"The whole point of any medium, where it is video or writing or painting or film is to expand our thinking and expose us to new ideas, not repeat the same ones over and over ad infinitum...Tell me what I don't know. Tell me what I never even thought about before." Michael Rosenblum

" For it to be a content business, content people have to run the company. The business has to be obsessed with what it’s consumers want and be able to give them that and much more. In fact then need to give them things that they didn’t know they wanted. Content consumers ultimately need to be surprised and fully expect their sources of information to be smarter than they are about the topics they are reading or viewing." Larry Kramer

"It will be very hard for people to watch or consume something that has not in some sense been tailored for them." Eric Schmidt

Today's image: Leaning Tulip by Fred Winston. Wonderful. Thank you for sharing.

Let's suppose you launched a business in November of 2008 and in April of 2010 your business had achieved a value of approx $1.35 billion. Let us say your revenues that Spring were on pace to make $1 billion in sales faster than any other business in history. Let's agree that in October of 2010 your business was operating in over 150 markets in the USA, over 100 markets in Europe, Asia and South America and you had over 35 million registered users.

Now...
What if?

What if in the Fall of 2010 you were offered $3 billion to sell that business and then weeks later you're approached by another suitor who offers you over $5 billion to sell?

What if your 2011 projections indicated you were in good shape, pacing to deliver between $3 and $4 billion in revenues. Would you dare change anything?

It's the true story of Groupon and here's how they've answered those two what if questions...

They said no. They were not interested in selling (Yahoo! and Google were the rumored buyers)

and

They decided while business was good it was time to change things, invent another product and introduce a different business model.

Imagine that.

A company that's about two and a half years old which is on track to produce revenue equal to about 21% of US radio's total revenue in 2010 (using BIA/Kelsey estimate of $14.1 bil, and $3 bil rev assumption for Groupon) and instead of being laser focused on tweaking and optimizing their existing business model they've decided to also change up their own game, innovate and launch another business.

Before you continue reading, please watch the following video.



Clearly, Groupon and its competitors (over 100 similar US sites) are having an impact on local ad spending.

Allow me to suggest that Groupon Now has the potential of changing the local direct game yet again because its value proposition is fundamentally different. Groupon is putting the third screen to work and doing it in real-time, they've entered the brave new world of the mobile pure play.

"Mobile is huge for Groupon...I believe we could see us doing 50 percents of deals sold/purchased in the next couple of years" said Michael Shim, Groupon VP Mobile Partnerships. As eMoney writer Tricia Duryee reports "Mobile, along with social and local, will be one of the largest drivers for Groupon's deals business over the next few years...Shim said the service has also exceeded expectations, with more than 1,000 merchants already signed up to offer real-time deals. 'We’ve been inundated with demand. Groupon Now is about local discovery. What can I find around me?…We are just getting going on where we think it will take our business.'" [ref]

Introduced last week and more than 1,000 merchants already signed up. Pop quiz: what's your best take rate story? Is it a compelling one-sheet being used on the street and on your site?

My sense is there are strategic issues involved. Here are four to consider.

1. The practical notion of "Local" is being redefined. We're moving from the traditional big/generalized (e.g., DMA, SMSA, US Census block code) to the new small/personalized (think GPS or exact position within three meters). A new marketing grammar, a new sense of place, will be one of the second or third-order effects in the growing adoption of location-based services.

2. New players want in, others want bigger local shares. Local has not been 100% owned and operated by the usual suspects (i.e., the traditional incumbents including print, broadcast and out of home) for a while now but it's getting ever more competitive. Local and hyper-local is where everyone wants to be next. Everyone includes Google, Microsoft, Yahoo!, Pandora, and [insert the name of an advertising or ad-supported company here].

