Personalization and Online-to-Offline, Not "Mobile, Local, Social"

The technology buzzwords of the day are “social, mobile, local“, but personalization and online-offline better describe the broader trends.

Personalization

Personalization technology can be roughly fit into a few groups - targeting, collaborative filtering, social, and customization of creative, although in the real world these are often integrated and inseparable. If the internet started with the contextual and broad-based targeting of the offline world, and then moved to backlink-based search, personalization has long been taking market share from search as the mechanism to drive the online world from advertising to content to commerce (although search itself is becoming ever more personalized than more or less deterministic PageRank-style algorithms). The shift was enabled by the vast and accelerating rate of data online services collect about their users, but it only succeeds because of entrepreneurs who can figure out how to turn this data into information and then to action.

In ad-tech this has taken the form of behavioral, demographic, psychographic, and semantic targeting, in rough chronological order. My recommendation to premium publishers is to create halo and valence data to integrate into ad targeting ASAP to monetize the incremental value of their own brands vs. lower quality sites, and I think this represents an interesting void for ad-tech startups to fill. Collaborative filtering is invading the ad-tech world, with AdKeeper recently telling PaidContent that “The way to understand the ‘good’ ads from the ‘bad’ ones is to let consumers actually come out and tell us what they are.” Social ad-targeting is on everyone’s radar but cultural barriers remain as illustrated by LinkedIn’s misstep with social ads in August. Opt-in social recommendations have been far more successful, primarily in the form of Facebook likes and Twitter mentions, but this is not quite advertising. Personalization of creative is taking ad-tech beyond the question of what product to advertise where and to whom, but also what that ad should look like as the where and to whom vary. Companies such as SundaySky and EyeView customize video creative on the fly on a per-user basis, while Dapper and Tumri do the same for display. 

In content personalization has primarily taken the form of collaborative filtering by companies such as Netflix, Taboola, Outbrain, Sailthru, and nRelate, with some recommendations from the social graph although this again raises privacy issues.

Online commerce is increasingly personalized, with Amazon leading the way in applying collaborative filtering to suggest purchases, and practically every e-commerce site of any scale following in their footsteps. FourSquare is lead the way towards location-based analytics for brick and mortar merchants, while niche sites like BirchBox and Fitocracy can offer incredibly rich data to such mammoth industries as beauty and fitness, respectively.

Online-to-Offline

I have long postulated that online-to-offline is a basic axiom of media, whose appearance in digital media and the mobile web are the natural evolution of these technologies rather than a paradigm shift. Every form of mediated human communication, from the printing press through the telephone to the various incarnations of the internet (Web 1.0, Web 2.0, mobile Web) has been about facilitating and optimizing real world results, rather than some sort of masturbatory self-referential information exchange (jokes about internet pornography aside). As technology matures it ceases to be technology per se but rather becomes just another tool to enable the satisfaction of our eternal human needs: food (Yelp, Menupages, Zagat), shelter (AirBNB, HomeAway, HotelTonight), transportation and navigation (ZipCar, GetAround, Garmin), in-person social interaction (Meetup, Evite, Paperless Post), work (LinkedIn, TheLadders.com, Indeed.com), sex and intimacy (JDate, HowAboutWe, PlentyofFish) and finance (Mint, BankSimple, LearnVest), sports (RunKeeper, Fitocracy, DailyBurn), entertainment (Netflix, Hulu, CollegeHumor), etc. Email and sms are no more intermediated than letters and telegrams, and the technology of previous generations such as airplanes, ATMs, and microwaves were no less wondrous or disruptive when they were launched than the internet, smartphones, and tablets. This concept is neatly summed up by the Alan Kay quote that “Technology is anything invented after you were born. Everything else is just stuff.” It is true that the pace of disruption has accelerated, but I don't believe this represents a discontinuous break with the past.

The long-term trend in the world of digital media products or services – be they apps, software, hardware, etc. – is therefore not determined by feature sets or tech specs but by utility as a tool for solving a real-world problem, defined as effectiveness in creating real-world results with the least real-world effort. The digital media companies that succeed in transforming their “technology” into everyday “stuff” will be those that heed the above. Apple is the pinnacle of this transformation, but there is room for plenty more companies to get this (if they can).

