CES 2008

2008 CESJust a quick note that I will be attending CES 2008 in Las Vegas. I will be at the event through Tuesday of next week.

Being the gadget guy that I am it will be a lot of fun to get a glimpse at the latest emerging technologies across a number of categories.

If you are going to be in attendance definitely let me know. Otherwise I will follow up with a review of the sights and sounds of this years consumer electronics show.

 

Why $60???

I still remember when I saw my first $60 price tag on a game. My jaw almost hit the floor. Now $59.99 is just what you pay for the latest title. Throw in the collector’s edition ($69.99) or the recent Halo 3 Legendary edition ($125) or the recent Rockbank release ($169) and you see the trend in gaming today.

So how did we get here? Where does the money go? Like any other product there is a breakdown of how the cash is spread around. Take for example a 360 title that sells around 500,000 units. $20 is to pay for the actual development cost of the game. This is everything from coding, level design, QA, etc…Then of course there is publisher overhead which warrants $9 of the $60. Next Microsoft licensing and manufacturing takes $12 for license (You know the Xbox 360 branding and Xbox Live stamps at the top of every 360 title). $7 is spent on advertising of the game. All of the POS materials, TV, magazine ads etc… the money has to come from somewhere right? The final take is the actual retailers cut of $12. This is your Gamestops, Best Buys, etc…

Now throw in strategy guides and downloadable content and the life of a game is now extended as is the profitability of the title. Take for example the latest EA title Need for Speed Pro-Street. It is the best example of a console game that leverages in game play with actual cash based (Microsoft Points) based extras. Don’t want to wait to get your dreamcar in the game? It can be yours for 200 Microsoft points. Not happy with your engine or injection system? No worries upgrade for 150 Microsoft points. It is a great move by EA to add this extra option. This also results in additional revenue for the title.

It will be interesting to see the continual evolution of gaming. I foresee a time when most of the content will be downloaded and the introduction of subscription models moving forward. We will have to wait and see.

SMS & Marketing

SMS based marketing is definitely on the rise. Why is that? Well for starters think about this. There are 6 billion people on the planet. There are over 3 billion cell phones in circulation. That is equivalent to 2.5 times more cell phones than internet connections!!! That will definitely qualify as a potential market for advertisers.

How many of you have received a text based ad, more importantly did you respond? In the month of September alone 4.7 milllion people in the US responded to an SMS ad. That may seem a bit surprising. I know I was surprised to read that data. The trend is definitely on the upward swing as well. Response rates have steadily risen since May from 4.3 million to 4.7 million in September.

So if 4.7 million people responded, imagine the increasing number of text based ads. Currently a majority of the ads are from the mobile operators centered around their mobile phone service (Downloads, News, Entertainment, etc..) I expect to see an increase of advertisers focus on this medium. Especially with a generation of individuals who rely heavily on this style of communication.

So do not be surprised if you begin to feel that familiar buzz of your phone when you receive a text message and you look and there is some form of advertisement. Be prepared for more messages from your favorite or not so favorite advertisers are coming to a mobile device near you.

 

Teaching & Learning

January 2008 will be 5 years for me as an adjunct faculty member of Wayland Baptist University. Initially I taught courses such as Principles of Marketing, Market Promotion, Consumer Behavior and Global Marketing on campus. Now I am a member of the Virtual Campus focusing mainly on distance education around Principles of Marketing and Human Resources Management. Each Semester (4 semesters a year) I get two new groups of students and begin the process of introducing them to the various concepts and provide insight into the latest marketing theory.

After interacting with thousands of students from across the globe I wanted to take a moment and reflect on the impact that this profession has had on me. In many ways teaching a course really enables you to emerse yourself in the content. When you are a student your main responsibility is to comprehend the information that is presented to you. When you are on the other side of the desk not only do you need to comprehend the information, but you also need to be able to apply the concepts to real world scenarios that are relevant to your students to truly enhance the learning experience.

What I have found over the years is that students want the information presented to them to be relevant to their lives in some way. So this makes my job even easier as marketing impacts everyone on a daily basis. It would be very difficult to go through a day without some type of message either directly or indirectly trying to capture your attention. Radio, Television, Print, Online… no matter where you go you are constantly being reminded about various brands trying to maintain their position or gain market share against competitors. 

Many of my students own businesses and this allows them to have a better understanding of how they can reach their target audiences and understand the many facets of their envrionment (Political, Technical, Competition, etc…)

I am very grateful for the experiences and the interact with all of my students. Thank you all.

