It was back in January that my Netflix prices increased 18% from the increase a year earlier. An email earlier this week (July 12, 2011) from Netflix indicated that September 1, 2011 prices were increasing again, this time an additional 50%. The real news is that Netflix is basically doubling their prices from January 2011. Currently I pay a standard rate for 4 DVD out-at-a-time plus streaming, starting on September 1, 2011 Netflix will increase and standardize their prices to split them into the Mailer services and the Streaming service. No discounts if you combine the two they just add both services together. This to me feels like a great deal of arrogance on the part of Netflix and frankly I assume this is more a move to encourage people to cancel the Mailer service and replace it with the streaming service. A little bothered by this email I called the phone number provided in the email, only to get a recorded messsage, “We are experiencing high call volume, please try your call again later <CLICK>.” A little frustrated, I wrote and email. The auto-response returns “Your email has reached an automated mailbox. Email sent to this address does not reach our Customer Service team and will not receive a personal response.” So I venture onto the “Contact Us” portion of the website where I find a different 800 number and call it with my special “I’m a customer” number and over 10 minutes later on-hold, I get to a speak with a representative. After explaining that I had a been a customer for a while, it takes him a few minutes to determine I have been a customer for over 11 years (Netflix started offering their services in 1999, do the math!). I proceed to say that this increase is outrageous and that I was not feeling appreciated as a long time customer. I admitted that if Netflix could not show me some appreciatation I was not going to cancel one or the other plans that I was intent on cancelling my entire account the rep only replied, “Well that’s your choice.” He later tells me he can cancel my account in only a few seconds. Outraged not, I ask to speak to a manager a few moments later I have a new person on the phone who basically tells me there is nobody else to appeal to, this is the policy, they don’t care if I want to cancel. It would seem that Netflix thinks they have it all figured out and that they have proven to me they have zero loyalty to existing or long standing customers. Their customer service is pretty horrible and this latest move is pretty arrogant. I am sure some product manager thought all of this was really great; and for their corporate goals that might be the case. What they failed to understand is that I I have Cable, a Tivo, and subscribe to Amazon & Hulu and that acrosss the libraries there is much overlap. I have enough devices that have integration with multiple services that at some point price and quality of service will be the differentiation, NOT size of content library (as is the case right now). Sadly, because of the poor customer service, arrogance, and a 76% price increase in less than a year, I will cancel this service later this year and stop supporting a company I once admired for their technical excellence and innovation.
I came to a small realization this weekend; this is big, traditional media is dead!
Gone the way of the dinosaurs. Twitter is breaking more news these days than CNN or the Wall Street Journal. The news papers or bleeding life. Subscriptions are down. Pew Internet studies state that younger generations are going online to get their news and dont read traditional publications. Here’s the rub, social web and social media still lack a proven business model.
The real question is business model; Web 2.0 witnessed a resurgence of advertising. In the late 90s we used to laugh at new web portals coming to market with the idea that they will just sell some ads on the site to sustain their business. Interestingly, networks like Google and others brought ads to the little people. Or more appropriately it is the ad networks that became outsourced ad sales forces that could be easily consumed to enable even poor monetization on a web property. It has amazed me at how many new ideas are not betting the farm on Google’s ability to sell ads into their channel. Let’s not forget the death of Google AdSense when Google enabled the advertiser to opt-out of the Google publisher network. This killed the revenue for many publishers (side note: the quality of these publishers is in question but that’s another topic).
If we look at ad effectiveness; why is it that we always see mortgage ads, even after I just refinanced my house. It’s because the ad networks have access to their traffic data which by itself suggests that certain ads performe and monetize better than others. We say profile based ads in the 90s become contextual of the early 2000s. And now we have behavioral being all the rave. Behavioral is really just taking the profile and applying as context over time. If I read the front page of ESPN a lot, perhaps I like sports related stuff. So even as I am reading an editoral page on a remote site or a blog, I still might be intereted in sports. We have found time and again that behavior and profile dont always work. Advertisers are still struggling with how to get their signal through, when they are surrounded with all of this noise. It is this ratio of signal to noise that determines relevance. With the flood of information; relevance is dying. It is becoming harder and harder to find what you want on Google through all the cruft. Does Google search have a similar fate to that of AltaVista? Excite? Inktomi?
