Twitter Chairman and Square founder Jack Dorsey sat down with Charlie Rose last night to talk about Dorsey’s unique position of being responsible for two technology startups based on the idea of simplicity: Twitter and Square. Watching this interview you realize that Dorsey’s accomplishments have little to do with luck, and more with his focus on creating the purest products by throwing away any unnecessary flourishes. “It’s really complex to make something simple,” he tells Rose.
Dorsey describes himself as an “editor” who edits technology and teams “so that we have one cohesive product that we tell the world.” In the clip above (provided by the Charlie Rose Show), Dorsey talks about how he got the idea for Square and how hard it is to make mobile payments no more complicated than swiping a credit card.
Dorsey believes the most powerful technologies are those which disappear, like the iPad disappears:
“When you’re using the iPad, the iPad disappears, it goes away. You’re reading a book. You’re viewing a website, you’re touching a web site. That’s amazing and that’s what SMS is for me. The technology goes away and with Twitter the technology goes away. And the same is true with Square. We want the technology to fade away so that you can focus on enjoying the cappuccino that you just purchased.”
In the clip below, he talks about how he got the idea for Twitter from his obsession with cities and dispatch systems, but how he felt those systems were missing one thing: the people, his friends. Now Twitter is not just about status updates but about pointing to, and carrying via short links, other media on the Web. He boils down the essence of Twitter into this: “Any media that you can imagine it can point to a carry in real-time. And the only other technology I know that’s done that well is the web itself.”
Dorsey also pegs the number of registered Twitter users at 200 million (when I checked with Twitter to confirm this number, I was told it was very close, but not quite there yet—so chalk that up to rounding). Also, asked at the end whether Twitter is making any money, Dorsey said the company has revenues but it didn’t sound like it’s got any profits yet.
You can watch the full interview here or read the full transcript below (courtesy of Charlie Rose).
TRANSCRIPT
CHARLIE ROSE: Jack Dorsey is here. He is the chairman of Twitter. Since its inception in 2006, the site has become a powerful tool of information and communication. Almost 200 million users worldwide tweet every day.
That has allowed Twitter to become a real-time news feed. It’s also reshaped how public figures from celebrities to politicians communicate. The company is now working hard to monetize its popularity. Dorsey started Twitter as a side project in 2006 with Evan Williams and Biz Stone.
His latest venture is called Square, which can turn your mobile phone into a credit card reader. Pleased to have Jack Dorsey at this table for the first time. Welcome.
JACK DORSEY: Thanks for having me, Charlie.
CHARLIE ROSE: Good to have you here.
Let’s just talk about Square and go back to Twitter. How did that come about?
JACK DORSEY: It came about because my cofounder is a glass artist and he sells these beautiful glass faucets and he was selling one for $2,000. And all he had in his pocket was his mobile phone. He couldn’t accept the credit card from the woman who wanted to buy this faucet and she didn’t have a checkbook and she obviously didn’t have $2,000 of cash, so he lost the sale.
And we were discussing this and we have these general purpose computers next to our ears and yet –
CHARLIE ROSE: The iPhone-4.
JACK DORSEY: Or an Android phone, or a blackberry, whatnot. But yet he wasn’t able to accept that credit card. So we wondered why that was, and we answered it by building this system.
CHARLIE ROSE: You write code, yes?
JACK DORSEY: Yes. I wrote code.
CHARLIE ROSE: And that’s what you do well?
JACK DORSEY: Yes.
CHARLIE ROSE: That’s what you’ve been recognized for since you were 14 or 15 years old.
JACK DORSEY: Yes.
CHARLIE ROSE: So you immediately set out to do what?
JACK DORSEY: My goal is to simplify complexity. I just want to build stuff that really simplifies our base human interaction. Twitter was around communication and visualizing what was happening in the world in real-time. Square was allowing everyone to accept the form of payment people have in their pocket today, which is a credit card.
So we have built the simplest way to accept credit cards. It’s a little tiny device that we give away for free, and you just download some so wars from the app store and plug it in to your mobile phone or iPad and suddenly you can take credit cards. So if you’re a tax accountant or a lawyer or doctor or even a hair stylist, you can now accept credit cards.
CHARLIE ROSE: And you monetize this how?
JACK DORSEY: We take a cut of every transaction. So we charge 2.75 percent and 15 cents on the transaction. which we then pay the credit card companies out of. So the user only has to pay that 2.75 percent. They don’t pay any credit card fees. They don’t have to have a setup charged. They don’t have to pay for the hardware or even the software.
CHARLIE ROSE: Hardware’s free, software’s free.
JACK DORSEY: You just use the phone you have in your pocket.
CHARLIE ROSE: OK, so this sounds to me like a win-win for everybody. Small businesses like it . . .
JACK DORSEY: Yes, they love it.
CHARLIE ROSE: Somebody has a credit card and wants to pay with a credit card likes it.
JACK DORSEY: You can pay everywhere now.
CHARLIE ROSE: So you who created this with your partner like it. It seems so fundamental. Why hadn’t someone done that before?
JACK DORSEY: It turns out it’s really complex. It’s really complex to make something simple and especially when you started addressing the financial world.
We have a number of things — in order to accept credit cards you have to talk with a bank. Normally when you’re a small merchant or a business or individual you have to get a merchant account, which means you have a one to two year relationship with the bank, and then there’s always these fees and setup costs and monthly minimums. It’s a mess.
And it’s never really been designed in a beautiful way and that’s what we’re good at. That’s really hard to do.
CHARLIE ROSE: How do you minimize fraud, because that would be a concern?
JACK DORSEY: Right. So we actually have a lot of benefit in using the credit card system itself because a lot of the protections are on the payer side. When someone issues you a credit card, when your bank issues you a credit card, they assume that that card is going to be lost or stolen. So all of the protections are watching the payer.
So if we get a swipe or if we get a signature on those card payments then a lot of the risk is off us because we know the payer was in that location. And apart for that, there’s a lot of information in these phones. There’s GPS. We know where the transactions are taking place. People are putting in their Twitter accounts. They’re putting in their Facebook accounts. They’re telling us about themselves and we can use that to build a reputation for how they will interact in the world.
CHARLIE ROSE: Did I read that you were involved in some kind of lawsuit because of somebody else?
JACK DORSEY: We — so we worked on this system which actually was prior art. So we built this little credit card system with another individual who we worked very well within the past. But unfortunately we were not included on the patent we both created together. So it’s just a minor thing. We’re not independent on this IP, it’s just something nice to have.
CHARLIE ROSE: And this is the future of mobile payment, in your judgment?
JACK DORSEY: I think so. I think — the biggest thing we’re trying to address is let’s simplify this entire world. Let’s speak what people are using today. A number of people in the United States, almost everyone, is using plastic cards to pay for things, but it’s extremely difficult to accept these cards. So let’s make it’s easy and take more and more of the friction out as we can.
CHARLIE ROSE: And what’s the global response?
JACK DORSEY: The global response has been really good. You need to tailor these technologies to each market. So we’re starting on the U.S., but we want to be completely payment device agnostic. Different countries use different methods. So in Japan, for instance, they’re using a lot of near-field communications, obviously. In places like Kenya they’re using SMS, they’re using phone credits.
So all these markets have their own technologies to pay for things and exchange value, so we need to make sure that Square can accept every for of payment that is in the payers’ pocket. In the U.S. it’s the credit card.
CHARLIE ROSE: And how do you divide your time between Square and Twitter?
JACK DORSEY: I have a really fortunate situation. I’m now in the midst of I think two of the great et cetera companies in the world. I’m chairman of the board of Twitter so I go in when I’m needed, I point out what I think is moving, what technologies are interesting, things we may need to fix and things that we’re doing really well at. And when I’m not needed I get ou of the way.
CHARLIE ROSE: And how did Twitter get started?
JACK DORSEY: Twitter has a long story. I’ve always been fascinated by
cities and how they work. And I taught myself how to program so I can understand how the city works.
CHARLIE ROSE: You taught yourself to program so you could understand how cities work?
JACK DORSEY: I wanted to visualize them. I wanted to see them. I wanted to play with them. I was inspired by New York City and just — if you consider New York City, all these entities roams about the cities, taxicabs, ambulances, fire trucks. And they’re always reporting where they are and what they’re doing. And if you can visualize that you can see how the city is living and breathing and what’s happening in the city. So I started building dispatch software. And that’s the software that runs these entities, always reporting where they are and what they’re doing. I’m in an ambulance at Fifth and Broadway taking a patient in cardiac arrest to St. John’s Mercy, a very, very simple model.
