Exploring Marketing Technology

Opinions are all my own

  • Scrutinizing the long tail of Halloween

    Jon Krouse is in a perfect position to help me test a hypothesis about long tail behavior. A co-founder of OnMilwaukee.com (a rare success story among regional online communities), Jon recently joined BuyCostumes.com. This is the world’s largest online retailer of costumes. As you can imagine, the month of October is major crunch-time for him.

    Nonetheless, when I instant messaged him the other day to see if I could test an assertion from Chris Anderson, Jon was willing to help. Anderson is a Wired editor and most notably the author of The Long Tail. He contends that for companies with virtual inventories, just about any item they post for sale — no matter how obscure — will sell (i.e., be downloaded for a price) at least once every three months or so. Using sales statistics from Rhapsody.com, he made it sound like this was nothing short of an immutable law.

    That’s for virtual inventories. Anderson admits it’s a little trickier for companies with real ones. That’s the case with BuyCostumes. I’ve visited their warehouse, which stores over 13,000 very real SKUs. Yow!.

    Companies like this must mark down some items teetering at the tip of the tail before they finally sell. Carrying costs are a constraint that virtual inventory merchants simply don’t have. But the fact is, even real inventory items sell with some price manipulation. Or so Chris Anderson contends. I wanted to know for sure, and asked Jon.

    He reported that minor adjustments to price do indeed make the most obscure costumes and accessories sell. Sure, there are the rare dogs, but priced properly, nearly all SKUs generate profits. This is huge, because the number of items offered is a precedent for the industry.

    Imagine how many items a bricks-and-mortar costume shop can physically stock. Now consider that at one time quite recently, conventional wisdom was that no one wanted more selection than could be held on a really well-stocked costume shop’s shelves. Or, for that matter, in music store’s bins, or along a bookstore’s stacks.

    The web, with its power to categorize, search and suggest, has exploded that myth. Which would mean little to a company like Jon’s if the demand for these products wasn’t so large.

    How many sales are anticipated in the next couple of weeks for this humble little online costume shop?

    “At our busiest, we’ll be doing 20,000 orders a day*,” Jon reports. Tune in November 1 to see a photo featuring the costumes that my wife and I chose and wore at Jon’s Halloween party, the first in his and Peggy’s new home. 

    *It never hurts to advertise. BuyCostumes has major private label deals with major retailers, plus an effective search engine optimization and pay-per-click advertising strategy in place.

  • Commerce sites ignore branding at their peril

    Real estate on a web site is precious. That’s one reason why many e-commerce sites cram as much merchandise as possible into the home page. You can’t blame them. Shoehorn one more offer onto the page and you see sales of that item go up. But does this practice erode overall sales?

    The research of Kevin Hillstrom looked at overall sales from pure selling sites (example) vs branding sites (example) vs hybrids that split the difference (example). The sites evaluated were those taken from the largest businesses represented in the Internet Top 500 retail sites.

    I was most interested in how hybrid sites would fare in the study. Although these hybrid sites featured home page offers, they also used much of its real estate to reinforce the brand. White space was more common, and often these hybrid sites didn’t even require you to scroll down to take in the entire home page.

    A business that regards its e-commerce site as nothing more than efficient catalog would argue that the hybrid site approach is misguided, since it is not focusing enough on specific offers. But do the numbers bear this out?

    The conclusion from this study says no, although it does find weakness in a pure branding approach to the home page:

    It appears likely that a hybrid strategy is most likely to maximize the net sales of each visitor to the website. Selling sites may overwhelm visitors, while branding sites may not present enough merchandise to entice consumers.

    Many have preached this hybrid approach, but it’s nice to see this validation. It only stands to reason that consumers need to know two things before they buy:

    1. What are you selling?
    2. Are you to be trusted?

    Raising levels of trust, through your site’s branding, is the best way to maximize sales in an environment where competitors are only a mouse click away.

  • New hypervideo linking cheers news junkies and marketers alike

    Imagine that you’re on a web site, watching a video of a talking head. The speaker is talking about something that interests you, but it’s hard to get past the frustration of wishing you could ask her to explain a point further before she goes on to the next. Whereas the rest of the web experience is more of a dialog, with us asking questions by clicking on hypertext links, this video is one way only. She talks, we listen.

    Now imagine you can click on a section of the video to drill down to another video clip or web page, offering more information. @View Magazine calls it hyper video drilling, and touts it as a way to add deeper meaning and clarity to brief news videos. In another timely application, politicians can support their sound bites on their sites with supporting content. And advertisers and online marketers are, of course, the other big winners in this new web protocol.

    If I can boast for a moment: I should say that with the news of this innovation, I experienced for the second time this week a “We’ve been scooped!” moment.

    It’s the sensation that my team’s recent brainstorms have already been taken and run with by others. Far from being disappointed, I’m thrilled. It means we’re thinking the right way and finding creative ways to bridge the needs of both our clients and their audiences. The marketplace is validating our work.

    Moreover, these widespread introductions of new technologies* are paving the way for acceptance by a mass audience.