One Console

While flying to San Francisco today I read an article that got me thinking… It discussed the fact that it is inevitable that a unified gaming platform is coming. It referenced past examples of commodification (when an item that previously was not a commodity becomes one). The primary example was the cell phone and how it started as a status symbol and they were expensive and all they allowed you do was make calls. Now they are small, play music, record video and for the most part are no longer status symbols… essentially a commodity. 

History shows that technology always becomes commodified and follows similar life cycle patterns. This is now happening with gaming consoles. Gaming consoles today do more than the market wants or needs. Now they serve as your media hub for movies, pictures, the web, etc… Once you reach the point in a products lifeccle where you are positioning more features than the market needs you begin to commoditize your offering. 

The current splits between systems also greatly impact publishers as they have to decide whether they are going to release a title across the major first party systems or go with a proprietary system and receive additional compensation. This model is counter productive in some ways as additional resources are utilized not in the creation or enhancement of the gaming experience but to ensure the game ports to the specific format. Also there is more content being released that is not necessarily competing directly with other titles on other systems. This in turn dilutes the publishers efforts as they are not receiving the type of market penetration that is conducive to larger profit margins.

In esssence these factors will lead to the inevitable which is a one-console future. The article stated that this would not occur because we want one but because the market cannot sustain itself. What would happen if this were the case? You would see a drop in hardware cost and an increase in manufacturers as this would de-emphasizes the importance of the hardware (Think TV’s in recent years) and allows game publishers with 100% market penetration which would lead to cheaper games as publishers would not have to split resources between two versions of the same game. This would also create more of a channel approach to distribution.

What are your thoughts? Is a unified console a reality? Can the market continue to sustain the current fragmentation? If it were based on the current generation consoles I would call it the WiS360… or the PSWii60.

Microsoft Marketing Services

Microsoft has a lofty goal. Within the next 4 to 10 years they look to have advertising account for 25% of Microsoft’s business. Based on recent revenue that would be upwards of $12 billion dollars a year. That represents a couple billion more than Google made in total last year. Think about that for a moment.

Why the sudden interest in advertising? Well to start you can look at the strides Google has made in the space with the AdWords model over the past few years. Combine that with Steve Ballmer’s view that there is an increasingly blurry line between software, media, and advertising and the fact that Microsoft spends $3 billion a year on advertising it’s various products and brands and you can begin to see why this is becoming such a central focus within Microsoft.

It’s great to have a goal, so the next question is how will Microsoft strive to achieve a 12 billion dollar yearly run rate? It will be a major transition going from a software services model to a marketing-services/audience company. It looks as though acquisition will be the plan of attack. Looking back to the recent acquisitions of Avenue A/Razorfish, AdECN, in-game ad serving company Massive and mobile network Screen Tonic shows the initial steps in this direction. There are also many rumors swirling that Microsoft is targeting a deal with Yahoo. Microsoft currently has a goal of 30% of the market where their current search share is 11% and Yahoo currently owns 23% whereas Google owns 56.5%. 

It is true than many agencies outsource the technology pieces and focus on being a strategic partner. Microsoft looks to be focusing on all sides of Marketing-services and advertising. Avenue A/Razorfish highlights the desire to learn more about agency style work while they simultaneously are working on gaining market share in online advertising. This is an interesting move considering that Microsoft is a very partner driven company to date. Product implementation and customization services are handled by Microsoft Consulting Services and various partners from the partner program. And currently Microsoft leverages the services of Young & Rubicam and MRM Worldwide to handle the advertising for its various lines of business. It will be very interesting to see how the acquisitions will go on the Marketing-Services side.

If any team can do it (funding and understanding of technology) it is Microsoft. They have always followed a second to the market mentality, or make it better and faster and endlessly market it. Agency style marketing is not in the corporate Microsoft DNA so it will be very interesting to watch over the next few years.

How Do I???

While traveling to London meeting with some of our European clients some common questions arose that we get quite often. How do I measure what is going on with my community? How can I calculate the health of my community? How do I identify key influencers in my community? How will this data help me develop a profile about my users? How do I back up my request for additional budget when it comes to social networking solutions vs. traditional marketing avenues? These are all great questions and ones we at Telligent are happy to answer.

I have talked in the past about calculating B2C return on investment. Prior to calculating return on investment, a common understanding of measurable business objectives needs to take place. This can come in the form of basing your analysis on such things as incremental value of the community, to trending the current userbase over time. The key to this is that the variables selected are measurable.

Once you have defined the measurable business objectives it is now time to analyze the data. With this in mind we have focused on developing a new framework to report on the data within Community Server implementations in the form of an Enterprise Reporting Suite. The new Enterprise Reporting Suite will ship with over 60 different reports and charts to help you understand exactly what is happening in your community. The reports will quickly show you such vital user information such as users by day, roles, points, posts, registrations, activity, country. The remaining reports are directly tied to which applications are currently enabled. This will allow you to quickly build a user profile and discover what information is truly valuable to your community.