3. New rules of engagement are emerging and with them new expectations are being created. The metrics used in buying and evaluating local media will likely change and affect some share of local ad spend. From buys based upon audience estimates and proof of performance (run as ordered?) to registered users and completed transactions (products/services sold). Moreover, performance pressure will increase. From flights evaluated over days and weeks to flights evaluated over hours in real-time. In this new always-on connected world it's certainly possible that price and item copy will be placed, judged on actual in-the-moment purchase behaviors. Impulse purchasing is exploited, solutions defaulting to mobile (i.e., Help, I'm hungry or I'm bored). As ever, the research tool preferred by local retailers continues to be the cash register.

4. Creating awareness without generating completed transactions will become less and less attractive to buyers, especially those local merchants provided more performance-based options. Branding or pure image driven advertising will become more difficult to justify. John Wanamaker gets credit for the famous adage "Half the money I spend on advertising is wasted; the trouble is, I don't know which half" but as AdWeek's Michael Wolff wrote just yesterday on the subject of digital marketing and TV's upfront week "...15 years into our ability to measure the absolute effectiveness of the way and the methods by which we sell something, and, still, TV advertising, which measures nothing, guarantees no sales, offers no data, registers no interest, quantifies no desire, provides no follow-up, and which no sentient being watches anyway, is making more money than ever before. Waste works." [ref]

While I appreciate Michael's point of view there remains major work to be done on the metrics used in the buying and selling of digital media. Serious debate continues and we have yet to reach a consensus relative to accepted definitions and measures. Bravos to IAB for their ongoing efforts. Further, while Steve Jobs continues using TV to sell his iPhones and iPads I'll remain bullish on the potential of TV advertising done right. We'll stipulate here that doing TV right is not at all easy and most don't do it right, however, Apple stands out as a good example of just how powerful TV advertising can be. Target, the merchant, is another exemplary TV advertiser. There is, imo, a significant share of the $65.9 billion in annual US TV ad spend [2010 cit] that is pure waste.

"At every crossroads on the path that leads
to the future, tradition has placed 10,000 men
to guard the past."
Maurice Maeterlinck

What's a broadcaster to do?

To those working in radio, those progeny of the first generation wireless, the true real-time media pioneers, let me offer five suggestions. As well, let me encourage you to share your thoughts, ideas and suggestions via comments here below.

1. Game it up. At your next sales meeting, play the Groupon Now! video and give sellers the following homework assignment. "How do we pitch Big Frank? What is our value proposition that will blow Big Frank's face off? How will we help him to fill his empty tables?" Make it a pitch competition. On pitch day encourage brutally candid discussion. Vote first, second and third place winners. Let the sales team and a good representation of staff not on the sales team participate in the voting. For those already deep into "Deal of the Day" and other discount coupon strategies, how are you measuring up? Would Big Frank buy your offer over Groupon Now? Do you have a video that demonstrates how your program works? A video that clearly articulates value that the prospective client can understand? Does your value proposition match or exceed the one offered in the Groupon Now video? You must have and present a compelling, engaging story. Remember Leo Burnett's counsel on great advertising being three messages: "Here's what we've got. Here's what it will do for you. Here's how to get it."

2. Work your network. Start a serious conversation with others. What's happening with Groupon, LivingSocial, et al in your market and others? What are your colleagues (and clients) hearing, learning and doing? What's the RAB's best thinking on this? Take the advice of Dr. Jeffrey Cole and ensure that your learning curve is consistently steeper than your action curve. "You have to be paying attention, learning and watching." Do your homework. Be prepared for your client's phone call asking you "What do you know about Groupon?"

3. Make something happen. Get in the game. Take measured action and experiment. Be willing to fail and learn how to fail faster. Be agile. Embrace iterative development. Take the winner of your pitch competition (see #1 above) for a test drive. Carefully study the results. Revisit your design and fine-tune or blow up and move on to your second place winner. Repeat. Move on to your third place winner. Hold another pitch competition.

