Crowdsourcing: Using the Power of the Masses

One of the hottest buzzwords of The Web starting in September 2005 - one which I am still surprised is in use and has not been replaced - is “Web 2.0″. Web 2.0 was coined by publisher Tim O’Reilly to describe the “second generation” of web sites and businesses. As buzzwords usually are, many companies have become associated with the term:

• Digg.com is the web 2.0 approach to keeping up with technology and other news. Slashdot is the web 1.0 approach.
• Flickr is the web 2.0 approach to sharing photos. Yahoo Photos is the web 1.0 approach.
• Google Mail is the web 2.0 approach to email. Hotmail (the old version) is the web 1.0 approach.

People seem to be throwing around the term Web 2.0 like rice at a wedding. Every new web business these days has to have a web 2.0 angle. But what is Web 2.0 exactly? Is there a way to define it, or has the term become so misused as to become meaningless?

To me, the difference between Web 1.0 and Web 2.0 can be convered by the following four things:

1. Emphasis on usability: less screen clutter, bigger fonts, pretty pastel colors, AJAX elements. An overall easier and more intuitive experience for customers
2. New business models, particularly the rise of freemiums: core features are free and a small one-time or monthly payment for more features. And yes you can make a profit just on Google Ads.
3. Crowdsourcing: let your users create your content. No paid editors and authors, just user submissions and voting. Or create tools that allow users to create and store their OWN content online. To do lists, project management software, shared bookmarks, email. Think YouTube and Flickr.
4. Social networking: enabling a community of web site users to exist with sophisticated user profiles, friends, voting, and seeing what your friends are doing on the site.

Out of those four, crowdsourcing has been one of the biggest trends in web 2.0. Sites like Newsvine and Squidoo lets users write and submit stories. Flickr and YouTube allow them to post their pictures and videos for all to share. Digg allows users to determine what stories hit the home page.

And what is Facebook and MySpace except places that allow users to create content (their profiles) and interact? Those sites don’t have any actual content except for what the users create. Facebook is crowdsourced!

Squidoo

What is Squidoo? It defines itself as a”fast and free way to build a web page about a topic you’re passionate about”.

There are three things interesting about Squidoo (for me):

• It was started by marketing guru Seth Godin, who has written some very interesting marketing books
• It’s a site that pays you a portion of the advertising revenue on pages you create (revenue sharing)
• I simply love the idea: create pages about topics you’re passionate about

Squidoo can defintely be used for marketing. For one, like any web page, you can use your Squidoo page to direct customers to your own product or service web site. If you create a Lens (what they call a web page on Squidoo) on digital cameras, you can definitely send people to your digital camera web site after giving them a decent taste of all the information you can provide on digital cameras.

Say you’re a web developer. Why not create a Squidoo page on “the best web design tools”? That Lens contains a link to your personal web site. It has the result of building up your reputation as an expert in the field, adds another incoming link to your site, and even directs people interested in web development tools to you as potential customers.

Marketing with Twitter

Twitter (see www.twitter.com) is a type of blogging tool that focuses on extremely short messages. Its akin to a blog that is only one sentence long. The maximum length of a twitter post is 140 characters.

People have been mostly using the technology to post “What I am doing now” type information. Some examples of twitter messages (known affectionately as tweets):

• “I’m at SXSW today”
• “Eating lunch, clam chowder”
• “Has anyone heard about kijiji? http://www.kijiji.ca/ Really cool.”

So you know I assume how blogging can be used to market to your current or potential future customers. But can you market over twitter with such small messages? You sure can.

The most common type of marketing over twitter happens with a conversation. On twitter, its very easy to follow other people. So I can subscribe to your twitter feed, another persons, and perhaps even subscribe to hundreds of peoples feeds. Then when Robert posts “Has anyone seen this cool thing?”, I can post “@Robert: yep, its cool. did you try the other thing?” And Robert can see that and respond “@Scott: oh wow, didn’t know that. thx”.

And basically everyone who subscribes to Roberts feed and to my feed can see this conversation.

The marketing happens because you can encourage personal and short responses to your posts. Its not cumbersome as email, blog posts, blog comments, etc. It’s short and concise, and can even be done as a text message from or too your cell phone because its the perfect size for something like that.

So from the corproate perspective, you can post a short question to your customers, and watch their short answers roll in. Or post a thought or link, and watch other peoples thoughts and links come back to you. And that can happen on a truly huge scale, because of the lightweightness of it. Robert Scoble currently watches about 5000 people on twitter, and has that many watching him.

I don’t think he could read 5000 RSS blogs, or 5000 emails, or almost any other form of conversation in a day. And even if he did, could he also be an active participant in so many too?

