Bad ads

Credit: http://dognpony.wordpress.com/

 

Disclaimer: I’m not from the ad world. I am a just a curious observer.

Well, for the past 2 to 3 weeks, I’ve been watching this really dumb ad from TVS for its product Wego. Apparently, it’s something to do with body balance. It’s here:

I want to go through the ad in a bit detail to explain my (and I doubt, unique) thought process:

I swear to God…for the first half of the ad, I didn’t know what the fuck was going on….it took me my second time watching it (Yeah,apparently, there is big media buying purchase for this shit!) to realize that there was a specific pattern of contrast between the music played for the two chicks – one was a Tamil score and the other, a Hindi music score….so the ad was supposed to show a North vs. South thing ? Ok….then, for those who don’t know Tamil, the lyrics mean “Put it like this, put it like that”. So North Indians and South Indians “do things” differently ? Ok….except that both those dumb chicks start sexually assaulting the guys driving the bikes with their dirty dancing…..so this is an ad for condoms ? Oh, and then they get all hyper standing on the seats and start dancing…now, by this time, I’m expecting either 1) One of the chicks will fall off the bike and die a sorry, bloody death in which case, the other gal says “XX chappals, now with super grip” or 2) A voice over cuts talking about the smooth, beautiful roads of Bangalore built by a private construction company.

But, then both bikes stop at the signal and the two “chauffeurs” stand and smile at each other like they remembered their experiences in their own, private “Brokeback Mountain”. And then, cut to a buddha and buddhi (who covers the face of a toy) who are afraid one the chicks would fall. And aforementioned “buddha” says something to the tune of “TVS Vega with body balance” and said buddhi says “oh!” and they all drive away!

OK so seriously, how many products could this ad have been for ? Any and all of the products I mentioned above? What does it say about the bikes ? For guys with idiotic women? For women who apparently can’t dance at home? For the women who have better physical balance and less mental balance? Even the tires of the bike? Or both chicks dying  and the ads say “Do not try this ” by the Mumbai police? Doesn’t it look like the ad can be interpreted in way too many ways?

The reason? People try too hard….they try to incorporate too many signals into a single 30-sec spot. For example, the two guys, the buddha and the buddhi were frankly, unnecessary. They did nothing but add too much information into an ad which, by its own, was quite vague. Same with the North and South Indian thing. The contrast was not required unless you want to say “North Indian dancing or South Indian dancing, sab chalta hai Wega pe!” Then, add the buddhi admiring the bikes in the end. Why ? She wants to do a Street Hawk with them, now that she discovers they have body balance? Why two bikes ? To show that they have both black and white color bikes ? Does that have anything to do with the body balance feature? Or were they just trying to say “Since we already spent 50 lakhs on this spot, why don’t we get value for money?”  Except that, in this case, it was volume for money (too many signals) instead of value for money (specific focus on one feature). And it’s that  specific aspect that this post is about.

Have you ever seen a fashion show? I don’t mean the college ones. I mean the actual Ralph Lauren, Valentino kinda Fashion Week shows. Take a look at the models on the catwalk. They refuse to smile, they refuse to look at anybody in the crowd (they look absolutely straight ahead). Their gait is one that doesn’t serve to really endear them to the crowd. In fact, some of the models are butt ugly. Why? To take the focus off them and onto the clothes. Their blank expressions dampens any kind of signals that may arise from their facial expressions otherwise. Their gait serves only one purpose and that is to demonstrate the flow of the clothes around the body as a person is moving. Its rigidity and predictability cannot be translated to any kind of emotional expression of the self. The models look absolutely stone cold. They are all for all practical purposes, walking mannequins. The make-up and the hairstyles are built to complement the clothes not the body of the model. The body of the model is, in fact, chosen to complement the clothing. Basically, all other signals that may take away attention from the “pure” signal of clothing is dampened (to use an engineering expression). The only time, the models smile and clap is at the end when the designer walks the ramp to receive the accolades from the crowd. Even then, the choreography is so brilliantly executed that it is extremely easy to locate who the focus on the catwalk is.

