Turing’d:

We have this long list of tasks and occupations that we humans believe only humans can do. Used to be things like using tools, language, painting, playing chess. Now, one by one they get Turing’d. A computer beats them. Does it better.

So far we’ve can check off arithmetic, spelling, flying planes, playing chess, wiring chips, scheduling  tasks, welding, etc. All have been Turing’d.

[Via: The Technium]

At the end, Kevin wonders to the audience what else has been Turing’d (i.e. given over to computers because they are better than we are). I’d like to add Marketing to the list of fields and disciplines that have been Turing’d.

Most of us in the online marketing sphere are well past the idea of marketing on instinct. The medium lends itself quite handily to automation and marketing to algorithms.

The direct marketing world is slowly giving itself over to the same idea. Not that they haven’t been using computers and models for years. In fact, direct marketers are some of the most disciplined adherents to deep testing methods that tweak and adjust the smallest minutiae.

Still, this isn’t quite the same thing as giving it over to the computer entirely. To build models that run without human intervention and sort the massive data sets into personalized (and quantified) offers that are proven to be more effective.

It’s coming, folks. Actually, the best companies are already doing it.

Like it or not, in most organizations HR has grown up with a forms/clerical/factory focus. Which was fine, I guess, unless your goal was to do something amazing, something that had nothing to do with a factory, something that required amazing programmers, remarkable marketers or insanely talented strategy people.

…

Microsoft and Google both have a very healthy focus on finding and recruiting Talent. McDonald’s recently announced that they want to hire people who smile more. The first strategy works, the second won’t. Talent is too smart to stay long at a company that wants it to be a cog in a machine. Great companies want and need talent, but they have to work for it.

[Via: Seth Godin]

While I haven’t worked for a startup tech company, I’ve been a customer of quite a few. From that angle, I can tell you that Tatum’s book is perfect for every growing tech company. No, really. If you are running a tech company, buy this book now and read it before you reach your plateau. See what lies ahead of you and stop it before you have a real mess on your hands.

But like I said above, Tatum’s advice is not just good for companies, it’s good for fast growing departments within larger organizations too. If you run a high growth area, there’s no doubt that you will recognize the signs that Tatum talks about in his book. His practical advice can really help drag you out of the doom and gloom scenarios that inevitably come to fast growing departments when they reach maximum capacity and need to change.

[Oh, and in case you'd like to stay small, Tatum will point you to Bo Burlingham's Small Giants. I read Burlingham's book too and I think it is spot on advice for those companies who have pegged themselves to be a certain size. If you run a smallish company and want to keep it that way, buy copies of Small Giants and give them to your executives. This will ease a lot of frustration. You might lose some growth-oriented folks, but in exchange you'll have focused leadership that understands the long term vision.]

“Companies not lead by geeks in tech driven marketplaces will fail.”

I’d expand that to most industries, not just tech concerns. Every company could use a hard core geek at the top.

Being a geek means that you like to tinker with things. Tinkering produces data and new ideas. Those elements form the basis of more experiments and eventually you hit on something new and powerful.

No matter what business you’re in, embrace the data. Companies that fail to tinker die. (maybe not today, but eventually)

Why Are So Many Seemingly Great Companies Failing?:

By most accounts, eBay is in big trouble. Why? Because their technology has lagged woefully, while Amazon, a true geekocracy, is about to eat their lunch. Amazon understands that they are not a retailer, or a marketplace. They are a platform. They figure out how to connect buyers to products in the most efficient way possible. That means putting products in front of people in the optimal manner. It means creating technology that maximizes transactions. These are hard problems. It also means creating systems that allow others to do the same thing while taking ever smaller pieces of the transaction, but for massively larger numbers of transactions.

Amazon sees itself as the ultimate Internet transaction system. And they are winning. The reason for this is Jeff Bezos and his team had the vision and they realized that they needed to have serious computer scientists working on the really hard problems associated with Internet transactions.

Meg Whitman never understood that that could or should be eBay’s role. This is because non-geeks running public companies generally can’t see beyond next quarter. Google is to Yahoo as Amazon is to eBay. Eventually both Yahoo and eBay will shrink to total irrelevancy because they could not create successful *platforms*, whereas their competitors did.

