed for mechanical for 3 hours.  B6 makes it worth your while.  And they always smile.

Tags:  northwest, exit row, jetblue

What's missing from this picture?

Construction began on the WTC memorial yesterday.  I was in downtown Manhattan last week for the first time since 1995.  Obviously, eleven years later, things have changed.  Most of the people visiting Ground Zero on this Saturday morning were tourists for sure and mainly from outside the U.S.  It's nice to see that the area hasn't (at least yet) become an overly commercial or political place.  There were a couple of vendors selling WTC replicas and books, but on West Broadway away from the main focal point (follow the link to get the perspective on where my pic was taken, facing west).

Like November 1963, September 2001 has shaped culture through tragedy.  It's the unfortunate modern moment of which we can ask someone "where were you when..." and even in that open-ended statement could get a response on 9/11 in the first few tries.  I was with a friend Phoenix and we drove cross-country back to Philly.  Took the train back to Boston and could see columns of smoke, five days after the fact.

So - where were you when...?

P.S. Some new pics in my flickr stream from MoMA and some other random NY places (check the sidebar at right).

Tags:  wtc, ground zero

When did Google become a sieve?

Does anyone else wonder why secret stuff at Google has been leaking so much recently? 

First it was GDrive.  Then it was the 2006 financial target.  Then Google Calendar or CL2.

Inadvertent?  A result of hyper-growth and lack of controls?  Or for all you conspiracy theorists out there, a strategy to communicate bad news without having to communicate the bad news?  Alternately, is it a strategy to communicate alpha products to keep brand and stock momentum going?  Like the new beta releases that seem to last forever, this goes in the opposite direction - and techies are biting hard on every bone that GOOG throws their way.

Tags:  google, gdrive, cl2

Wait a second...all consumers don't prefer ad-supported video?

AdAge reports that 72% of respondents in a recent survey say that "they would be more likely to download a TV program in exchange for watching an ad."

What I want to know is, why isn't that number closer to 100%?  Do the other 28% not understand how to ffwd?  The 72% know they can just ignore the ads, even if they can't be skipped - they can just tune out for 30 or 60 seconds and then tune in to the content, or are multi-tasking anyway.

Advertisers should push for a guaranteed impression, using something interruptive like click to continue at the end of an ad.

As for pricing - at the [arbitrary] price of $1.99 per video, that's $1,990 per thousand viewers...but so many factors come into play like targeting and context that it'll be very interesting to see the rate cards on this one.

Tags:  ipod ads

Proof of what search marketers should already know

Seth Godin conveys "good news for Google investors" from a lesson learned with Squidoo and WWE Smackdown! superstar Rey Mysterio.  The other side of this coin is terrible news for Google advertisers - which smart search marketers should already know.

To quote Mr. Godin:  "...the efficiency of using google.com means that many people (perhaps most people) start their online journey on Google, even if they know the url."  I agree.

In a situation where your site comes up first in organic search results AND you are paying for a top paid position, you are paying for traffic you should have gotten for free.  For example, search for "bestbuy" or "circuitcity" on both Google and Yahoo.

Yahoo's decision to prevent trademark bids should help defend against not only guerilla hijacking but also aggressive affiliates (who should be following your policies prohibiting competitive keyword buying anyway).

Next time someone recommends that you buy your own search keyword to "protect your brand," consider the motivation - do the math - and determine whether or not it's really necessary.

BTW Squidoo and Rey Mysterio are both pretty cool, too.  You should definitely check them out.

Tags:  seo, sem, adwords

Rethinking positioning - are Ries and Trout still relevant?

Jack Trout and Al Ries are referenced in every marketing textbook for their work on the concept of positioning...which doesn't necessarily mean that everything they say regarding marketing is correct or totally on point.

A couple of recent articles on renaming Guatemala (Ries) and word-of-mouth marketing (Trout) have got me thinking about whether these marketing legends are still relevant in today's environment of media proliferation and technology adoption.

Ries makes some good points about why Guatemala should change its name, but misses in his recommendation.  Sure, many countries have changed their names in recent history, but as a result of government changes (Eritrea, Myanmar, Czech Republic, Slovakia, etc.) - not for marketing purposes.  Good counterpoint at Adrants (until Steve Hall hedges following a Laura Ries comment).  In any case, lucky for Mr. Ries, he didn't suggest this change for a predominantly Muslim or otherwise anti-USA foreign entity.  I don't understand the improper grammar at the end of Ries's article but I assume it is some sort of attempt at ethnic humor.  Difficult to take him seriously after this one.

On the other hand, Trout gets it right for the most part in his take on WOMM - but the [over?]reaction in the WOM community is quite heated - see Brand Autopsy and George Silverman.  Trout doesn't actually recommend against WOMM; he advocates using it as "another tool in your arsenal."  This echos Forrester's view that the most effective marketing is integrated and optimized for cross-channel media.  However, Trout misses the fact that despite a company's best effort to position its brand, it cannot control how a consumer will react.

The real key is customer experience.  Companies do not control brands and must understand "social computing" in order to thrive and ultimately survive.  Technology has changed the name of the game and that's why there's so much buzz about word-of-mouth marketing today, as its efficacy has improved dramatically.

So back to the concept of positioning:

• wrong, if you think it means a company can control what a consumer thinks
• wrong, if you think advertising alone can get the job done
• correct, if you think a company can offer a suggestion of how they should be perceived, then support that concept by delivering a relevant experience, meeting or exceeding consumer expectations.