Mobile, rather than distancing people from the real world, makes them more effective in dealing with it. Mobile has taken the utility of media to its natural conclusion, by bringing the media (“online”) to the physical location in which its consumption is most effective ( “offline,” aka “the real world”). Printed guide books and handwritten travel directions are perhaps the original forms of mobile media, but required far more effort while producing far inferior results. Their replacement by digital mobile media was therefore inevitable.

iPad vs the Rest: It's the Marketing, Stupid

James Kendrick of ZDNet wrote a nice article today on why no one can challenge the iPad.  His thesis is not that the iPad has an unassailable first-mover advantage, that consumers automatically associate "tablet" with "iPad," that the iPad has the superior ecosystem, or any of the other arguments that are usually made.  Rather, according to Kendrick, it is the end-to-end pre-purchase experience that Apple presents the consumer.  While I am sure the other factors play a role as well, I think that Kendrick is on to something.

Essentially, Kendrick's thesis is that no one cares about the technical features of their tablet. Unlike a computer, the majority of buyers don't think of a tablet as something they need, but rather something they want.  They want the "magical" experience that Steve Jobs offers them, from his initial unveiling of the iPad at a frenzied press conference down to the last detail of his gleaming white Apple stores.  

By comparison, other tablets are aimed at the tech-savvy crowd, and come from companies whose DNA - and marketing message - is computing rather than consumer electronics.  Even if a competitor could come up with a marketing message that appeals to the masses, Apple's "coup de grace" is "carrying the magical marketing experience right to the cash register." Other tablet makers simply lack the infrastructure to even compete on the retail front.  Not only do other tablet makers lack their own retail channels, but the shopping experience that is offered is abysmal, writes Kendrick:

Go in any Best Buy or other big box retailer that carries tablets and there’s no telling what you’ll find. Maybe there will be a counter with tablets scattered all over. Maybe some of them will actually work. The only consistent part of the retail buying experience for tablets is that the sales reps don’t know much about any of the products, much less help you decide which one is right for you. They don’t care, frankly, and that message gets through loud and clear.

In the online channel, where design is more fluid, cheaper, and under the manufacturer's control, the other tablet makers should in theory be able to compete on the shopping experience.  However, writes Kendrick, this is not the case:

If you don’t believe that, simply visit hp.com and try to buy a TouchPad. It’s in the Home & Home Office section, and the first thing you see is not magical marketing, it’s a small sales page that compares the two models of the TouchPad. No pizazz, no marketing, just click to buy.

The same holds true for all online retailers selling tablets. They are designed for selling computers [emphasis mine], and expect the customer to have some idea what they want coming in. Their sites aim to help you decide between competing products, which assumes some prior knowledge. There is no sales technique at play, simple point and click to buy. Or to leave, which is apparently what most customers are doing if sales numbers are accurate.

So what can tablet makers do to compete with the Apple juggernaut, besides having better marketing campaigns?  A couple of off-the-cuff ideas:

• Control the retail channel: either do a better job partnering with existing retailers, or set up more stores like the Samsung Experience.
• Find alternative distribution channels to the traditional consumer electronics retailers, where they can be the exclusive tablet offered in the store.
• Create a more compelling brand story around their products.  Apple realized long ago that computing is personal, and that people would identify with their computing devices like they identify with their fashion choices.

Ultimately however it will depend on tablet makers getting outside of their computer-seller box and getting into technology-as-fashion.

How iPhone, Android, and BlackBerry users stack up. Plus, 33% of Americans would rather go without sex than their smartphones.

This is a fascinating infographic on how addicted Americans are to their smartphones, as well as the differences b/w iPhone, Android, and BlackBerry users.  My favorite stats:

• In favor of the appeal of Android's hardware diversity: 50% of Android users think their phone reflects their personal sense of style, versus only 35% of iPhone users and 43% of BB users.
• In favor of the appeal of the iPhone to developers: Only 38% and 37% of Android and BlackBerry users have ever paid more than $1 for an app, vs 55% for iPhone users.  The dig on Android that users don't pay for apps might have some truth to it.
• In favor of BlackBerry: nothing really.  Sorry RIM.

