Whose Ad Is It Anyway?

Investors and company executives are cheering of late for the resurgence of Facebook above its IPO price from about a year ago.  Mobile growth is the story at Facebook, and many are pleased with the associated revenue progress.  I wish everyone well tallying their riches.  I am still not sure how much significant value is being created, particularly as it applies to the company’s core advertising business.  And hey, I was a very early believer in this business model and all the promise it held as the definitive interactive media platform of a generation — kind of like the first time as I kid when I saw a movie on HBO, a complete movie on television with no commercials, I just  knew something good had happened and someone was going to get rich as a result.  Uh, that was for taking the ads away.

If you are active on Facebook, particularly mobile, you probably weren’t surprised by the earnings improvement.  You’ve seen the ads — oh, have you seen the ads — you can’t miss them, right there in your news feed, as intrusive as the interface mandates.  Recently an ad for a salacious French maid’s costume was offered to me with the following copy — pretty much full screen — and I was kindly given the opportunity to Like the page:

“This five-piece At Your Service set from Dreamgirl comes with a sexy babydoll with apron, maid’s hat, ruffle back thong, and feather duster.”

Curiously this clever bit of sponsored media appeared above a friend’s timely post on racism and below a post from a financial journal I follow on how to avoid manipulated options.  I suppose under certain circumstances this might be considered targeting, but I can honestly assert I was not in the market for such an outfit, either for myself or as a gift, nor had any click stream I created left a trail for the behavioral targeters.  Perhaps they could have offered me a nice bottle of Bordeaux, which would have made sense since I am a wine enthusiast and often post articles about my favorite varietals on Facebook, and I’m guessing their database knows I have a Pinterest board on the subject of value excellence (“Good Wine, Good Price“), but no such luck.  I am a middle-aged male, heterosexual, and married, so maybe that’s the profile they sold to the advertiser.  I would guess that the CPM (in ad-speak, that’s “cost per thousand” impressions, where the M is the Latin numeral) was very, very low, offset by volume that was very, very high.  Again in ad-speak, we sometimes call that “dollar-a-holler.”  In these cases, maybe a nickel.

Just so it’s clear that I am not picking on Facebook, my friends at AOL Mail where I have maintained the same email account for about a quarter century, now offer a curious feature: After I send an email, the confirmation screen is filled with singles looking for a date.  It’s nice to see that the advertiser is not presumptuous; sometimes they offer me women and sometimes men.  The fact that the advertising delivery system is ambivalent toward my preference is unusually progressive.  It also is quite genially unconcerned that my wife continues to see my email send pages resolve to these artifacts on our shared monitor.

Note to New Media Companies, with love, from Old Media Companies: Some things have not changed, including that there are still four key constituents in the advertising equation:

1) The manufacturer or seller of products and services.

2) The ad network or agency.

3) The media delivery vehicle or platform.

4) The viewer of the ad.

For full value to be created, all four have to be satisfied by the results of the supply chain.  For real ongoing business, it is most essential that #1 and #4 are happy, so that #2 and #3 can speak to a job well done.

Let’s look at all four in the French maid and available-singles ad examples and see who is happy working backward:

4) Me: Not happy, except that it gave me an idea for this story.

3) Facebook and AOL; Happy (except if they read this post); they got paid by #1.

2) Agency or network: Happy; they found plentiful inventory in the form of my news feed and mail page, and they also got paid by #1.

1) Advertisers: Should not be too happy; they paid the bill, and I am making fun of them for it.

So the owner of the bill and the receiver of the message are not happy (#1 and #4), but the middle-folks are just fine with it (#2 and #3).  Oh, they’ll tell you they are working on it, improving their targeting technology and all that, but they aren’t losing sleep, because they got paid.  They should be losing sleep, lots of it.

There is also an implicit fifth constituent, the expanded community surrounding the nucleus of the supply chain, particularly of significance in our interconnected world of social media.  When an offer is useful and enticing, like many of the tested e-coupons on RetailMeNot, pleased customers will gleefully pass them along.  That’s free evangelism from existing fans to unlimited prospects, making ad dollars work even harder through leverage.  When ads are garbage, they are terminal, mercifully so.  In fact, bad-vertising can hurt a brand through negative association — poor word of mouth is difficult if not impossible to combat.  Wonder if your would-be customers are laughing at you?  You may not know until the community turns on you, then it’s costly to recover, or perhaps too late.

