Exploring Marketing Technology

Opinions are all my own

  • Sharing is good, but only with a few hundred of your closest friends

    Metcalfe’s Law says that the usefulness of a network grows exponentially with its size. A recent New Yorker article by John Cassidy (pp 50-59, 5/15/06) pointed out that if this were the case, MySpace would be far more useful than Facebook. My calculations are that it would be about 100 times more useful.

    MySpace has 70 million members. Facebook has 7.5 million.

    However, if usefulness is measured in activity, you can’t get much better than Facebook.com. Two-thirds of all members are on the site every day, and they spend an average of 20 minutes there!

    If “stickiness” isn’t a measure of usefulness, consider this fact. Cassidy reports that since a recent Facebook policy change, members can upload an unlimited number of photos to their Profiles. Boy, are they enjoying that free ride! 

    The volume of photos added to the site is unsurpassed anywhere on the web. One and a half million photos are uploaded to Facebook every day!

    Other sites, most notably Yahoo’s Flickr.com, also have members, and unlimited uploading bandwidth. So why isn’t Flickr the leader? After all, it has far fewer restrictions to membership (just a Yahoo account), and far more open sharing between members (anyone can see everything).

    Here’s a hint: That’s the explanation. Cassidy suggests restrictions add value to this type of network. Who wants to share really interesting photographs* with everyone in the world?

    Unlike MySpace and Flickr, Facebook is a gated community. Only if you have an email address from one of the 2,000 colleges and universities it recognizes can you get in and establish a profile. And even within its walls, there is limited sharing of profile information between members who don’t designate each other as friends. Its very exclusivity encourages sharing.

    * Speaking of interesting photos, many have discovered that you can have a fun, if useless, online experience by going to Flickr.com and searching on the tag “interesting.” But it’s a pain to browse through pages with very limited numbers of thumbnails on each. I discovered this cool way to view 500 of the most interesting photos of the day — and any other day you specify. Thank you houserdesign.com for wasting more of my time!

  • What monkeys can teach us about offers and pricing

    Earlier this month, research that I had come across a year ago, in The Economist, received additional attention in Seed. This study of the economic behavior of capuchin monkeys suggests that the human response to various pricing strategies has been in our DNA for a very long time.

    When these monkeys were trained to use special shiny disks as money (which could be exchanged for pieces of their favorite fruit), they tended to behave with this cash in exactly the same ways as us humans. In fact, looking only at the data, you would be hard-pressed to differentiate a human consumer from one of these monkeys.

    The research sheds light on behavior that marketers have puzzled over, and exploited, for generations. These include:

    Why are “premium” test offers so much more likely to out-pull non-premium packages in direct response, even when the price of the offer covers the cost of the premium?
    Answer: We all love getting a free “bonus” with our purchase.
    Why are gambling games with some of the worst odds, such as lottery tickets and slot machines, also among the most popular?
    Answer: They give the player small rewards more frequently, and keep our losses incrementally small.
    Why are bonds more popular than stocks, in spite of the latter always performing better over the long haul?
    Answer: We are loss-averse, and would rather guard what we have than take short term risks for long term gains.

    What do I mean by loss-averse? Human experiments in game theory have repeatedly shown that in two scenarios — one where (for instance) we lose half of our transaction every third time we trade, and another where we double our transaction every third time we trade — we tend to choose the second set of trades more often.

    Even when the equation is altered significantly to favor the first set of trades over the long run, we still favor the occasional free prize over the less likely loss. It’s simply human nature. Now we know the same rules apply to capuchin monkeys. Go figure.

    Parenthetically, there is one other way that these monkeys seem to be behaving a lot like humans. Last year I read an account of this study in The New York Times. There I read that these researchers witnessed what was “probably the first observed exchange of money for sex in the history of monkeykind.” Keith Chen, the Yale economist behind this study, said that he noticed the exchange out of the corner of his eye. Although he wanted to think skeptically, that the trade was coincidental, he conceded that “The monkey who was paid for sex immediately traded the token in for a grape.”

  • When is an email click-through not a click-through? Think “unsubscribe”

    When is an e-mail click-through not a click-through? When they’re telling you to kiss off!