In 2000 I realized that I had this beautiful picture of all these verticals in the city that make the city work but I was missing the citizens. I was missing the people. I was missing my friends. So what if I could just take my phone and — we didn’t have mobile phones that worked that well in 2000. I had a very simple Rim device which was the precursor to the blackberry. What if I could be anywhere and share what’s happening and I could get everything in real-time? What if we did that?
And it turns out it was just the wrong time. In 2006 SMS got really big in this country. I met my cofounders Biz Stone and Evan Williams who had worked with blogger to build blogger. So they understood the importance of self-publishing. And I just added this real-time aspect, this SMS aspect and we said what if with just SMS and the web I can go anywhere I want and report what I’m doing and see what everyone else is doing in real-time, a very, very simple start and users have taken it from there.
CHARLIE ROSE: Was there a conversation that took place to make you do that or did this take place in your head?
JACK DORSEY: We were — you know, we were working –
CHARLIE ROSE: Because it was Odeo what was the company?
JACK DORSEY: We were working at a company called Odeo, which was a podcasting company, and I joined as an engineer. And the interesting thing about Odeo was that no one in the company was really that excited about podcast. So we weren’t –
CHARLIE ROSE: So it was a business you didn’t care a lot about?
JACK DORSEY: Yes. I just wanted to work with Ev and Biz. I saw them from afar as my first real job, the first time I had to write a resume. I wanted to do more consumer facing stuff because I had always been back in the real-time transactional systems, and they presented that opportunity.
So I joined, I worked on this podcast, it wasn’t that interesting. And then iTunes came out with the podcast directive which kind of took Odeo’s business model and potential off the table. So we started trying to figure out what we’re going to do and how we make audio more social, how we have group communication.
And during this time SMS was coming and being used and the first time you could send a message from Cingular to Verizon and it was amazing. I fell in love with the technology and the rest of the company did as well. And one day Ev said “Go out, think of some things to do, come back, we’re going to present to the company.” And I took a group of two other people and we talked about this very simple idea of being able to report where I am and what I’m doing and go out in real-time over our phones and the web in 160 characters. And we were on the playground and we presented to the company.
It didn’t really go anywhere, but then a week later we talked about it more and we decided I would take two weeks and Biz Stone and my other programmer Florian, and we would build the system. And we built in the two weeks and we took more and more resources. And the first tweet that was actually written by a human was by me and it was inviting co-workers.
CHARLIE ROSE: Inviting co-workers?
JACK DORSEY: That was the start.
CHARLIE ROSE: and how did you decide on the responsibility between you and Evan and Biz?
JACK DORSEY: Well, I was leading a lot of idea and the vision for where the product was going. Ev was funding and supporting what we were doing. He put the shelter over our heads. And Biz was just an amazingly creative guy. And he was helping come up with words like “follow” –
CHARLIE ROSE: He’s the marketing –
JACK DORSEY: He’s a marketing genius. He’s amazing and fun to talk to.
CHARLIE ROSE: So where is it evolving to? Because some have made this point — it’s more information than social, social being Facebook.
JACK DORSEY: Yes. I think that is a great point. I think we’ve put a lot of emphasis on tweeting when a lot of the value is actually following people. And anything you’re interested in the world whether it be Charlie Rose or JetBlue or a public figure or your local coffee shop, they’re on Twitter and broadcasting what is interesting to them. They’re broadcasting about the organization, what they’re doing. So I can go and get immediate value from these things that I care about. And that’s the most important thing is being able to get in immediately and being able to follow someone I love, like Kanye West or like Barack Obama or any politician serving my particular state. I can see them immediately.
But then there’s another hook — you can actually participate with. You can reply to them, and they may reply back. They’re human again. And we spend so much time putting these organizations and public figures on this massive, massive pedestal, but we have to remember they go through all the small details of live that we do. And you can make them human again and you can interact with them.
And it’s not just humans, it’s a social movement. It’s seeing what’s unfolding in Iran. It’s seeing what’s unfolding in Moldova or Arizona or anywhere in the world.
CHARLIE ROSE: And so it has political implications?
JACK DORSEY: It could.
CHARLIE ROSE: It did in Iran. It was about the only way people could communicate.
JACK DORSEY: It was one way. There were multiple ways. I think what was really important in Iran was that the first time people were really using these tools to be on the ground and show what was happening. And that alone created an international conversation.
To a lot of people in America Iran and what’s happening in Iran is a black box. It’s hard to understand what’s happening. But to be able to instantly see video and to see man on the street accounts of how things are unfolding in real-time as they’re happening is amazing and I’ve never seen that before with any other technology.
CHARLIE ROSE: What I don’t understand when you look at your penetration around the world, you’ve done really well in Japan, and Facebook hasn’t. What does that say?
JACK DORSEY: We’ve had massive success in Japan. And it wasn’t just recently. It was very early on. It was within our first year. People just took to it right away, and we really couldn’t figure out why. But we found all these amazing things. People would actually put these automated tomogotchis onto Twitter and you could follow the tomogotchi patterns.
CHARLIE ROSE: What does it say about culture?
JACK DORSEY: It’s a very engaged culture and they’re very, very focused on constantly iterating technology. And Twitter is a very, very fast way to do it. In Japan, it’s not 140 characters, it’s 140 words. So you could write a little mini-novel. This is a whole story in the universe.
CHARLIE ROSE: And in China?
JACK DORSEY: In China it’s the same, very much the same. So people are writing non-stop about what’s happening within the country, what’s happening around the country. So it’s a very, very interesting peek into these cultures.
CHARLIE ROSE: So there’s these two ideas. One is Twitter is the next big internet success story. I would expect you to say yes, but if you had to say yes, why would you make the case?
JACK DORSEY: I think it’s huge. I think it’s huge because never before have we had such access to that immediate information. And once we have that information we can participate and interact with it. It spans at the intersection of every single media. It’s a great way to point to video, to images, to text, to web sites. Any media that you can imagine it can point to a carry in real-time. And the only other technology I know that’s done that well is the web itself. So I put it on the same league as the web.
CHARLIE ROSE: When was the last time you wrote an e-mail?
JACK DORSEY: I write one every day.
CHARLIE ROSE: More than one? Do you write many or do you mainly use text messaging?
JACK DORSEY: I use text messaging a lot more.
CHARLIE ROSE: Than e-mail?
JACK DORSEY: More than e-mail.
CHARLIE ROSE: And do most people you know who are — have the same affinity for technology follow that rule, follow that practice?
JACK DORSEY: I think so. As we go to a younger generation that’s definitely through because it’s more instantaneous. I use e-mail as a reference. E-mail is a great reference. It has a subject line. It titles what the e-mail is about and I can refer to it, I can search.
But it’s not great for communication because it’s not focused on the most important thing. The subject is the message, and that’s the message. The subject is in the message in the IM. It’s bringing the content to you right away.
One of the things I love about the iPad, for instance, is when you’re using the iPad, the iPad disappears, it goes away. You’re reading a book. You’re viewing a website, you’re touching a web site. That’s amazing and that’s what SMS is for me. The technology goes away and with Twitter the technology goes away. It’s so easy to follow anything you’re interested in. It’s so easy to tweet from wherever you are. And the same is true with Square. We want the technology to fade away so that you can focus on enjoying the cappuccino that you just purchased.
CHARLIE ROSE: Your CEO has said that Twitter has cracked the code when you advertise. What did he mean by that and how have you cracked the code?
JACK DORSEY: It’s not just the advertising but the human behavior. It’s a new way to communicate which is to spark interaction. One example of this is one of the first entities that was using the promoted products that Twitter has was Disney and “Toy Story.” We naturally have when toy story three came out people were going the theater and they were tweeting they were going to see “Toy Story 3″ and some would tweet during the movie. Then they would come out and say “This is amazing.” And it just naturally trends to the top. And Disney used that as a way as an opportunity to capture that natural trending ability and then also point to content that they want to surface to their consumers and to their customers.
So it was just a very natural and easy way to again point attention and direct attention to something that the advertiser wanted to see. But you’re going to see that anyway, because it was trending.
CHARLIE ROSE: The relationship between Evan, Biz, you, and where there’s tension and where there’s not tension and where one — and why there have been so many different executive changes since Twitter was founded, what’s the answer?
JACK DORSEY: For any Silicon Valley company, the most important thing is the company. And any great founders need to get out of the way of the company. We presented a spark with an idea. We saw a lot of the direction being driven by our users, and a lot of what we have to do now demand very, very specific management. And we know our strengths. And that’s mainly it. This company is bigger than any individual. It’s bigger than Biz, bigger than Ev, bigger than myself.
CHARLIE ROSE: Do I get this then? So Biz’s strength is marketing?
JACK DORSEY: He’s a great communicator. He’s a great protector of the brand.
CHARLIE ROSE: Evan’s strength is product strategy and that kind of thing?