The way that the concept was originally introduced in the 1970's was as part of marcom - not customer experience.  Maybe as a first step, these guys should start blogging to understand the nature of consumer-generated content/media/etc. and then update their concepts to become legends in 21st century marketing as well.

Tags:  wom, marketing, positioning, ries, trout

You decide: 1 Berkshire Hathaway or 231 Google?

If you had to guess, what percentage of investors in Google right now are "smart money" (vs. dumb money)?  I'm intrigued by corporate statements that seem to be driving recent changes in GOOG share price:

• "Clearly our growth rates are slowing..."  CFO Reyes, 2/28/06:  closes down 6.8%
• "I'll leave it as an exercise to you as to whether Google means $100 billion in revenue or valuation.''  CEO Schmidt, 3/2/06:  closes up 3.2%

This isn't guidance - no EPS estimates or financial results from product lines - just talk.  Do you think smart investors heard these statements and went back to their valuation models, coming up with new targets and changing their positions?

Probably not.

What struck me was a side link on the SJC Mercury News article - a pdf of the Google "owners manual."  Clearly modeled after the Berkshire Hathaway owners manual.  But the differences between the two - diversification of BRK vs GOOG in particular - are night and day.  Their websites are both simple, yet on opposite again:  brochureware vs. one of the most powerful tools in the universe.

If you had to decide, which would you choose:  1 share of Berkshire Hathaway Class A stock or 231 shares of Google?

Disclosure:  I do not own any BRKA or hold a direct position in Google.  Don't consider anything you read here as financial advice - even if you have some dumb money burning a hole in your pocket.  This post is provided for informational purposes only and does not constitute an offer to sell or a solicitation to buy any security or other financial instrument.

Tags:  Berkshire Hathaway, Google, BRKA, GOOG

monopoly - delivered

Source:  Wikipedia

Well, this game of RBOC monopoly started on January 1, 1984 and now at&t is only two (giant) steps away from reclaiming the entire board.  But the game has changed - technology has changed the  board from analog to digital.

Great article at Wikipedia for a trip down memory lane with the carrier you grew up with (more or less - both Southern Bell and South Central Bell are missing).  As for the carrier that the next generation grows up with...maybe the death star will survive, but the right answer maybe none of the above.

Although the term "monopoly" carries a negative connotation today, it's clear that the economic natural monopolies evident in network industries are not mutually exclusive of a Laissez-faire market structure.

Tags:  at&t, bellsouth, ma bell

iPod hype-fi

When are we going to see a really useful iPod product extension?  E.g. Bose already makes a great speaker unit.  A few items on the wish shortlist:

• Wi-Fi
• Flash drive with MEGA capacity
• Phone integration

Until one of these happen, can we stop biting on the hype every time Apple gives a head fake?  Maybe if MSFT's Origami meets expectations, it will kick off a new revolution in CE (and give Redmond new life).

UPDATE:  we got a hi-fi to test out in the office.  It's big.  Not as aesthetically pleasing as my Bose SoundDock.  I turned it all the way up - good bass response but the highs are muted.  I'd recommend you spend $50 less and go with Bose unless you're a total Apple freak or are planning to build a custom entertainment unit and slide this in next to your Mac Mini - in which case, you're a total Apple freak.

Tags:  ipod, apple, hi-fi, origami

Will city-wide wifi survive lawsuits?

Great news that cities like Philadelphia, San Francisco, Chicago, and Boston are on the verge of setting up city-wide wi-fi networks.

We live in a lawsuit-happy world.  Technology is an easy target because it is often difficult to understand.  It took about six weeks between the Northwestern University announcement of iPod earbuds causing hearing loss to the first publicized lawsuit against Apple.

With Google potentially involved in SF's wifi buildout, being the world's most recognized brand, you can hear the ambulance chasers getting tuned up there and in cities across the nation.  Hopefully cities and tech companies are prepared to legally defend against issues such as:

• Health risks
• Access equality
• Competition from incumbent telcos

It will be interesting to see this play out, as wifi is a public win for politicians, who get to look progressive, and consumers who own devices that will have greater access.  But the majority of urban consumers - people who have a vote, don't own wifi devices, and may not see a meaningful tax break from a privately owned and operated network - may have a valid Luddite-style opposition movement and rightly so.

Tags:  public wifi

Show me the machinima

Another feature in the March issue of Wired discusses "rotoscoping" - the process of painting over live actors to create cartoon characters with realistic movement.  Charles Schwab had used this treatment in 2005 and I think another FS company has been using it recently (Citibank?). 

It's great to see more creative treatments making their way to the 30-second spot.  After Blair Witch, we saw a lot of documentary-style spots, like Toyota's recent Tacoma ads.  We also did manga-style campaigns at PUMA for our 2002 football advertising.

As gaming goes mainstream - with corporations finally wake up to the huge untapped potential therein - it's just a matter of time before we see more machinima-style TV ads.  It would make perfect sense for brands that have crossover with a hardcore gamer audience - like Mountain Dew, Nike, or Scion, not to mention the console manufacturers.  Some companies have gotten close - I remember a Volvo S40 ad with some in-game footage - but there's an execution using a FPS approach out there just begging to be created (that doesn't promote a video game).

Oh, and if you're reading this and can point out examples where it's already happened - please post links!!!

Tags:  advertising, rotoscoping, manga, machinima