Awareness is Everything: July 2007

Tuesday, July 31, 2007

Is Second Life a dip or a cul-de-sac?

Last week my colleague Eric Brunker posted about the recent wave of Second Life bashing. He was a little ahead of himself -- the biggest bash of all came a few days later in Wired, in the Frank Rose story How Madison Avenue Is Wasting Millions On A Deserted Second Life and editor Chris Anderson's Long Tail blog post, Why I Gave Up Second Life. There are robust comments at both links that offer the pro/con give-and-take, mostly centered around the not-enough-to-do-in-SL/not-enough-traffic-in-SL reasons given by Rose and Anderson. Erick Schonfeld seconded those opinions on the Business 2.0 blog the.next.net, as well. Wagner James Au from New World News not only disagreed, but put forth an interesting argument that SL marketing in the short term creates something of a long tail for a brand (an argument with which Anderson, who created the Long Tail, did not disagree). Au also says (and has said before) that Second Life marketing is simply waiting for the killer marketing app that will in the long term bring value to SL marketing efforts.

The idea that Second Life marketing is doomed and corporations are wasting their money there is a classic example of missing the forest for the trees, in this case missing the virtual forest for the Second Life trees. This is essentially the point Eric (Sentient Eric, not Business 2.0 Erick) made in his post. There are other marketing/media/PR bloggers saying much the same thing -- for example, B.L. Ochman and Shel Holtz, who says "more forward-looking competitors stand a better chance of being prepared when the scales tip." Paul Hemp in a Harvard Business Review blog, said "It would be a grave mistake to dismiss the notion of marketing and selling in virtual worlds simply because of the shortcomings of Second Life."

We concur. Here's some food for thought from Business Week's April 16, 2007, article The Coming Virtual Web:
"The Acceleration Studies Foundation ... (a non-profit research group that has set out to define the 3D Internet) assumes much of its vision won't materialize until 2016 — and some participants think even that date is ambitious."
Here's another way to look at it: Is Second Life a cul-de-sac, a cliff, or a dip on the path to virtual world marketing success? According Seth Godin's latest short-but-thought-provoking book The Dip, knowing when to quit is a matter of strategy. It makes sense to quit if you're in a cul-de-sac or a dead end. If what you're in is a Dip -- "the long slog between starting and mastery" -- then it's important to "lean into it...push harder" because people (and companies) who "invest the time and the effort to power through the Dip are the ones who become the best in the world."

If the 3D Internet does not come to true fruition until 2016 or so, which companies are going to be best poised to take advantage of its marketing possibilities -- those who waited until everything got figured out by someone else, or those who pushed through the early, tough years, gained experience, and figured out how to make it work?

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Thursday, July 26, 2007

Bottled water and other disasters

Our environment is melting away, small artisan and high quality “shops” (farms, journeymen…) are slowly disappearing – well you know the story. While the woes of these happenings are becoming less and less disputed the solutions are not becoming any clearer that I can tell. There are still some who see this as simply the market economy and make some valid arguments – for one of my favorite back-and-forth discussion on this “Rethinking the Social Responsibility of Business” there is a spirited discussion between Milton Friedman, Whole Foods' John Mackey, and Cypress Semiconductor's T.J. Rodgers (http://www.wholefoods.com/blogs/jm/archives/2005/09/).

Another great recent article in Fast Company (July/August 2007) by Charles Fishman (auther of The Wal-Mart Effect) talks about the $15 billion dollar a year bottled water industry and the branding psychology behind it. What seems like a healthy choice quickly becomes an environmental and humanitarian crisis. Fishman points out that bottled water is a recent invention, like the iPod and 10 years ago we did not know about it or “need” it – now it is the must have lifestyle accessory – both the water and the iPod. The issue with the water is that "we" (I buy it by the box) are spending billions, producing plastic and shipping something around the world (all steps eating fossil fuel and resources) for something that runs in our homes and offices - thought provoking to say the least. Read it here and let me know what you think: (http://www.fastcompany.com/magazine/117/features-message-in-a-bottle.html).