Enter’s the world of social media and the socail web. MySpace (the trailer park), Facebook (hey look at me), YouTube (check this out) and the many others all embrace our primal needs to network and congregate especially in a virtual world. We still have yet to see advertising in these new mediums find true success. Frankly, most of the ads on Facebook are terrible.
It is my feeling that advertising is not going to be as effectiven the social web or social media as it has been in pure search. There I said it. Traditional online advertising in social media does not work. Many may ask why, its mainly because there is too much noise and the message gets lost. Long gone is the billboard, radio ad, or TV ad that big brands have been built on over the past 30+ years.
Once again that turtlehead called relevance is poking its head out again. With so many social updates, in a modern world with a river of news; you can either
a) only see what flows by you when you decided to engage or
b) find new ways to parse, sort, and consume the massive amounts of information being fed through a fire hose.
The river of news which was once a babbling brook is now nearing a class 4 rapids. Strap into your wooden barren and hope for the best as the information sweeps you away. Niagara Falls here we come!
Returning to the arguement of business model. If users do not want to be engaged in a traditional commerical mechanisms; how do you get the message out? Do I want to friend a brand? Should I be a fan of a brand? More practically will injecting ads within the stream work? Along side of the stream? or will ads even work in this space.
Why do most ads in search either find labels of “Sponsored” or “Advertisement” or “Paid Listing” – Let’s not forget that women still buy beauty magazines for the ads. This is a perfect example of how relevant advertising when wanted; is considered content. What a novel idea? How do we make advertising more useful and content-like?
The answer lies somewhere in the idea of joining the conversation. What are the many conversations relevant to a brand? a consumer? a product? a company? and other interested parties?
Its funny the resurgence of advertising on the web, build it and they will come… great traffic strategy, bad business model. We are on the eve of needing something new. We need new leaders to usher in new innovation in business models to support this new method of information dissemination.
We are all witnessing the precursor to this business revolution… What’s next?
Rumors of last night are that Google is close to acquiring Twitter… see Techcrunch if this rumor matters to you. I opened my TweetDeck late last night (as I often do). And saw acquire as a trending topic. I clicked on the term… some 30 minutes old… and watched it grow over the next couple of hours before the country went to bed (when traffic tailed off). The social trifecta is very much alive…
Interestingly… I see twitter and similar technologies as a new trending and buzz tool… there has been speculation that Twitter is the next generation of "search" — I question search versus aggregation. Twitter aggregates thoughts, ideas, and loosely conversation. It is tools through their API that have enabled search, albiet with their API limits, this makes it really hard to be overly innovative. Until this data is opened up or more free … we will not know the gems locked within. Strategically, we may never see this data on a public API and this may be where the true value is locked for Google.
I still do not think that twitter can ever be a true corporate or enterprise tool… (or really get to be a true crm tool, even though some companies use it that way..)… most people are focused on how do they advertise within Twitter… Twitter has long been relegated to a feature … NOT A PRODUCT. And I still very much see it that way, but as with most things Web 2.0 – buzz drives excitement, excitement drives interest, interest and eyeballs are success. Then sets off the easy part of the business plan (or so they say) … then we can just monetize the eyeballs.
Fair warning, the social web does not work that way. We have to get back to the basics of what I have dubbed as the social trifecta (more on this in future posts). The crash course of the trifecta; ethos, pathos, and logos. The social web is persuasive or rhetorical media. Unlike the media of old where you broadcast… (traditional radio or tv theory). This is about establishing credibility, appealing to emotion, and providing logical thought.
We see this over and over; peole dont want to be advertised to on Facebook (that and most Facebook ads are really bad). The guys who get slaughtered in this arena are the people who’s opening bid is to "buy my product" or "let me sell you something"… "check out my get rich quick scheme" … interestingly corporate identities also loose credibility. Social web-goers prefer to deal with individuals, even if that person is representing a company. And you have see the growth of the personal brand. An employee being the embodiment of the corporate brand. Marketing is changing boys and girls. Don’t be a dinasuar…