Data Disconnect: Don't Let This Happen to You

I'm just back from the SIIA Information Industry summit, and it was refreshing to see so much enthusiasm in this industry again. Online advertising is back with a vengeance, and many in the room are predicting 20% to 80% growth in online ad revenues this year. And for the subscription-based publishers in the room, there seemed to be growing comfort with their products, and in how to market effectively to ever more demanding customers. And all this wasn't just my sense: more than a few speakers and attendees were noting that "it feels like 1998 again."

The only disturbing note was the seeming appetite to address the growing cost and complexity of data compilation by simply skipping the hard stuff. What I mean by this is that there is a lot of activity around the idea of essentially automating the editorial function. Halsey Minor created some buzz when during his luncheon talk he mused about the possibility of building services such as CNET without editors. We heard from companies whose entire businesses were based on re-packaging data gathered on the Web. In several conversations with publishers, it seemed that all of them were seeking opportunities for products that could be built largely, if not entirely, from Web-based data gathered on an automated basis. This thinking stands in stark contrast to one of the main themes I heard hammered home by speaker after speaker: success depends on adding value to your content and building content products that were not only useful, but unavailable elsewhere. Certainly, software is more powerful than ever, and there are examples of products built largely on an automated basis that offer real value. But when it comes to building database and directory products, I believe a lesson I learned early on still holds: if the data you need for your product is easy to collect, your new product is probably a lot less valuable than you think. Re-formatting readily available data or adding a few additional data elements rarely yields "must have" data products, particularly in today's demanding environment. Just as important to remember, if you can get your hands on the raw data easily, so can your competitors. And the software you developed to create your automated product? Every single day, application development tools are becoming cheaper and more powerful, meaning that your "proprietary software" offers little competitive protection either. While you can light up a data publisher's eyes at the thought of eliminating phone calls, faxes and mail, and possibly even eliminating human editors altogether, what we're really seeing is a re-emergence of the perpetual motion machine fallacy on the late 1980's, where a number of half-baked schemes were launched where the database was supposed to somehow maintain itself, the product would be shipped automatically, and the publisher's primary responsibility became checking his daily bank balance from the beach. If only! I am very excited by the potential of data mining tools and user self-updating, and all the wonderful things that can be done by applying software to the wealth of data available on the Web. But I'm concerned by our blind rush towards the world envisioned by computer industry visionary Bill Joy where "the future does not need us." Let's not be too eager to disconnect data quality from human effort just yet. Instead, let's recognize that the human editorial function, which by the way allows us to address the sizable base of businesses that still have no Web presence, is fundamental to the creation of the value added products we need to produce in order to succeed and thrive in the years ahead.

The Importance of Being Vernacular

I remain amazed at the number of database publishers, particularly those chasing B2C markets for the first time, who haven't seen fit to make their heading structures as friendly as possible to a wide range of audiences.

Consider health sites that offer consumers physician specialties such as "Otolaryngologist." Or legal sites offering categories such as "admiralty law." Or a food ingredients directory with a category for "EVOO" (that's Extra Virgin Olive Oil in case you were wondering).

Technical terms and acronyms may be acceptable as categories in a trade directory (and I say "may" because even within a specialized field, not everyone has the same level of knowledge and expertise), but they're major roadblocks when trying to woo outsiders -- in these cases, consumers.

Kudos then to UK yellow pages publishers Yell, for recently introducing alternate headings based on regional dialects, in recognition that descriptive terms in common use are often not the formal term.

Taxonomies also need to account for common misspellings. One industrial directory found by an analysis of its searches that large numbers of users never got to its category for "throughbolts" because they were typing "thrubolts."

Too much effort you say? Like it or not, we all now operate in a "satisfy them or lose them" environment. Anticipating how users will search for information results in more hits, and more satisfaction. The smartest publishers I know all log and regularly review user searches that generate zero results as a simple way to identify problems. When your site allows users to search your heading structure using free text, such reviews are even more important.

The more paths you can provide to get to your data, the more satisfied users will be and the more successful you will be. When it comes to database taxonomies, if your terminology is correct, and the user's terminology is wrong, then you're wrong too.

Back to the Future

When we coined the term "infocommerce" way back in 1999, it was meant to express our belief that information content needed to be linked with software and become increasingly integrated into the business processes of our customers. This would go far beyond assuring high renewal rates. It would drive customer demand for better and deeper data, for which publishers would be able to charge premium prices, with all this data now integral to the basic operation of client companies. We saw this as a very attractive vision of the future, but at the time it really was in the realm of theory.

Over the past few years, we've seen these precepts of infocommerce become part of mainstream thinking in the industry, with more and more publishers talking about delivering high value data as continuous data feeds, and finding ways to embed themselves into the workflow, systems and processes of their customers. But while more of us are "talking the talk," still only a handful of us are "walking the walk."

That's why it is so nice to hear a top executive at leading company demonstrating that they not only see the future, but are making serious strides to re-position their companies accordingly. Nancy McKinstry, chairman of Wolter Kluwer's executive board, told the audience at the recent DeSilva & Phillips conference that it was the goal of Wolters Kluwer to move beyond providing their customers with information to read in favor of finding ways to "embed our content in what our customers do." And in a dramatic illustration of their commitment to this goal, McKinstry noted that the company now devotes as much effort to creating software as it does to creating content and has already reached the point where "we have as many programmers as we do editors."

