Why Facebook, Twitter, Netflix and Others Have Personalisation Wrong.

Today, it is hard to escape digital technology’s great promise of personalisation and customisation. Every company under the sun is touting tailored customer experiences. One based on learning about individual habits, preferences and interests; driven by our past behaviours, choices and actions.

Every advertiser and marketer swears the new ‘holy grail’ of connecting more intimately with customers, and they are racing to build algorithms and artificial intelligence that gets better, as it learns, at predicting future decisions based on past behaviours. They learn about our interests, hobbies and consumption habits in a bid to sell us more of what we ‘want’.

Amazon recommends products based on our purchase and browsing history. Netflix suggest movies based on our viewing history. Delta sends us special deals based on our travel history. The Wall Street Journal recommends news articles based on our reading history. Facebook shows us posts in our news feed based on our ‘likes’, and even the screensaver image on my PC asks me to like the pictures I want to see more of – well, you get the picture.

However, I believe every one of these companies has got it wrong. There exists a fundamental flaw in the way they are approaching personalisation, one that does not truly deliver on the greatest promise of the internet and digital technology.

The internet, beyond connecting the world, allowing us to share, engage, collaborate – is about discovery. The ability to discover new peoples, cultures, places and even points of view. It has the ability to open our minds, widen our worldview and expand our horizons through discovery; so why show us more of what we already know, like, see and do?

It is great that technology has allowed companies to peek into our daily lives (for those who opt-in), and digital tools in turn allows them to deliver experiences and messages uniquely tailored to us. But here is what I want them to do with this power – use it to deliver on the greater promise – one that opens each of us up to new ideas, enables us to experience new things, and even challenges conventional beliefs and viewpoints. Let’s use it to experiment with broadening our worldview; rather than limiting it based on what we already see and do.

Only by doing this can we begin to unlock the potential of the human mind and deliver what I believe to be the holy grail of technology.

Today, Facebook’s feed algorithm works to show us more of what we already like. The same holds true for Twitter or CNN’s article suggestions and the principles behind every other personalisation algorithms – they are designed to show us more of what find most agreeable.

As a result there is little debate and no authentic discussion because we are in essence talking to ourselves. More importantly we learn nothing new, if we don’t have the opportunity to experience views, ideas and thoughts that are very different from our own.

Currently, technology is only perpetuating our natural human instincts to find and then quickly form safe, secure and comfortable tribes and online havens. Yet, societies only make progress through discord, based on debating conflicting ideas and diametrically opposed views, before the majority can find common ground and reach consensus to move forward on the most contentious issues.

My challenge to every company is to start applying a different set of principles their algorithms and in doing so redefine the idea of ‘personalisation’ along the following lines:

40% what I already like
+ 40% things that are new and different (stretch my worldview)
+ 20% that I will dislike/disagree with (challenge my thinking)

Now imagine what your Facebook and Twitter feed, Netflix recommendations, Open Table picks and Fox News or CNN article suggestions will begin to look like. I guarantee they will be richer, more rewarding and in time will also help us bring back civil dialogue and respectful debate on both the most divisive political and social issues; not to mention that our minds and society will be richer for it.

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Starbucks Race Together and the Starting Line

I was lucky enough to see Howard Schultz talk about Starbucks’ Race Together initiative at a small gathering not too long ago. While I was already a supporter of the company’s brave foray into the issue of race, I became an even bigger fan after witnessing Mr. Schultz’s passion and personal commitment to a cause he clearly views as important, and genuinely holds close to his heart.

While I laud the effort, I also think it is important to point out that there has been a problem with the execution and the manner it was launched into the mainstream. Execution always matters, but in an effort of this magnitude, sensitivity and complexity, it will be the difference between success and failure. For one thing, it is absolutely imperative that this effort not come across as a glib and disingenuous marketing campaign. Nor can it afford to be ‘perceived’ as an altruistic effort designed to generate sales and foot traffic for Starbucks. I know it is not, but I may be the in the minority.

For starters, there are very few companies and brands in the world that could even attempt to raise an issue so loaded and so sensitive, leave alone try to convince the world that it is coming from a selfless place. The Starbucks brand has built a strong reputation for authenticity both with the respect with which they treat their partners (employees) and the amazing benefits they offer. They also have a history of actively supporting the communities they do businesses in. They were one of the early companies to join RED to help fight AIDS. During the recent recession they partnered with Opportunity Finance Network to help put people back to work. Diversity and inclusion have always been more than a motto and mere words on a vision statement to this company. Recently, they launched a major initiative to help US veterans. They sponsored a star-studded concert this past Veterans Day, and Howard Schultz has even co-authored a book “For Love of Country” that shines a light on these brave men and women by sharing their personal stories. Starbucks has also pledged to hire at least 10,000 veterans and military spouses by 2018. This is a company whose social outreach has always gone above and beyond writing cheques. They have never been afraid of rolling up their sleeves and getting their hands dirty on issues they believe are important to society.