When advertising works — the right, relevant message in front of the right, engaged human being — it can be an excellent experience.  Absent concerns about privacy, you might embrace the very respect involved in not having to see ads you don’t care about.  But all this posturing about collecting intelligence on customers to deliver better leads — how come I’m still getting ads for reverse mortgages on My Yahoo homepage, which has every financial feed coming through loud and clear to tell them I’m a reasonably well heeled owner?  That page is still sold as remnant inventory (in ad-speak, leftovers) at bargain-basement prices, maybe less than the French maid costume or the singles ads.  Some money being left on the table there?  They’ll probably tell you no.  They would be wrong.

As the national dialogue on privacy invasion is reaching fever pitch, even POTUS has been dragged into the ruckus with a defensive “Don’t worry, we respect you while we protect you” mantra.  That dialogue is likely to resolve itself in the dialectic, because it is a civil rights discussion grounded in our cherished democracy.  I actually think that problem is going to get solved before the ad targeting starts to get it right, because there is too much money at stake for annoying and disrupting us that no one really wants to give back.  Like the story goes, always follow the money — the real today-money, not the theoretical long-term-value, someday-we’ll-get-this-right money.  Why would you want to do that?

Maybe I’ll just watch HBO.  The price has skyrocketed, but the shows are pretty good, and it is still ad free.  I am always willing to pay for that.

HBO Image

The $20 Brand Bond

Amazon LogoLet’s talk about lifetime value of a customer for a few seconds. I use the term “a few seconds” purposefully.

Recently I bought one of those discount vouchers for a neighborhood deli, where you pay something like half of face value and then cash in full value when you’re at the restaurant. This one wasn’t from Groupon or Living Social, but from Amazon Local. When I went to cash it in, the deli was out of business. Tough times always for restaurant retail. It happens. Went to another place for lunch. Oh well.

I got home that night, went to the customer service web page for Amazon Local, found the template under Contact Us, and submitted a one-sentence email notifying them of the event. How long did the response take? Less than a minute. Full credit.

Yep, Amazon Local “bought” this voluntary endorsement for a whole twenty bucks. Plus my ongoing loyalty. My lifetime value to Amazon the Brand just increased a good deal more than twenty bucks, perhaps a hundred times that, maybe more. Why? Well, first because they respected me and my time, but more so because they laid the pipe to assure me that if something bigger ever needed to be addressed, I could count on them.

What did they do right internally to cause this function to be enacted externally? For one, they fully empowered their staff, someone in a call center likely on the other side of the world. There is no way in that brief turnaround their staff person had to ask anyone for permission to do anything. They saw an issue, they jumped on it, case closed.

We look for WOW THE CUSTOMER moments in business all the time. We spend hundreds of millions of dollars on advertising to get someone to sample a new product or service, so that somehow a WOW THE CUSTOMER moment can occur. This one cost an entire twenty-dollar bill.

Compare this experience to another I wrote about earlier this year, where try as I might, I could not get one of the largest retailers in the world to help me locate a $5 replacement part for a thousand-dollar appliance I had purchased from them. That retailer competes with Amazon, probably does not know it, and will never get another dollar from me. If you have a moment, go read the transcript I shared from that interaction. Coincidentally, I happen to have shared that post with a rising star at Amazon back when it happened who was aghast when he read it. He had no idea of the contrast to come.

This is not meant to be a lionizing of Amazon. Full disclosure, they were a minority investor in my previous company and proved to be a formidable competitor, daunting in many respects, not the least of which was their near-rabid obsession with precision, time to market, and transaction perfection. They had vast resources to call on that were not available to me, but they used them wisely and never skimped when it came to the customer experience. That is a big part of how they got to be best in class, and consistently one of the top performers in the Internet Retailer Top 500.

Germane to Amazon’s perfection is a mandate of setting a customer service standard that is so extraordinary and so rare it can seem financially irresponsible to emulate—so much of net margin goes right back into the expense line to serve the customer. Market analysts often shiver when they report on Amazon, wondering how their eye-popping trading multiples can last, with so much volume but so little relative profit. Amazon seems to pay little mind to these analysts, instead worrying instead about customers. That leaves them no choice but to focus on lifetime value, calculating it in complex equations with net present value back to the reinvested capital that most others would probably harvest.

How tempting it is to consume the fruit of that harvest, but harvest has to come each year, and that is why we focus on brands. Here I lionize the customer service commitment as an essential and grounding component of the brand promise. It is the shortest business case study in the world, yet almost every company you encounter gets it wrong.

A service culture in the information economy puts the CEO at the bottom of the hierarchy and the customer at the top. The customer is the boss. The people closest to the customer, individual contributors like those in customer service, are the ones who interact with customers. They make or break your brand. How much discretion and authority are they usually granted? None. How much should they have? As much as you can pile on. They own the customer relationship, so they own your future.