JACK DORSEY: Yes, he has a great way of thinking about the user and how the user’s coming to the technology.
CHARLIE ROSE: And your strength is writing programming?
JACK DORSEY: My strength is programming. I also think my biggest strength is simplification. That’s what I love doing. I love making something complex. I love taking everything away, taking all the debris, the conceptual debris from a technology away so that you can just focus on what’s most important.
So I see myself as a really good editor. That’s what I like to be. When I edit a technology, I want to edit a team, I want to edit a story so that we have one cohesive product that we tell the world.
CHARLIE ROSE: Meaning what? What does “edit” mean?
JACK DORSEY: There’s so many ways Twitter could go, there are so many features Twitter could build. There’s so many features that Square can build. But there is only one or two going to bring us to the next level. So edit that to one, to get rid of all those inputs and edit to one cohesive story, one single thing we’re saying to the world and that’s what we do with product.
CHARLIE ROSE: Are you by — at the core, primarily a software programmer or are you primarily an entrepreneur who’s simply wanting to ask the right questions which will lead you to the next business?
JACK DORSEY: I think I’m a mix. I love building technology, I love programming. I love building teams. And I also love building beautiful things. I love art, I love design, and I love seeing that intersection of technology and the teams that work on it.
CHARLIE ROSE: But once you build them are you thinking about the next thing?
JACK DORSEY: No, I’m thinking about how to scale what we built, how to bring it to a global audience.
CHARLIE ROSE: So what do you have to do to scale Twitter?
JACK DORSEY: We have to get it everywhere. We have to make it easy for people to use.
CHARLIE ROSE: How many, 200 million users?
JACK DORSEY: Yes, 200 million people are using Twitter.
CHARLIE ROSE: Facebook has 500 million plus.
JACK DORSEY: So we have a long way to go.
CHARLIE ROSE: Do you think you can reach 500 million.
JACK DORSEY: We can go well beyond that. And I think the important thing for Twitter is that it works on any technology. The mobile phone itself, like anyone in the middle of — we have a short cut in Iraq, for instance, Twitter has a short cut in Iraq, and 60 percent of the population of Baghdad has a cell phone in their hands and they can use SMS. And they can send a tweet for free to the short code in the middle of Baghdad and then also receive these tweets in real-time. That is amazing. That is just unheard of. And that’s why I’m so excited about this technology because it speaks to the lowest common denominator, every technology.
CHARLIE ROSE: Would you argue the most exciting agent of change in the world today is the number of mobile devices? I mean by that one smart phone, that an increasing number of people in the world have it, that that’s the agent of change, how many people get put in their hands a device that has such power?
JACK DORSEY: I think it’s a — I think it may be — it’s a single spark. I think it’s a good way to further our understanding of what it means to be mobile and what it means to have technology around us all the time. But the iPad is mobile as well. Laptops are mobile. So all these devices we can take with us and interact. But I think the important is what does that mean for these technologies? What does it mean for communication when a device like those knows where it is, when it can accept the forms of payments that we use and we can build it into address whatever we want to address.
CHARLIE ROSE: So what is your counsel inside when the subject is the following — we ought to merge with Google or we ought to follow the Facebook pattern and stay independent and go public?
JACK DORSEY: I think Twitter is so unique that we must stay independent. We must continue to build what we dream of having in the world. And we’re just barely started, that’s the thing. Twitter’s been an amazing success, but we’ve just gotten started.
CHARLIE ROSE: Just gotten started because of what it can do or just gotten started –
JACK DORSEY: Because of what it can do.
CHARLIE ROSE: Lay that out for me, finally, what it is you think you can do.
JACK DORSEY: So we’ve built this very easy way, no matter where you are, to put content in, to share what’s happening around you. But it’s still very difficult to find meaning and relevancy in real-time. How do we get people to discover what’s most important? How do we surface what’s happening right now that someone should pay attention to? And that happens within your social network. It happens in the things you care about, within the country or even the world. But how do we in real-time bring that to people? And this is not just a challenge for Twitter. It’s also a challenge for the technology industry because we have all of this information just swirling about. How do we make sense of it? We need to do a much, much better job in making sense of it.
CHARLIE ROSE: Is Twitter making money?
JACK DORSEY: It’s making money. We have revenue.
(LAUGHTER)
CHARLIE ROSE: I know you have revenue. Making money has to do with profit. Making money has to do with a positive cash flow.
JACK DORSEY: We have a long way to go.
CHARLIE ROSE: That’s yes, or no? I’m not sure?
JACK DORSEY: We have revenue. We have revenue. You’ll have to speak to Dick.
CHARLIE ROSE: Everybody has revenue.
(LAUGHTER)
Thank you for coming.
JACK DORSEY: Thank you so much.
CHARLIE ROSE: Jack Dorsey, Square and Twitter. Thank you for joining us. See you next time.
END
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Companies: Twitter, Twitter, Square, Ustream Software engineer Jack Dorsey is the Co-Founder of Twitter, and was the CEO until October 2008. Dorsey had the original… Learn More
Website: charlierose.com Birthplace: Henderson, North Carolina Charlie Rose is an American television interviewer and journalist. He entered television journalism full-time in 1974, when he became the managing editor of the PBS series Bill Moyers’ International Report. He currently hosts the Charlie Rose Show,… Learn More
Website: twitter.com Location: San Francisco, California, United States Founded: March 21, 2006 Funding: $360M Twitter, founded by Jack Dorsey, Biz Stone, and Evan Williams in March 2006 (launched publicly in July 2006), is a social networking and micro-blogging… Learn More
Website: squareup.com Location: San Francisco , California, United States Founded: February, 2009 Funding: $37.5M Square is a revolutionary service that enables anyone to accept credit cards anywhere. Square offers an easy to use, free credit card reader that plugs into a phone or iPad. It’s simple to sign up. There is no extra equipment, complicated contracts,… Learn More
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Wednesday, January 12, 2011
From TechCrunch. Jack Dorsey: "We want the technology to fade away so that you can focus on enjoying the cappuccino that you just purchased.”
Tuesday, January 04, 2011
Retailers reinvent selves as media, now produce content too! From AdAge. Best Buy Launches Network
Stay on top of the news, sign up for our free newslettersABC, Syfy and Best Buy? Retailer Launches Network
Electronics Expert Turns Publisher With Multichannel Net Packed With Original Content -- and It's Seeking Ads
By Natalie Zmuda
Published: January 03, 2011NEW YORK (AdAge.com) -- The press corps at this year's Consumer Electronics Show may find themselves jostling for soundbytes and product demos on the Vegas strip with video crews from Best Buy.
--> Yes, the retailer is now a publisher, rolling out a multichannel network filled with original editorial content spanning everything from how-to videos and gift guides to new-technology primers and behind-the-scenes looks at popular movies. The network, called Best Buy On, includes a website it bills as an "online magazine" and a huge in-store component with its content and ad messaging "broadcast" on screens across the store, including in the TV, mobile and portable entertainment sections.Advertisers have access standard ad units on Best Buy's global home page, every product home page and BestBuyOn.com
The project has been in "soft launch" mode since 2009. In that time, Best Buy has established an internal advertising and editorial team, cultivated relationships with media buyers and advertisers including Sony and Procter & Gamble, and invested in new screens and online video players. And later this week, Best Buy On, which is now ready for prime time, will be cranking out content from Las Vegas' MGM Grand.
Advertisers have access to nearly 145,000 screens, as well as video players and standard ad units on Best Buy's global home page, every product home page and BestBuyOn.com. Two to four screens per department are being added, allowing advertisers to specifically buy into the mobile department or portable entertainment department. Between 100 and 150 screens per store will ultimately be a part of the network, said Keith Bryan, senior director-media strategy.Related Stories
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The project is ambitious, considering that any number of in-store TV ventures have struggled to gain traction and been plagued by image problems. Even the Walmart Smart Network, the most high-profile venture in the market, has rolled out significantly slower than originally anticipated. The network targeted 2,700 stores two years ago -- Walmart has more than 3,700 stores in the U.S. -- but had rolled out to just 1,200 as of early October. By comparison, Best Buy's network is deployed in 98% of its nearly 1,100 stores.
Mr. Bryan said Best Buy On isn't simply an in-store network, and is significantly different from other retailer's models because it lives in multiple channels and produces original editorial content. So far, advertisers like P&G's Swiffer, Tide, Duracell and Braun have advertised with Best Buy On, as have vendors like Canon and Sony.
"We're just getting our feet wet, but it's already beating our expectations," said Mr. Bryan, who would not comment on the company's financial commitment to Best Buy On or its marketing budget.