4. Give your team a better chance to win. Be the best that radio can be. The anecdotal evidence would suggest 7 of every 8 potential merchant deals are rejected by Groupon. Can you imagine a radio sales manager failing to approve 7 out of 8 orders for new business? Even if it turns out not to be true let's admit it...7 of every 8 being rejected makes a killer urban ad legend for Groupon. If what Groupon is doing is working it's working, in part, because they do qualify their clients and work within a creative framework designed to optimize performance on the Groupon platform. Radio should consider taking a more pro-active, aggressive approach in working with clients to develop creative that plays into radio's inherent strengths and utilize smart scheduling of that creative to maximize the chances of producing best results for the client.

5. Check out what Fred Jacobs and the digital ninjas of Jacobs Media have to say about all of this. They're offering a good read. Make the jump to the always informative jacoBLOG here.

Keep in mind Groupon was Andrew Mason's second attempt at using the platform he developed. His first, ThePoint, failed to produce the results he expected but he didn't give up, he moved on to invent Groupon. Now he's inventing Groupon 2.0 What's your team up to?

Ever tried. Ever failed. No matter.
Try again. Fail again. Fail better.
Samuel Beckett

Footnote: What did Google really want? My guess is Google - if they really did make an offer - already having the superior tech skills, wanted Groupon's creative staff and their local sales team. It would have been a very savvy accretive acquisition in their local strategy. They have since launched Google Offers.

Previously: My post about Groupon from late last year: Nobody likes it but the audience.

Finally, a must-see video and a book recommendation. Thanks for stopping by.

Bonus: TED: Eli Pariser: Beware online "filter bubbles."











Recommended:

The Filter Bubble: What the Internet Is Hiding from You by Eli Pariser.
Amazon info.

Reviewed by Jesse Walker: The Facebook Friend in the Plastic Bubble

"The true test of being comfortable with someone else is the ability to share silence." Frank Tyger

"There must always be some advantage on one side or the other, and it is better that advantage should be had by talents than by chance." Samuel Johnson

"The ability to have our own way, and at the same time convince others they are having their way, is a rare thing among men. Among women, it is as common as eyebrows." Thomas Bailey Aldrich

Today's image: The unknown bud by Fred Winston. Beautiful. Thanks for sharing.

A beautiful Spring day here in Madison. Today I'd like to share a video and my notes of a keynote session from last month's ad:tech SF 2011 conference. As readers of this blog are aware, I am a big fan of Dr. Jeffrey Cole. Simply put, he's brilliant. Dr. Cole is Director of Center for the Digital Future at the USC Annenberg School. The video of his keynote, available via YouTube using the following link, is a must-see. Trends, Fads & Transformation: The Impact of the Internet.

Following are my notes from the keynote which are by no means complete and should not be considered a substitute for watching Jeff's performance which is, indeed, a tour de force.

---------------------------

Your learning curve must be much steeper
than your action curve.
You have to be paying attention, learning and watching.

We lost a great opportunity in the 1940s understanding the impact of television. We are undertaking the study of the Internet that should have been conducted on television in the late 1940s. Digital is going to be far more important than television. Eleven years ago began the massive project, tracking of digital, first the web and now mobile that should have been conducted with television in the 1940s. Started in the US now covering 35 countries around the world. For eleven years now we've gone back to the same people year after year. Watching as non-users moved to dialup, as dialup users went to broadband, we watch as 2% drop off the web each year and want to know who are the people who leave and why and more importantly do they return and if so when and what brings them back. Eleven years in we continue to track the never users and want to know how the people who have never been online do things in a world where most of us are online.

Highlights. What we've found over the last eleven years.

Schedules have almost disappeared. The old way. Newspapers - once a day. Having to wait 24 hours for an update doesn't work anymore. How up to the moment does a newspaper online have to be? The answer is thirty to sixty seconds. Music used to have one of the most formalized schedules of any medium. Artists would produce about forty minutes worth of music, (about 12 songs) and release in a cycle of about every 18-24 months. For some people this never worked. Prince is an example. There was no way to release ten albums a year. Today we are waiting for the new model. TV was on such a schedule that the greatest success in the history of magazine publishing - TV Guide - came from a magazine that listed what was on television.