However, unlike all their past efforts, there is one stark and crucial difference that they need to recognise with Race Together before they can create a blueprint for how to execute it. Free undergraduate college degrees (recently announced for all employees), helping fight AIDS, supporting Veterans and every other social initiative Starbucks has undertaken are very easy for people to get behind in ways that instantly make them feel warm and fuzzy, be it through personally getting involved or by simply buying a cup of coffee. Race Together is different.

The topic of race pushes people well outside their comfort zone. There is no warm and fuzzy here – only guilt, grimace, shame, embarrassment and gross discomfort. Whether you have witnessed a racist act and did nothing to stop it, or have been humiliated because of the colour of your skin and felt like you did something wrong – most everyone has had a personal experience with race. Yet, this is not a subject that families discuss at the dinner table or even with close friends. It is something we bear witness to and experience, most often in silence.

For this reason, I am confident that none of the traditional tactics will work here. In fact, the message will fail to resonate as long as it is delivered in a top-down manner. What I mean is that USA Today inserts make this feel like a marketing campaign. Writing it on cups (while well intentioned) made it feel forced and gimmicky. You cannot force people to talk about sexual abuse publicly; and most people feel the same way about racism. One final point on this; I believe that as long as Mr. Schultz and/or his board and senior executives are seen to be the public “voices” and faces of this campaign, they will struggle to lend it the authenticity it requires. I have no doubt that Mr. Schultz is genuine about his desire to start this conversation and for all the right reasons, but he is still a wealthy and successful white man and this fact matters in this conversation (even though it should not).

My suggestion to Mr. Schultz is to turn his current executional strategy on its head – stop trying to deliver it top-down. By this I mean think about Race Together less like every other traditional corporate PR and communications effort, and imagine it like needing to build a grassroots movement – one that can only be built bottom-up.

For me the video Mr. Schultz showed us of an impromptu town hall meeting (he held at Starbucks headquarters last December) did more to provoke thought and evoke a sentiment about this topic than anything else Starbucks has done thus far. And it was not Starbucks’ voice that caused this emotional stirring, but the voices of the everyday people sharing their very personal stories.

By sharing starkly different experiences about simple, mundane, everyday acts that most of us go through without batting an eyelid – it brought to life very vividly the different Americas we still live in today and experience differently based purely on our skin colour.

Hearing a black mother say that one of her greatest daily fears is making sure her child does not wear brightly coloured clothes to school has a power that no advertising or PR agency can ever deliver in a campaign. It is raw. It is authentic. It is where Mr. Schultz should begin building his brave and much needed conversation about race in America, all while ensuring that Starbucks Corporation and his voice are always in the background, creating the safe zones, providing the platforms and championing everyday voices until one-day they light the spark that will get everyone speaking out, across America.

How Facebook Can Fix Internet.org

When I first heard about this initiative, called internet.org, I was thrilled and thought it extremely charitable of Facebook to give free mobile internet access to the poorest people in the world. People for whom the decision often boils down to choosing between adding a data plan and putting food on the table. It just felt like the right way to give back; for a large, super wealthy corporation that has profited from a free internet. The logic seemed altruistic; access to knowledge empowers more people. The mission almost poetic; provide free access to “two thirds of the world that doesn’t have internet access.”

The one thing that struck me as curious is that Facebook was always included in the basket of so called “basic services” they were providing free access to; this basket included education, government, NGO, job listing, and e-commerce portals. But I was willing to accept this self-serving move for the greater good they were arguably doing.

However, as a result of neutrality debate in India, large web companies have now publicly dropped out of internet.org initiative due to a severe consumer backlash and based on how it might actually skew the level internet playing field. All this based on the curtain being lifted on a startlingly important fact, that was previously not made clear – the “basic services” internet (i.e. which websites to include in each country) is going to be determined by Facebook.

I will not waste ink talking about how this new information about the initiative clearly violates the core principles of net neutrality; while arguably trying to turn poor customers into Facebook addicts. SavetheInternet coalition has written an article here about why we should be concerned about the seemingly arbitrary and anti-competitive nature of the decisions on which services to include; e.g. in India the world’s largest search service, Google, has not been included but Microsoft’s Bing has.