Mr. Bryan, who is responsible for both buy- and sell-side media at Best Buy, said nearly every advertiser that has experimented with the network is coming back, because of the value proposition, competitive CPMs and engagement that he claims is as much as 10 times that of other online media publishing networks. He declined to comment specifically on the network's CPM. Best Buy boasts the ability to reach a billion people a year via its stores and site.
In promotional materials for Best Buy On, the network makes a case for why its shoppers are influential in categories, such as automotive, food and beverage, home and furnishings and travel. While electronics vendors are a no-brainer, Mr. Bryan also expects the network would be a good fit for advertisers in the hospitality, travel and automotive sectors, and even the apparel category could make sense, he said.
"Strategically, it makes a lot of sense to me," said John Swift, president-integrated communications at Omnicom Group's OMD. "We need to find different ways to connect our messages with consumers in different places."
Editorial content is shepherded by Bill Anderson, VP-creative director Best Buy Media Network. Mr. Anderson, who has a journalism degree from the University of Minnesota, acts as Best Buy On's editor, overseeing the editorial calendar, which includes stories like "Are Your Kids Too Connected?," "Tech 101: Connected TV Basics" and "Inside 3D Animation."
Execs say the intent is to be complementary to, not competitive with, publications like CNet, Engadget or Gizmodo, which cover consumer electronics. But while Best Buy says it's not looking to compete for eyeballs, media buyers say it will be competing with those publishers for ad dollars.
"We're not looking at them as a peer to some of the other, bigger consumer electronics publishers, yet, because they're still growing in scale and reach," said Jeff Rossi, VP-digital director at MediaVest, which has made buys with Best Buy On on behalf of P&G. "But if they do get there, content is of a strong enough quality that it provides another competitor in that space."
Editorially, Best Buy On is steering clear of controversial territory, focusing on broader tech stories rather than product reviews, lest it get into sticky situations with vendors. "We're going to stay in a nonbiased place." said Mr. Anderson.
While stories will be told from a Best Buy point of view, something executives say is clear to customers, stories are meant to be journalistic in nature. "It's not journalism in the sense that they're not independent of commercial pressures," said Stephen Shepard, dean of the Graduate School of Journalism at the City University of New York. "If they do a good job of it, it's welcome. I don't mind reading something from Best Buy, if it's fair and informative and honest."
And, at the end of the day, it's just one more example of marketer as media, something Mr. Shepard says, for better or worse, is becoming more common.
"I don't know that all brands can aspire to be a media outlet that's relevant to the agency community," Mr. Bryan said. "But multichannel brands that have a footprint physically and digitally can very much be media. Multichannel brands could be one of the most important forms of new media in the next 10 years."
"Customers expect us to have a point of view," Mr. Bryan continued. "If the only way we can do that is in a 30-second spot or a Sunday free-standing insert, then we're screwed."
~ ~ ~
Contributing: Michael Bush
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This is definitely yet another interesting development in making the case for Digital OOH / Place-Based Media.
Monday, December 20, 2010
Are agencies finally getting it? From NYT. Marketers Aim to Sway Shoppers, From the Couch to the Store
Shopper marketing once mostly took place in stores; tactics included placing coupon dispensers on shelves, designing eye-catching end-aisle displays and giving away product samples. Now, the battle to land on shopping lists or in shopping carts is waged long before consumers set foot in stores as they spend more time researching potential purchases online or asking friends on Facebook what to buy.
In another sign of the growing role for shopper marketing, units of two agencies owned by WPP — JWT and Ogilvy & Mather Worldwide — have formed a joint venture in North America to help marketers and retailers guide consumers on the so-called path to purchase. The joint venture, called JWT/OgilvyAction, is the brainchild of the Malone Advertising unit of JWT, which is being renamed JWT Action, and the OgilvyAction unit of Ogilvy.
JWT Action and OgilvyAction continue as autonomous agencies as they work together as JWT/OgilvyAction. The joint venture is handling tasks for clients that include American Express, John Deere, Kimberly-Clark, Kraft Foods, SC Johnson, Nestlé, Sara Lee and Unilever.
•
The goal is to “help us transform someone from a consumer to a buyer,” said Deborah Hannah, integrated marketing planning director at the Neenah, Wis., office of Kimberly-Clark, which is working with JWT/OgilvyAction on brands like Cottonelle, Huggies, Kleenex and Kotex.
Retail marketing can influence a shopper “as she goes from watching a TV ad on the couch to writing a list to going to Walgreens or Kroger,” Ms. Hannah said, “and then, once she is in the store, help us close the deal with her.”
The aspects of shopper marketing that are focused on consumers outside stores are assuming more significance, she added, with “the explosion of e-commerce and social commerce.” The latter refers to the combination of shopping online and networking on Web sites like Facebook and Twitter.
“Now that shopper marketing is no longer just in the store, there are so many opportunities,” Ms. Hannah said, offering an example of “shopper apps for the iPhone.”
“We need someone to help us navigate who is our target and how she decides to buy,” she added.
JWT/Ogilvy Action has 3,400 full-time and part-time employees in offices and field offices in cities like Akron, Ohio; Bentonville, Ark.; Chicago; Cincinnati; Los Angeles; Minneapolis; and New York. The joint venture is being led by Fred Bidwell, executive chairman, who continues as president and chief executive of JWT Action, and Sheila Hartnett, chief executive, who remains chief executive for the North American operations of OgilvyAction.
“There’s a major sea change going on in this space, which requires a different kind of agency,” Mr. Bidwell said. “We needed to bring a broader array of tools to the party.”
As a result, “we approached OgilvyAction and said, ‘Let’s go in this together, in a strategic partnership,’ ” he added.
•
He and Ms. Hartnett decided that a cooperative effort would “need to be a true business unit of WPP,” Mr. Bidwell said, “so we approached WPP with the idea of creating a joint venture.”
The joint venture is “having some early success,” he said, and it recently added a couple of marketer clients. Although they declined to be identified, Mr. Bidwell said, he was able to describe one as “a significant over-the-counter pharmaceutical company” and the other as “a significant food company.”
Asked for examples of cross-pollination — clients of one agency or the other that are working with the joint venture — Mr. Bidwell listed John Deere, “a Malone client, for which we’re bringing in thinking from OgilvyAction,” and SC Johnson, “an OgilvyAction legacy client, which people on the JWT side are deeply involved in helping.” Ms. Hannah said Kimberly-Clark, a longtime client of Malone, was obtaining from the joint venture services that are specialties of OgilvyAction, like product sampling.
Chip Martella, managing director for the New York office of JWT/OgilvyAction, singled out Kimberly-Clark, along with Procter & Gamble, as among the marketers that are “accelerating the growth of shopper marketing.”
“They’re telling their agencies: ‘Don’t come to us with a campaign idea that starts with TV or print ads and then show us how it works in the store. Start with the store,’ ” said Mr. Martella, who is also executive director of strategy for the North American operation of OgilvyAction.
The store can be virtual as well as real, he added, citing research that shows “over 50 percent of those shopping Wal-Mart stop at walmart.com first.”
Another indication of the increasing role being played by shopper marketing came last week, when a former executive of Procter — the world’s largest advertiser — was hired as the new leader of Saatchi & Saatchi X, the shopper marketing unit of Saatchi & Saatchi, part of the Publicis Groupe.
Dina Howell, who had been vice president for global media and brand operations at Procter, joined Saatchi & Saatchi X as worldwide chief executive. She succeeds Andy Murray, the founder of Saatchi & Saatchi X, who becomes chairman, a new post.
WPP is known for reorganizing and reconfiguring its agencies to better serve clients. For instance, in 2006 WPP formed a joint venture named Team Detroit by combining five agencies that worked for the Ford Motor Company in North America.
Are agencies finally getting it? From NYT. Marketers Aim to Sway Shoppers, From the Couch to the Store
Shopper marketing once mostly took place in stores; tactics included placing coupon dispensers on shelves, designing eye-catching end-aisle displays and giving away product samples. Now, the battle to land on shopping lists or in shopping carts is waged long before consumers set foot in stores as they spend more time researching potential purchases online or asking friends on Facebook what to buy.
In another sign of the growing role for shopper marketing, units of two agencies owned by WPP — JWT and Ogilvy & Mather Worldwide — have formed a joint venture in North America to help marketers and retailers guide consumers on the so-called path to purchase. The joint venture, called JWT/OgilvyAction, is the brainchild of the Malone Advertising unit of JWT, which is being renamed JWT Action, and the OgilvyAction unit of Ogilvy.
JWT Action and OgilvyAction continue as autonomous agencies as they work together as JWT/OgilvyAction. The joint venture is handling tasks for clients that include American Express, John Deere, Kimberly-Clark, Kraft Foods, SC Johnson, Nestlé, Sara Lee and Unilever.