Similarly, noticed the ambiance every time you enter a movie theater to watch a film? They cut off any ambient lights the moment the film starts. The main reason, of course, is that it reduces the effect of this light on the projection of the film. However, the side-effect is that it blocks out any signals that may distort the experience of watching the film – the people around you in the theater (Where’s that damn hot chick!), the shape of the walls and the pillars, the color of the seats, the color of the walls, the make of the speaker system (OK, that’s my peculiar nosiness!). Hence, your attention is directed on the only thing visible. The screen. Hell, if you want to make out in the dark, the only thing that distracts you is the shining film! And if its distracting you too much, you’re probably not really into it…..you’re probably wondering where that other hot chick is….so here again, there is an instance of blotting out unnecessary signals to divert your focus to what really is important.

There’s a similar expression of this focus in the Apple iPod ads:

Credit: www.ipodhistory.com

So first, lock out the background in a solid single tone colour. That removes basically any redundant signal about where the person is: in  a garden, road, skyscraper, tunnel, train, etc. Then block out the person, leaving only a silhouette. That blots out anything perceivable about the person: race, color, religion, hair color, clothing (to a large extent, it merges into the silhouette). That leaves you with two things: the motion of their body and something that’s white. If you notice, the iPod has been actually better detailed than some of the bigger items (the screen is grayed to provide contrast and if you look really really closely, the faint outline of the scroll wheel can also be seen). So the first focal point is the motion of the body: the person is grooving. Obviously, this raises the question: Why? And then that feeds into the second focal point and that’s the iPod. And that completes the picture. It shows people enjoying the product as it was meant to be. In fact, even if your attention is directly attracted to the iPod, it’s a shortcut to the same focus of the ad. There is also an interesting subliminal message if you think about it: no matter who you are, what you wear and where you are, you WILL enjoy grooving to an iPod (Frankly, I don’t think iPod’s marketing people must have thought so much about it. I truly am jobless!)

Honestly, if you look at the other amazing ads, Nike’s brand ads (rather than actual product ads) or Apple’s “Think Different” commercial, unnecessary signals are drastically compressed (Nike’s video removes unnecessary video – it only shows Jordan walking around the stadium and the gym, hence the focus is completely on the voice over which in itself, is completely unhurried and clear. In the Think Different ad, there is only one instantly recognizable person in each frame. It also mutes out any sound associated with the video to remove that signal. The story or the focus lies, once again in the voiceover.). Among Indian ads, the one I really really love was an Airtel ad of the yore:

No matter how many other ads Airtel makes, no matter, how good they are, I don’t they will ever be able to recreate an ad like this again. Now think about the ad. Each frame has just two words. Each clip is only a second or two to enhance THOSE SPECIFIC WORDS in almost poetic fashion. The clips are black and white to blot out any color signals that “corrupt” the purity of the focus. There is no ambient noise, once again, in any of the clips. Even better, you don’t even notice the bloody music, it’s actually “background” music as compared to the Wega one. So you just focus on the text. It displays long enough to register but short enough that you don’t get bored. Then each of these texts weave through long enough for you to understand that it’s an emotion-based thing. And finally, this wreath of emotions culminates into to a single line: “Express yourself”. Perfect. Can you imagine what would happen if they ended up adding a Sachin Tendulkar’s “Nothing official about it” kinda thing or SRK’s overactive jumping around to it? I’m not saying that they suck at acting (They do, though!) But the point is that their star power pulls away attention from the focus of the ad. And if your focus is on the celebrity, you’ve lost the message.

In fact, a poor execution of a celebrity endorsement especially ends up corrupting the signals. For example, if you look at the Nike and the Apple ads, the celebrity don’t talk about the product. They reflect it. In one of Steve Jobs’ speech (when he launched the “Think Different” campaign), he talks about honoring people in the ads. That’s perfect. Nike uses Michael Jordan since MJ is the person who NEEDS a high-quality shoe to further his craft. To further his passion and everything he seeks to achieve. He endorses something that’s a very critical thing for him. SRK can’t do without Dish TV? or a Hyundai i10? Atleast Aamir Khan plays a role of someone else in his endorsements. In all these cases, once again, the message is about the star saying “use this” rather than ” I need it” or “This is me”. I can’t imagine that the former brings the focus to the product/brand/service as much as the latter does. But it’s all in the “Oh! But we paid him! Let’s get our money back by splattering his mug wherever we can!” panic. I’m not saying using celebrity endorsements are bad. God knows there must be some serious correlation between using celebrities for endorsements else they wouldn’t be spending so much money on it! But, there is a difference between rationalization of using a celebrity endorsement and the execution of said endorsement.