So my question is this. How does a research, marketing and advertising shop like Sentient along with our clients build worldwide brands, reach out to consumers, built market share and all that other stuff and be part of the solution and not the problem. Let me know what you think, please!

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A Sentient History

The history of Sentient Services, LP? Well I guess that has to start with my history. No, I am not “Sentient” – the company is much more and I have been lucky enough to hire smarter and more creative folks than I. However, here is how the company started. I came out of undergrad at UT Austin with dual degrees in Government and Economics and took a job with The Gallup Organization (yes, the one that does all the political polls). However, a little known fact is that the political polling is a small part of the company. They have great brand consulting, employee strengths and hiring practice, customer engagement, and a myriad of other research and consulting practices. I was lucky enough to work with an amazing team in California doing market research and brand consulting for Intel, Microsoft, Toyota, Nissan and others. Alas, Austin came calling – well actually it was the birth of our first child (my lovely daughter) and the desire to be able to own a home. So, back to Texas we came and during this time I left Gallup to join one of my research clients from Intel where he started a market research and branding company catering to the technology sector. There I worked around the globe with clients such as HP, Intel, IBM and others to develop new products and services, build and track brands and conduct just about any flavor of quantitative and qualitative market research.

At this point I knew I wanted to become a professor and get my Ph.D., so I enrolled in grad school at UT Austin in the Government department specializing in political behavior (a lot of sociology and psychology) and survey research methodology. And, we had our second child (an adorable little boy). During this time I worked as the Branding and Research Director at an advertising agency where accounts included Dell, Seagate and others. Needless to say, I was busy, too busy. So, realizing I wanted to see my children and wife and not move somewhere in the middle of nowhere to get my first teaching job (I won’t name undesirable cities at the risk of offending) I left school with my Masters and started Sentient Services, LP right as the .com bubble burst. Our (I use that term liberally, it was just me) first clients were Business Objects and working on the largest IPO ever at the time – the Freescale spinoff from Motorola. I worked around the clock doing brand tracking and consulting in 8 countries for the Freescale spinoff which turned out to be extremely successful. From there the business continued to grow – I moved out of the house into office space, hired former clients, travelled the globe and developed a list of clients that I truly consider friends and am blessed to be able to work with to this day.

Sentient today is a thriving company and we pride ourselves on our amazing employees and clients that work with integrity and respect for each other the end customers to create better products, brands and experiences. There you have it – a short history.

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Howdy from the CEO

I am Paul Janowitz, Founder and CEO of Sentient Services, LP. I am going to use this space for some open dialogues with customers, friends, partners and whoever else happens to be reading this. Those of you that know me, know that I want Sentient to be at the forefront of social responsibility and an amazing place to work, first and foremost. If we do not do this, the business is simply not worth running for me personally. I want clients to work with us for who we are and how we operate before they even consider our portfolio or skill sets.

However: I also want to be profitable, work with large global clients and local clients alike, push the boundaries of technology, develop new products and work within consumer goods, real estate, technology, and other brand centric categories.

As a market researcher first and foremost I see my job as developing better customer experiences by listening. The art and science of market research helps build better products and deliver them to the right market. This I see not as pushing stuff people don’t need, but as actually reducing corporate waste, increasing customer service and delivering more of what works and less of what doesn’t to the market place. I also see our advertising practice as helping those companies that do this the best – our clients that employ market research. So, am I putting lipstick on a pig and trying to make myself feel less like a consumer? Let me know your thoughts.

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Monday, July 23, 2007

It's about the "cliques"


...not "clicks". Advataring is not about open rates, click throughs, or even conversions. It is about creating a community around a brand that is influential over the sentiment of a brand for each and every member of the community. Avatars are social in nature, they communicate via various mediums, but basically they are about interacting and communicating with the virtual world they reside in, which includes other avatars. Thus, to market to them, you must treat them as communities, not as individuals. In doing so, you will effectively influence the community to immerse itself in a brand, your brand.