With his pet project under attack, Mark Zuckerberg also penned an Op-ed in Livemint defending internet.org. While I agree with his basic argument that giving the poorest people access to “some” internet services is better than no access at all – I also believe that Facebook must let people decide which sites and services they want access to. So I want to offer Mr. Zuckerberg some suggestions on how he can fix this initiative to genuinely deliver on his mission of empowering the poor.

The way it could work is under the same basic principles they have outlines (large internet companies would still pay telecoms for the data costs, and Facebook could pay for smaller sites that cannot afford to):

  1. Customers would choose from a list of the top 10 sites (based on traffic rank, in each country) for each category of basic service e.g. ‘SEARCH” would include Google, Yahoo, Bing, Ask, etc. and so on and so forth for ‘JOBS’, ‘TRAVEL’, and every other category offered
  1. If necessary, for cost reasons, the total basket of basic sites could be limited to the same number allowed now; I have seen between 12-15 sites depending on the country
  1. Consumers would be able to change the list of sites at the beginning of each month AND go beyond the initial top 10 based on personal experiences, level of satisfaction with a service, word-of-mouth from friends and family, or due to their own discovery on the internet

By doing this Facebook would achieve their noble goal but also ensure that EVERY person has access to a free, fair and service-competitive internet – the way God and Tim Berners-Lee intended it.

Everybody’s Doing The Social Commotion…

The hype with social has become so big that a whole new industry of “social-experts” has appeared out of thin air. Just a few years ago these people did not exist or perhaps wore some other moniker when peddling their wares.

I am not saying there is no need to have a social strategy but merely that it is also important for to think about the relevance of these platforms for your product and business; think about the best way to engage your customers, based on who they are. This means that every company DOES NOT needs to have a social presence with a Facebook page, a Twitter account, a Pinterest board, or a blog. Maintaining a presence in social media is a full time job and doing it in a way that is meaningful to customers and valuable for your business – is a full team job. Few people realize that just setting them up and then posting or tweeting a few times is probably more damaging than not having it an account all. I routinely ask companies why they feel they need a Facebook page or Twitter account, and most say because everyone else has one. For me, a single person startup or small business should have many other priorities they need to be focused on before starting to worry about tweeting every few hours. And then there are also products and categories that really should not have a Facebook page – toilet papers and clogged drain cleaning brands come to mind as high on that list. Ultimately, it boils down to a little old fashioned common sense being utilized before rushing to sign up to the social bandwagon.

It takes time and work to build a solid social presence. Each new platform that you add means more work because it’s not as simple as sharing the same information across all your social pages. If you really want to build value for your business then you need to create value for your customers. This means first understanding the role of Twitter versus Facebook versus a blog and seeing how your customers are using and interacting with these platforms. Only then can you start to formulate a strategy to effectively make use of them for your needs. For example, Facebook can be an effective platform for building a community around your brand; by sharing information, starting discussions, soliciting ideas and requesting feedback on your products and/or services. It can be a great way to build loyalty through engagement and dialogue. Help to create long-term relationships with your customers and maybe turn them into evangelists; if done well. Twitter on the other hand is a great tool for more instant sharing. You can use it to announce new product launches, special flash sales and even to resolve customer complaints in real-time; as Dell and Southwest have done so effectively.

No matter which social platform(s) you decide to use there are a few things you have to be prepared to do; if you want to succeed. First and most importantly, get over yourself, your products and your services. I don’t care how great you think they are – it does not matter if you think so – it only matters if your customers do. Never use social media to blow your own horn; nothing is more off putting to an existing or prospective customer than a company telling them how brilliant they are. Second, never try to sell, sell, sell – you have sales people and channels for that. Social media is not a hit them on the head type selling tool. You can place ads for that. Find smarter and more subtle ways to offer value to your customers that will in turn lead to sales or generate word-of-mouth for your brand. Third, make sure that what you share will be of interest to your customers, beyond just your company stuff. This means not restricting yourself to tweets or posts that are always about your products and/or company. Take some leaps and broaden your horizons. Don’t be scared to follow interesting people, to be creative, human and inspirational. Share things that make you laugh and things that make people laugh about you. Share stories about your customers and even your competitors. All this helps make your brand and company come across as more secure and confident; and those are typically the kinds of brand that customers are attracted to and like to be associated with.