Go on, hire the highest paid consulting firms and retain power player ad agencies. Hold multi-day off-sites for brainstorming retention strategies. Give motivational speeches about reframing your mission and vision.

Or just be really, really, really appreciative of your customers. Love your customers, every single one them, embrace them as strategic imperatives, bonds that build moats.

What’s the ROI on world-class handling of those who frequent your brand? You tell me.

Why I Love LinkedIn

LinkedIn 200 Million MilestoneLinkedIn recently celebrated a milestone, surpassing 200 million member accounts, which they announced earlier this year. Shortly after that announcement, I received an email from LinkedIn congratulating me on having one of the 1% most read profiles on their social network. For a moment I felt like a big part of the celebration, until I remembered that put me among two million others. Curiously, I seem to know most of them, who have not hesitated to share this bragging right. Apologies, I guess I just joined them!

But that’s not why I love LinkedIn. I love LinkedIn because they have created a fantastic online service. I love LinkedIn because they do clever marketing like telling me unprompted where my profile ranks, which makes me feel good about being part of their community. Last year they sent a similar email thanking me for being someone early to their party, signing up in their first year as an early adopter (I tend to do that sort of thing, but very few beta programs ever thank me, especially a decade later). I love LinkedIn because I am convinced that they are eating their own dogfood, which probably means most of their employees love LinkedIn more than I do.

Here are some other reasons, with numbering left open so I can add more things as I think of them, and you remind me of others:

1) They are transparent. They say what they do, and don’t cause you to think otherwise. Your data is being mined by people you want to mine it for the reasons you want it mined. If you don’t want it mined, you don’t post it.

2) They provide a valuable service that brings me business. It’s my network, I built it. They facilitated my actions. I have hired talent off the site, my former head of Human Resources has used it to identify candidates for open positions, and I have been sourced for consulting work as well as investment opportunities, almost always by people I know and with whom I can quickly build trust. It works.

3) They don’t violate my privacy and I understand their privacy controls. They tell me clearly what they are doing with the information I give them and let me easily block what I don’t want to share either through menus or suppression. I know what I get myself into at all times and I am cool with that.

4) Their ads are relevant and not intrusive. They don’t get in my way. They don’t annoy me. I would advertise here if I had a product or service relevant to segments of the network.

5) I don’t currently subscribe to their premium service, but I might. The price is reasonable for what it offers. The rest is free, and I like that a lot, especially because they respect me in spite of my free use. I am part of the ecosystem and their multiple revenue streams. They don’t discriminate and treat me worse than a paid member because they need all of us active and happy.

6) The site helps me teach recent graduates how to think about presenting themselves and creating a resume. Come to think of it, it helps me do that for people with thirtysomething years of experience. Focus is good.

7) The site forces me to think about keywords that matter to me, which forces me to think about the science of keywords, which is the backbone of internet search.

8) It has been an awesome vehicle for growing my blog. I suspect the same will be true when it is time to release my book.

9) The community self polices. Just try posting something polemic on LinkedIn. The community will remind you this is a place for business, not politics. In fact the community is so dynamic on LinkedIn, it makes the whole thing work, a place of relevancy for smart articles, worthwhile referrals, and relevant personal milestones that matter to readers as much as writers.

10) It is more of a cable channel than a broadcast mishmash. I find useful, targeted business information posted by individuals in my network every day. The weekly email summaries use well-designed filters to point me to posts that interest me. The group subscriptions are equally helpful, and can be personalized for volume.

11) The software is robust. It is solid on all my systems and browsers. It is not an open platform which makes their life easier, but because it doesn’t need to support so many third-party APIs it remains remarkably stable. The mobile app is intuitive and efficient, especially handy on iPad.

12) I am not overwhelmed by the time commitment to get value from LinkedIn. I can use it, not use it, come, go, whatever, and it is always there for me. It takes the right amount of time to be useful, and is seldom a frivolous waste of time. It lets people stay active and visible even when they are busy and engaged, so opportunities don’t slip by because of timing or assumptions. Again, I think a lot of this has to do with the community self-policing. It’s a big enough network to have boundless value, but not overcrowded with unnecessary distractions.

Yeah, bravo!

Why did I write this post about LinkedIn? Because since the holiday season, I have been overwhelmed by all the online and mobile brands I don’t love, I’m not even sure I like, and some I have simply abandoned. While that was going on, I longed to present a model of a brand that was getting better in spite of its success. During that same period, my network on LinkedIn led to a whole batch of advantageous stuff, not just for me, but for a lot of people I know. I don’t think it is a coincidence. Good brands are created when good people create and embrace good products.

People, Products, Profits—in that order. The formula still works, at least for me.