Thinking Like a Customer

It’s the holiday season, and over the next few days, a billion or so people around the world will be opening billions of packages. Smiles and good cheer all around.

This makes me wonder whether package designers spend enough time thinking like a customer opening the product. It seems like the logistics folks often have the largest say in package design. How does it fit on the shelf, and how can we make it easy for retailers to stock?

If you’ve ever opened an Apple iPod, you will know that the package design team at Apple have given a lot of thought to the customer opening the product. Opening an iPod is an “experience”. People actually post photos to the web of each stage of opening a new iPod box.

Have you ever opened a hard plastic package, for example containing audio earphones? You can’t open this type of package with your hands - its impossible. Even a pen or other sharp metal object would not help much getting the package open. To open such a package, you NEED scissors. It takes 10 minutes to open such a package even with scissors, and when you’re done, the package is destroyed.

So what is the purpose of such a negative customer experience? Why do <insert electronics category here> manufacturers make their products so hard to open, and leave you with a package that’s in several pieces?

I suspect there are two reasons, neither of which are customer-focused. One, to prevent in store theft. Making it very difficult to get at the small product inside, forcing potential theives to have to try to get the entire package out of the store.

The other reason would to discourage returns. Imagine if you could buy something, take it home, open it, try it out, and if you’re not satisfied with it, take it back to the store for a full refund. That costs the store money, and maufacturers as well I bet, so one of their solutions is to discourage returns. By making you destroy the package while opening it, they are effectively saying, there’s now no way you can return this in the original condition. And in fact, since the package ends up in little pieces, you are likely to throw the packaging away immediately after opening, thereby making it impossible for you to return if you change your mind a few days later.

This, I suspect, is the main reason. But perhaps I am just a natural skeptic when it comes to these things.

Nissan in SecondLife

I had the chance to try out the Nissan sim in SecondLife for the first time in a long time.

For those that don’t know, Nissan Motor has two servers in SecondLife. Those servers are mostly just a car track that you can use to drive a Nissan vehicle around.

I’m not sure how popular this campaign has been, although this is the one of the big dtractions about marketing inside secondlife. If Nissan gets 100 people a day visiting their servers, driving their cars around a small track, is it worth it? Is it worth the investment when they can spend the same amount of money on a big newspaper advertisement and get 100,000 daily readers at once?

I believe it is often worth it. Nissan is engaging its customers and potential customers on a more interactive level within SL. You can buy an ad in a newspaper that has 100,000 subscribers, but how many of those people see the ad? If 1,000 people see the ad, how many people spend more than 10 seconds look at it? Not many. Maybe 1 or 2. So the money that Nissan is spending to allow SecondLife residents to interact with this products and experience their brand reaches a lot more people than the same money spent on a billboard, TV commercial or newspaper ad.

Google OpenSocial

I’ve written in the past about the Facebook applications platform, and how marketers can look to leverage it to build their brands.

Everyone and their brother has their own Facebook app now. But I still think the platform is underutilitized and we are a while away from seeing its full potential in use.

Google is not dumb of course. They see this developer excitement for applications on the web, and it’s all happening on Facebook. Since they can’t buy Facebook (who have reportedly turned down offers for $1.6 and $2 billion in the past), they’ve decided to compete instead. And their Facebook killer is called OpenSocial.

OpenSocial is an application platform that promises to allow you to build an application once, and run it on Facebook, MySpace, Orkut, LinkedIn… basically on any social network that supports it. OpenSocial takes the application hosting away from Facebook, where they can profit from it, and moves it to Google.

There was a lot of excitement when OpenSocial was announced. Anytime Google moves into a space, there’s excitement. Obviously not everything they do turns to gold. After all, they have their own blogging platform (Blogger) that’s losing to WordPress, and their own word processor and spreadsheet application (Google Docs) that has yet to impress anyone.

So is OpenSocial a Blogger, or a GMail? Boring or a platform killer?

The jury is still out. But early reports from developers trying to use the platform aren’t good. Basically, the platform isn’t very robust, has too many critical features on the “to do” list, and in fact many of the important architectural design decisions about the service are still to be decided.

Marketers looking to develop a social networking application to connect with their customers are advised to continue working on the Facebook platform for now. Even though OpenSocial is supposed to be ready for the spring, it looks like it won’t contain everything you need to make a cross-platform application. And in 12 months from now when it is ready, maybe things will have changed too much?

Countdown to the Death of Facebook?

I read an interesting post on Fortune about how Facebook’s new advertising system (dubbed Beacon) has been a public relations nightmare for the young company. The author of that article wittily said that Facebook hasn’t jumped the shark, they’re being devoured by the shark. 1 point for cleverness.