There is a mantra by a well-known advertising company that goes something like this "The more time a person spends with your brand, the more likely they are to spend money with your brand." This defines Second Life in that we are not trying to drive clicks or conversion, rather we are driving immersion by communities into a brand. A person that is immersed in a community will spend time with that community. If said community is immersed in a brand, then members of that community will spend time around the brand which will increase the likelihood they spend money with that brand, either in first or second life.

Thus if x = a user, y = a community, and z= a brand, if x is a subset of y and y is a subset of z, then x must be a subset of z (I just made that up, smile).

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Who is your avatar?

I'm quickly approaching my 1 year anniversary as a resident of Second Life and lately I've spent a fair amount of time inside this virtual world. The more time I spend the more interesting people I meet. The more interesting the person the more I realize that they are living in a reality where their avatar is perceived as the first persona and their real persona is now on the shelf collecting dust.

Being married with a young child and a dog I am forced into a world of normalcy. Sure, I make a concerted effort not to fit in with most parents my age, because
their sense of normalcy gives me the shakes although I do have my quirks which I freely admit to possessing and which I fully embrace. When I originally created my avatar, MSGiro Grosso, I tried my best to design it after my human self, even right down to choosing an Italian last name. The only liberty I took was to have a somewhat crazy hairstyle, which is impossible to recreate in the real world unless you have five different products from Bed Head. I only use two which means my hair is borderline different. When you see the effort and great lengths that Second Life residents go to in order to create their perfect persona you realize how easy it is to fall in love with that character and eventually want to become them.

Creating a persona on the other side of a computer where nobody can see you and pass instant judgment upon you is quite empowering. It gives you great confidence when total strangers are drawn to your avatar and quickly strike up a friendship. I can see how one may want to become that person and in some cases I've befriended people within Second Life who now want to be known by their avatar name and/or persona in the real world. Even Second Life developer, Aimee Weber, is somebody else in the real world yet she prefers to go by her avatar name. It's as if avatars have given everyone the ability to have a stage name, which was until recently only reserved for the entertainment industry. I wonder why it took a 3D virtual universe to bring that confidence out in somebody, because obviously it's been stored away inside of that person for a long time and yet they don't possess the confidence to tie that newfound attitude to their birth name, because somehow that name has established characteristics and expectations that cannot be changed. I'm sure in 5 years time a group of researchers will release studies on the influence of avatar based society and it's sociological ramifications on the human based society and I hope I'm the first person to read about their findings, because I find this to be so fascinating.

I bring this up, because as a marketer I'm curious if this is going to change how we look at Second Life demographics when approaching the build-out of a client's presence within the environment. Sure we may have loads of data on the typical behavior of a 28 year old single woman who is the manager of a drugstore in the South, but does that mean you have to cater your messaging to her or do you apply it to her avatar who is a 6' tall, redheaded, bombshell who spends her time as an escort in Second Life? Who am I speaking to? That's our challenge. As the community expands even further this should work itself out in one direction or the other, but for now it has forced us to be sensitive to this new reality and carefully assess our approach.

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Sunday, July 22, 2007

A sideways smack at the focus-group methodology

Focus groups -- the most picked-on market research methodology of them all -- got a sideways smack from James Surowiecki in the New Yorker's July 9 edition. I say "sideways" because the point of the article was not to dump on focus groups, but to tout the much more fashionable prediction markets as a potential method for identifying hits and misses in the consumer market space. The slap at focus groups was just a by-product:
"Prediction markets avoid many of the faults of focus groups, which tend to be dominated by the loudest and most opinionated people, to be driven toward consensus decision, and to discourage disagreement, making them of limited usefulness. ('Seinfeld,' famously, was a complete bust with focus groups.)"
First, surely someone can come up with something newer than Seinfeld about which focus group respondents were wrong. That example is aging.

Second, note that when people complain about focus groups they always complain that they were wrong at predicting a product's success (usually) or failure (occasionally). Yet among professional qualitative researchers, the idea that you might use focus groups to predict *anything* is ludicrous. So, once more, repeat after me: Focus groups help you discover why and how -- not how many. The job of quantifying and predicting falls to quantitative research.

