Evolving From Tools to Hands

I recently learned about a company called LeadGenius that styles itself as an “end-to-end sales-acceleration solution.” What that means is that you tell LeadGenius about your market, and they take it from there: identifying leads from business databases, scoring them, sending promotional messages to them, right through to appointment setting – all duly reported to you in the CRM system of your choice. It’s obviously an appealing concept, and it may also suggest the next level for data publishers. Data publishers have built stronger and more profitable businesses by building tools around their data and injecting themselves into client workflow. But what’s next after that?

If LeadGenius represents where things are headed, the answer may be to not just fuel prospecting for our customers, but to do prospecting on their behalf. It’s not as wild a concept as it might sound. Indeed, many B2B media companies have pushed hard into a new business called “marketing services,” which can include just this.

Does it make sense? Well, talk to data publishers and you’ll quickly find that a key frustration is that they are providing much more sales intelligence to their customers than they know how to fully use. You’ll also hear endless horror stories about customers who squandered great leads or missed big opportunities. Perhaps sales prospecting (and we’re talking about developing live prospects with an expressed buying interest, not closing the sale) belongs with the organization that understands it best.

It is also worth considering the appeal of a service such as this in our app-driven world, where anything can be obtained with a few clicks. In a nod to this, LeadGenius offers its own API through which customer projects can be ordered and managed. Someone who offers to do the work tends to be more appealing than someone who wants to help you do the work yourself.

Of course, it’s speculative to discuss where things are heading based on the example of just one interesting company. But in our pay-per-click, cost-per-action world, is this really so difficult to imagine?

How Do Your Customers Rate?

It’s recently become known that Uber not only allows its customers to rate its drivers; it also allows its drivers to rate its customers. If you’re loud, abusive, demanding or otherwise unpleasant, you might find yourself silently boycotted by Uber drivers, none of whom are obliged to pick you up. Is this scary, unfair, an exercise in pure democracy or a wake-up call to consumers, who have to date exercised sometime life-and-death power over all types of small businesses with their comments, ratings and reviews, often furnished anonymously? It’s too early to know if this move by Uber foretells a trend, but it’s worth exploring.

Spend just a few minutes online, and you’ll quickly learn of the outrage of small businesses against rating and review websites such as TripAdvisor and Yelp, not to mention the periodic lawsuits. These businesses see an issue of basic fairness: why should unknown strangers (who may even be my competitors pretending to be customers) determine the success of my business in a manner in which I cannot even defend myself?

On the flip side, should businesses be empowered to rate their customers? In some cases, it’s simply not possible: customer transactions are largely anonymous. But for big dollar B2B transactions, rating and review platforms already exist.

An early example of this is a site called TheFunded.com. It had the audacity to let entrepreneurs rate venture capitalists, anonymously. It created a firestorm in the industry, with venture capitalists up in arms about the unfairness of anonymous reviews. In fact, the outrage really stemmed from the upending of the power dynamic in that business. Suddenly, entrepreneurs were no longer supplicants.

Business credit website Cortera has an interesting approach, creating online forums for credit managers in specific market areas to exchange information on companies. It’s a good concept, but one where it’s difficult to get a critical mass of interactions.

The idea of businesses rating customers is not completely new. Indeed, companies like ChexSystems operate “bad customer” databases used by banks to judge whether or not they want to do business with you. And in the apartment rental industry, numerous databases exist to report bad tenants, some with catchy names like badtenantslist.net and donotrento.com. These are not credit rating databases as much as they are places to report poor behavior.

So maybe widespread customer ratings will come along faster than we think. And if they do, a nifty data opportunity will arise: aggregate the ratings of customers that can then be used to weight the ratings these consumers assign to businesses. In algorithms, veritas.

Content, Technology or Something Better?

There has been a recent flurry of head-scratching (here, here and here) on the topic of when a media company should better be thought of as a technology company. It’s a good question, but it’s a question muddied by the slippery, umbrella term "media." I am of the belief that if you create and publish articles, you are a media company, even if you happen to be running on a proprietary content management platform.

But when it comes to data publishers, things aren’t so clear. Data is a form of content that plays very well with software. In fact, most data products would be a lot less valuable if they couldn’t be used effectively by software. The real question is: whose software? Those data publishers whose roots were in print directories had the business mentality of most print publishers, which was to ship out big fat books filled with information and let the customer figure out to how extract value from them. When these publishers first began to offer electronic versions, they followed the same approach, shipping out Excel sheets and letting the customers once again figure out what to do with them. Those who did wrap software around their data were known mostly for creating really bad software, and found that their customers were asking, sometimes begging, just to get the raw data without the software. This led to the conventional wisdom that publishers couldn’t and shouldn’t create software, and technology companies couldn’t and shouldn’t create content. In theory, the two camps were supposed to partner, thus marrying great content and software. But it never seemed to work. There were too many issues around revenue splits and who owned the customer, not to mention a bevy of marketing, sales and operational issues. It’s only been fairly recently that most data publishers woke up to the fact that that selling raw data was not only leaving serious money on the table, it was eroding their perceived value as well. Thus the smart ones began to invest to bring in the talent and tools they needed to create top-notch software customized not only to their data, but to the needs of their customers. The results have been uniformly brilliant. Data wrapped in (good) software means higher price points, more customer engagement and better renewal rates. It’s also forced publishers to get a lot closer to their customers, because you can’t build good software unless you fully understand its use cases. As I see it, data publishers can fairly lay claim to being technology companies. Indeed, many now report spending more on software development than content. But when you think about it, why would a data publisher want to be considered a tech company? In a way, that’s slumming. After all, what’s more valuable: a salesforce productivity tool, or a salesforce productivity tool pre-populated with high quality and regularly updated sales leads?