The data in and of itself is invaluable, now you have the means to manipulate the data based on your measurable business objectives as well as easily writing new reports specific to your needs. Once you have the data in hand then it is a matter of defining which ROI scenario makes the most sense for your given situation, B2B, B2C, or E2E (Employee to Employee) or leveraging a metric such as the conversation index (Total Posts/Comments + Trackbacks + Ratings) to calculate impact of blog posts. I will be posting more about the ROI scenario’s in future posts but note if you need immediate assistance in defining ROI around your current community initiative please do not hesitate to e-mail me.

A comprehensive demo of the Enterprise Reporting Suite is available athttp://reports.communityserver.org/demo/. The reporting package will begin it’s beta testing in early October and will be a must have for any marketing or community manager running aprofessional or enterprise instance of Community Server.

The Halo 3 Marketing Machine

While flying to New York today I was reading an industry magazine and came across a Halo 3 cross-promotional ad that caught my attention. Outside of this ad featuring Halo 3 & 7-11, the teams at Bungie and Microsoft are collaborating with a number of brands and agencies, including the same team that brought you 7-11’s transformed into Kwik-E-Marts, to kick off a Halo 3 go-to-market campaign that will be assaulting mainstream audiences faster than Master Chief can blast a covenant elite with a dual-wielded mauler.

It looks as though Halo 3 inspired Mountain Dew will be flying into 7-11 sometime in August. This promotion will also see Halo 3 Slurpee cups and Master Chief emblazoned bags of Doritos. The Doritos campaign will be tied to a voice cameo contest for the upcoming Ensemble Studios Halo Wars title. I have been very impressed with 7-11’s strategy over the past year. You would not think that a convenience store would have this type of marketing prowess but the proof is in the tie-in’s… Spider Man, the Simpsons, and Halo. And this only accounts for campaigns launched in 2007.

Regarding Halo’s GTM strategy, other brands will also leverage Master Chief to help cross-promote their offerings. Pontiac, Burger King and even a Halo 3 sponsorship for an upcoming music tour featuring acts like Linkin Park are just a few of the publicly available elements of the upcoming campaign. All of this does not include the Microsoft centric items such as Halo 3 branded Xbox 360’s, controllers and Zunes.

What this tells me is that the point is no longer to just make a game that entertains. The main goal now is to develop something that can transcend a niche genre and break through to the mainstream. It happened with Pac Man in the 80’s, it has happened with the Electronic Arts Madden franchise which is the best selling franchise of all time and now Halo is primed to cross into the mainstream by following the road taken by many a Hollywood blockbuster… meaning directly into kids meals at Burger King and on the bag of chips you eat in your living room… while playing Halo 3. Who says marketing doesn’t work?

MasterChief

20,000 Points

It is finally official. I have reached the 20,000K gamerscore mark!!! I have expressed in the past that I am an avid gamer and I enjoy the work that we do with various gaming studios such as Electronic Arts.

One thing about me is that I am very competitive and focused on results. I like to set goals and subsequently achieve them. This coincides very well with the Xbox 360 achievement system as you get a very measurable ROI metric out of your gaming experience.

Gaming is a lot like marketing in that you select a specific vertical that you want to target. For example, I like to focus on sports and retro titles. Then I formulate a plan based on the market segment that I have selected. I review the achievements that are available with each game prior to playing to predetermine ratios around potential time spent on pursuit of the goal vs. actualization of the achievement and then move towards the execution phase of the plan. Once the plan is put into motion it is very easy to then determine success of the strategy. And it is just a lot of fun to have the achievement pop-up on my screen once I have earned the achievement.

So is a 20K gamerscore required to be a good marketer? Not at all… All it shows is that you spend a lot of time looking at a screen. Speaking of which I have to thank my wife and children for allowing me the “small” amounts of time that I spend on…. market research. I also would like to thank the guys at EA for giving me the hookup on the best EA titles.

Thanks again! On to 30K!!!

Microsoft + Electronic Arts = In-game Advertising?

Coming to you live from Oklahoma City. Wi-Fi in a hospital room, who would have thought it was possible? No I am not in the hospital just blogging from one. So Microsoft and Electronic Arts have partnered together to sign the largest in-game advertising deal to date. Initially the campaign will be rolled out to the Sports titles like Madden, Nascar, Tiger Woods and Skate.