There are too many choices. In 1975, in the average American city, most of us had seven television channels, 90% of viewing was on three - ABC, CBS and NBC. Thirty years later, most markets had well over one hundred channels and 90% of viewing was on six or seven channels. You give people infinitely more choice and we only move out or branch out a little bit. Restaurants owners know that. 20 page menus frustrate people. They can't make choices, there's too much to choose from. Most people in a restaurant want eight to ten choices. Enough choices to feel they can actually make a choice but not so many that they're overwhelmed. On the web 90% of Internet time is spent in 15 places and all the other millions of places account for less than 10% of our Internet time. We're overwhelmed by choice.

All media will survive, but most will be smaller players in a digital era.

The Film Business

Been shrinking for a long time. It's high point was in the 1930s and 40s before the introduction of television. This year film has experienced its most serious decline in a very long time, film attendance so far this year is down 20%. Hollywood is looking at economic factors but is settling on the fact that it's probably the quality of films. DVDs which kept the film industry afloat during much of the 21st century are disappearing and not coming back. DVDs will be gone in four years as everything moves into the cloud. Movie theaters have been seriously overbuilt, many/most will close or convert, become smaller but remain important. A war is brewing between the studios and the theaters. Studios want to release films on the day they're released to home video as well as into the theaters. Theater owners can't catch a break. Studios now want to take films that have been in the theaters for two months and make them available on home video. Theater owners said if they do that they won't run trailers for any of the studios. At the same time as we're seeing film move closer into the home and the distinction between the home screen and the film screen is getting shorter and narrower and the quality of the sets is getting bigger. Theater owners are about to experience another serious problem. Historically, business model gave major share (80-90%) of box office to studios in first weeks of showing, share to theater owners increased becoming majority in later weeks. Most films are out of theaters now within three weeks. In a typical year of 52 weeks, 40 different films will have been number one. With the exception of Avatar we have not seen a film in the last five years that has been number one more than three weeks in a row. With declining share of box office revenues theater owners were hiking up the cost of refreshments. The minute calories counts are required on movie theater food the game is over. A large popcorn and a Coke is about 1,600 calories. Power: those who create good content. The old adage "Content is King" is true.

Music Industry (or what's left of it)

What it takes to be #1. It used to take selling 15 million copies of an album to be number one, last year the number one selling album of the year, Eminem's Recovery, sold 3.4 million copies. Digital in the next three years will pass the CD sources of revenue. CDs will disappear. Digital only platform in 5 years. Music becomes supplemental, becoming the place you get familiar with the music, an ancillary market to the real money in touring, merchandising, advertising. Cloud new home. Power: everyone. Consumer, artist, everybody except the music company.

Book "Publishing"

Long before the Internet, per capita sales have been pitiful for a generation. To get on the New York Times best-seller list out of a country of 300 million people you have to sell 15 to 20 thousand copies of a book. We are not a country of book-reading people. 50% of us buy zero books a year. And of the 50% of us who buy books 70% of them buy one or two books a year. Books are bought by a small minority. Amazon last year now makes more revenue from its digital sales than from its hard cover sales. "Books" will survive but we'll pay a very precious premium to own. We will own few (30 to 40) and pay a lot. Beautiful, expensive books the new reality. Self-publishing which used to be a necessity for some people who couldn't get their books published and used to be low rent and no status now looks like a smart business choice. Power: Authors.

Newspapers

Teenage habit broken. We know thirty years ago teenagers didn't read newspapers but started to when they got into their 20s and 30s. Today they don't read newspapers and the evidence is clear, they never will. When Internet penetration gets to 30% offline newspaper sales begin to decline. 30% is the line that changes everything. India, where internet penetration is at 15% newspaper sales are skyrocketing. By the time they get to 30 they will begin to decline. The sad truth for newspapers is every time a newspaper reader dies he or she is not being replaced by a new reader. In America, newspapers have less than five years remaining. In 1900 we had 600 communities that had two or more newspapers. Today we have six that have two or more newspapers. Instead of counting down the two newspapers towns, we are now counting up the no newspaper towns. Power: Global Players. Examples: New York Times - growth last ten years has been outside of New York not inside of New York. Wall Street Journal. Washington Post. Four or five "global" American voices.