The bottom line is we are now in the age of the geek. Non-geeks don’t realize this – because they are not geeks, and so they resent it. And they can’t smell the CO. Too bad. Companies not lead by geeks in tech driven marketplaces will fail. What we are seeing now is a radical clarification of what kind of organizational DNA leads to tech success.

[Via: Why does everything suck?]

You pay for the brain. Vanity costs extra.

As defined by the OED, vanity is that which is vain, futile, or worthless; that which is of no value or profit; self-conceit and the desire for admiration.

In the world of E-Commerce, there is really precious little time for vanity. Things move at a whiplash pace and the margin for error is small. To be successful, you need people who are focused on the goals of the business and not whether they chose the right tie. E-Commerce is 24-7 (an overused phrase, but apt for this context) and working 9-5 just doesn’t cut it. There are some people I’d rather see stroll in at 11AM, knowing that they were up working at 10PM or midnight the day before. To me, it means they’re engaged with the real-time business.

Some people get caught up in the sales growth. They like to strut. Hey, I like big numbers too, who doesn’t? Yet, while E-Commerce may grow at a double-digit rate for some time to come, there are so many exogenous factors impacting growth that are difficult to measure, like channel shift.

Being vain about growth like this is bound to make you look a little silly in the long run.

I do think it’s important to know when you need to be professional, but you can’t exchange looking good for performance. It eventually shows up on the bottom line, which is how we should all measure ourselves (and why I charge extra for vanity).

Why?

Here’s something for you to think about…

In 10 Years, Marketing Will Be Taught In Engineering School:

Technology is removing all friction from the marketplace. Marketing will really be about figuring out how to most quickly and effectively tap the feelings of the market for the benefit of the product. This will go from a process that currently takes months or years, to one that happens in hours and days. All messaging and product feature sets will be rapidly optimized using the next generation of marketing techniques and technologies.

[Via: Why does everything suck?]

I have no doubt that Hank Williams is right.

Though heavy on the tech side of things, I’ve floated around between IT and Marketing for most of my career. However, it’s been awhile since so many books about marketing to algorithms have hit the shelves. Search is obviously the big reason and that makes me happy. I’m happy because search actually works and is quantifiable as opposed to the personalization craze circa 1998-2001.

The change is here and it is real.

Rock Band and Guitar Hero Drive Digital Sales:

In the two months since MTV Networks and Harmonix released the music-based video game Rock Band, players have purchased and downloaded more than 2.5 million additional songs made available after the game’s initial distribution.

Activision, meanwhile, said it has sold more than 5 million new songs via download for Guitar Hero III: Legends of Rock since it began adding downloadable content in early November.

By comparison, it took wireless operator Sprint four months to sell 1 million songs on its over-the-air full-song download service. While new digital music services competing with iTunes and free peer-to-peer services have struggled to convince music fans to pay $1 for a single, downloadable tracks for games like Rock Band and Guitar Hero are flying off the digital shelves.

[Via: News.com]

The Video Game May Be Free, but to Be a Winner Can Cost Money:

In a major departure from its traditional business model, E.A. plans to announce Monday that it is developing a new installment in its hit Battlefield series that will be distributed on the Internet as a free download. Rather than being sold at retail, the game is meant to generate revenue through advertising and small in-game transactions that allow players to spend a few dollars on new outfits, weapons and other virtual gear.

[Via: NY Times Technology Section]

While I don’t see Guitar Hero IV being offered for free in hopes of making up the revenue on master track downloads, the revenue potential of this “free” distribution method is definitely a nice pad to the bottom line. In EA’s case, the model is more extreme but perhaps the upswing is even better as they will be able to tap a wider audience.

I really like this idea, but I think it is imperative for businesses to quantify the shift rather than just jump in with blinders on.

Here’s an example in the form of Chris’ smackdown of Spencer Wang’s analysis of a free WSJ.com:

There is one thing clearly missing in this analysis: the indirect benefits of the Wall Street Journal reappearing in the online business conversation that it has largely ceded to others due to its subscription wall.

For instance:

* What about the new newspaper subscriptions that a 6x increase in web traffic will generate? (Print subscribers are typically worth five times what online viewers are worth, due to the higher effective CPMs of print media.)
* What about the increased buzz and respect that the ability for bloggers everywhere to link to wsj.com stories will engender, bringing the paper back to the front of mind of media buyers and thus bringing in more ads?
* What about the fact that, in a fierce competitive battles with its cross-town rival, the the New York Times, once nytimes.com went free, wsj.com had no choice but to do the same to maintain mindshare with an audience who are increasingly shifting online?