•
The goal is to “help us transform someone from a consumer to a buyer,” said Deborah Hannah, integrated marketing planning director at the Neenah, Wis., office of Kimberly-Clark, which is working with JWT/OgilvyAction on brands like Cottonelle, Huggies, Kleenex and Kotex.
Retail marketing can influence a shopper “as she goes from watching a TV ad on the couch to writing a list to going to Walgreens or Kroger,” Ms. Hannah said, “and then, once she is in the store, help us close the deal with her.”
The aspects of shopper marketing that are focused on consumers outside stores are assuming more significance, she added, with “the explosion of e-commerce and social commerce.” The latter refers to the combination of shopping online and networking on Web sites like Facebook and Twitter.
“Now that shopper marketing is no longer just in the store, there are so many opportunities,” Ms. Hannah said, offering an example of “shopper apps for the iPhone.”
“We need someone to help us navigate who is our target and how she decides to buy,” she added.
JWT/Ogilvy Action has 3,400 full-time and part-time employees in offices and field offices in cities like Akron, Ohio; Bentonville, Ark.; Chicago; Cincinnati; Los Angeles; Minneapolis; and New York. The joint venture is being led by Fred Bidwell, executive chairman, who continues as president and chief executive of JWT Action, and Sheila Hartnett, chief executive, who remains chief executive for the North American operations of OgilvyAction.
“There’s a major sea change going on in this space, which requires a different kind of agency,” Mr. Bidwell said. “We needed to bring a broader array of tools to the party.”
As a result, “we approached OgilvyAction and said, ‘Let’s go in this together, in a strategic partnership,’ ” he added.
•
He and Ms. Hartnett decided that a cooperative effort would “need to be a true business unit of WPP,” Mr. Bidwell said, “so we approached WPP with the idea of creating a joint venture.”
The joint venture is “having some early success,” he said, and it recently added a couple of marketer clients. Although they declined to be identified, Mr. Bidwell said, he was able to describe one as “a significant over-the-counter pharmaceutical company” and the other as “a significant food company.”
Asked for examples of cross-pollination — clients of one agency or the other that are working with the joint venture — Mr. Bidwell listed John Deere, “a Malone client, for which we’re bringing in thinking from OgilvyAction,” and SC Johnson, “an OgilvyAction legacy client, which people on the JWT side are deeply involved in helping.” Ms. Hannah said Kimberly-Clark, a longtime client of Malone, was obtaining from the joint venture services that are specialties of OgilvyAction, like product sampling.
Chip Martella, managing director for the New York office of JWT/OgilvyAction, singled out Kimberly-Clark, along with Procter & Gamble, as among the marketers that are “accelerating the growth of shopper marketing.”
“They’re telling their agencies: ‘Don’t come to us with a campaign idea that starts with TV or print ads and then show us how it works in the store. Start with the store,’ ” said Mr. Martella, who is also executive director of strategy for the North American operation of OgilvyAction.
The store can be virtual as well as real, he added, citing research that shows “over 50 percent of those shopping Wal-Mart stop at walmart.com first.”
Another indication of the increasing role being played by shopper marketing came last week, when a former executive of Procter — the world’s largest advertiser — was hired as the new leader of Saatchi & Saatchi X, the shopper marketing unit of Saatchi & Saatchi, part of the Publicis Groupe.
Dina Howell, who had been vice president for global media and brand operations at Procter, joined Saatchi & Saatchi X as worldwide chief executive. She succeeds Andy Murray, the founder of Saatchi & Saatchi X, who becomes chairman, a new post.
WPP is known for reorganizing and reconfiguring its agencies to better serve clients. For instance, in 2006 WPP formed a joint venture named Team Detroit by combining five agencies that worked for the Ford Motor Company in North America.
Are agencies finally getting it? From NYT. Marketers Aim to Sway Shoppers, From the Couch to the Store
Shopper marketing once mostly took place in stores; tactics included placing coupon dispensers on shelves, designing eye-catching end-aisle displays and giving away product samples. Now, the battle to land on shopping lists or in shopping carts is waged long before consumers set foot in stores as they spend more time researching potential purchases online or asking friends on Facebook what to buy.
In another sign of the growing role for shopper marketing, units of two agencies owned by WPP — JWT and Ogilvy & Mather Worldwide — have formed a joint venture in North America to help marketers and retailers guide consumers on the so-called path to purchase. The joint venture, called JWT/OgilvyAction, is the brainchild of the Malone Advertising unit of JWT, which is being renamed JWT Action, and the OgilvyAction unit of Ogilvy.
JWT Action and OgilvyAction continue as autonomous agencies as they work together as JWT/OgilvyAction. The joint venture is handling tasks for clients that include American Express, John Deere, Kimberly-Clark, Kraft Foods, SC Johnson, Nestlé, Sara Lee and Unilever.
•
The goal is to “help us transform someone from a consumer to a buyer,” said Deborah Hannah, integrated marketing planning director at the Neenah, Wis., office of Kimberly-Clark, which is working with JWT/OgilvyAction on brands like Cottonelle, Huggies, Kleenex and Kotex.
Retail marketing can influence a shopper “as she goes from watching a TV ad on the couch to writing a list to going to Walgreens or Kroger,” Ms. Hannah said, “and then, once she is in the store, help us close the deal with her.”
The aspects of shopper marketing that are focused on consumers outside stores are assuming more significance, she added, with “the explosion of e-commerce and social commerce.” The latter refers to the combination of shopping online and networking on Web sites like Facebook and Twitter.
“Now that shopper marketing is no longer just in the store, there are so many opportunities,” Ms. Hannah said, offering an example of “shopper apps for the iPhone.”
“We need someone to help us navigate who is our target and how she decides to buy,” she added.
JWT/Ogilvy Action has 3,400 full-time and part-time employees in offices and field offices in cities like Akron, Ohio; Bentonville, Ark.; Chicago; Cincinnati; Los Angeles; Minneapolis; and New York. The joint venture is being led by Fred Bidwell, executive chairman, who continues as president and chief executive of JWT Action, and Sheila Hartnett, chief executive, who remains chief executive for the North American operations of OgilvyAction.
“There’s a major sea change going on in this space, which requires a different kind of agency,” Mr. Bidwell said. “We needed to bring a broader array of tools to the party.”
As a result, “we approached OgilvyAction and said, ‘Let’s go in this together, in a strategic partnership,’ ” he added.
•
He and Ms. Hartnett decided that a cooperative effort would “need to be a true business unit of WPP,” Mr. Bidwell said, “so we approached WPP with the idea of creating a joint venture.”
The joint venture is “having some early success,” he said, and it recently added a couple of marketer clients. Although they declined to be identified, Mr. Bidwell said, he was able to describe one as “a significant over-the-counter pharmaceutical company” and the other as “a significant food company.”
Asked for examples of cross-pollination — clients of one agency or the other that are working with the joint venture — Mr. Bidwell listed John Deere, “a Malone client, for which we’re bringing in thinking from OgilvyAction,” and SC Johnson, “an OgilvyAction legacy client, which people on the JWT side are deeply involved in helping.” Ms. Hannah said Kimberly-Clark, a longtime client of Malone, was obtaining from the joint venture services that are specialties of OgilvyAction, like product sampling.
Chip Martella, managing director for the New York office of JWT/OgilvyAction, singled out Kimberly-Clark, along with Procter & Gamble, as among the marketers that are “accelerating the growth of shopper marketing.”
“They’re telling their agencies: ‘Don’t come to us with a campaign idea that starts with TV or print ads and then show us how it works in the store. Start with the store,’ ” said Mr. Martella, who is also executive director of strategy for the North American operation of OgilvyAction.
The store can be virtual as well as real, he added, citing research that shows “over 50 percent of those shopping Wal-Mart stop at walmart.com first.”
Another indication of the increasing role being played by shopper marketing came last week, when a former executive of Procter — the world’s largest advertiser — was hired as the new leader of Saatchi & Saatchi X, the shopper marketing unit of Saatchi & Saatchi, part of the Publicis Groupe.
Dina Howell, who had been vice president for global media and brand operations at Procter, joined Saatchi & Saatchi X as worldwide chief executive. She succeeds Andy Murray, the founder of Saatchi & Saatchi X, who becomes chairman, a new post.
WPP is known for reorganizing and reconfiguring its agencies to better serve clients. For instance, in 2006 WPP formed a joint venture named Team Detroit by combining five agencies that worked for the Ford Motor Company in North America.