    Take the example of this hyper video drilling: When we were brainstorming about how wonderful it would be to click off of the talking head videos we were building into a site, and thereby see supporting documentation (in this case demonstrations of the technology described by the speakers), we knew we could build it pretty easily in Flash, but run the risk of it going underused. Or worse, it could confuse unfamiliar users!

    Awareness of new user interfaces is notoriously slow to grow.

    Think of the hypertext link: It’s a fundamental benefit of the web, but it took a while for the average web user to fully recognize that some text on a page can be clicked on to go somewhere else (those readers under the age of 30 need to talk to your grandparents to fully grasp this sad fact).

    Same goes for clicking off of videos. I’m thrilled that this is being tested and talked about widely. It’s clearly the next step in the evolution of online video. And it leaves to groups like mine the thrilling opportunity of how best to leverage this new web convention.

    *The other incidence of us being “scooped” was discovering that our ideas exactly — and I mean to the letter — had been accomplished. The idea was how to express visually and with movement and “drillability” the connections in an online community such as Facebook. It’s demonstrated in this video (it loads slowly — be patient), of a visual browser created by UC Berkley Ph.D. students Jeffrey Heer and Danah Boyd. Amazing stuff, and encouraging.

    Legend has it that the telephone was invented simultaneously by at least two labs in two countries, and similar innovations have had similar simultaneous origins. If I can be indulged a little more bragging, I’m encouraged that the marketing technology “lab” I’m affiliated with is working at solving the right problems at the right time.

  • 37signals has made a splash by keeping things simple

    A recent post on the 37signals blog helped explain how their project management product was born: Turn the tables on that petty tyrant MS Project. Everyone I’ve talked to who uses Project has the same complaint. It gets the job done but it’s painfully complicated.

    The Chicago-based 37signals decided to do something about this complexity and created the award-winning Basecamp. It’s a smart strategy. Users occasionally need to push the limits of their software, but far more often, they just want to get their work done.

    I was reminded of this as I had dinner tonight with a friend who has recently taken the plunge and bought an iMac. After working with nothing but PCs, his response was almost comical: “What have I been missing all these years?!?” On the Apple site they list reasons for “Why you’ll love a Mac.” The first: It just works.

    We all pine for the day when something actually gets simpler instead of more complex. Those who deliver simplicity and still allow us to get work done win our hearts and our pocketbooks.

    Is it any wonder that the biggest threat to email marketing — if you want to call this new, complementary tactic a threat — is something whose middle name is simple? Really Simple Syndication, known more commonly as RSS, is catching on because you don’t have to fill out a form, you don’t have to open an email program, and you don’t have to go beyond reading headlines, should you prefer not to. Like the iMac, RSS just works.

    Read the 37signals blog entry and see if you agree: The Davids of the world are continuing to win their battles against Goliaths, especially if they stick to what’s simple. While you’re at it, take a look at some of the blog’s other entries. This is one of the best “corporate” blogs I’ve come across, if you can call it corporate. These folks really know how to use mildly subversive content to drive home points that also happen to advance their brand. They’re just themselves, warts and all.

    Simply refreshing.

  • Selling policy and teaching law on virtual islands

    One thing in particular strikes me as extraordinary about Second Life, the online community game that stretches the definitions of both community and gaming. As I’ve mentioned before, I’m most impressed with its demographics. Second Life’s 750,000+ “residents” are older than most online gamers, and much more evenly split in terms of gender. Their communities’ inhabitants are much closer demographically to the real world, and most would probably tell you they aren’t playing a game at all. They’re simply … living.

    So it should not be too surprising that a real world recording artist has given a concert there (Suzanne Vega) and a real life presidential hopeful has campaigned there (former Virginia governor Mark Warner).

    These online community firsts were reported in this week’s excellent On The Media podcast / NPR broadcast. And although they are impressive, I think you’ll agree that the online appearances of trailblazing musicians and politicians are a little too “fringey” to suggest further marketing possibilities.

    Then, a few hours after hearing that podcast, I read more details about how Harvard is teaching a law course on an “island” that it has purchased on Second Life.

    Yes, one way you can take CyberOne: Law in the Court of Public Opinion is in a virual Second Life classroom. The course description explains that it is, “A course in persuasive, empathic argument in the Internet space.” Students will be, “Studying many different media technologies to understand how their inherent characteristics and modes of distribution affect the arguments that are made using them.”

    What separates this genuine taste of things to come from mere headline-grabbing gimmickry is the way the subject of study actually becomes the medium of discourse:

    “Students will be immersed in this study through project-based assignments in which they will be using these technologies to make their own arguments.” [Emphasis is mine.]

    Having learned about using this medium within the medium, these students will be ready to help the future Mark Warners win real votes in virtual spaces. And if you can sell policy, you can sell a heck of a lot of other things.

    Instead of businesses spinning their wheels trying to set up things like MySpace profiles for their brands, perhaps they should start looking at creating Second Life avatars for their brand spokespeople to use to polish their online persuasion skills. If done right, these businesses could find prospects who are closer to the demographics of their customers, and much more willing to hear what they have to say.

    NOTE: Another recent piece on Second Life is in the Wall Street Journal. Read about how clothing designers for this online world are creating and selling fashions designed to turn avatar heads.