That's a dramatic statement for a publisher to make, but it reflects the reality that our business is changing profoundly. Reference data has traditionally been standalone and passive, and that constrained both its utility and its value. Need to find something in the old days? You'd stop what you were doing, look it up, and then go back to what you were doing, often cutting and pasting or re-entering the reference data you had found. That's not efficient or productive or easy, which means that a lot of directories and databases became place of last resort, destroying their value. Information that is used frequently and valued highly is information that is integrated into the daily work of the customer, if not driving the daily work of the customer.

We've all talked about the desirability of owning "must have" information. This new environment allows us to get to that goal more easily than ever before, but we've got to see the vision, and make the necessary investment to adapt our products now. Those who do will find themselves with even better businesses than they ever thought possible. Those who don't will end up as roadkill on the information highway.

We're pleased to announce our first Models of Excellence award for 2005 has been awarded to Primary Intelligence for its Account Profile product.

For a handy reference to Models of Excellence winners for 2005 and years past, please visit our awards page for the complete lists and full details.

Feed Me

Just yesterday, VNU's European arm announced a deal with NewsGator to distribute a bundled offering of the NewsGator RSS reader and VNU's business content covering the information technology industry.

Why is this significant? Because I think RSS feeds are potentially very important, and very good news for business publishers, including data publishers. RSS feeds are simply content sent by publishers in a standard XML format to users. Users read RSS feeds with newsreader software such as the product offered by NewsGator. RSS feeds are commonly associated with blogs. There are two ways to view a blog. You can visit the blog just as you would any other Web site, or you can have new blog entries sent to you as RSS feeds. Every time the blog is updated, the new information is automatically sent to your newsreader and you are alerted.

What excites me is not the technology, which conceptually speaking is quite mundane. Rather, it's the potential of RSS as a new and powerful distribution channel. RSS feeds allow publishers to push content directly to the user's desktop, bypassing spam filters and a whole host of other hassles and delivery impediments.

That's why I have begun to think of RSS feeds as "trusted feeds." Users subscribing to RSS feeds are saying to publishers that they value, trust, and want or need this specific content, and they will pay attention to it upon arrival.

And dare I say it, the other reason RSS feeds are so powerful is that they represent push technology. Push technology has been discredited in the eyes of many because it has been so badly over-hyped in the past. But I increasingly believe the successful publishers of tomorrow must have a push aspect to their product. It's simply the only way to engage your attention-deprived users in a value-added way that doesn't offend. I would even go so far as to say that the surprising resiliency of print publications is due largely to the fact they push content to users, a different form of trusted feed if you will. RSS feeds aren't only for blogs and news stories. They are equally adaptable to pushing out new listings and other event-driven data. This kind of continuous customer connection is crucial these days as more and more publishers find that it's actually easier to sell a subscription than it is to get a subscriber to use a subscription. And if they don't use it, they won't renew it. Staying visible with your subscribers is essential. RSS feeds provide a low-cost and increasingly popular way to do this. With RSS feeds, the medium is very much the message.

Click Clarity - Getting What You Pay For

It's been an interesting week in the world of pay-per-click. First there was the big New York Times article on click fraud, which gently concluded that the search engines will ultimately extinguish it, so paid search marketers can rest easy. Then, click fraud was the topic of a lively session at the huge Search Engine Strategies conference, where nobody seemed to think that the problem of click fraud would disappear anytime soon.

There also was the article in Business Week suggesting Google might just be a "one trick pony" given its near-total focus on paid search advertising. For good measure I'd throw in the announcement by the snap.com search engine that it is rolling out a "cost per action" advertising program that allows advertisers to tie payment to specific activities, such as downloading a white paper, registering or making a purchase. Keep in mind that while snap.com may be a small player, it's an Idealab company, and they're the people who invented paid search in the first place with a little company that later became Overture.

All this market discordance says to me that we're on the verge of a new generation of pay-per-click business models and tools that will reflect a better understanding by all parties as to what pay-per-click can and cannot deliver.

It's been my view that the phenomenal growth of pay-per-click has been fueled by hype and misunderstanding. Advertisers embraced pay-per-click because of its compelling COD -- cash on delivery -- premise which offered guaranteed results. Is it any surprise that advertisers flocked to it?

Despite their loose use of terminology, paid-per-click providers aren't really in the pay-per-performance business, at least as advertisers define it. These providers are selling traffic to their advertisers, with absolutely no guarantee that this traffic will turn into sales leads, purchases, or anything else for that matter. Stated another way, these providers are delivering what those in other media call advertising impressions, they just charge for them differently.

My sense of the market is that advertisers, sensitized by such issues as click fraud, are rapidly coming to realize that they've been buying impressions, not performance, and are now starting to demand real pay-for-performance that ties payment to specific, measurable and largely fraud-proof actions. Ultimately, what advertisers want, they get.

It's too early to say if this shift will be good news or bad news for data publishers, but it seems likely that this new clarity on the part of advertisers will work to level a playing field that had tilted much too far in favor of the search engines. Finally, everyone will truly get what they paid for, and that is a good thing.