I don’t know how to quantify any of those factors, but I know they’re all non-zero, and in the case of second, at least, could be large.

I’m sorry, but if you can’t quantify the impact you can’t include it in the analysis. It might be a feel good in a discussion with the board, but at the end of the next fiscal year Lucy’s going to have some ’splaining to do. Of course, with a little noodle work, you can show that even under a conservative scenario the WSJ is going to do better under an all-free model. It just isn’t going to come in the form of paid subs.

(Analysis after the jump…)

Paid Subs

With an ad-driven content site, we might expect about 0.1% of visitors to purchase paid print subscriptions.

Really? How did I arrive at this number?

Quantcast puts the NYT daily traffic at about 1.5MM unique visitors per day. The NYT maintains a subscription portal at nytimesathome.com which has an average of 2.8K unique visitors per day. Let’s be very generous and say that just over half convert. This works out to 1.5K subscriptions per day, which happens to work out nicely 0.1% of the 1.5MM.

(Believe it or not, I didn’t fudge this as much as it looks. I actually wrote down 0.1% and then thought I ought to see what the “real” number might be.)

Alright, now we need to figure out how many visitors the WSJ will get with their new and exciting, all free format. I will use Wang’s peer analysis of roughly 6X pageviews increase as the “break-even” analysis is ridiculous.

Quantcast shows the NYT running at 3.25 pageviews per visit. The WSJ currently runs 2.71 pageviews per visit. If we split the difference, the new WSJ might get 3 pageviews per visit. This should put us at 240MM visitors per year. The NYT averages 2.92 visits per unique so that brings us to 82MM unique visitors.

If 0.1% of those visitors convert to paid print subscribers, the WSJ will see 82,000 subscriptions These are not incremental subscriptions, just raw subs. At $100 a year, that’s $8.2MM. A nice and tidy sum, but not something I’d include in my analysis of free versus paid content considering they are drawing $78MM for WSJ.com subs today.

Ad Revenue

I have to agree with Chris that $6CPM is way too low for the WSJ. They ought to be able to draw double that figure at least. At $12CPM, they are just about at break even. At $15CPM, they are $20MM to the good.

Conclusion

At worst, going free will be break even. Yet, a free WSJ.com should bring in 4.9X more visitors than it does today (taking the difference between traffic increases and pages per visit). This increase will provide substantial opportunities for email address acquisition, RSS subscribers (more advertising), along with other ancillary sales. I’m sure that the WSJ folks have figures available for the value of an email address and their revenue from ancillary sales (and list rental).

So unless there is a major impact on offline paid subscriptions to the WSJ, it seems like the all-free model is the way to go. Paradoxically, Wang doesn’t think this will be a problem:

A potential risk to the free Web site model is the breakdown of the Wall Street Journal’s print subscriptions, but Wang considers this unlikely given steady growth of the New York Times’s print subscriptions after offering free online content and because the core Wall Street Journal reader has above-average disposable income.

“We think a large portion of [Journal] readers also appreciate the physical hard copy of the WSJ, particularly for those who commute to work in the morning,” he said.

[Via: TradingMarkets.com]

Related Links

Free WSJ would need 12X to offset loss [PaidContent.com]
If WSJ.com Was Free: The Numbers at Stake [PaidContent.com]

Mac Daily News served the dish at 9:33AM…

Platforms, Applications and the Future of Digital Marketing:

There is one important last piece that can’t be overlooked to ensure success. Marketers and creative folks must begin to understand technology and learn how to use it creatively. This will be the biggest hurdle to success. The days of siloed IT and Marketing, of Creative Directors that don’t know their clients Content Management Systems will end in a fiery furnace filled with ashen businesses and agencies.

In the first decade of the commercial net access to data smote a number of verticals like travel and music. In the next decade far greater access to data will continue to destroy a number of now successful businesses and advertising models. It will also create many revolutionary opportunities and digital success stories. Which will you be? The answer probably rests in if you have or will create a plan in the next 6-12 months for creating the platform, rules and delivery of your marketing content.

[Via: Optimize & Prophesize]