The Value of Volume

A fascinating story in the New York Times takes us inside a planning session between Facebook and a major consumer products marketer, Reckitt Benckiser (RB). RB wants to market its fish oil nutritional supplement via Facebook. After listening to Facebook executives pitch a large and broad marketing campaign, the RB marketing manager stops the conversation to note that he’s interested in using Facebook because of its targeting capabilities, not because of its massive reach. He suggests that perhaps RB would be better served by targeting known fish oil buyers as well as buyers of other products that are suggestive of the consumer having an interest in heart health – a key benefit of taking fish oil.

The representatives from Facebook, rather than embracing a targeted approach, instead pushed back. It wasn’t that Facebook couldn’t deliver this highly targeted audience – it could. The primary objection of the Facebook team was that a highly targeted marketing campaign like this would be “too expensive.” And keep in mind that RB is a major global marketer, with annual sales pushing $15 billion.

If you find it odd that Facebook is pushing marketers to broadly-based marketing campaigns, the underlying logic is even more intriguing. The Facebook “advertising strategist” in the meeting explains the company’s view by saying that advertising on Facebook was like firing a shotgun. My early education in the world of direct marketing taught me that the goal was to use information to move away from sloppy, imprecise shotgun marketing, to precise rifle-like marketing. Perhaps this strategist simply butchered this well-known metaphor. But as you read deeper into this article, you start to see that Facebook really wants to sell big, volume campaigns with only minimal targeting.

You probably see where I am going with this. Facebook develops this truly massive and engaged audience. On top of this, it has unbelievably detailed and accurate information about this audience, and can target against these data. Yet when a large and sophisticated consumer marketer wants to take full advantage of this deep targeting capability, Facebook proposes a mass media solution instead. Sure, Facebook is happy to tweak this huge campaign once it rolled out, but Facebook clearly wants you to start big and whittle your campaign down over time.

Why is Facebook seemingly disavowing the precision targeting that is ostensibly its greatest asset and differentiator? While the article doesn’t provide any numbers, the likely answer is this: money. You make more money selling volume than precision.

I saw this many years ago in the direct marketing world. Everyone there preached the gospel of targeting – rifle precision over shotgun sloppiness. I listened to endless presentations by clever people showing how you could use data to identify and reach the exact best prospects for your product. But try to actually purchase these highly targeted names, and you got the exact same tap dance now being performed by Facebook. The reality is that nobody with a ten million name database wanted to sell you just 500 of those names – your absolutely best prospects. Direct marketing was a volume-based business: you made your money selling big lists, not precisely targeted lists (which truth be told were kind of a hassle to produce anyway). It was a business where you talked targeting and sold saturation.

And lest you think I am pointing a finger only at media companies, be assured that marketers need to sign up for their fair share of the blame. For example, I see B2B media companies working so hard to deliver fresh, hot, highly qualified sales leads to marketers who in many cases won’ t buy them unless the media company can guarantee a minimum volume each month. Quantity trumps quality – again.

Like it or not, there’s an important lesson here for those of who run media and data companies. Precision and targeting are great – but only to a point. Marketing and sales activities are inherently sloppy and imprecise activities, and that’s why they depend on volume. And we also now must acknowledge that in a digital world, mass marketing is cheap and can often yield powerful market research insights. That’s why, despite all the advances that have been made in increasing precision, there will be continuing value in volume.

Everything Has Its Price

An excerpt from a new book by former Time Inc. executive Walter Isaacson makes a point that is still not fully appreciated by everyone in the content business:

“At Time Inc., we initially planned to charge a small fee or subscription, but Madison Avenue ad buyers were so enthralled by the new medium that they flocked to our building offering to buy the banner ads we had developed for our sites. Thus we and other journalism enterprises decided that it was best to make our content free and garner as many eyeballs as we could for eager advertisers”

Isaacson confirms an absolutely critical insight: it’s not that “information wants to be free.” The reality is that many of the largest content companies chose to make information free. And with no history to provide a guide, and a sense of a giant gold rush and land grab underway, other content producers followed suit. Soon enough, pretty much all content on the web was free, and guess what: users decided they liked things that way, so much so that any content producer brave enough to offer paid content experienced derision from other content producers and almost militant pushback from users.

All this led to the sorry state of affairs where advertisers have moved much of their advertising dollars elsewhere, and users have been fully conditioned to expect their content for free. Intriguingly, what saved most data publishers from this fate was the fact they typically had little in the way of advertising revenues. Thus, offering free online content was clearly nothing more than an express lane to bankruptcy, and this gave them the backbone to continue to charge for their content. And they are all better off for it.

Even today, it remains true that you can make more money faster selling advertising than selling subscriptions. And that’s why many media companies, with their executives steeped in advertising sales culture, still can’t get fully comfortable with the notion of paid content. Subscription-based businesses are desirable, durable and diversified in terms of the customer base, but these businesses build slowly. Indeed, almost all the characteristics that make subscription-based businesses attractive as businesses make them unattractive to those who grew up selling advertising. It’s truly a cultural issue.

All this leads me to think that the emergence of the freemium and metered models is critical to the future of many content publishers. More and more websites are sporting “plus” and “pro” versions that offer different and supplemental content on a paid basis. The publisher keeps a portion of its content for free, the better to aid discovery and get the user hooked. And a portion of the audience will pay to get even more of that content.

Just as we trained users to expect all content for free, we now must begin the slow but essential process of training them that going forward only some content will be free. You can also argue that this shift simultaneously weans both users and publishing executives off of free content. There are still plenty of eyeballs to sell while at the same time the publishers begin to diversify their revenue streams.

And for those data publishers that have always charged for their content online, I will say just two words: carry on.