Week 6: Googlenomics: A new topic in economics

I wont be surprised to see a new subject being taught as a course in a business school very soom on Googlenomics or clickonomics, simply because of the creation of equivalent indices used in the digital world, which is only becoming pervasive as the mobile smarts are becoming ubiquitous. 

To talk about Keyword price index (KPI), one can see its definition to mirror itself to the CPI. Here every user/surfer is the customer. Since it is almost to safe to say that almost all of us use search engine dominated by Google, the clickonomics will result in solid and safe predictions by product usage, a certain usage etc.

I am awed to see how GOogle is able to build robust and continually evolving complex algorithms along with statistical methods to predict quite accurately usage.

This firmly leads me to believe that there will be one day so much data that a quantitative analysis class will start building case studies on this as well as enough to determine supply and demand curves in the area of clickocomics. All this will only serve to build future theories, which I strongly believe that economists are certainly looking into it while I also believe that right now, it is at a stage where the surface is barely scratched.

Week 6: Googlenomics

As we are nearing the end of this class, let me begin this blog by first commenting 'Understanding googlenomics - a fusion of math, computer science and the concept of supply and demand!! What a way to end this class. Awesome!'

Yes, the bottom line of googlenomics is a fusion of math, computer science and the concept of supply and demand.

Very impressive to see the then entrepreneurs in the early 2000s to think totally out of the box to create a disruptive market in a very established area of advertising. Even though this the secret sauce of Google, understanding the magnitude and the complexities of algorithms of prediction and extracting signal from noise, a challenging and a daunting for a statistician is a differentiator that will hold high and tall for a long time, even though its competitors such as Yahoo and Microsoft are building inroads to the concept.

It is fascinating to see someone using the concept of game theory and Nash equilibrium, something I learnt in micro-economics to implement Google's risk taking idea coined 'Adwords', its unique method of selling online advertisements using auctions going on real time.

I can see why Google is OK with making many of their apps and especially their Android operating system as an open source platform. All of this has to do with the end goal of having more users using the Internet benefit them.

Week 5: Moving to a different plane in web analytics

Traditional web analytics as defined by wikipedia is a microcosm of what is expected to continually evolve with increasing numeratis in Google, Twitter etc.
Web analytics is the measurement, collection, analysis and reporting of internet data for purposes of understanding and optimizing web usage.^[1]
Web analytics is not just a tool for measuring website traffic but can be used as a tool for business research and market research. Web analytics applications can also help companies measure the results of traditional print advertising campaigns. It helps one to estimate how traffic to a website changes after the launch of a new advertising campaign. Web analytics provides information about the number of visitors to a website and the number of page views. It helps gauge traffic and popularity trends which is useful for market research.

As seen above,  the current definition is akin to simple tasks that consulting companies are focused on i.e. proliferation of analytics for coporate strategy level problem solving. Yet it is a very very long way away when these tools can supplement behavior i.e eliminate humans needing to make decisions. Digital marketing is the only area that is getting close to tthis realization even though one can say that it is still a few years away.

Week 5: Web analytics

The articles I read this as posted in the class folder has an interesting issue that is currently being resolved if not need to be addressed based on our web surfing, whether it be using smart phones or laptops, tablets etc.

Let me bring up the classic example of Pandora, an online music streaming service app that brings you close to this realization. This app atleast on the surface appears that it has trained itself to figure out what your music likings are. Similarly, based on my professional content viewing, the emails I get have changed over time from my previous job to the current one using my viewing pattern.

All this is reflected in the all math concept introduced by Google about 15 years back labeled as the numerati. The challenge is that achieving perfection is almost impossible beacuse this involves a lot of behaviorial topics which is highly non-linear. This means that putting together mathematical models is tremendously challenging, if not very difficult and daunting. For the internet to guess what your next mood pattern will be is highly nontrivial. Using past data will give one more noise from statistical analysis because of the multi-variable non linear behaviour.

At a professional level, companies like IBM, SAP are coming up with their decision making corporate level engines that are coined as analytics. These are relatively easier to tackle considering fewer constraints compared to an individual.

