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Thursday, September 19, 2013
Wednesday, August 21, 2013
Recent Read: Articles: Understanding Perils of co creation: HBR article
http://hbr.org/2013/09/understand-the-perils-of-co-creation/ar/1
The rise of social media has generated tremendous opportunities for companies to engage with customers. Many allow customers to participate in value-creating activities, such as brainstorming advertising taglines or product ideas—a process often referred to as co-creation. These activities not only help companies innovate at low cost but also engage customers—every marketer’s dream.
In practice, however, these programs are hard to run. Some customers “hijack” them—instead of offering real ideas, they seize the chance to ridicule the company. Such hijacking is one of the biggest challenges companies face. Prior research suggests that about half of co-creation campaigns fail.
Consider Henkel, a large German manufacturer of detergent and other products. It ran a contest in which customers could submit innovative packaging suggestions—and was deluged with negative ideas. (One was a label describing the detergent as “Yummi Chicken Flavor.”) General Motors invited customers to tweak its advertisements, resulting in a rash of ads criticizing its SUVs as gas-guzzlers that contribute to global warming. McDonald’s set up a Twitter campaign to promote positive word of mouth, but the effort became a platform for consumers looking to bash the chain (see examples below).
When Tweets Attack
Managers considering co-creation initiatives should think carefully about the risks. Our research identifies three areas of particular concern:
Strong brand reputation. Firms with strong brands need to protect them—they have a lot to lose. They must be aware that these initiatives give customers opportunities to tarnish the brand. Strong brand reputations are generally built through consistent, effective marketing, and companies should weigh the potential for misbehaving customers to undo their careful efforts.
High demand uncertainty. Companies are more likely to ask for customer input when market conditions are shifting. But this frequently backfires when demand is highly uncertain, because customers in fast-changing markets often don’t know what they want or what they’ll like. Porsche got lots of negative feedback when it announced plans to release an SUV, but it proceeded anyway, and the Porsche Cayenne was a great success.
Too many initiatives. Companies ordinarily benefit from working repeatedly with the same suppliers, but that doesn’t hold when the “suppliers” are customers. Experience shows that the quality, quantity, and variety of input decrease as the frequency of engagement increases. A study of the Dell IdeaStorm program (in which customers were invited to submit product or service ideas) found that people submitted ideas repeatedly—including many for things the company was already offering. And customers whose ideas were implemented tended to return with additional ones that were quite similar to their first suggestions.
This isn’t to say that firms should never try to crowdsource value creation in an attempt to engage customers. It can be a viable strategy—but managers must understand the high probability of misbehavior. They need to monitor engagement activities continuously and intervene if customers begin offering too much comedy and too few genuine ideas.
Peter C. Verhoef is a professor, Jenny van Doorn is an associate professor, and Sander F.M. Beckers is a PhD student, at the University of Groningen, in the Netherlands.
The rise of social media has generated tremendous opportunities for companies to engage with customers. Many allow customers to participate in value-creating activities, such as brainstorming advertising taglines or product ideas—a process often referred to as co-creation. These activities not only help companies innovate at low cost but also engage customers—every marketer’s dream.
In practice, however, these programs are hard to run. Some customers “hijack” them—instead of offering real ideas, they seize the chance to ridicule the company. Such hijacking is one of the biggest challenges companies face. Prior research suggests that about half of co-creation campaigns fail.
Consider Henkel, a large German manufacturer of detergent and other products. It ran a contest in which customers could submit innovative packaging suggestions—and was deluged with negative ideas. (One was a label describing the detergent as “Yummi Chicken Flavor.”) General Motors invited customers to tweak its advertisements, resulting in a rash of ads criticizing its SUVs as gas-guzzlers that contribute to global warming. McDonald’s set up a Twitter campaign to promote positive word of mouth, but the effort became a platform for consumers looking to bash the chain (see examples below).
When Tweets Attack
Strong brand reputation. Firms with strong brands need to protect them—they have a lot to lose. They must be aware that these initiatives give customers opportunities to tarnish the brand. Strong brand reputations are generally built through consistent, effective marketing, and companies should weigh the potential for misbehaving customers to undo their careful efforts.