Wednesday, December 15, 2010
'Tis the season for predictions. Here's an exciting one from Oracle.com: NFC Will Be the Killer App for 2011 (Insight-Driven Retailing Blog)
« Google Leverages Like.com | Main | A Look Back at 2010 Predictions »
NFC Will Be the Killer App for 2011
By David Dorf on November 29, 2010 12:40 PM
As a former smartcard engineer, I've seen many different electronic payment schemes come and go. Payment technology is saddled with the "chicken or egg" problem. That is, you can't justify the expense of the infrastructure without a critical mass of consumers, and the consumers won't bother unless they know the new method will be around for a long time. For this reason, most emerging payment techniques remain in campus settings (e.g. universities, corporate campuses, sporting arenas) and fail to go mainstream.
But the momentum behind mobile commerce is about to introduce us to NFC, a short-range contactless technology that's been waiting for the right moment to pounce. With NFC-enabled phones, consumers will be able to quickly and easily communicate with retailers to accept marketing offers, pay for goods, and receive loyalty points.
The following news stories illustrate that momentum:
- April 2010, Apple files patents for iPay, iBuy and iCoupons that include the use of NFC.
May 2010, The French government-backed NFC trials in Nice commence as a dry-run for a planned national rollout. The trial involves four mobile operators, two banks, and the city's transit system.
June 2010, Nokia spokesperson Anssi Vanjoki announces (and later clarifies) that Nokia will begin including NFC technology in some of its phones starting in 2011.
August 2010, Apple hires NFC expert Benjamin Vigier and continues filing patents for mobile payments, including the use of NFC.
November 2010, Google CEO Eric Schmidt announced Android "Gingerbread" 2.3 will support NFC.
November 2010, AT&T, T-Mobile, and Verizon Wireless announce joint venture to build national mobile commerce network using NFC-enabled phones. The Isis™ mobile wallet will eliminate the need to carry cash, credit and debit cards, reward cards, coupons, tickets and transit passes, fundamentally changing how you shop, pay and save. All with your phone.
Retailers would be wise to begin looking at what it takes to add an NFC reader to their POS. Oracle Retail will be demonstrating integration with the VivoTech NFC reader at the NRF Big Show in January. Stop by the booth and see.
Comments (4)
Tom Chorn:Smart phones already are vulnerable to a number of security threats. The Wikipedia entry for NFC enumerates additional threats for this technology.
IMHO, the biggest threat comes from NFC relying on the phone to authenticate the user. There are a number of ways to get around this --yes, you can circumvent the phone PIN... So, if you lose your phone, what protection will you have when someone starts to use it to rack up hundreds/thousands of bucks in purchases?? I bet it won't be the same as the protection you get on your credit cards.
Posted by Tom Chorn | November 29, 2010 1:34 PM
Posted on November 29, 2010 13:34
Tom, the technology has its shortcomings, but I don't see it as worse than current magstripe cards. Once lost, your phone can be deactivated by your TSM to minimize the damage. Good point, nonetheless.
Posted by David | November 29, 2010 1:47 PM
Posted on November 29, 2010 13:47
One way to facilitate deployment of NFC services can be through infrastructure, not only POS payment equipment, considering every usage which could benefit from contactless. We have been working on this and are proposing both infrastructure equipment, modules to allow other companies to integrate contactless in their own equipment such as kiosks, and also dedicated mobile devices when needed. All of our products are NFC and Zigbee capable, then you can add mid-range to short range communication, the communication flow being secured between both protocols.
More information on our website http://www.taztag.com
You may also visit us at CARTES in December or CES in January.Posted by Michel | November 30, 2010 3:30 AM
Posted on November 30, 2010 03:30
chip:Another option to prevent an unauthorized use of phone is to have IMEI of your device printed on your driving license. heh ...
Posted by chip | November 30, 2010 8:59 PM
Posted on November 30, 2010 20:59
Tuesday, December 14, 2010
Some of the best things in life can be free. From MediaPost. 10 Tools for Digital that Don't Cost a Dime
Which tools do experienced digital marketers rely on to develop their marketing strategies, plans, and programs?
Before building your next digital plan, be sure to check out these terrific free tools for input, support and guidance in 10 important areas.
1) Competitive site traffic: Compete.com estimates the number of U. S. visitors to practically all the top web sites, enabling users to enter up to five website names and receive Traffic Volume for each, along with additional site analytics. Quantcast.com provides U. S. audience composition stats, including gender, income, age group, visit frequency, and other sites visited. Alexa.com ranks sites comparatively based on traffic by millions of its toolbar users.
2) Search volume: Google Trends lets you enter up to five topics and see how often they've been searched on Google over time. It calculates how many searches occurred for the entered term(s), compared to total Google searches, and graphs the results. The Hot Searches feature displays the 40 fastest-increasing searches in the U. S., and is updated hourly. Google Insights enables narrower analysis to compare search volume patterns across specific geographic regions, subject categories, time frames and other Google properties. Google Traffic Estimator shows predicted search volume, average cost-per-click, and ad positions for specified keywords.
3) SEO Evaluation: WebsiteGrader.com, a free SEO evaluation tool, grades any site on its SEO effectiveness, based on factors including title, meta description, keywords, headings, images, Google Page Rank, inbound links, Google indexed pages, directory inclusion, and Delicious bookmarks. Entering your own url or a competitor's delivers a quick SEO assessment.
4) Competitive search activity: SpyFu.com reports the keywords a website buys on Google Adwords and the keywords causing a site to rank in search results. It also provides cost per click, search volume, and estimated search advertising spend. Other available information includes keywords used, organic search rank, top competitors, sites purchasing specific terms, and sites ranking organically for a given query.
5) Social media dialogue: SocialMention.com tracks the most current conversations about a company, product, or any other topic across the social media landscape, encompassing blogs, forums, bookmarks, comments, events, news, etc., by monitoring over 100 social media properties like Twitter, Facebook, Digg, and YouTube. Technorati.com is the leading blog search engine, indexing over a million blogs, tracking the authority and influence of blogs, while providing an index of what is currently most popular in the Blogosphere.
6) Twitter monitoring: TweetMeme.com aggregates all the popular links on Twitter to determine which are popular, organizing these into Categories, Subcategories and Channels, so it's easy to filter and find what you are most interested in. Klout.com measures influence on Twitter (and Facebook), on a scale from 0 to 100, using variables like the number of retweets, the Twitter audience size, and influence of followers, while also providing influence monitoring tools.
7) Social media case studies: To keep abreast of social media marketing activity by industry leaders or competitors, visit these wikis/sites, which provide a wide range of case studies. For Social Media Cases across all industries, check out A Wiki of Social Media Marketing Examples. If you're focused on the healthcare and pharmaceutical industries, read the cases at the Dose of Digital Social Media Wiki.
8) Sample Size Calculator: If you aren't a statistician, but require a simple, quick way to quantify the validity of your results, or establish the correct quantities for an in-market test, either of these two tools will do the trick: http://www.surveysystem.com/sscalc.htm or http://www.raosoft.com/samplesize.html.
9) Online Advertising Impact: Both DoubleClick Research and Atlas Institute Insights regularly publish valuable white papers with insightful analyses of online media performance impact, benchmarks and trends.
10) Marketing Stats and Presentations: Slideshare.com lets you share presentations, or view documents written by others, across a whole range of topics and industries. PewInternet.org is an ongoing research project providing a rich resource of trends and statistics about consumer usage of digital channels.
These are among the most powerful, free tools that equip digital marketers to plan and analyze more effectively, but if you have other personal favorites, please share them by posting or emailing.
Friday, December 10, 2010
Online Retailing is on the Rise - and So is On-Air! From The Guardian - QVC: Sale of the Century
Inside the QVC studio, a model shows off a ring in front of the cameras. Photograph: Sarah Lee for the Guardian
It's Christmas time at QVC. But then it often seems to be Christmas time at QVC. It is 25 November when I visit the HQ of the home shopping channel in Battersea, south London, and it is gearing up for its Big Christmas Weekend. That's different from Early Bird Christmas; that was 25 September. Or Christmas In July, which took place on 25 July. "If there's a 25 in the month – there'll be Christmas," says Dermot Boyd, QVC's twinkly CEO. "It's the best time of year for us. We do make a feature of it." The channel's buyers, almost 100 of them, have already done their buying for Christmas 2011. You can see why.
But then QVC has reason to feel extra-specially Christmasy this year. Profits are up 6%, and it is now the UK's most widely distributed retailer. One-in-four homes have had something dispatched from its mile-long Liverpool distribution centre, one that's six times larger than Wembley Stadium. Last year it handled 15.1m calls, generating £368m. Six weeks ago, it launched a second channel, QVC Beauty, to tap into the UK's £16bn lipstick and mascara market, which has proved impervious to the recession.
