Alphabet: what does it all mean?

Social media went into overdrive on Monday evening UK time when Google announced a formal restructure of all its businesses, creating a new company called Alphabet. For the man on the street, Google means Search, YouTube, Drive (including Docs, Sheets etc.), email and Android. For the average marketer you can throw various advertising products and Google Analytics into the mix. For business IT managers, it is everything from productivity, software-as-a-service and possibly as a supplier of a search appliance for its internal servers.
Google Logo in Building43

Three different customer types exist and a product set that grows layer-by-layer like an onion. The bulk of Google’s revenue currently comes from advertising due to the clever technology behind it. One can see from Microsoft’s move to the cloud that there is less revenue in cloud computing than in Google’s current business, so when advertising reaches a natural ceiling for growth, services will provide an incremental benefit at best.

Android was designed as a conduit to Google services and for advertising to venture out into the mobile space. But the world’s most popular mobile operating system is not without its own issues. Despite all phones essentially looking the same, there is a massive amount of fragmentation in the Android marketplace, which makes life harder for developers. Google is also a developer, so building applications that it can build loyalty through and make money from becomes more difficult.

Secondly, an appreciable amount of Android devices (those sold in China) and many sold in Russia don’t use Google services and provide little to no opportunity for Google advertising.

This means that Google is forced to make big bets in very different sectors. Sergey Brin and Larry Page, partly because of their entrepreneurial nature to explore new opportunities, built in an ability to scale Google beyond the business lines that I have outlined above. This was apparent from their original IPO share prospectus and accompanying letter. Xerox is famous in Silicon Valley lore for fumbling the future, by inventing lots of products that would be recognisable to us today in the late 1960s and early 1970s, only to see a corporate head office miss the boat. Brin and Page would have had some awareness of this. Microsoft’s inability to leapfrog beyond its core business successfully is probably also a factor for consideration.

Alphabet formalises the framework that Page and Brin had been working to for a number of years.

So what does this mean to Google?

For the foreseeable future it will be more of the same for Google. We’ve the seen the business scale back services; by September last year Google had closed down 30 services. It has cut back the functionality of Google Adplanner as a reference tool, to just focus on sales. Google has continued to prune back services such as Google+ (a challenging task given the tentacles + has across Google’s services). The changes inside Google for staffers also reflect similar moves towards profit optimisation, move away from experimentation and being a ‘mensch’.

The biggest move was to get rid of the 20% of time engineers could devote to projects that interested them. The truth is since at least 2009, the Google myth of people working there to change the world rather than delivering profit hasn’t held sway for a great deal of their staff.

On the outside Google will still likely have playful swag and cool offices, but the reality is that it will be more of a ‘normal’ business. That means that we won’t see the next Facebook coming from within Google and that whilst the speed of evolution will continue to run along at the same pace, substantial innovation probably won’t. This kind of business requires a different kind of leader to Page, and by appointing Sundar Pichai, will create a cultural break from the past. Pichai is likely to be able to get more revenue out of the Google ‘cash cow’ to help drive innovation in these other areas.

Page and Brin are freer to bring their energy to the other businesses in Alphabet. For instance, keeping Nest out of Google allows it to work easier with Google competitors like Apple and Microsoft as part of a wider eco-system.

Lastly, it could be an effort to ring fence Google’s anti-trust woes within the existing business and prevent restrictions being imposed against its newer businesses because of the past sins of the core business.

So what does this mean for marketers?

Google is likely to pursue a steady as she goes approach. The focus will be to optimise revenue, so there will be tension with agencies on advertising practices. We’ve already seen this, with Google restricting methods of buying YouTube advertising. These changes will impact the advertising technology business around programmatic advertising.

The picture with SEO is more about slow and steady change; Google has evolved its Panda index changes to a rolling change rather than the massive shake-ups of old.

More information

Android Fragmentation Report August 2015 – OpenSignal
2004 Founders’ IPO Letter – Investor Relations – Google
Fumbling the Future: How Xerox Invented, then Ignored, the First Personal Computer
What’s eating Google’s brand | renaissance chambara
Why Google Employees Quit? | TechCrunch
Google Tightens How Advertisers Buy YouTube Ads | AdWeek
Google’s $6 billion miscalculation on the EU | Bloomberg Businessweek

Taking a balanced approach to intellectual property

IKEA is coming under a lot of scrutiny at the moment given it’s recent action against IKEAHackers. IKEAHackers is an online forum where consumers swap ideas and tips make things that better suit their needs by mix-and-matching items from the IKEA catalogue.
ikeahackers
This message from the founder was posted on the site:

Some months ago I received a Cease and Desist (C&D) letter from the agent of Inter IKEA Systems B.V., citing that my site IKEAhackers.net has infringed upon its intellectual property rights. In that letter they asked that I agree to voluntarily transfer the domain name IKEAhackers.net to them, failing which they reserve the right to take any legal action it deems necessary against me.

Long story short, after much negotiation between their agent and my lawyer, I am allowed to keep the domain name IKEAhackers.net only on the condition that it is non-commercial, meaning no advertising whatsoever.