High demand uncertainty. Companies are more likely to ask for customer input when market conditions are shifting. But this frequently backfires when demand is highly uncertain, because customers in fast-changing markets often don’t know what they want or what they’ll like. Porsche got lots of negative feedback when it announced plans to release an SUV, but it proceeded anyway, and the Porsche Cayenne was a great success.
Too many initiatives. Companies ordinarily benefit from working repeatedly with the same suppliers, but that doesn’t hold when the “suppliers” are customers. Experience shows that the quality, quantity, and variety of input decrease as the frequency of engagement increases. A study of the Dell IdeaStorm program (in which customers were invited to submit product or service ideas) found that people submitted ideas repeatedly—including many for things the company was already offering. And customers whose ideas were implemented tended to return with additional ones that were quite similar to their first suggestions.
This isn’t to say that firms should never try to crowdsource value creation in an attempt to engage customers. It can be a viable strategy—but managers must understand the high probability of misbehavior. They need to monitor engagement activities continuously and intervene if customers begin offering too much comedy and too few genuine ideas.
Peter C. Verhoef is a professor, Jenny van Doorn is an associate professor, and Sander F.M. Beckers is a PhD student, at the University of Groningen, in the Netherlands.
Monday, August 19, 2013
Wednesday, August 14, 2013
Recent Read: Mobile monetization
http://venturebeat.com/2013/07/30/how-facebook-went-from-sucking-at-mobile-to-killing-in-mobile-in-12-short-months/
A little over a year ago, Facebook was so bad at monetizing mobile that the company tried to hide that fact in its legally required pre-IPO documentation, adding it only days before the company went public. The whole mess contributed to what ended up almost being the worst IPO in a decade and a share price that still hasn’t recovered its IPO heights.
Then a week ago, Facebook announced record earnings and a massive 41 percent of revenue from … mobile.
How did the company turn it around that quick?
“Every single year we’ve heard people say ‘This is the year of mobile,” Nanigans SVP Dan Slagen told me, laughing. “But this is the first time we’ve seen someone come forward and put forward the kind of number that Facebook did.”
Nanigans might be the single biggest conduit of Facebook ads on the planet, managing “nine figures” of annual ad spend. So Slagen knows a little about Facebook and revenue. And he says that Facebook targeting has gotten so good in the last year that “there’s really no excuse for someone seeing your ad who doesn’t want your product.” That’s had a massive impact on Facebook profitability, especially on mobile.
Mobile ad exec Krishna Subramanian agrees.
He’s the CMO of mobile advertising company Velti, and he says the massive shift is due to Facebook’s data-centric approach to products and decisions.
“I don’t think it was luck,” Subramanian told me yesterday. “Facebook executed flawlessly after spending the second half of last year experimenting and looking at all the possibilities of making money in mobile.”
Perhaps most interesting is that Facebook’s mobile revenue has gone through the roof this year at the same time that Google’s mobile earnings have tapered off — in spite of layering in mobile into AdWords, which was supposed to increase click prices but actually did not.
For Slagen, it’s all about creative, targeting, and optimization, which have never been better on Facebook.
“Mobile ad units used to be tiny little banners, but Facebook completely broke through that model,” he said. “Facebook’s mobile ad spot is a massively large ad unit, which has given advertisers a whole new opportunity on mobile.”
“Never seen clickthrough rates this high”
Because Facebook’s mobile ad unit is large, brands can be creative again. Aesthetics and visuals are the first things that grab attention, and there’s plenty of room to add a title and some copy — perhaps a call to action. Add in Facebook’s unparalleled targeting capability, and you’ve got a winner, advertisers say — and profitable winner.“We’ve never seen clickthrough rates this high outside of Google Adwords,” Slagen says.
Read more at http://venturebeat.com/2013/07/30/how-facebook-went-from-sucking-at-mobile-to-killing-in-mobile-in-12-short-months/#qOHulv9FPTyVRTdk.99
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