Somehow, there seems to be this incredible mixup between quality and quantity. A picture may be equal to a thousand words but is redundant when all you need to say can be done in a hundred. Quality comes through focus not per-display-of-product-per-rupee-spent. It doesn’t come by filling the screen with extras. It come from creating the equivalent of  a cat-and-mouse cartoon series where two characters chase around the house for 10 minutes at a time. (That allows people to establish the “what” of the plot beforehand and lets them focus on the “how”). It comes saying “No”.

P.S. - Sometimes, I wish I could do that with my posts. Cut the meandering route to achieve a conclusion. Give me some time

P.S.2 - Obviously, the assumption is once you bring in focus on the right things, you still have to have an amazing story ! Else, you’re better off with this B.S.

Change the tone

I think we should stop saying “India can become an economic superpower because of its advantages of a vibrant democracy. All it needs is to get its act together on infrastructure, corruption and social justice”

I think we need to start saying “India will FAIL to become an economic superpower despite its advantages of a vibrant democracy, simply because it just CAN’T get its act together on infrastructure, corruption and social justice”

That should piss enough people off to initiate the change. All we really need a kick in the pants !

Where’s the product placement in mobile gaming?

It started with a discussion I was having was discussing with one of my cousin’s friends who was into digital media (pertaining to my career and stuff) and he mentioned that gaming was an area ripe for mobile advertising. So I basically went out to do some research and realized that most of the advertising is banner based i.e. either during the game, before and after the game, there are banners displayed that you click to probably go to a website of the advertiser or can make in-app purchases. I think this is ridiculous. No one playing a game is going to click on a banner or ad and go out of the game to make a purchase. That’s just unrequested interruption that a player will ignore.

It just seems that mobile advertising seems to track the web based model very closely rather than acting as the digital replacement of several different kind of ad strategies. One example which I don’t think is being exploited enough: product placement. And what’s really wetting my pants right now is a remix of a game, a product placement and a mobile coupon (I am getting too obsessed with this mobile coupon concept for my own good!).

For example, let’s say someone playing Angry Birds finishes a particular level (I understand Level 14 is one of the more difficult ones), there are already inherent rewards built into the game in terms of his scores or getting to move on to the next level. However, what if there were the possibility of also obtaining extrinsic rewards as well? For example, because he finished a tough level, he gets rewards such as: a 20% off on Mango merchandise, a free hukkah/ nachos combo at Times Cafe (This nachos and hukkah at Times Cafe is driving me crazy….i love them both !) or a 50% off on say three movies at Reliance Big Cinemas. You can choose any one and the reward (now obviously you realize we have now entered into the realm of mobile coupons) automatically gets registered against the player’s mobile number and the player continues with the game. Now at any time (before the expiry of the coupon) after playing the game, the player can access those coupons to get their requisite discounts.

One way to do this is tie up with advertisers at the game development stage itself. Something like in Sega’s Sonic the Hedgehog – along with picking up gold coins, you also pick up a discount for 20% of a Pepsi or 30% of a Bacardi Breezer or something. And later versions can have tie-ups with other advertisers. So depending on which version of the game you download, the offers will differ.

But even better, the best part is that I don’t see a reason why a particular coupon needs to be integrated in the game. If a profile-based advertising model can be built (where the customer needs to maintain an updated profile….duh!), the offers can be updated everytime the level starts  through GPRS. This brings in another dimension to the typical content provider-ad network-advertiser model as shown below:

Credit: Contextweb

Notice something in the diagram on the left? The word “users” don’t seem to appear anywhere. That’s because the current advertising model rests on the basic assumption that people who use a particular content are interested in specific type of advertisements/products. That may be true for only specific types of content providers (technology blogs, MMORPG) where the content is somewhat specialized and the fan following are of a specific psychographic. But how do you extrapolate that to casual games like those from Zynga’s or general news such as CNN where there is no specific demographic that watches the kind of news/ content they provide. This is where I believe a user profile would be extremely important at the ad network level. I have some ideas on how that needs to be built-up but it requires some serious level of trust in the ad network (and that is a vicious circle – you don’t give information because you don’t trust them, they don’t have any information to safely maintain and hence have no way to win your confidence). However, if you do build that up , the game suddenly gets more interesting, a lot more rewarding and hell, the mobile coupon business gets a serious shot in the arm.