The reason this is possible now is how connected most gamers are. Think about some of the current titles in your library. You can get up to the minute ESPN feeds and updates now when the game fires up in NBA Live 07 and other EA titles. These feeds are a precursor of what’s to come. In reviewing research for this post it turns out that there are 4.4 million connected gaming console households. With 46 million game consoles in homes and another 148 million people with access to gaming consoles these numbers will continue to increase. So needless to say it is very appealing to advertisers to want to reach this segment of the population as this is a key demographic for positioning products and services.

All of the major consoles now have an online presence with Xbox leading the way online and the Wii attracting scores of new gamers. The industry is definitely in for additional growth online. So this all leads to the million dollar question… er the $600 million dollar question (market projection in 3 years)… Do you want ads in your games? It is nice to see the Dodge ads on the billboards in Crackdown and it does add to the realism in games, but how would you respond to something that interupts game play?

Personally, I like the subtle (or sometimes not so subtle) product placement approach in most films. It is about characters interacting with name brand products but not about the product itself. This to me has more impact and would make me more likely to remember the reference than stopping in the middle to see a pop-up or ticker during game play.

So whether you are a fan or not, In-game advertising is coming and in a big way. There are too many dollars and distractions these days to not take this medium seriously. What do you think? Are you for, opposed or just in-different to in-game advertising? In the end it will be your dollars that do the talking.

Is That a Kwik-E Mart???

7-11 just did something that is pretty innovative from a marketing standpoint. They have transformed a dozen stores into Kwik-E-Marts from The Simpsons in an effort to promote the upcoming Simpson’s movie. I really like this campaign as it is a great example of reverse product placement and by the buzz and lines at the store I went to today it seems to be working.

KrustyO’s, Squishees, Buzz cola and the ever famous pink Homer Simpson donuts are just a few of the products that you can now pick up and take home with you and as they state have “absolutely no nutritional value”. For those of you wondering, Duff beer did not make the product cut for this promotion.

The ability of 7-11 to “laugh at itself” is very key in this promotion. “The idea of actually changing the stores into Kwik-E-Marts was over the top but a natural” stated one of the execs at 7-11‘s agency. “It shows they get the joke”. You would not think decorating a store to look like a cartoon would be that effective, but they are definitely reaching a new audience as I saw people in the store today that you normally would not see going to a 7-11 for a specific purpose.

It is funny that I get this excited around a campaign, but as an instructor of marketing and a marketing professional, it is great to see creative application of marketing strategy and the ability of a proven brand to embrace something that is “different” in order to garner additional attention. Plus it is just a lot of fun.

Tom-simpsons-7-11

Viral Marketing & SMO

Viral Marketing is now one of the most powerful ways to market online. The key to viral success comes down to interruption vs. invitation. Traditional media such as television has the potential to reach hundreds of millions but the message may not resonate or be clearly discerned by the prospective target audience due to the “noise” and passive positioning associated with this type of delivery. The beauty of viral messaging is that it has a much better chance to get the users attention as the message is either coming from a trusted source, a recommendation, or meets the search criteria defined by the user.  Also, this type of message is available on-demand which gives the user ultimate control over when and where consumption occurs.

One viral aspect that is getting a lot of attention is online video. If you are reading this you have more than likely viewed a user created video on YouTube or some other site and you are not alone.  Online video is beginning to garner more attention from average viewers with 4% of people over the age of 18 watching videos daily and another 14% watching at least once a week. Research shows more organizations will be shifting marketing dollars to producing and positioning online videos. The reason for the shift is that video ads show a propensity to generate higher ad interaction and longer ad viewing (2/3 of the way through on average) this in turn leads to higher click-through rates.

So as an organization you may be thinking about focusing on online video or maybe you are looking to tie into user generated content and incorporate your advertising. If so, you need to focus on a few key factors. As with any type of marketing activity consistency is the key. Ensure that you are intrinsically linked to your brand, your video should require online interactivity and it needs to have synergy with offline marketing material. The other key factor revolves around the concept of Social Media Optimization or SMO.

SMO is the process of optimizing your online media presence by becoming more visible through searches within online communities and community web sites. The concept of SMO is to increase the chances of your video being distributed more widely through community search engines. This is very important as this is the key driver for this type of viral strategy.

As you consider your viral strategy it may become clear that you need a solid community presence associated with your brand. This is where branded community offerings can be applicable. Integrated platform (Blogs, Forums, File, Photo Galleries, Video & Podcast support, RSS) that streamline the positioning of an online community. Let me know if we can assist you with your community or viral marketing needs. We would be more than happy to assist. Feel free to contact me with questions at tedwards@blackfin360.com