Finally, remember that you will need to grow a very thick skin. By putting yourself out there, and you will be if you do this well, be prepared for harsh criticism from customers and screw ups by employees (have an action plan to deal with them when they happen but don’t retreat). This is the price you have to pay to truly come across as real, in a world where very little can be controlled and preplanned. This will ultimately determine the difference between your social success and failure – how “real” or contrived your company comes across.

The Trouble with Monetizing Facebook

Aside from the fact that the CEO is a very young man who wears a hoody, I believe there are few other fundamental impediments to Facebook’s future success based on the very reasons that have made it so popular.

Think about what Facebook is at its most basic – a self-aggrandizement platform that is entirely built around feeding our obsession with me, me and me. From status updates about myself, to wall posts about things I like, to the latest gossip I want to share – it is nothing more than a one-way megaphone to the world; a modern day digital soap box for the one billion people who now use it.

I believe this has in large part been the reason for Facebook’s astounding success; it feeds into our most basic human desire to have our voice heard, in a completely unadulterated manner. Often while never having to listen or pay attention to other opinions. It is the modern day equivalent of “I post therefore I am,” as Descartes might have put it. It is as if the act of posting today guarantees the existence of self, for this socially driven over-sharing generation that has never known the world without the internet and Facebook.

Arguably, we are all better at talking than listening. We humans have always yearned to be heard, preferably without anyone offering an opposing argument or opinion. Well, there is no better place or platform to fulfill this need, than Facebook. However, this does not exactly make Facebook a great platform to get my attention as a marketer, or to try to sell me stuff when you think about it in this way. So it is not surprising to me that among the hundreds of people I know, who use Facebook regularly, not one person who has ever clicked on (other than accidentally) or bought something after seeing an advertisement on Facebook.

The other fundamental issue with Facebook and the notion of social commerce that it is trying to tap into is that people don’t buy simply based on what they see their friends or family buying. Also, not everyone wants to broadcast their every purchase, publicly. We may go see a movie that has been recommended by a good friend or perhaps have our interest piqued about one being discussed on Facebook but I know that I will never buy an i-Pad or a new car just because one (or many) of my friends bought one and advertised it on Facebook. Not to mention the fact that it would become incredibly tedious (and sometimes embarrassing) to see a continuous list of purchases made by my friend list – find me one person who enjoys seeing each and EVERY song being played by their friends…

The fact that Facebook has always been free for users also poses a challenge when it comes to monetizing any of their features or services. The New York Times is struggling to gain paid subscribers after being free for so many years. Once you set such a basic expectation with people it will be viewed as a betrayal to try and charge for something they have come to consider a right. Facebook just started to offer the ability to pay to “promote” posts, this after a failed experiment in New Zealand, where they tried charging people a nominal fee to ensure that their friends could see what they wrote on their wall posts. Not surprisingly the pay per post experiment was a complete disaster because of the transient and self-obsessed nature of the information posted on Facebook; in my estimation. Not only is it societally worthless but certainly not valuable enough to people posting it, to pay to have it seen.  Think about how many of your status updates and posts on Facebook you think are worth paying to share with your friends?

The final part of Facebook’s problem boils down to behavior and human programming. Think about how we function in our daily lives; from brushing our teeth to the brand of toothpaste we are loyal to. The rituals and routines we develop happen over time and are formed due to comfort, familiarity and a level of trust that, over time, leads to an automatic-ease and unconscious behavior.  I go to Google to search, to Amazon to buy stuff, to a news site for the latest news – why do you go to Facebook?

Facebook: Not $$$ocial Enough?

Earlier this week General Motors decided to stop advertising on Facebook. GM made this announcement “after deciding that paid ads on the site have little impact on consumers’ car purchases” according to the Wall Street Journal (“GM Says Facebook Ads Don’t Pay Off”). Albeit, the total amount, $10 million, is but a tiny fraction of Facebook’s whopping $3.15 billion in reported 2011 ad revenues, the timing was not great. It was less than one week before Facebook’s much vaunted IPO.

So while the revenue loss is paltry, there are two larger concerns for Facebook. One, GM is the third largest advertiser in the US and their announcement might lead other advertisers to re-evaluate their advertising spend on Facebook. The second more worrying thing is that it is a major blow for a young company trying to convince the world that “social advertising” is not only effective but provides Return on Investment (ROI). In the short-term the impact may not be that great simply because Facebook is about to reach 1 billion active users (approximately 14% of the world’s population); and this number alone is hard for most advertisers to ignore. But as a public company, with shareholders, they will soon need to prove that they are worth their high valuation, in revenue terms.