In fact, if any of you played the Mario Bros. games, there are these bricks you hit in the game levels and get these gold coins/ mushrooms (yummy!) that add to your powers. Now, imagine the same game remixed to include product placement (I’m going to use “hitting the brick” as an example of a specific desired action to access an ad/offer). During the game, there is also another brick that if you hit, opens an interface which offers you various coupon rewards ( as explained before), you immediately choose the option you want (including one that implies “none of the offers are interesting or relevant to me) and continue playing the game. The way it would be designed is that as per the original code, if such a brick exists in that game level, then use an API to download content in a pre-defined format during game load and when the brick is hit, display the content. So when the game level is loading, the API connects to the ad network and basically, downloads various relevant ads (based on the user’s profile). When the game is played, and the brick is hit, you get the requisite content i.e. the offers. In fact, the design can be modified either to display various offers that the person can access at the end of the level or when he hits the brick. More importantly, the design should ensure minimum intrusion during game-play i.e. literally simulate as much as possible the collecting of coins as per the usual gameplay. It should not simulate an unwanted distraction instead of a valuable reward. The song and dance around the offers can come after the level is completed.

I can easily imagine people sitting in cafes and restaurants playing games to get discounts on meals at that restaurant/ cafe. That would become similar to something what Scvngr is doing except that their games are a lot less complicated than a Angry Birds or a Super Mario Bros. game. In fact, it would be the reverse of what Scvngr is doing, in the sense that in a Scvngr model, both the game and the offer are store-specific, while in this model, the game is location/ store agnostic but the offers are not.

It seems to be an interesting and a more powerful way to enhance the mobile advertising process. I wonder what I am missing?

Why MNP may not just impact churn but also VAS revenues

Note: Some aspects of this post has been detailed here and if you didn’t find that interesting, I doubt this one will either

MediaNama: What’s been the impact of the multi-SIM environment, in terms of VASrevenue?

Anil Pande: VAS is the first casualty when a user is constantly switching SIMs. The lastthing he will do in such an environment is subscribe to any monthly subscription service.He wouldn’t like to commit to that. There will be a certain class of users who will have oneSIM as a primary SIM, and subscribe to some services, and none on a secondary SIM. Incase of the student community, where there is no primary SIM, the subscription rates willgo down significantly.

I have heard quite some stuff about Reliance Comm and its employees, culture and the constant griping about salaries but man, total respect to Anil Pande. He has really nailed it time and again on VAS in his interviews with MediaNama. Well I have to agree to some extent that non-GPRS services have not really taken off but I feel that that’s more of an utility issue than a technology issue.

Anyways, I’m digressing from the issue. I remember I was explaining one part of my project to my cousin (who is into market research) and his first question was: “If you need this data, say from the mobile operators, then why do you think that they won’t enter it either?” I think that this comment from Mr. Pande clearly nails that question. With MNP already being launched selectively in various circles, no subscriber would want to be locked in or more specifically give up some service they like just because they want to shift operators. Mobile numbers already acted a very strong lock-in and people don’t probably want to get into that situation again. The fact that it is called “Value-added service” itself is a clear indicator that these serve to act as a revenue enhancing product from subscribers of the telecom service provider rather than as a independent content provider/ platform (read: sell new products ton only Reliance subscribers rather than spin it off as a separate business and sell content like other content providers to anyone with a mobile irrespective of the service provider). The difference between the two is the difference of acting as a utility vs. making money of differentiated content, something we partly discussed here and here. And if they do, indeed to act as a content provider, then suddenly, they are suddenly striped naked of their gatekeeper role (which is no longer a feasible role) and have to compete with the hardened content providers as well. Given that data services are being looked at a source to stanch the revenue bleed that has come to signify this sector, can volumes alone (rather than sale of content at a premium) be adequate?

If service providers think they are locking-in customers, it’s time they re-think that now. They are actually locking themselves out of the market.

Note 2: A large part of this post is based on the assumption that subscribers are really looking forward to MNP as an option to change their services. However, differing opinions seem to arise on the impact of MNP

Steve Forbes feat. Warren Buffett and Jay-Z

Brilliant interview in 4 parts :

Part-1

Part-2

Part-3

Part-4

Part-5

 

What Apple really did with the iPhone

Caveat: A large part of the latter part of this post on monopoly of telecom service providers has been discussed and dissected to death. Am adding it only from a completeness perspective. I am also using Apple as an example of a different business model rather than as the only company that works on this principle

A large part of my work as a consultant in the telecom domain related to VAS or value added services. This included services and products ranging from dialer tones, missed call alerts to multimedia applications like wallpaper downloads, MMS and the like. These really were the dominant applications during the time (I’m assuming it’s still the same). And for each of these services, the vendor system needed to understand and interact with various telecom systems such as the prepaid billing platform, the switches, the mediation or the SGSN. The main reason being that all this telecom elements were essential for one of two aspects: Service / content delivery and billing. So you always needed to understand the format in which data would be accepted by these systems to process billing (usually as a CDR or a call data record), understand in what scenarios could billing or service delivery fail, etc. Basically, you needed to have extensive domain knowledge in telecom as well.