    It’s hard to believe it’s been nearly a year since I had lunch with my friend and long-time career doppleganger, Melinda Krueger, and she told me about her latest email metrics discovery. It was a way to take into account the click-throughs that people register from your emails when they are in fact clicking through to unsubscribe.

    She described it, and it made perfect sense. Melinda’s formula in many cases would take meaningless data and actually tell us something. Specifically, it measures the power of a specific offer or message to cause a segment of your email audience to decide that enough is enough.

    She was thinking of calling it the DI, the Disaffection Index. Personally, I thought something a little more dramatic was in order for a metric that could enter the email lexicon. I suggested, because it measured their very last click-through with you, the LCI — the Last Click Index.

    She thought otherwise, and DI it remained. Do read this article, and the other articles and advice that Melinda provides as MediaPost’s “Email Diva.”

  • Crunching the numbers can expose myths

    A recent article in the New York Times Magazine’s Freakonomics column, and one of my favorite books of the year, both remind me that a careful examination of data can dispel long-held myths. Neither is directly related to a particular marketing challenge. But they both inspire me to continue to goad my clients into thinking beyond the obvious. We can seize a strong competitive advantage by assuming nothing and testing our premises whenever possible.

    The Freakonomics article is ostensibly about soccer and an odd correlation between player excellence and the month that player was born. In analyzing data about the birth months of some of Europe’s best soccer players, it was found that they were born far more than you would expect in the first three months of the year. When researchers looked deeper, they realized that a logical explanation is that children born in these months were exposed to more months of coaching in their schools — more repetition, more chances to excel.

    It suggests that the power of the Two P’s of practice and passion — as opposed to simply having “raw talent” — is far more important in excellence than is commonly believed. Thus the title of the Freakonomics article: “A Star Is Made.”

    If you know me, you know I care little about sports. But after reading Moneyball by Michael Lewis, I was so inspired I bought three copies*. One to keep, one to pass around to co-workers, and a third to give to my father as a gift. The message of the Freakonomics article was that stars are made, not born. Similarly, the message of this book, about the unlikely, data-driven success strategy of the Oakland Athletics baseball team, is: “A winning baseball team is made, not bought.”

    Read the book, and marvel at how Billy Beane, the general manager, refused to believe the group think of baseball scouts and the status quo. He wouldn’t listen to them when they told him how to identify promising players for his under-financed, under-performing team.

    It’s a great read, and another reminder that looking at the data instead of listening to the way things have always been done can pay huge dividends.

    *Thank you Bret Stasiak, my boss from my BVK/respond360 days, for letting me know about this wonderful book!

  • Internal search data is free, quantitative usability testing, if you use it

    Even if I’ve never met you or visited your web site, I can diagnose with a fair amount of certainty what many users say about it. Whether you realize it or now, they don’t particularly enjoy visiting your site.

    That’s because most people use web sites only out of necessity. And your web site really has only one responsibility to these people: To give them the information they value. Period.

    Ideally this trade of “effort for information” should be short and sweet. No visitors to your site want to feel like they’re on a scavenger hunt. But that’s exactly what it often feels like, and it pisses them off. Thus, your site’s low conversion rates and high abandon rates. How did I know about those? They’re about as predictable as inhaling and exhaling.

    So how do you take some of the frustration out of using your web site? Simple. Fix your site’s confusing navigation and it’s improperly labeled and organized content.

    And I suggest you start with the single easiest and best source for learning what’s missing on your site: Namely, data from your internal search.

    Think about it. If you have an internal search engine operating right now, the people who find your site the most frustrating are often typing out their frustration in that little text box. The sound of user dissatisfaction (dissatisfaction with your navigation, dissatisfaction with your content) is right there … loud and unequivocal. But it’s got to be captured and measured or this gold mine of information is lost.

    Okay, here’s a shameless plug: I and my team at ec-connection build this system in many of our clients’ web specifications. By tabulating the search phrases that users type in, we get to see what’s frustrating them, or at the very least, what they want to see on this site that they’re not finding. With this valuable, free quantitative research, we can fix our clients’ navigation and content problems. And watch the searches, and the user pain they suggest, fall off.