I agreed to that demand. Because the name IKEAhackers is very dear to me and I am soooo reluctant to give it up. I love this site’s community and what we have accomplished in the last 8 years. Secondly, I don’t have deep enough pockets to fight a mammoth company in court.

Needless to say, I am crushed. I don’t have an issue with them protecting their trademark but I think they could have handled it better. I am a person, not a corporation. A blogger who obviously is on their side. Could they not have talked to me like normal people do without issuing a C&D?

IKEAhackers.net was set up in 2006 and truly not with the intent to exploit their mark. I was a just crazy fan. In retrospect, a naive one too. It is not an excuse but that was just how it was when I registered IKEAhackers. Over the last 8 years the site has grown so much that I could not juggle the demands of a full time job and managing IKEAhackers. It also costs quite a bit to run a site this large. Since IKEA® does not pay me a cent, I turned to advertising to support myself and this site.

Now by June 23rd, I would need to take down the ads, not earn any income and still advance their brand on this site. Wonderful!

This is an interesting move for a number of reasons:

  • IKEA is relying on the site’s owner to not crowd-source a defence fund from the members. There are a number of reasons why IKEAHackers would be likely able to win a court action if IKEA took things that far. The key element  could be that IKEA has only taken action against IKEAHackers after the site has been up for eight years; so IKEAHackers could avail of the Laches Defence
  • IKEA so far hasn’t explained to a wider audience it’s rationale for taking action against IKEAHackers. There could be valid reasons, for instance, does it consider that there is a risk of litigation in the U.S. if someone were injured by an IKEAHack design? Or is some of the advertising inventory on IKEAHacks being sold to direct competitors?
  • The stance reminds me a lot of Apple and it’s eco-system of rumour sites. The key difference being that IKEA is a utility furnishing brand with little prestige

At present time I don’t know what to think because I don’t know enough about IKEA’s rationale; there isn’t anything on their UK press room for instance. At the time of writing, the company hasn’t responded to angry fans posting on the IKEA UK and IKEA USA Facebook pages.

As a digital marketers I do find it ironic that most businesses struggle to build up a community around their brand:

…for social to be effective, companies must be able to wrap their products and services in well-designed experiences that people can get excited about and share with their friends.

As my ultimate boss Larry Weber recently put it in an interview with Forbes magazine.

Yet IKEA seems to have that kind of social experience, purely through the efforts of Jules Yap and the rest of the community at IKEAHackers!

More information
Big changes coming to IKEAHackers | IKEAHackers
Larry Weber: Why Social Media Is Important For Startups | Forbes
Jules Yap | Google+ profile
The Laches Defence | Wikipedia – IKEA’s legal weakness in it’s dispute with IKEAHackers
Ikea bullies Ikeahackers with bogus trademark claim | BoingBoing

Glocal and the complexity of social interactions

‘Think global, act local’ used to be a mantra for international marketers, but in a world of social media this springs up a myriad of complexities. Some of them good, some of them bad.

For years internet users pirating content have acted as a bridgehead for Japanese anime content, often much to the bemusement of the Japanese themselves. Just this week Japaneses netizens were puzzled by foreign praise heaped up a Japanese remake of My Little Pony.

But this diffusion of local content to an international stage also has a darker side to it. Singapore Tourism Board has been embroiled in a firestorm of criticism at home when a promotional video that was made to encourage visitors from the Philippines came to the attention of Singaporean netizens.

The reaction was so harsh that it the video was covered in The Straits Times and marketing press across the region.

The Singapore Tourism Board took it down from YouTube and the video was reposted by netizens under the title ‘Singapore Tourism Board’s Horrid Promo Vid’. At the time of writing the reposted version has enjoyed almost 140,000 views with 230 comments and 577 dislikes.

What would have been considered sweet and romantic for the intended audience was considered excessively syrup in its nature by Singapore netizens and I can see their point. Some of the comments include:

Live From Asia videos: WHAT THE HELL DID I JUST SAW??? hahaha
MegaSmilee1: STB is never gonna live this down xD
Terence Yang: Honey, look! Its so lame…
Jennifer Kingston: STB needs srsly needs new talent… Is this made by foreign talent too? -_-
sporeKAfan: OMG this is such a fucking cheesy promo video! Such an embarrassment compared to our neighbouring countries’ tourism videos. What the hell is STB thinking of?
Anurag Shivach: Was this supposed to be one of those so bad it’s good videos. I laughed all throughout, well done guys.
Yibin Teo: My money!!!!!!! My hard earned money!!!!!God why do I pay tax?????

The video spawned at least two parodies by Singaporeans:

Glocal came about because doing everything from headquarters usually lacks brand resonance in local markets. In the age of worldwide social reach organisations need to move beyond the glocal model of ‘think global, act local’ to ‘think global, act local, review global’ in terms of sense and sensibility – if you come up with a sufficiently snappy acronym for it, put it in the comments and you could get to win a book by our CEO Larry Weber.