What Apple done with its iPhone and iTunes products is, basically, is reduce the importance of understanding the telecom infrastructure( the service delivery and billing systems) and focusing more on building the product. Not only has Apple built an eco-system that transferred power from the service providers to the handset manufacturers, it has also transferred power from the telecom domain experts to the IT product developers. Basically, it has brought the control back into the vast IT community of developers. This was something I realized when building my prototype for an LBS-based product (let’s say severe re-working is going on right now). Even though, I already knew how geo-positioning is done, how GPS or triangulation works or what accuracy ranges are allowed, it is all immaterial. Why? Because the iPhone has already all this in-built with its GPS and allows you to extract the location coordinates using a simple API. An API that works just like any other product API. Something which is extremely familiar to all programmers. Even if you’re not designing for the iPhone, other third-party vendors have built similar APIs for Blackberry, Nokia and J2ME devices. This severely reduces the dependence on the network operators. Product developers no longer have to worry whether the service is provisioned on an HLR to deliver the service. Or whether an incorrect configuration on the network side is going to wreck havoc on their revenues. One product that already slipped from the grasp of the telecom operators was ring tones whose revenues fell when handsets started working on standardized formats such as MP3 which could be downloaded from any site on the web.

Further, ITunes allows you to use credit cards to purchase the application. Using a payment gateway. The same way all online transactions are processed. Another familiar platform for any one who has built e-commerce sites. No more worrying about whether the subscriber has been disconnected at the billing system and has, hence not been charged, or incorrect configurations at the mediation, or that a service has not been charged because well, the SMS short code and the rate was not configured in the billing system. Basically, no revenue loss because the telecom operator messed up. Remember: All operators have contracts with the VAS vendors saying that the operators will pay an X% of what they bill. Not X% of what is billable but what is actually billed. So if an incorrect configuration in the telecom operator’s system allows the subscriber to use the service free of charge, even the vendor does not get paid for the same.

However, the pain is not only on the side of the telecom operators alone. Till now in this post, I have not distinguished between the VAS content creator (who makes the content/ owns the copyright of the content) and the VAS content aggregator (who licenses the content from the creator and sells the content to the customer through the telecom service provider. But in the new scenario, aggregators are the online app stores. No longer do the aggregators control the service delivery to subscribers of a specific telecom operator. An Airtel subscriber, need not only extract content from aggregators that Airtel has a tie-up with. He can go to any store online and get the content. This allows content creators to sell their wares on numerous online sites. Hence, the content aggregator has also lost his own somewhat-cushy monopoly over the content creators because of his tie-up with the operator. Even stores owned by handset manufacturers such as Nokia Ovi has to compete with all the other app stores that sells Symbian (the operating system for Nokia handsets ) applications and products. Unless you are Apple of course.

One last way Apple is blowing up this eco-system is basically solving one of the most oft-lamented problems faced by VAS vendors in India. That of service providers have this incredible choke-hold on the entire service delivery mechanism that they pretty much dictate the revenue share % and the other terms and conditions. After all, what’s  the point of building an application if you can’t charge the customer or allow him to use it? Some of the apps were available for download on the Internet even before but Apple and iTunes brought it together at such phenomenal scale, that it cut off the legs of the telecom operator monopoly in the USA.

But make no mistake. Service providers do have a few cards up their sleeve as well.