Week4: Twitter could be the bellweather for the new business models

In the new digital ma rketing era, I see Twitter as the one that could be the trendsetter or the bellweather given the short and to the point feeds as well as its convenience towards its display in our smartphones which is almost getting to be ubiquitous. All the marketeer needs to do is to post the link or a short sentence on a new product or a new sale or bonanza deal. Twitter, as the CEO was alluding to, could use this marketing campaign as the main source of revenue, especially when the marketeer doesnt have to spend large sums of money for campaigning other than paying digital providers such as Twitter.

Quite honestly, I never used Twitter before this class. However when we had our first asssigment in this class a couple of weeks back, the company that we were following which was Whole Foods got me following my own company Texas Instruments which I learnt key products and training websites for quick learning and updates. Amazing!

Week 4: Riding the service economy and other factors

I want to make a general comment as why to these new age digital business models are gaining attention and showing successes. It is because it thrives well in a service based economy, atleast in th e US which has transformed over the last few decades to one from a manufacturing one.

Is that true for China which is perhaps the largest manufacturer in the world? Even though these models exist there, it is certainly not dominant.

Also, the other reasons for these models to thrive would be the free 2 way digital traffic that is not monitored by the government. I am not sure if this is quantified but it certainly can be restricted by the government or some dominant forces that could be a monopoly with a strong political influence.

Week 4: The Pandora experience and the zero cost model

Let me share an experience of the one that was discussed in the podcast and the Factiva article in WSJ on

Essay: The Economics of Giving It Away. The discussion was 'How do companies generate something from nothing?

The professors talked about WSJ teasing the free customers into buying the subscription using the subscription model, perhaps the most common business model after the advertising model.

I am an avid music listener on my iPhone and the my best app is the Pandora. This is a music (radio?) app that caters to any music taste one has. It keeps feeding in full music of any type. It also allow you to bookmark a track that you like. The ony caveat is that when you start as a free user (the most common way for any internet based application) if you search for an artist or a song etc, it does not necessarily play that exact song, but close enough either from the same band or a similar band. Once initiated, you create a station and it keeps playing full songs of that flavor, For example, I love the Beatles and it keeps playing Beatles or band similar to them in that station with some interlude of ads popping up now and then. Very often it tempts you to become a paid customer where the benefit is that you can now get that track and skip ads. Bookmarking a track for a free subscriber is just a sample of that song. The point here is that over time, you get so used to listening to your favorites that the model believes that you will end up becoming a paid subscriber thereby generating revenue for the company.

This is exactly what the Twitter CEO mentioned in the podcast. Even though the paid subscribers may be minority, the total number is still in millions and a small fraction of them is enough to generate revenue which equates to profit since the cost is amost zero.

Week 4: New digital age business model concepts

This week's articles, podcasts and Flash Videos are a a set of excellent source of concepts that I believe needs to be taught if not highlighted in any curriculum, simply because this is the scoop of this and next generation technology and business models.

The concepts discussed this week are quite paradoxical to the conventional business models we learnt in our strategy courses. I liked the ones where the different business models are dicsussed.

To extend the podcast discussion on subscription model on newspaper which in essence is free such as the NY Times, the key question is how does the newspaper generate  revenue for this kind of model. There are 2 ways which they should be able to do so, one is adverstising and the other is the demographic info of the customers which they sell to the marketeers and in that way, the ads can be generated by user.

Some of my daily experiences I can share with in similar lines are:
- FTimes. We get the freee subscription upto a certain limit as part of one of the finance classes from Kelley school. But a certain number of full articles per month, it teases you enough to make you buy the subscription, very similar to the WSJ discussion in the podcast.

The other experience I enjoy is that of the brokerage model by TDAmeritrade which acts as a liason which takes a commission fee for any stock transaction I make.

Week 3: Transition to the social web

The chapter 3 'Making the Transition to the social web' can be considered as a classic textbook of 101 Marketing concepts and how those concepts change wth the current environment. This is a higly recommended reading even though the course reading says suggested.

The chapter sets the pace very well by positioning the reader to change the marketing mindset. It goes on to talk about the essentials of marketing with branding, segmentation, targeting, communication, content etc.

Highlights that interested me in particular is the metric that was developed by GE Healthcare that uses an NPS score and how it went up with lowered response time to technical problems.