"The demand for beauty over the last couple of years has been incredible," says Kate James, head of buying for the channel. Her clients agree. "On a good day, we've done £1m on QVC," says Andrew Rodgers, European marketing director for cosmetics company Bare Escentuals. "That would take a year in a department store."
QVC now reaches 106 million customers across five countries (QVC Italy opened in September, joining Germany, Japan and the original US parent company) with new-customer growth at a 10-year high. Just in time for 2011: QVC's 25th anniversary.
This will be the economic downturn, you'll be thinking. With no money left to leave the house, people are slumped in front of their digital TVs, morosely dialling up for cut-price Butler & Wilson PVC mock croc skin shoulder bags or Jack LaLanne compact power juicers. QVC has heard that one before. "It's not to say QVC does better in a recession than a boom," Boyd says carefully. "But relative to other retailers, it's a very resilient model. In the UK, we were founded in a recession, in the 1990s. And we grew successful in that." But QVC's biggest recent success may be one that's harder to put a figure on. That's a subtle brand repositioning.
The Apprentice's memorable 2007 candidate Katie Hopkins may have spoken for many (though perhaps not in quite the same language) when she described QVC's audience as "bored, big-boobed housewives called Mavis", balking at having to go on and sell plastic footspas and chocolate fountains (her amiable Apprentice rival Simon Ambrose faired better, going for the high-risk strategy of the pricier folding wheelchair). The perception was that QVC sold cheap tat, cheaply. Seventeen years ago, that may have been hard to argue with: when QVC UK launched, its must-have item was a yellow alarm clock shaped like a Volkswagen Beetle. Today, it stocks boutique-level beauty brands Decléor, Elemis and Bobbi Brown, alongside Bose stereo equipment and 3D-ready plasma TVs.
In April, it sold £1m worth of Dell notebooks in 24 hours. Before that it had some £19,000 necklaces for sale (it only sold two, but then you only need to sell two – the Simon Ambrose model). Marco Pierre White, Jemma Kidd, Lulu Guinness – and, indeed, Lulu – have all appeared on QVC, selling their own product lines. In the US, the channel has courted upmarket vendors such as NARS Cosmetics, while Mad Men costume designer Janie Bryant launched her collection on the channel. With co-sponsorship from Vogue, celebrity stylist Rachel Zoe recently helmed a New York fashion week show during which, noted QVC's US merchandising boss, "the inventory kind of evaporated".
That's not to say QVC is ever going to be confused with the Beverly Hills appointment-only boutique The House of Bijan: in the UK, the median purchase price remains £35-£40. You might recall the laughter directed at James Arbuthnot, chair of the House of Commons defence select committee, during the MPs expenses' scandal, when his claim for a four-piece garlic-peeling set was revealed – bought from QVC for £43.56. But at least it wasn't a yellow alarm clock shaped like a Volkswagen Beetle.
"In the early years, TV shopping had a negative connotation that came from the US, because they had a lot of infomercial channels that made unrealistic claims," says Boyd. "Here, the Advertising Standards Authority regulates very strictly what you can say. We think that's a good thing. We do a lot of work measuring brand recognition and, actually, in the UK, people don't have a negative [opinion of QVC]; but they don't have a positive. That's an OK starting point."
This year, Boyd set out to build on that, to "raise the profile of the company". In February, he handed a £500,000 contract to the PR firm responsible for Channel 4 and BAA. Their brief was to reposition his presenters as experts in their field, and build awareness. There have subsequently been a number of those PR perennials, the consumer survey, making their way into the papers. In June, thanks to a QVC-commissioned poll, we learned that 10% of the country "would rather give up their partner than their TV"; and then, in July, that women "are at their most beautiful at 31". But that was small fry compared with November's bright idea: within hours of William and Kate's marriage announcement, QVC had dug out an Epiphany Platinum-Clad Diamonique oval cluster ring, branded it "The Royal Engagement Look" and watched sales jump 800%. It has been sold-out ever since. To HRH: a priceless family heirloom. QVC price: £34.42. "We probably sold £40,000 worth of rings with a blue stone," says Boyd. Who would buy such a ring? "One assumes it's people who approve of the royal couple," says Boyd, smiling. "I think it's the feelgood factor."
A selection of items for sale on QVC. Photograph: Sarah Lee for the Guardian
Then there is 2010's most surprising innovation: pop stars going on QVC to sell their albums. In February, the famously shy and retiring light entertainment polymath John Barrowman suggested he come on to promote his new collection of songs from musicals, selling 1,000 copies in the first three minutes. He was already a QVC devotee (he got his shopping card out on air to prove it). Where Barrowman leads, others can only follow. Charlotte Church, Jamie Cullum and ecclesiastical supergroup the Priests subsequently all launched their new albums on the channel. You can see the thinking. With few CD shops and even fewer music shows left, here's an hour to sing live, have a nice chat and, in Church's case, not be asked any awkward questions about Gavin Henson.
"You have to take advantage of the promotional opportunities there are," says the Priests' Fr Martin O'Hagan. "A lot of people don't go down the street to do their shopping any more." Boyd says that currently "all the main record companies are talking to us", while QVC's PR says the labels have told them "what a relief it is . . . how it's been an absolute nightmare to find new platforms". In May, the Official Charts Company changed the rules to allow QVC sales to contribute to the Top 40. You don't have to be Paul Gambaccini to spot that QVC's acts have all come from one place: the middle of the road. You're not going to see Moțrhead on there. Or are you? "Actually, metal's interesting, because a lot of metal fans are in their 40s Рour core audience," says Boyd. "Moțrhead in full-flight wouldn't work, but maybe Lemmy acoustically. Rap would be tricky, though if I got Dizzee Rascal I might be tempted."
QVC was started in Pennsylvania in 1986 by Joseph Segel; founder of the coin and memorabilia supplier The Franklin Mint. Having watched a videotape of the Home Shopping Network, he felt he could do better. Segel insisted his presenters sell by informing. They would have to gen up on their products beforehand, and there would be no staring down the camera, hard-selling – the high-pressure tactics of the infomercials were out. Products were never "cheap", "cheaper" or "a bargain", but "good value". The presenters should convey the idea that they're shopping with a best friend.
"I look for voice tonality," says Tina Halvorsen, QVC UK's guest presenter manager. "Lots of our viewers keep QVC on all day, like a radio."
As any Apprentice fan knows, producers constantly direct their presenters via an earpiece. In the gallery, a live database tracks precisely how well a product is selling, and how much stock remains. Anything that triggers a sales spike – a certain phrase, or stroking a jacket's lining – is encouraged to be repeated. If sales-per-minute numbers are not good enough, it's on to the next item. An underperforming product might get a second chance in another time slot. After that, it's out.
"Even if you're presenting something that you personally don't like, the head you have to put on is: 'Well, my neighbour across the street would'," says Julia Roberts, QVC's longest-serving presenter (no, she's not that Julia Roberts). "You do a Worzel Gummidge."
QVC presenter Julia Roberts: she says her viewers look on her as a friend. Photograph: Sarah Lee for the Guardian
Roberts used to be a hostess on The Price is Right with Leslie Crowther. Before that she was a cabaret dancer, supporting Cannon and Ball in summer season in Guernsey. For her QVC audition, she was given a pencil. "They said: 'Now sell this for five minutes.'" Her audiences love her. They come and chat in the supermarket. "Then you can see them thinking: 'I don't actually know you! I feel really stupid!' I take that as a compliment. They think I'm their friend." Judging from the number of enthusiastic montages on YouTube, she's also got more male friends than QVC's demographic would suggest. "I don't even want to know!" she wails.
Halvorsen gives me a tour of the building. It's like a village and is home to 500 planners, buyers, set builders and producers – all making 17 hours of live TV, 364 days a year. Everyone is very cheerful. Behind one door, a team have been prepping Christmas puddings since 7am.
"Hello, Tinee!"
"Hello, guys! How's everyone?"
"Oh, busy, busy!"
In the gallery we watch Dale Franklin – son of one of the Wrigley Doublemint twins – selling gold rings. "One thing you never hear us say on QVC is, 'Buy these as an investment because they're going to go up in price'. We don't know. Buy it because you love it. Buy it because it's something perhaps you want to pass down to your family . . ."
"'You're saving over £300 . . .'" nudges his producer, James Faulk.
"£686 regularly," Franklin parrots. "Now it's £374 – the one-time-only price . . ."
Faulk glances at his database. "Dale, we've lost 'R' for 'romance'," he says, indicating the sold-out ring size. "We've got S, T, V only . . ."
Halvorsen turns and beams. "I always say QVC is like a jigsaw puzzle: you need to look behind the scenes to see how it all fits. It's such a hard combination, isn't it?: broadcasting and selling."