1. There are still some services like Dialer tunes or Missed Call alerts which are still the dominant VAS services.  And these are completely network-dependent. However, other services in the ABC categories (Astrology, Bollywood and Cricket which dominate Value Added Services) such as downloads and periodic updates can soon break out of this monopoly only if there is the requisite proliferation of credit cards and in the future, mobile money products happens.
2. Service providers still control GPRS Mobile browsing – as per InMobi’s KK at the Mobile Monday Mumbai summit the day before, the Mobile Web is still providing it with its largest ad inventory yet. However, even in the mobile browsing business, the service providers are paid only for the volume of the content and not the value of the content. For example, irrespective of whether you are accessing the scores of the hottest cricket match or you’re visiting an old, dilapated blog that no one ever updates (hint: Z, Alpana, Charsi), the service providers get paid the same amount. They don’t get more money for the cricket website. And obviously, services like ZIP Dial are going to take their pound of flesh by destroying their other premium SMS services (KBC anyone? )
3. Further, the telecom service providers also have their own stores for downloading content. But these are no longer exclusive. You can’t lock-in a customer to your store. You have to still be price-competitive against the rest of the stores out there. You are just another store.

This is getting to be incredibly interesting given that one of the ways that telecom service providers were planning to shore up their falling ARPUs was through Value added Services. Wonder how the battle will turn in India given our incredible ability to turn every challenge into an opportunity.

Note1: When I say what Apple did, I mean what Apple started and what the general trend of service delivery is. Obviously, there are hundreds of app stores available today, including the Ovi store (Nokia), the Samsung app store (Samsung), Android Market (for Android phones

Note2: Obviously, given Apple’s limited success in India and India’s relatively lower wireless data usage/ Internet usage, this model will take a bit more time to mature before it spreads to the smaller towns. But I think it’s a matter of time

Note3: I am very interested in the rumors around Apple’s next phones which will have an embedded SIM and allow you to choose the carrier long after you have purchased the handset. What happens is that the operator does not provide the SIM but Apple does. The configuration of the network carrier is done through iTunes and is essentially software !

Brilliant post from Dan Lyons

I love this post by Dan Lyons (better known as Fake Steve Jobs):

Friends Without Benefits

Not saying something is wrong with the way things are. But IBM is the only big company trying to solve problems truly on a global scale. (It could just be plain marketing but it’s too early to be cynical)

Is there a market for a rewards program exchange ?

 

Credit: Chris Guillebeau

First, there was Facebook credits. Now, EBay has its EBay Bucks program. Add that to your frequent flyer miles, your points on your credit cards, Crosswords Stores and BPCL/ HPCL points, etc. and you have a whole load of points and credits that you wouldn’t want or are not going to use. On the other hand, you want to be upgraded to a better room in the Hilton but you either are not a member of the scheme or don’t have enough points for the upgrade. Can’t both problems be solved if we could create an exchange like the NSE or the BSE for reward points?

So you would basically get on the exchange and check if anybody would want to trade out 400 ICICI cash back “points” for 1000 Hilton credits. Somewhere else, another person who doesn’t intend to travel anytime soon has 1800 Hilton credits which are set to expire within a month but also has to pay her ICICI credit card bill soon and doesn’t have immediate funds. A third person has 400 Hilton credits and wouldn’t mind frankly, a few petrol pump points to since she is travelling in Leh where you don’t have a Hilton (Stupid Hilton! Wouldn’t you want a hotel in one of the most beautiful places in the world !). Hence, a barter is achieved. In fact, there could even be a cash transaction where you could actually buy the desired credits in a cash or demat transaction where the cost gets debited to your bank account. Or you could define an “exchange rate” against each rewards program based on the supply-demand characteristics of the points and hitch them all to a common “currency” which does not have its own points. The value of each set of points would work like a government bond i.e not just based on the issuer but also on the “term” (read expiry date) of the points. So we could have one set of 100 credits of company A expiring in a week for another set of 40 credits fo the same company expiring within a year. Now let’s get to the advantages and disadvantages.

Advantages for the member:
 1. Quite apparent. Exchange things you want for the things you don’t want.
2. Points will never expire. They will just get exchanged

Advantages for the business owner (the entity whose points will get exchanged)

1. New customer acquisition: People who wouldn’t have bought your product unless they got it free. Now this acts a new marketing strategy which does not cost anything over and above your existing rewards points program.

2. Better performance benchmarking of your own rewards program vis-à-vis the competition i.e. not only can you correlate the impact of the rewards program on your own sales (as was initially done)  but also rewards-to-primary-sales of your product vs. rewards-to-primary-sales of your competitor’s product based on the “price” of each and the monthly / quarterly sales.