Here's a similar example from another New Yorker writer, Malcolm Gladwell. In his book Blink he tells the story of the Aeron chair: Apparently in the early 1990s, when the concept for the Herman Miller Aeron chair was being researched, focus groups were held with "facility managers and ergonomic experts" -- the target market. These group participants mostly did not like the odd aesthetics of the chair. Gladwell gives the Herman Miller folks a big pat on the back for going forward with the launch anyway. And what happened? Quoting Gladwell:
"In the beginning, not much. The Aeron, after all, was ugly....however, in California and in New York, in the advertising community and in Silicon Valley, it became a kind of cult object....It began to appear in films and television commercials....and by the end of the 1990s....was the best-selling chair in the history of the company."
I'd like to point out here that this is *exactly* what the focus group research indicated. Not predicted -- but indicated. The target market didn't like the chair and wasn't likely to adopt it. That is a finding -- not an implication, insight, or recommendation. (The fact that the focus group did not like Seinfeld was also a finding, not a recommendation.)

A smart qualitative researcher would have been able to dig deep and get a sense for what those findings meant. It's *not* about whether the groups hate the Aeron and Seinfeld -- it's about gaining insights that help Herman Miller put together a product-launch strategy for the Aeron that....about understanding the kinds of reactions Seinfeld elicits from a specific small demographic. The mistake comes with premature closure. The findings are not insights or recommendations. They are not quantified. They are not predictions.

The purpose of focus groups is not to predict or quantify. The purpose is to understand how and why, to get the "lay of the land," to come to an understanding of the opinions of a particular, very small group. There are lots of ways to do this, of course -- observational research, such as traditional ethnography or an online hybrid; one-on-one interviews; interviews and groups online, in virtual worlds; interviews and groups with target markets, with existing customers. Gathering 8 to 12 strangers in a room and asking previously written, non-directed questions of them, leading them into a group discussion, is a perfectly legitimate method -- as long as it's done correctly.

The prediction market, as cool and up-to-the-moment as it is, won't give you the depth of insight and understanding in people's likes, dislikes, and motives that qualitative research will. But I can totally see how it would be way better for predicting who'll win the Oscars, and may also be better at predicting how well a given book will sell (the subject of the Surowiecki article).

I'll give Surowiecki the last word, because despite his sideways slap at focus groups, this indicates that he *does* "get" consumer research -- but like a lot of others, he just can't resist smacking the focus-group methodology around a little.
"The collective intelligence of consumers isn’t perfect—it’s just better than other forecasting tools. The catch is that to get good answers from consumers you need to ask the right kinds of questions; asking the market to predict how many copies a book will sell, which requires predicting how a wide readership will behave, is better than asking the market to predict which manuscript will get a book deal, which requires predicting the decisions of a small number of editors. (The Simon & Schuster experiment with MediaPredict, unfortunately, focusses more on the latter.) And you need a critical mass of people to participate."

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Tuesday, July 17, 2007

3 Essentials of Virtual Worlds

Much of whether or not a business has success in the virtual world space depends on whether business comes to understand these 3 things about virtual worlds:

1. Virtual worlds are a 3D version of websites that offer a social, spatial, and experiential factor not present in today’s websites. Proof point - “The more time a consumer spends immersed in a brand, the more willing the consumer is to spend money with that brand.” - J. Walter Thompson Advertising. Today’s consumer is less influenced by company advertising and marketing, and more influenced by their experience and the experience of their peers and thus it is less about click-thru, CPM, and conversion and more about the brand interaction.

2. Many of the historical marketing metrics (such as conversion rate, click-thru rate, CPM, etc.) that are used today to evaluate online success are not (yet) applicable to virtual worlds. Solution - we must look at experiential metrics and determine the success of people spending minutes if not hours immersed in a brand. The typical banner ad creates something like 5 seconds of brand identity, while the typical website gets 4 to 12 minutes, and the typical virtual world presence gets 30 minutes plus. Anyone who has been anywhere for more than 30 minutes will most likely tell someone that they were there, thus creating a viral effect as well.