Posted via email from SYSTEMS ANALYSIS

A Tale of Two Entrepreneurs, or Why Mark Zuckerberg Deserves More Privacy than Steve Jobs

The usual conversation about privacy in the tech world has been turned upside down recently.  The CEOs of Apple and Facebook have been in the news a lot about privacy recently, but not for the usual reasons.  Although I'm not a big fan of the way they chose to structure it, Mark Zuckerberg and Facebook´s investors certainly have the right to keep their company private for as long as they want and for whatever reasons they want, including Zuckerberg's own privacy.

Steve Jobs on the other hand, is running a public company with a $300Bn+ market cap.  That means that the public absolutely has a right to ask about the possibility that he will be unable to continue to contribute to Apple.  Obviously I am sympathetic to Steve Jobs' medical situation, and I wish him the best and speediest recovery, out of general humanistic empathy as well as a recognition of the loss his passing would represent to the technology ecosystem that I love and live off of.  I am also sympathetic to the general need for privacy, which only grows in times of personal duress.  But the trade-off for going public is surrendering your privacy.  Want your privacy?  Don't go public (see exhibit A, "Mark Zuckerberg.").

The iPhone and the Dark Side of Korea's Mobile Leadership

Much has been made of second-place Korean mobile carrier KT picking up the iPhone, as the world waits to see whether the smartphone prodigy can cut it in a famously competitive wireless market.  However the really interesting question is not whether Koreans will take to the iPhone, but what they will do with it.  Korea's dark technology secret is that for most Koreans this will be their first time on the mobile internet.

The world knows South Korea, rightly, as leaders in wireless and internet technology.  South Korea was the first country to have mobile 3G, mobile TV, and pretty much everything else mobile, and is first in the world in broadband rankings.  But the country remains woefully behind in mobile content, due to shockingly high walled gardens and byzantine data plans.

In a sort of quid-pro-quo for the massive capital investments the carriers made to build the world's first 3G data networks, the South Korean government and public have not pressed for an open mobile ecosystem as they have in the West.  The leading South Korean mobile operators - KT and SK Telecom - have complete control over Korean mobile content, and almost everything has to go through the carrier deck.

As a result, only 1% of Korean cell phone users have smartphones according to Korean paper the Joon Ang Daily, compared to the US where smartphones made up of 31% of new phones in Q3.  These are not old phones either - half of all Koreans replace their phones every two years.

Korean phones may have super high-end features, but they are still feature phones.  For the uninitiated, feature phones are basically everything that is not a smartphone, which is to say everything without its own operating system and the ability to install third-party applications like a computer.  Feature phones tend to have limited web browsing abilities.   They have lots of cool features - or what could be called "apps" - but these features are pre-installed by the operator and can not be expanded or modified.

Thus we find that in 2009 the South Korean mobile internet is one of the most backward and underdeveloped in the world, despite their world-leading infrastructure and handsets.  Korean carriers have been deathly afraid of a mobile internet that they could not control.  In 2008, when LG Telecom offered OZ, its unrestricted mobile internet service, this was considered a revolution in the South Korean market, while SK Telecom first announced unlimited data service plans in April (2009!!!).

The true impact of the iPhone on the South Korean market will be to introduce the real mobile internet to South Koreans, much like the iPhone did in the US (where mobile internet was available for years before the iPhone but never caught on).  As in the US, the ripple effect on competitors has come quickly.  While market leader SK Telecom declined to pick up the iPhone, it made a preemptive strike at KT by opening up its own app store, T-Store (I don't speak Korean so I hope this is the right link ;-).  Perhaps because of the harsh criticism the T-Store received, SKT has just announced plans to introduce the Motorola Droid and HTC phones to continue the fight.

The clear winner in all this is the Korean consumer, who will have access to unlimited mobile applications for the first time.  Based on what the Koreans have already come up with for mobile phones and broadband Internet, I can't wait to see what they come up with once they put the two together.