From a purely selfish agency point-of-view, it is a lot easier to get teams to work on work that they can feel proud of. But poor-quality content and trying to get along with insufficient resources in some markets runs the risk of embarrassing the brand and tainting its reputation in the same way that a conventional PR crisis can.
More information
Overseas reaction to Japanese My Little Pony dub is a little odd to Japanese people | RocketNews 24
STB defends promotional video for Filipinos | Marketing Interactive
‘Baby surprise’ tourism promo video could have been done better: STB | Straits Times

Video didn’t kill the radio star – in fact, the internet might have given it a new lease of life

Radio

As the song goes, the demise of the radio has long been predicted as video, video streaming, mobile internet access and various other mediums have developed.  Good old radio, however, is tougher than it might look.

I’m not ashamed to admit that I love listening to radio. In fact, a lot of people I know love it.   I’m a huge fan of BBC Radio 4 and, have been to the recording of the Now Show and the News Quiz. I even got a bit star-struck when I met Simon Jack from the Today programme. I was also quick to get a DAB Radio when that was the latest thing and am known to enjoy the Craig Charles funk show on BBC 6 Music. It’s the platform I use to get a lot of my daily news.

At Racepoint, we read a recent report from eMarketers[1] with interest. The report covers media consumption across TV, mobile, internet, print and radio and looks at changing behaviour.  Some of the results are unsurprising – for example, the UK now uses multiple channels for media, print is in decline and consumption through mobile devices is growing. However, what I found most interesting was that the UK’s Radio Joint Audience Research Limited (RAJAR) has reported that the average radio listening hours was over three hours a day per listener. It is still the second most popular medium with 47.3 million adults, 90% of the adult UK population tuning in to the radio in Q1 2013[2]. It demonstrates the enduring popularity of one of the oldest forms of mass communication.

The report sheds light on how different devices are used to listen to the radio. DAB radio devices have not been as popular as was initially hoped – most of the adult population have stuck to analog (35%) or switched to mobiles or computing devices (16%).  It’s a different story when it comes to children: only three per cent use traditional devices and the majority listen over the internet. The overall picture shows the enduring popularity of radio. It’s a versatile medium that is kind to muli-taskers and allows us to get on with our day job whilst absorbing information.

But there’s more to come in the story of radio. In June this year Apple announced plans to launch iRadio – a music streaming service that promises to take your own personal tastes into account and deliver music and content that is relevant to you. No doubt other vendors will follow suit, but it’s important that Apple has taken the first step. Apple’s ability to influence consumers is massive and we may see a new golden age of radio.

So what does this mean?  Firstly we should not forget the value of the wireless. Particularly when developing an integrated communications plan. Radio isn’t just the domain of older generations – it reaches an exceptionally broad demographic.  Secondly, as the media landscape is becoming more diverse, the research would suggest that traditional platforms are as popular as ever, only delivered in new ways across multiple devices. With such a wide reach, radio should be embraced by communications professionals to reach niche, as well as diverse audiences.

By Alice Jackson

Paid Content: All you need is love…and tablets…and smartphones

Paid-for news content is having a tough old time in the Internet age. Us readers are so used to getting news for free that even the lowest cost news and online content is shunned in favour of free site. According to two separate reports, from Forrester and the Columbia/Indiana University, there are two lifelines for news content – the rise of tablets and smartphones and…umm…’love’.

Easy one first. Analyst house Forrester has released its predictions for potential grown in the paid content market in the coming years. It’s being driven by the increasing number of smartphones and tablets out there. The firm predicts the market for music, games, film, TV and news content will grow by 65% by 2017 – bringing it to a total of £8bn. ‘Digital news’ specifically is expected to shoot up to almost £250m, a 77% increase in spending from us consumers.

Which all sounds like good news for those news outlets with paywalls erected around their content – the FT, The Times and New York Times and so on.

Forrester states the change will be driven by the appeal of new services available on cutting edge tech, although how this relates to news specifically isn’t clear. Forrester’s own Darika Ahrens says “Demand among European Internet users willing to pay for digital content grew between 2009 and 2010, but the number of online buyers didn’t due to a lack of compelling service offerings.”

So we need some more compelling services. And also a bit of ‘love’. That’s according to a study from  Columbia/Indiana University titled ‘Paying for What Was Free: Lessons from the New York Times Paywall’.

As the name suggests, the study examined New York Times reader habits and motivations for paying for the paper’s content post-paywall. The 954 participants were shown two “justification paragraphs” that explained why the New York Times had opted for a paywall model.

One focused on the publisher making a profile from editorial, while the other emphasised the charge was needed to avoid the paper going out of business. The respondents were then asked to rate “how the information changed their support for the paywall and their willingness to pay”. By far and away, they were more likely to pay when facing up to the prospect of the paper closing.  Sadly, according to Paid Content, guilt is “not a guaranteed way to get readers to pay”, as most readers chose not to pay at all, regardless of the statement they read.

There are a few bright spots in the paid content space, but it’s a long slog toward a healthy, stable and profitable market. Love and smartphones are not enough.