3. It requires some work to discover the way to best utilize a 3D website (which is important because if you remember correctly, we did not know at first the best way to use 2D websites, either). Solution – we must realize that you need to have brand consistency, brand education, and integrated media support (blogs, Web 2.0, etc). You also need to make your site fun and push the messaging from a direct in-your-face message to a message that delivers via the experience.

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"______________ Sustainability" (Insert New Technology)

Sex, Pranks, and Reality - Forbes July 2, 2007
Will the Last Corporation in Second Life Please Turn off the Light - TechCrunch, July 14, 2007
Avatars, advertisers alike having second thoughts about virtual world - Austin American-Statesman, July 16, 2007 (by way of the LA Times)

What do the above have in common? They are all spreading the sensationalism that a growing technology – virtual worlds – might be headed down the proverbial drain.

I won’t waste your time de-bunking these claims, as there are more inconsistencies, mistakes, and lies by omission than you can shake a stick at. Instead just go read nwn.blogs.com Wagner James Au’s excellent de-bunking in his blog posts Forbes Flunks School of Second Life and De-bunking 5 Business Myths about Second Life as Wagner James does a great job of educating the realities of the virtual reality.

I would prefer to talk about virtual world sustainability and the relevant importance to the way we entertain, conduct business, socialize, and surf the Internet in the near future. Virtual worlds on the Internet are here and they are here to stay. This is evident from the over 20 major worlds in existence and the millions more that play online massive multi-player video games. Moreover, virtual worlds like Second Life, Kaneva, There.com, and others have proven to us that a 3D Internet is very possible and is an obvious evolution of the Internet.

Thus, to me, the debate is not whether virtual worlds are a relevant technology, but rather what is the best way to utilize this technology. This is the not the first time we have been through this type of cycle. In case anyone has forgotten, we went through the same type of high tide/low tide with 2D websites back in the mid-to-late 90’s. However, if you were to just listen to the journalists (who may or may not have ever spent more than 1 minute inside a virtual world) they would sound much like the iconic fairy tale character, Chicken Little, as they scream in unison “The sky is falling, the sky is falling.”

I sarcastically applaud the Austin American-Statesman, NY Times, and the other “news” agencies that diligently took an LA Times article and re-tread it for their paper without as much as lifting a pencil sharpener to check facts. Why is this the case? Simple – it is the NASCAR syndrome. People would rather hear about the crashes than the wins, even if the crashes were just slight fender rubs.

As these articles reported, yes, some companies, are leaving Second Life, but is this Second Life’s fault or is the fault of the “market” not yet knowing how to best utilize this type of technology to communicate, interact, and integrate with the virtual world community? Many of the early adopter companies (which not so coincidently are some of the ones bailing out) moved into Second Life knowing that it would be an experiment. They also had a “if you build it they will come” mentality, which is 180 degrees from “virtual” reality, as you need to continue to provide compelling content within a virtual presence just like you would re-invest in any website, banner ad, press release, email or other e-circular.

The question of whether or not virtual worlds are sustainable is to me just another attempt to refute the potential boundaries of technological evolution. Doubts have been cast on every new technology, including the TV, telephone, and telegraph. Recall that in 1995, Bob Metcalfe, inventor of Ethernet wrote an article for InfoWorld in which he listed 10 reasons why the Internet would fail, mostly due to the fault of the "people." Sound familiar?

The real question for me (and for many people who are much smarter than me) is not whether virtual worlds are sustainable, but how quickly can virtual worlds grow and be accepted by businesses.

And in the end, it will be the people and residents of virtual worlds that determine their sustainability – and so far those combined numbers reach into the 40+ million range (including all MMOG’s) and the numbers are climbing. To me this says the people have spoken and it is up to as marketers, corporations, and organizations to determine the best way to communicate with them.

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