He went on to say that the death clock for the social networking site has started. People are already leaving in droves, and the moment something every remotely as good comes along, Facebook’s valuation will fall faster than… (insert own analogy here of something that falls rapidly).

Umm, I’m not sure about that. The vast majority of Facebook users don’t know what Beacon is, and couldn’t care less. And when you really stop and think about what Beacon is, versus simply making up the Big Brother scenario, it’s not that bad.

For those of you who don’t know what Beacon is, here’s the 60 second synopsis. Facebook developed an advertising system that allows you to recommend products to your friends as you buy them. So you go to Walmart.com, and buy a sweater. And if you want your friends on Facebook to know you bought this sweater, right from the Walmart.com site you can click an ”Add This to My Facebook” button and have them notified. i.e.: “Jacob just bought a sweater from Walmart.com for $9.99. Click here to buy one too.”

And over something as simple as that, the Internet erupted with screams of “invasion of privacy!”

What’s scared everyone is two things. One, advertisers are now watching what you BUY and recommending products to you based on that. We already live in a society where companies such as Google/Doubleclick track you from site to site, and put together a profile on you to target ads they think you will like based on your web surfing habits.

This is basically tracking your online purchases. If you buy a sweater, gloves, and a coat, Facebook will know you will likely want to buy a snowboard and show you those ads. If you buy medication from an online pharmacy, they’ll target you based on that too.

The other thing that’s scaring people is the personalization of the ads. Basically, they’re turning you into a spokesperson for a product to your friends. You purchased this, and now they can use your name and picture to tell your friends to buy something.

Is it a bit creepy? Has the potential to be. Advertisers aren’t dumb. If you get an email from an actual friend, you are more likely to click on it and read it than a spam email. If you see your friends face in an advertisement, you’re more likely to read and think about that content than any other random ad.

So, I think it’s far far to early to say that Facebook is inevitably dying. But certainly as marketers come up with more and more clever ways to advertise to people, turning the social experience into one that profits, people will inevitably start to protest against this invasion on what to them should be a pure ad-free experience - them interacting with their friends.

As Mark Twain once said, “The accounts of my death have been greatly exaggerated.”

Case Study In How Not To Treat Your Customers

It’s hard to remember what life was life before the Internet. I think I had my first dial-up account in 1994 or so. 13 years later, the Internet has become ubiquitous in my life - I develop web sites for a living, and have a blackberry, cell phone and iPod Touch all capable of surfing the web. I have 8 Internet-enabled devices in my house in fact.

Investing is one of my passions, but back in 1999 - 2001, I spent a larger part of my time reading investing books, visiting financial web sites, tracking my stocks, starting my own financial web sites, etc. And it’s not that my interest has gone away, but I no longer think about it as much.

One of the web sites I used to frequently visit was called The Motley Fool. Motley must be a hard word for most people to spell, because these days it just calls itself The Fool. The original idea behind The Fool was that people should take their financial education into their own hands, and that ordinary people CAN beat the so-called expert money managers at stock picking. Most people can invest their money on their own, and get a return better than the average equity mutual fund.

The Fool was irreverent. It was anti-establishment. It branded itself as being about the community helping each other at financial education. I loved the Fool’s philosophy, I bought the books. I visited the site daily. I participated in the discussion boards. They had me at hello.

So how could The Fool screw this up? How can they get someone who visited the site daily to stop coming?

To sum up, the site became about making money for its owners and less about people helping each other.

Making money is not a bad thing. I love making money. And I would never demand someone give me something I value for free. But there are ways to do that without upsetting the applecart.

One of the first actions they did was they started charging a membership fee for their existing (formerly free) message boards. Now as I recall they very quickly felt the backlash from the community, because a few days later they started giving out free memberships to the top contributors. It’s not a bad strategy on paper - you have a community of 10,000 people and you want to start charging them $15 a year to be a member. But then you realize the number of people signing up is far lower than expected and the message boards are dying from lack of content, so you find the people who add the most value (the top posters) and give them free access.

Well, so you give out 100 free memberships (or 200) and the other 9,800 people are still upset and forced to pay just to read their formerly favourite message board hangout. I assume a number of people do pay, because this subsciption model stuck for 6 years or so.

Then what do you do? You email your members about the products you have for sale. Every few days you send out a reminder that such-and-such stock newsletter is available for monthly subscription. OK, how do I turn off these offers? I go to the web site and can’t find anything to make them stop. I go so far as emailing support, asking for the spam to stop.

And support says, “As a condition of being a member of Fool.com, you agree to receive emails from us. There is no way to unsubscribe.” Yes, they DID say that.