I write this entirely unsolicited endorsement for LinkedIn freely and without interest. I don’t currently own the stock, nor do I have an opinion about its valuation. This is about loving the company and its product, not the equity. I don’t know if you can love a stock, because your motives are pretty limited, but I do know you can love a product, a brand, even a company. Hopefully they will love me back and this relationship can continue for a spell.

If you know someone who for some reason has not yet thought it worthwhile to be on LinkedIn, feel free to pass along this post. LinkedIn is a good place to do business, with a solid team running the show.

Customer Disservice

Why do companies with big brands and tremendous momentum go out of business? One reason often discussed here is lack of innovation, which is often opaque, quite difficult to grasp when it is happening because you are in the midst of it, even enjoying a final gasp of success. Another is much easier to understand and very definitely within control—when you stop loving your customers.

Here is a summary of a recent actual customer service call with a well-known company in which I was the very real customer.

ME: But the replacement knob you sent me does not fit the appliance.

CUSTOMER SERVICE: It’s the one you ordered.

ME: No, not exactly, I called and gave you the model number of the appliance and told you which knob was broken, and this is the one you sent me.

CUSTOMER SERVICE: Well, it should fit. Did you push hard on it?

ME: It does not fit, so pushing harder will only break it.

CUSTOMER SERVICE: Maybe you don’t know how to install it. Would you like us to send out a technician? I need to advise you we bill on site service visits at a minimum $95 per hour.

ME: I don’t need a technician. It’s a $4.75 plastic replacement knob to turn the appliance on and off. It does not fit on the metal stem.

CUSTOMER SERVICE: Sir, if you don’t want me to schedule a technician to come to your home, there is nothing more I can do.

ME: Yes, you could send me the proper replacement part. I actually looked up the appliance online and have the serial number for the part I need. It differs from the one you sent me by two digits.

CUSTOMER SERVICE: That’s not possible, they are all the same. If you are not able to install the one we sent, how do you expect to install another one?

ME: I’ll take my chances that the right part will fit. Can I send this one back and get a replacement please?

CUSTOMER SERVICE: We don’t refund parts you ordered incorrectly that become open stock. You can order another one if you want, but you’re still going to need a technician to install it.

ME: You do understand this is a $4.75 part for an appliance that cost more than $1000. How do you expect to stay in business when you treat customers like this?

CUSTOMER SERVICE: Sir, we’ve been here for a hundred years and we’ll be here for a hundred more.

Then he hung up on me. Really. Somewhere there is an actual recording of this call, for training purposes.

Just so the damage is clear, we have a house filled with appliances from this retailer. As these need to be replaced, none will come from that retailer. The next house will also have none. How much did that $4.75 part and the mishandled call cost the seller? The future lifetime value of this customer. I know from having told this story to more than a dozen friends that I am not alone.

One of my very best former senior executives used to start each morning in our customer service department with the kick-off mantra: “Remember, our business would be so much better without all those pesky customers. Never forget that, how happy our days would be without them.”

No Service Is Not ServiceOf course he was kidding, but just saying those words aloud every morning to our trusted heroes on the front lines reminded them how important they were to our success, or how much pain they could cause if they forgot what they were there to do—help keep our customers our customers. We would consider every inbound call a gift, an opportunity to repair any aspect of our relationship that might have been violated. Without our customers, we could not exist, and without the opportunity to hear and fix their problems, we knew we would lose them.

No one in a customer service role likes to get yelled at all day, but what’s the alternative? When the phone stops ringing and the emails stop coming, it is seldom because you are doing everything right. It is usually because the customers have been trained not to contact you or they simply aren’t there anymore. Not exactly a great alternative to customer complaints, is it?

Recovery, or “the art of the save,” is the process by which a negative becomes a positive. Every downside event experienced by a customer offers the single best opportunity you have to show your love. When you empower the people on your front lines to transform any possible negative experience by a customer into an opportunity to bond with them forever, you not only keep their business, you have a shot at recruiting an uncompensated evangelist. Solve a customer’s problem and exceed their expectations, lifetime value continues and they might even go to bat for you with their friends. Ignore or insult them with as many alternatives as there are in the marketplace, the tar pits of antiquity offer your final resting place.

Beating back the challenges of creative destruction is hard enough work. Is being nice to the people who pay your bills really that hard? If it is, get ready to join the march of obscurity and obsolescence. There are so many ways to lose what you’ve built and so few ways to win in the long run. Take heed and don’t lose the game for the things you can control.

Any presumption that a company will last forever defies logic and history. Don’t give your employees reason to think that perpetuity is ordained or soon enough you’ll sink together in the ooze. Love your customers, every single one—those who complain the most are probably the ones who control the keys to your survival.