Every company feels compelled to have a social advertising budget, even though there is scant evidence that these dollars generate any sales, or return on investment. The advertising and social marketing industry will have you believe they are effective sales drivers but the reality is that there are few independent studies or evidence to support this hypothesis. If you think about the number of times you have clicked on a Facebook ad or decided to make a purchase based on seeing someone’s status update (or wall post), you will likely reach the same conclusion. Facebook’s ad revenue actually fell in the first quarter of 2012 from the fourth quarter of 2011.

Here is something to ponder about Facebook’s current IPO valuation. According to Anant Sundaram (of Tuck School of Business at Dartmouth) the average price to earnings ratio for the majority of US companies, over the last one hundred years, has been around 15. Apple is at 15 and Google is apparently a little bit higher. However, Facebook’s price-to-earnings ratio is 100.

He goes on to say that “at current levels, it would take Facebook 100 years to generate enough profits to pay for itself. That number is so high because investors are betting Facebook’s profits are going to explode. Sundaram says, judging from this price these investors seem to believe that the company’s profits will double, and then double again, and then double again — all within the next few years. For that to happen, Facebook will need to attract 10 percent of all advertising dollars spent on the planet “across all media – print, billboards, radio, television, Internet.”  To put this in perspective he adds that “Facebook had just over $3 billion in global ad sales. TV ad sales in the U.S. alone last year were $68 billion.” (NPR: “Is Facebook Worth $100 Billion?”).

Facebook recently tried a new revenue generation experiment in New Zealand by charging people two New Zealand dollars (US$1.53) a post to ensure that their own friends see what they write (Wall Street Journal: “Facebook Gets Religion for Revenue”). Are your status updates and posts on Facebook valuable enough to start paying to share it with your friends? I know mine are not and never will be.

Let’s just say I am holding off buying Facebook shares because I don’t believe they have a real revenue model, yet. That is not say that they will not find a Google like search cash cow but let’s just say ad banners on the site are not the Holy Grail that Mark Zuckerberg wants us to believe.

To LIKE or not to LIKE…

There seems to something akin to a marketing frenzy to build Facebook LIKE’S among companies. Almost every second email I get relates to a contest that is trying to entice me with a $xxx,xxx prize or a dream vacation. However, when I excitedly click on the entry link it frustratingly forces me to LIKE the product in order to enter the contest.

Sure, it will help you drive up the number of Facebook LIKES on your fan page in the short-term but what is the real and long-term value of this? I get that there are many statistics out there about how conversion and engagement is much higher on Twitter and Facebook and social media is all the frenzy in marketing today but for a moment let’s break down the psychology of most of these contests.

I am not saying all contests are the same and therefore not valuable but am merely talking about the recent frenzy where the prizes have no bearing or relevance to the company, or product, and the contest itself does nothing to build customer engagement with the brand. Most importantly when you throw the kitchen sink by emailing people randomly, it becomes akin to a marketing bribe where in order to receive a LIKE; rather than trying to target a relevant audience and do it on the merits of your brand or product story.

The simplest way to think about – imagine walking down the street one day you decide you want to make 100 new friends that evening. You could simply stop every person you see and offer to pay for their dinner at a really fancy restaurant, like Per Se. I have no doubt you would end up with 100 new “friends” very quickly, and without too much effort. Now what are the odds that any one of these 100 people will actually ever have anything to do with you again or be there in a pinch? Versus building real friendships through time, common interests and all the other real and meaningful stuff.

This is what these almost daily contest emails have become for most of these brands. Everyone from airlines to tampon makers have sent me emails, to enter contests, but only after I LIKE them on Facebook. Ninety percent of them have no relevance to me, my purchase history or my interests. It seems all these so called social media agencies are throwing the kitchen sink to drive up campaign success metrics, which frankly are of little value for the brand. Because even if the grand prize for a tampon product was so amazing that I decided to LIKE it to simply be eligible to enter, I am never going to purchase that product of have any future interaction of engagement with the brand.

Social media done right is about building long-term relationships, kind of the way we build friendships in the real world; and it is hard work.

So the next time you want to increase your fan page LIKES on Facebook, remember that 10 truly engaged customers will not only spend much more money on your products, consistently, over the long-term but also are more likely to become evangelists for your brand. Their value alone will be greater than the 1000+ LIKES you may add of people who don’t even know what your company makes.