The final thing you can do to alienate your customers? Deviate from your own philosophy. Suddenly they’re selling daily/weekly/monthly stock–picking newsletters of all sorts. Wait, I thought the Fool was anti-establishment. Ads for brokerages (Ameritrade, ETrade, whatever) start appearing on every page.  The design of the overall site starts to look ugly because of all the ads. They start mixing in ads with their free content- talking about a stock in one sentence, and then hawking their stock newsletters the very next line. Suddenly the Fool was just like the establishment. The need for money drove them back into the arms of the very people they were at one time against. 

OK then, I can’t see much of the good content (message boards, newsletters, and all the nasty ads), and you’re going to email me regularly whether I like it or not? Well it was at that moment I decided to cancel my account for good.

First moral of the story for marketers and web businesses: get money from your customers by ADDING VALUE, not by charging for things you used to give away for free. Charging for a formerly free service is essentially “bait and switch”.

Second moral of the story for marketers and web businesses: don’t give your customer no choice but to leave your service. Marketing (essentially up-sell) to existing customers should be unobtrusive. If you actually start hammering your customer over the head with your marketing message, you really do risk losing them for good.

Imagine if Blockbuster started calling me after I rented a movie to ask how I liked it? And then to recommend similar movies to me? It would be annoying. And imagine if there was no way to get Blockbuster to stop doing that? I would stop renting movies from there.

As a general rule, harassing customers is bad.

CNN Opens Post in Second Life

This blog aims to keep an eye on new marketing channels, and so far we’ve focused on Facebook, MySpace, Second Life, Podcasting, Youtube, Blogging, viral, and Mobile platforms. More channels are invented every week, but we’ll try to focus on the ones with long term potential.

So CNN has finally caught up to Reuters and opened a “bureau” inside Second Life. Reading the official story, it seems that the purpose of it is to collect news items from citizens (a la CNN’s iReports) and then that can be featured inside SL from CNN newsreaders, and perhaps if you’re lucky on CNN’s SL blog.

There is no mention on these news reports being integrated into CNN’s existing news stream. Basically, CNN is not treating what happens inside SL as real news, but totally isolating it.

There’s nothing wrong with that approach. If a group of avatars inside SL get together and stage a protest on some new Linden Lab policy or initiative, and someone captures that, it’s not the same as when people march on Washington demanding change from congress. It clearly isn’t, so I wouldn’t want to see Wolf Blitzer reading about new records being set by the Second Life stock market, or some avatar did this, or some avatar said that.

Basically, companies such as IBM, Reuters, CNN, American Apparel, Nike, and Nissan have said that they’re willing to experiment with the Second Life “game” and see what interesting ideas can be generated by it. They’re not betting the farm on it (nor should they), but they want to be there alongside their competitors, trying new things out and seeing what works.

Who knows, in 20 years we MAY be getting our news from an animated 3D avatar, and things they learned from the Second Life experiment may have directly influenced the future of television news. I said “MAYBE”.

McDonald’s Loyalty Program

I’ve mentioned before on this site, McDonald’s needs a loyalty program. I’m a loyal guy, but I have a McDonald’s, Quiznos, Subway, Burger King and Mr. Sub within throw-a-baseball distance of my office, so the competition is fierce for my lunchtime dollar.

Today at lunch, I saw McDonald’s is rolling out a gift card program. Similar to Starbucks (which to my surprise I have found myself using), it means you have the convenience of a 2 second swipe to pay for your purchases. That’s opposed to a 10-second Interac process, or a 30-second cash process.

I’ve thought to myself, why do I like the Starbucks card so much? I don’t know for sure, but I think I like using it even when I have money on me, so that I don’t have to carry around coins. Even if I enter the Starbucks with $20 on me, I am bound to leave there with a pocket full of coins when my $4.26 Orange Mocha returns $15.74 to me in change. I like the Starbucks card because I don’t like coins. I also don’t necessarily need to do debit (Interac) transactions just for a coffee, and I don’t even think they will let me charge a single coffee to my credit card because of fees. So Starbucks card is a free and painless way to pay without the hassle of change.

And so McDonald’s has copied that, so good for them. Will make a good gift (for some people I guess). Everyone knows a McDonald’s lover.

Mickey D’s should extend this “card” program to loyalty points. Collect points for purchasing items. Points gets you free stuff like McDonald’s caps and shirts. Or even toys and gadgets. Track your points online. Market to these people who have self-identified as being your best customers. And watch the ROI skyrocket.

Why, why, why doesn’t McDonald’s want to track my spending? They should, I want them to! And then they can give me stuff. Free fries from time to time, free value meals. It’s not to much to ask in exchange for my loyalty.