Thursday, December 02, 2010
Electrifying. Just grabs and shakes you up. From AdAge. Dana Anderson's Celebrity Rules for Digital Marketing
Stay on top of the news, sign up for our free newslettersDana Anderson's Celebrity Rules for Digital Marketing
What You Can Learn From Robert Downey Jr., Angelina Jolie and Lady Gaga
By Kunur Patel
Published: November 30, 2010NEW YORK (AdAge.com) -- Dana Anderson, senior VP-marketing strategy and communications at Kraft, brought a gaggle of pop icons to the ME conference in New York. Even marketers can learn a thing or two from glossy celebrities such as Robert Downey Jr., Angelina Jolie and Lady Gaga.
--> For Ms. Anderson, celebrities and musicians show the course for big marketers looking to evolve for digital communications. Here are her simple rules for dragging a big, old-school organization like Kraft into the digital age.Pete KoloniaDana AndersonHave swagger
Ms. Anderson first looked to bad boy Robert Downey Jr., whom she dubbed the king of swagger."If you want to inspire people to go with you, you need the charisma and swagger," she said. "You need a little bit of Robert Downey Jr."
Ms. Anderson herself was a prime example of the value of swagger. Her confidence and ability to energize the crowd and to frame marketing lessons in easy pop-culture references and humor were evidence enough that the bad-boy rule also applies to girls. Badness is equal opportunity, she said.Related Stories
- Kraft
- Big Fork Little Fork IPad App
Be sly
Digital experiments also require a different set of rules than the typical measurement-driven campaign. Where new digital programs or media may be difficult to quantify by old standards, there are ways for an organization to dip a toe in and get people used to a new format."Pilot is my new favorite word: It means we are going to learn and going to have less risk," she said, adding, "Recess trumps calculus every time. Playing beats math. We're not going to worry about that [measurement] right now, we're just going to play."
That experiment mindset could also lead to an unexpected discovery of something valuable. "Two things I want you to remember are penicillin and electricity," she said."'Should we do social media?' is kind of like saying 'Should we get a light bulb?' when electricity was invented."
Play house
A next step is bringing people together to learn digital lessons in a more meaningful format than a training session. At Kraft, those events are called "digital hothouses." People are asked to bring their work problems to the hothouses and can expect to leave the event with an outline of a solution."It's not that people don't like training; they just don't have time for it," she said. "If you make it valuable ... they'll show up."
Don't settle
Ms. Anderson stressed that marketers should follow the lead of Angelina Jolie, who as an award-winning actress, mother and philanthropist, never settles. While her reference was playful, she acknowledged that digital means culling the herd.This advice especially applied to staffing, talent and agency partnerships, where settling should never be encouraged. "Be like Angelina," she said. "Learning about digital is hard for some folks," she said. "Not everybody is a 10."
"Not only do I want my guys to demand the very best, I want them to be the best, too," she added. That said, marketers and others need to be realistic -- or at least self-aware. She outlined the Rule of Two, where on a scale of 1 to 10, a person can only date someone two points above or below them.
"Let's say I am five, I can date two up and date two down," she said. "The same thing applies to being a great client. If you're a 5, you'll buy a 7 or 3, but what are the chances you'll inspire a 10?"
Be a little reckless
Next on Ms. Anderson's list of pop icons was Lady Gaga. From her, marketers can all learn a lesson in recklessness."Sometimes if you only color within the lines, you miss a lot," she said. "A lot of times when our folks get started, they think it's all about community, but pushing them beyond that can mean something great."
Live large
Staying in music, Ms. Anderson took a page from rap mogul Jay-Z's book. He does it big -- he even bought his wife, pop icon Beyonce, an island for $19 million. With him, Ms. Anderson emphasized the sheer scale of digital."We're moving to the big-D digital," she said. "Whether you're the new-products guy, the customer-service woman, there's a way for big-D digital to play a role in what you're doing."
Kiss and tell
Following pop star Katy Perry, Ms. Anderson says we should remember to kiss and tell. (She kissed a girl, and she liked it.) Especially in large organizations such as Kraft, marketers have to remember to share successes and new projects."You have to walk those halls and tell people what's going on," she said. Ms. Anderson tells her teams to take pictures for her.
"I'm going to tell these stories later," she said. "You have to work inside to let other people know you're having success."
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Wednesday, December 01, 2010
Encouraging news. Hope it happens. From AdAge. Marketers, Media Execs: Silos Breaking Down as Ideas Matter More
Stay on top of the news, sign up for our free newslettersMarketers, Media Execs See Silos Breaking Down as Ideas Matter More
WPP's Scanzoni: 'Clients Want Integration'
By Maureen Morrison
Published: November 30, 2010NEW YORK (AdAge.com) -- Marketers and media executives at Ad Age's Media Evolved Conference said they see silos of media type breaking down, and content mattering more than devices.
Scott McCune, VP-integrated marketing at Coca-Cola; Mark Kaline, global director-media licensing and consumer services at Kimberly-Clark; Rino Scanzoni, chief investment officer at WPP's Group M; and Matt Seiler, global CEO at Interpublic Group of Cos.' Universal McCann, participated in a panel discussion on the future of the media and how marketers can work with media companies and agencies to establish a new model built on partnerships and innovation.
From a marketer's perspective, Mr. McCune said, "We're looking at why we are buying media. It's no longer looking at spots and dots. We're thinking about how do we start to partner with content owners in a way that can actually drive our business." Mr. Kaline echoed similar sentiments. "You have to look at why you're partnering with these media companies in a certain way. It used to be because of efficiencies and scale. That is still valid but what we're trying to do is build programs around ideas."
Media agencies are recognizing clients' needs in an increasingly fragmented media landscape. "There are still siloed vendors and agencies but those are breaking down quickly because clients want integration," said Mr. Scanzoni. And Mr. Seiler observed that if agencies continue to think of media owners as vendors -- rather than partners -- then "we will continue to be in a buyer/seller antiquated world."
With all the talk of integration and breaking down of media silos, mobile still stands out. Mr. Scanzoni noted that with content being distributed through all channels of media, including mobile devices, content and engagement will become increasingly more important. "The way the consumer is going to engage is going to be more relevant to content than the device. The device is less relevant to experience."
Mr. Seiler added that mobile is not as much about the device, except for it's proximity to the purchase. "Is the consumer the same through all devices? The person is the same person. But at what point are they a consumer? Close to point of purchase. The moment of interaction is a much more interesting way of thinking about the cycle of entertained person to engaged shopper."
As for the future of media, Mr. Scanzoni reiterated the importance of content over devices; Mr. Kaline said the future media landscape will be dominated by strong media brands -- be it a magazine, network or mommy blog; and Mr. Seiler thinks it will be a mix, as opposed to one dominant player or medium.
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Tuesday, November 30, 2010
Monday, November 29, 2010
The Analog v Digital War has upped a notch! From The NYT. Print Magazine Ad Mocks Digital Cousin
The ad is meant to highlight print as preferable to digital.
So which is better: a print magazine or its digital version?
The newest ad for the nation’s major magazine publishers, which have been running a promotional campaign to counter perceptions that print is a dying medium, doesn’t side with its newer medium.
“This is not the Internet. Feel free to curl up and settle in,” begins the two-page spread, which features a full-page picture of a woman lounging in a hammock strung between two palm trees. She does not appear to be reading a magazine.
“Magazines don’t blink on and off,” the ad reads. “They don’t show video or deliver ads that pop up out of nowhere. You can’t DVR magazines and you can’t play games on them.”
Previous ads, which have all carried the tagline “Magazines: The Power of Print,” highlighted the strength of the print business. But they did not go as far as to actually assail the Internet.
This new approach may seem somewhat strange coming from an industry that has spent the last few years tearing down the institutional walls between print and online operations.
There is also all the money and resources — tens of millions of dollars each at the largest publishing companies — that they have poured into creating iPad versions and other digital formats of their titles.
But the ad’s chief creator, Michael A. Clinton, president of marketing and publishing director for Hearst Magazines, said the news that magazines are thriving needed attention even if publishing is an increasingly digital business.
“Magazines didn’t have a consumer problem; they had an advertising problem,” he said, stressing that the fundamentals of the business are solid despite the decline in advertising spending that forced many publishers last year to lay off employees and shut down titles.
“We have to be delivering our content in different ways,” he said, “but in a continually digitized world, the interesting thing is the passion people still have for the print product.”
The campaign, which began in March and was designed by Y&R New York, has been a joint effort by Hearst, Time Inc., Condé Nast, Meredith and Wenner Media, all of which have run the ads in their magazines.
The Association of Magazine Media has also thrown its support behind the ads. Formerly known as the Magazine Publishers of America, the group recently changed its name because its leaders wanted a less print-centric title.
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