The other concept that was first introduced in week 1 is 'occassionalization' which targets by behavior instead of demographics.

It would be interesting to see some trends or some stats that proves quantitatively the relation between the amount of customer dialogue and branding, although it makes qualitative sense that increasing dialogue increases the branding of the product. I like the example of Google as the icon for creating beta versions based on customer inputs. Even though the chpater talks about bottoms-up approach at the end, I think that linking it to branding concepts upfront in the chapter would be more impactful to absorb the elements of the new marketing concept in the social media environment.

Week 3: Comments on the long tail theory

The podcast on the long tail theory gives an interesting concept that has become popularized over the last 2 years by Chris Anderson. Complementing this podcast is an interesting perspective of the long tail curves from a traditional and current view point that is showing a tendancy to become horizontal as explained in the 'Long Tail' article written by Chirs Anderson.

This podcast and the long tail article both give an interesting view point based on the theory on the 80-20 rule from conventional marketing getting obsolete. This is based on the distribution from the current trends in sales and marketing that shows a strong deviation from conventional marketing.
The theory says that the tail is getting fatter, because of internet which allows the user to no longer be satisfied by the highest volume or highest selling products, but instead have the luxury of pick and choose. This stems from the wide variety available in the internet, that makes it possible for the user to almost customize the product to their choice.

Amazon selling vs the classic book store concept is a classic example of modern vs conventional sales respectively, simply due to the rarity of the books now becoming a sales hit as opposed to traditional days where only the top 20% of the items accounted for the major revenue.

Also it is a low cost for online sales because production cost is very low where books are stored in central location and therefore per store there is no inventory cost and storage cost, as well as rental and leasing of the individual stores.

From a business perspective, focus changed from a few potential hits towards marketing a lot on them which were considered as no-hits loosing money conventionally. This might lead to the fact the distribution is becoming wider. THis again comes back to this business model discussed in the previous paragraph where the business can make money if it is centralized. This implies not to abandon the less prospects, but also important to retailers who look at hits as their model as losses for neglected hits.
If people are shifting in this direction, then the money spent on conventional marketing might not work and might not even payoff. Current trend is based on profiles and customized online advertising. Again, the trend setter are the books, music and video.

Classic example is the Amazon website and emails I get from them, especially over the last 2 years during my MBA years. I had purchased all my textbooks from Amazon and lo and behold overtime, I get automatic updates on books in finance, marketing etc. as opposed to engineering which was the conventional background.

Likewise another example is Netflix. It gives me a trail of movies that it thinks I would be interested based on my viewings so far.

Contrast iTunes to Amazon.  iTunes is strictly digital whereas Amazon is more based on a distribution channel. It would have implications that rely on big hits and if the long theory holds true, these companies would neglect the increasing thickening tail or the low hits and therefore neglecting the low hits would  have otherwise become a money loosing proposition.

The podcasts however cautions that the long tail might be less predictable when it comes to retailers posting or sending emails on long tail items.

I like the probability concept that the professors discussed in this podcast which could reach the value 1 that one might find the book when all the books on earth are available online in a particular digital link. This would make the distribution tail close to horizontal.

Week 3: Blogs paving the way towards transparency

The article on Origins of Social media elaborates very well the fundamentals and the core of blogs in the second half ofthe article.

I found this to be not only educational but also a confirmation of my personal experiences on blogs both in terms of following as well as writing them.

For one thing in terms of the search phenomenon, the concept of tags and links in blogs and increasing their chances of being high in terms of search when done in Google is another factual experience I had from my personal blogposts.

The only issue I have is to keep up with these numerous posts and quite honestly relating back to week 1 when we talked about simply scratching the surface is perhaps true because one does spend a lot of time trying to read all the comments and the multiple blogs of a topic. But seldom, one could capture one or few of them that would enable one to go and deep dive into the topic. It would perhaps be more relevant to have some search criteria that would list the blogs and comments in the order of relevance through the user having some way of specifying or in terms of details, rather than merely listing by chronology.

I never felt the need for style points in blogs because it mires the content, cuts the chase and makes the customer to provider relation more transparent. Clearly, back in conventional marketing there was always a glass ceiling between the public and the provider, where ones' complaint was rarely taken seriously. Such issues should not only be taken seriously but also be prioritized to remediate the problem.