The iPad: Transformational Remarkable device. It's been out a year and no one has really caught up with Apple. Apple has moved the goal post before the other teams have even taken the field. The one thing that absolutely boggles the mind is "I turn it on and one second later I'm working. There's no three or four minute boot. That one out of ten times produces the blue screen of death" Keep in mind newspapers and magazines were never going to do very well on the internet until now because the internet was a "lean forward experience." Nobody wants to lean forward and read a newspaper. They might read an article in the newspaper. Jeff Bezos figured out that if people were going to read books electronically it had to be in the same environment they actually read books, leaning back, in bed, in the bathtub, he created the Kindle. The iPad also marks the beginning of the end for the mouse.

Television is the medium that grows not shrinks

People will watch on a third screen. First screen becomes better. The gap between the home and the theater is narrower than it has ever been. Television couldn't grow until now. It could only grow as it escaped the home. Television becomes our constant companion. We are witness to ratings growth in "live event" television because of "co-viewing." We've always had co-viewing at home when people were together but now people who are not together are watching the same televised event via social networking as if they are together. Laugh tracks may disappear from television because of this new co-viewing via social networking. Movies don't have laugh tracks because producers know we will be watching movies with other people. Power: Content creators and viewers. When, where and how viewers want.

New Trends

Screen time is exploding. In 1975, we spent 16 hours in front of a screen, last year it was up to 36 hours, we think it will be over 50 hours in the next three to four years. If you look at a teenager there's not a moment when they are not in front of a screen except school and sleep. People almost never lose their mobile phones. Mobile phones are important in our lives.The reason is if we leave our phone on the table in a restaurant we can't make it to the front door of the restaurant before we're reaching for it. We can't get far enough away from it to lose it.

Privacy concerns reach a peak.

If digital content is to survive it's going to be largely through targeted digital advertising. Targetability with limits provides a great bonus to the media owner who can charge ten times as much to give an audience that the advertiser wants. A boon to the advertiser who can reverse the most powerful quote in the history of advertising - I know half my advertising budget is wasted, I just don't know which half. Boon to the consumer who can start receiving advertising that is relevant and engaging. Fun once the shock wears away.

What happens with privacy and targetability? Four simple things. Newspapers, television producers, advertisers have to tell their customers, their readers and viewers what information is being collected and why and what they intend to do with it. Privacy policy statements (written by lawyers) must not be written for lawyers. Serious penalties for anyone who violates those policies. Simple opt-out or opt-in but those who opt-out may have to start paying for what other people get for free.

Social networking is the real deal. To a teenager an online community is like a nightclub and when the uncool kids start showing up at the nightclub or the nightclub becomes too popular you're outta there. What's the worst thing that could happen to you at at nightclub? Your mother shows up. And now your mother wants to friend you on Facebook. Facebook will climb close to a billion users. We are not likely to see another monolithic community like Facebook again.

Learning curve must be much steeper than your action curve. You have to be paying attention, learning and watching.

Many of us are tired of technology defining our lives. We call this phenomenon "E-nuff already." Wanting the benefits of technology without all the disadvantages. We don't go to sleep without answering all our email. People are looking for balance. They want control.

Moving away from the PC-based internet to mobile devices. Only 4 to 6 percent of people who own PCs will actually need PCs (desktops, laptops, netbooks). When the iPad came out the first question was is this a fourth screen or a replacement for the second screen? Firmly convinced this replaces the second screen for the majority of us.

Mobile is everything. The internet is going everywhere through mobile. 5.7 billion people share having a mobile phone in their life.

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Bravos to Jeff for yet another truly amazing presentation, he's doing work that matters. Thanks too to ad:tech for sharing the video.