Further, if the “price” of your rewards scheme is low, i.e. no demand for your reward points, it would imply that:

a) Your product needs more improvement since the accumulation of such points would indicate intent to purchase your product

b) Your rewards program may be the one that needs more improvement since the effort in collecting the points significantly exceeds the desire to purchase the product. Exaggerated example: you give a reward of 1 point per purchase but the user will need to redeem 1000 points for your lowest-priced product.

3. Increase stickiness among existing customers:  These points don’t work like the credit card industry which depends on you not paying your credit card bills in time. Usually, the more points get utilized, indirectly, the more the loyalty and retention. Hence, (and I may be mistaken on this though) while the cost of goods may increase with more redemption of points, it is offset by increased stickiness and loyalty.

4. Liquidity of your own rewards program: In a scenario where specific organizations in a sector abstain from participating in such an exchange while their competitors are, the disadvantages are very obvious: Your points lack “liquidity” and hence the risk of accruing such points in a way is high. Given absence of adequate differentiation between products, this is a dead end to your service.

Disadvantages for the business owner:

Given demand, there is one risk that might offset all the advantages: Enormous, huge increase in value of free goods and services provided. However, rewards programs are designed keeping assuming a high % of points redeemed. This negative impact would have to be balanced against the increase in actual sales to take a final call

NetFlix could easily be the next StarTV

Well, ever since NetFlix has started its streaming service, the adoption of the service has been incredible what with its  expectation to acquire almost 5m new subscribers this year. Interestingly, NetFlix has eschewed the traditional content (UCG like YouTube and Vimeo) and the traditional revenue model (ads). NetFlix focusses only movies and TV shows and only as a subscription-based model.

NetFlix Business Opportunity by Reed Hastings:

The beauty of this service is that the subscriber choice and segregation does not happen at a “channel” level (such as choose StarTV or Zee) or a “bouquet level” (News, Regional, GEC, etc.). It happens even more granularly at the episode (Season 1 Episode 1 of Scrubs) or the serial level (Scrubs). Hence, this kinda increases the signal-to-noise ratio (useful content to stuff I dont watch but have to pay for since it’s part of the bouquet). Right now, NetFlix is pursuing more of a catalog strategy (as in all the older episodes) rather than a premium TV channel with pay-per-view. But I believe that apart from this, this is the exact service delivery model that will dominate the media landscape in the future if  a single pipe-to-the-home kind of strategy is followed by the integrated teelcom operators i.e. the “bouquet” would be a landline, internet and cable / DTH. At the backend would be a content delivery server which will dish out the content as and when the subscriber requests it through a media interface (TV setup box/Internet webpage/mobile app).  In such a backend architecture, even my ad platform can easily be built to deliver customized ads to each subscriber. The ad purchase model would be based more like the AdWords model rather than the current media buying franzy that happens since content would not be broadcasted but delivered to a specific IP-based device.

But as Reed Hastings, CEO, NetFlix says in the presentation attached: ”almost no customers leave cable for netflix””. Why? We offer only a fraction of the content of the CST, and no sports

(CST refers to Cable / Satellite /Telcos)

Exactly ! One of the real hinges on which such a model could revolve is the giant libraries of content that will be required. If producers of such content are ready to work on such a platform, is there any reason we would need Star and Zee (from the perspective of the content which they aggregate and distribute – not the original content they produce)? Am I missing something here? What is the weak link in this argument/model ?
 

I have written about this earlier as well

Cloud vs. Handsets/ Carriers….the debate continues

Cloud Computing. Credit: News and Reviews

While I’ve talked about apps distributed through handset vs. apps through carriers, never really got into cloud vs. proprietary. Basically, it means that should there even be a more distributor channel for apps which means downloading applications only available through one handset provider or only through one carrier. For the uninitiated, simply put, cloud computing is where the handset sits as an input-output/ communication device while the processing parts are managed by a central server. This would be equivalent to saying that you want to add the numbers 2 and 3. You type “2″, then “3″ and then “Add”. If it’s a cloud infrastructure, all these inputs are sent to a central server (Somewhere in what is called the “cloud”. It doesn’t matter where or what type of server it is. What matters is that it can be accessed and it can perform the required function) through a connection established between the handset and the server. The server looks at the “2″, “3″ and the “add” and then performs a summing operation and returns on the same connection a “5″. The handset receives this and displays it to you. If you think, this is riduculous, you’re right. But only for this level of computation. However, if you wanted to perform some statistical analysis on your handset like a mean, or a variance analysis which your handset can’t support, then this architecture comes to your aid. Leave Math. What about hard core gaming which requires an operating system to talk to? This can’t be done on a plain vanilla handset. But if the only function of the handset required was to receive you input to “jump” or “shoot” on the input side and redraw the pixels on the output side, this can lead to a credible albeit slightly shaky experience.