The article talks about expediting the remediation process of any customer's concern very well in the Sony case which paid a terrible price for delaying the solution to the hidden software vulnerability problem.

Week 3: Social and interactive media escalates customer's voice

Here are some thoughts from the The Origins of Social Media article posted for week 3.

Taking the posting example of Vincent Ferrari on the cancellation conversation with AOL is a stark example of customer service amplified to the public.

Now, there are three classes of customers, the usual ones who are happy with the service and the prices, second are the ones who only want the best service and are willing to pay any price and third are the disgruntled customers.

Clearly Vincent falls into the third category. Also, the third category based on conventional customer segments are usually ignored, because, it is a lot of work for the provider to satisfy this customer. Therefore seldom action is taken, regardless of the percentage of the customers in this one.

WIth the advent of the social media, Vincent voiced his thoughts which bolstered others to think about it and voice their own. This effect cascades in such a way that it forces the provider to do something to prevent itself from cratering, something that otherwise would have been ignored in those days where the provider could afford to ignore or delay actions to satisfy the disgruntled customer, simply because they are not heard to the large public.

I am an avid follower of CNET since I keep an eye on consumer electronics latest and greatest. I am able to learn almost all pros and cons sitting in front of my laptop or using my smartphone, as opposed to me going to Frys or Best Buy to understand less than 10% of what I learnd from CNET. Also, one gets a biased opinion usually a favorable ones from most of them in these stores, since the persons you are talking to are salespersons whose goal is to sell what they have in the store.

Gone are the days which has the 'read-only' internet concept, Nowadays, almost every site has a blog which is perhaps the most interactive way for everyone to give their opinion. At the end, every customer gets an unbiased view of the product that they are interested.

Personally, I write blogs related to energy especially in the renewable energy frontier. I get comments on my posts and as well as one gets a sense of satisfaction of being a positive influence in the community. h

Also, with the internet costs falling down and the exponential rise of ubiquitous and pervasive computing via smartphones, one can only envision the interactivity to increase out of proportion.

Week 2: The new P&G concept

A. G. Lafley's concept of opening the door to the outside world to take advantage of the crowdsourcing concept is not only a stark example of the modern digital interactive way of exchanging and promoting ideas but also helping companies small or big (big in this case with P&G) to increase the value of the company.

I had the experience of going to the Innocentive website in one of my prior MBA classes. I can certainly second my thoughts on the effectiveness of the 2-way communication between the recipients and the idea generation team who at the end of the day benefit monetarily.

As Bill Joy, co-founder of Sun Microsystem, puts it very aptly, the crowd clearly outperforms any number of employees, something that companies are getting aware of.

Week 2: Threadless & iStockphoto: An accident?

I liked the rhetoric used by the author on crowdsourcing as to how Threadless made money. Was it an accident? Or was it an exploitation of the internet through which it was able to instill passion in the social media to design T-shirts.

Bottom line : the end result is a simple positive skew of the income statement. Less or negligible costs and a whopping revenue to generate a huge profit margin.
One question I would pose is sustainability. Deep diving more on this, how does the company make sure that the design oriented community can be branded to Threadless such that it will stick to them if the company were to expand its product line to more than the T-shirt business.

The other example is iStockphoto. This company is discussed in the article as to how it is part of the crowdsourcing concept that was initiated through the open source movement in software. All this is passion from the people who want o do it and want to discuss and be acknowleged by peers and friends instead of the standard hierarchical corporate organizational concept. However,some of these entrepreneurs end up becoming a disruptive market to the incumbents. The result is that they get acquired by the big guys for a substantial amount, making these entrepreneurs quite wealthy. It is therefore not necessarily an accident! As a side note, only 10% or less of the entrepreneurs make it.

Week 2: Threadless using brand community for promo

In the week 2 reading, the article on 'The Dawn of Human Networks" is emblematic of the brand community concept that Prof. Frisbie discussed in his podcast for this week's concept.

I like THreadless's campaign of design contests. This brings in new ideas completely free of cost which in turn results in millions of dollars revenue, yet paying the winners a handsome prize. But this total prize amount is simply a fractional amount of revenue. Bottom line is that Threadless costs are rock bottom. Why so? Free idea generation net of prize payment, free promos from the vast online submission and awareness of the T-shirt interested community and just a meager cost of $5 per T-shirt, resulting in huge profit margins.

Besides, the cusomers and the design contest participants all seem to get a sense of empowerment that goes to add a pat on their back for their creativity which in essence is a passion more than making money. This gives us all a sense of satisfaction that we otherwise hardly obtain from our daily working profession which is to a large extent is capital driven.

The silver lining is that their businesses are embraced with a fresh look as evident by their lecture invitations to the Sloan school of Management at MIT.

Week 2: iPhone Forum a free promo dept.

I am in the process of buying an iPhone. WHat do I do? Go no further. It is right here:

http://www.everythingicafe.com/forum/threads/best-place-to-purchase-iphone.23362/

 

iPhone community has an icafe that talks about how to buy one for newbies like me, futher illustrating how they go down the path of enabling Apple to do free promo and marketing.

 

I used Apple to just highlight how marketing has changed through community branding. The company creates a loyalty brand and once done, the community almost makes a promo dept. free of cost.

Week 2:Apple Brand community

The podcast on brand community deserves so much credit in our contemporary age with the advent of social networking and other cyber technologies that has become part of ur daily lives.

I really liked the analogy that Prof. Frisbie highlighted using Grateful Dead fans and how despite their period going back to the rock n' roll era experimented the concept of brand community. Brand community as manifested by the 'Deadheads' brings out the real experience of the product, the journey of experience of the product with constant improvisation.

Prof. Frisbie brought out several other examples of the 80's. Let me highlight another which is in the entertainment world, Startrek and StarWars fans who form their Darth Vader and Spock club through which Century Fox was still able to reload the first episodes before the filming of the pre-sequels.

The latest ones need no reminders, the strongest to me in my list is the Apple Brand community. I know many collegues of mine would only use Apple products regardless of its price, limited capabilities at Office atleast a few years back. However, its constant experimentation with this loyalty brand community (a large and a strong one) has made Apple products come of age that is on par for desktop/laptop levels. In addition, with the innovative ideas fueled by Steve Jobs that has made the computer/mobile space disruptive in many ways has only received more acceleration through its Apple Stores and Online Apple clubs. As a matter of fact, if one sees a problem with Apple, the response by posting in the Facebook clubs is much faster than any other application or product where one has to wait for the customer support to answer back. In the case of Apple, the brand community is so strong that one can either figure out the solutions from the social Apple Club media postings or get a response almost instantaneously.

Week 1: Regarding the Internet making you dumber

The article by Nicholas Carr in the WSJ on "Does the Internet make you dumber?" explains the reasons why the world we live in makes us think shallower and superficial.

The vastness and accessibility of the internet tempts everyone (I am not even sure who doesnt surf the net) to not stay focused in one subject, considering the immense choice of hyperlinks in any website that one opens.

Even if one attempts to host a webpage that seldom has links but indepth content, it unfortunately bores the user due to lack of links. Also, it turns out that almost most of the websites are not even authored in depth, considering the fact that the web authors understand that viewers of their site will simply spend no longer than a few minutes trying to just grasp the concept instead of going deep. They also understand that users who want content go to books to get details. All this has degenerated the thought process of inidviduals, especially the younger generation where unfortunately the schools of learning also encourage or tout themselves as providers of digital media or content for their classes.

So how do we get smarter? Well, humans are the most intelligent race in this planet and we should be cognizant of thie fact that we need to use the web in a discrete manner and not expect it to be 'one in all' source or information library. To elevate ones' cognitive thinking, it is therefore important that each of us make this conscious effort.

The same is true in an earlier blog that I commented on the downfall of newspaper where one can get the essence of true journalism which would only erode if newspaper circulation goes down. End result here is also the same - erosion of cognitive skills.

Week 1: Concept of Occasionalization

The article authored by consultants from Booz Allen & Hamilton has captured and explained the concept of internet marketing by contrasting it to traditional marketing methods (offline) based on segmentation.

Occasionalization is the paradigm change in the marketing concept when focusing on internet or digital marketing. The usage has been very aptly categorized into 7 ways, something each of us can resonate in our daily lives both socially and professionally.