Where I’m coming from is that migrating to a cloud-type of architecture basically allows you to be carrier and handset agnostic. The only thing that matters is the mode of communication between the handset and the cloud. In my opinion, this is the only significant strategy of adoption of services in India. With handsets like the Nokia 1100 as one of the faster selling phones, applications for the rural market cannot depend on any functionality on the phone itself except for voice and SMS.

The Indian market has already given a thumbs-down to the iPhone frankly, the reason being value for money. Even some of the people I thought to be relatively hip have no reason to have one. And those who do have one invariably have a hacked-out one which basically negates the whole exclusivity thing with Voda and Airtel.

Developer’s point of view:

In the urban areas, the handset market is littered with Nokia, Sony, Motorola and HTC as well. And while, Nokia is the dominant market leader, it doesn’t dominate it enough to ignore all the other manufacturers while developing apps.
From the brilliant App is Crap post by Mark Suster:

- Let’s start with Google’s Android. You’ve just hired your iPhone development team for you app. They’re super busy developing a new version of your product because, guess what, Apple changed it’s terms of service to allow in-app purchasing. So you rush to develop a new monetization strategy which means rebuilding your app. It’s taking time to finish the product because you’re super expensive iPhone developers (they’re in high demand) are not as good as you like (they’re super high in demand). Should you now hire Android developers? Can your iPhone developers be good at both? Do you have enough resource to cover both?
- And that Palm Pre. I heard it’s pretty slick and Sprint seems to be pushing it really hard. I heard they have an App Store. Let’s look into it. Maybe we could ship our app and see how it does?
- Oh, wait. There’s that RIM company with the Blackberry. Should we have an app for that? They have a super relevant and high-end installed base including people like Mark Suster who never gave up his Blackberry since Apple only offers itself on a super sucky network for which their is ZERO bars of coverage at his house in Brentwood. But their browser sucks, their app environment sucks, the developer community isn’t strong. But we need device coverage, right?
- Oh, wait. I need some Microsoft OS coverage. I know Windows CE is dead despite having like a 100-year head start on Google. But Windows is now making a push with Windows 7 Mobile. Maybe we could get an application out early for that before everybody else does?
- And how about Symbian? We’re going to want to develop for all those Europeans, right? And Nokia has the Ovi Store thing, right?

And this is only the developer’s headaches. How do you manage a team making the same product? You can’t re-use classes, you can’t re-use objects and hell, you’re rebuilding the same product from ground-up. I used to fantasize about some kind of universal compiler where you right the code once for one platform and then this universal compiler would actually re-compile this code for all other platforms. But wait a minute? Isn’t that exactly what a cloud architecture does? Keeping the processing of the data, the classes, objects, methods, databases and all that jargon away from the handset? Making it a kind of a black box for the handset so that the OS on the handset (Hell, even the absence of an OS) does not affect the functionality of the application)

Customer’s point of view:
Forget compiling code, using a basic SMS delivery platform a basic handset like a Nokia 1100 could access some pretty advanced functionality since the entire the thing would be processed in the “cloud” of powerful servers. It would be in some sense a “black box” for the handset and hence, the application was handset-independent.

Second is the freedom of choice. Jason has put it so succinctly put it in his post The Case Against Apple–in Five Parts:

Apple will face a user revolt in the coming years based upon Microsoft, Google and other yet-to-be-formed companies, undercutting their core markets with cheap, stable and open devices. Apple’s legendary comeback ability will be for naught if they don’t deeply examine their anti-competitive nature.

Making great products does not absolve you from technology’s cardinal rule: Don’t be evil.

It also doesn’t save you from Scarface’s cardinal rule: Never get high on your own supply.

Interesting times. While VAS in India has been dominated by ring-back tones and Missed call alert services, the VAS market has not seen the real relevant services being pushed. The real useful ones haven’t yet reached critical mass partially in terms of usability issues and partly in terms of the revenue model. Now, that voice and SMS are really going the commodity way, and data hasn’t picked up fast enough to replace the voice and SMS revenues, now there should a push towards maturing this service/ business model.

Let’s play !