No longer is age, gender, wealth and other demographic data is sufficient in current marketing methods. In fact, it is often a failure since surfers of all ages and demographics spend time in 7 different occassions ranging from quickies which lasts less than a minute to greater than an hour for surfing. These behaviorial patterns based on 4 variables such as:
- Session length
- Time per page
- Category concentration
- Site familiarity

which appear to be well understood as per the article is a useful tool for marketeers to focus on creation and placement of communications. It turns out three usage occassions - loitering, information please and surfing - are the most likely ways to involve shopping than others. Through detection of these three usage occassions is how marketeers can target ads. They can detect these occasions, there are dfferent methods described in the article that gives them the bandwidth to design different online strategies.

Already, one can get a glimpse of how technology assist marketeers if you go to Google, Yahoo and Amazon to highlight some major and more frequented sites/search engines.

Moving forward, technology is further being developed that can help marketeers target smartphone users especially in the wireless world, where it can detect the identity of the mobile user and thereby figure out the users' details such as age, gender, demographic identity and professional background helping the marketeer to target on the user's interest.

Implementation of hte occasionalization concept is just the beginning.

Week 1: Linked In CEO comments: My thoughts

The Charlie Rose interview with Linked In CEO Reid highlights the value of online networking playing a bigger role than ever before in areas such as job seeking and idea generation instead of the traditional methods such as mailing in resumes for job interview that was the predominant method about 5 years back and going through class room based learning for idea and concept development for an area someone is interested in.

I personally use Linked In to network to market myself. However, more impactful to me was finding some of my school friends at a professional level through Linked In as well as through Facebook at a social level.  These tools or social networking engines have not only been tremendously beneficial but actually has created a paradigm shift in the younger generation which in essence has forced the older generation to accept this new social media lifestyle, some of them out of reluctance while the rest out of willingness.

I should however highlight the cons which is glaringly in the area of privacy. With the advent of these enginese, there is absolutely no concept of privacy. Especially in Facebook, I see almost everyone posting their photos such as their house parties and trip details. This is something I still refrain from doing so. I always am concerned about the security breach, a recent one that was in Facebook, that could possibly result in the access of ones' photos and social details falling into the hands of unwanted elements. It is therefore very important that we should shoulder the responsibility of constantly educating kids about the security and identity issues that one could compromise in the event of posting everything in social media networks.

I would therefore feel comfortable and certainly advocate keeping the network moving at a professional level and hence my strong support for LinkedIn, therefore supporting the ideas and concepts that Reid talks about in the interview.

Week 1: The downfall of newspaper subscription

Let me start my blogpost (the first one for this course) with one of the topics that is near and dear to me which is reading newspaper. The three part audio dialogue between Prof. Acito and Frisbie resonates very well with what I and my wife enjoy every morning which is getting up early in the morning and allocate some portion of our time reading the Wall Street Journal while enjoying our morning coffee.

Talking to many of our friends, two things have surprised us. The ability to read in general has almost become minimal. Instead, many of them spend time getting updates over their smart phone. While I am an avid follower of news and updates through my smartphone and Yahoo mail during the day, I believe that none of the electronic devices should displace newspapers. First off, newspaper reading regardless of ones' interest section (mine is the marketplace section in WSJ) gives more details and also gives you the ability to fold and read anyway you want. I work in the technology sector and I do know that the consumer market is certainly looking at flexible screens (OLED) that could perhaps one day get closer to newspaper type reading.

Now, when it comes to ads, I would lean more towards the digital space. For example, when one goes to Yahoo, it posts ads depending on your internet viewing profile. This is certainly something that helps an individual become interested in the shopping experience directly rather than persuing through a bunch of ads in the papers that caters to the ubiquituous locale, which instead I would rather spend reading articles in the paper instead of the ads. The only time I occasionally skim through the ads section in the newspaper is on Sundays on an infrequent basis such as Best Buy and Frys electronics etc.

Also, the power of the language comes from a good journalism, besides just news.

Here is one link from the NY times that discusses the newspaper circulation issue: http://www.nytimes.com/2009/04/28/business/media/28paper.html