Online Economy – Page 2 – EUCAP Capital Partners

Build It, Blog It, and They Will Come

marketing innovation

Traditional Marketing

According to traditional marketing professionals, the “build it and they will come” attitude leads many entrepreneurs to their ruin. The full quote is:

“If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door”, [Ralph Emerson]

Allegedly wrong, wrong, wrong. Apparently, many entrepreneurs suffer and fail because they overlook the over-arching importance of Marketing..

Or so they say.

Ken Olisa, one of the more eloquent traditional technology marketeers, presents traditional marketing beautifully at his Marketing as a Science? seminar at a Cambridge Entrepreneurship center.

According to traditionalists, marketing is a core capability of a company without which your enterprise is doomed to fail. Many investment consultancy firms, like Ken Olisa’s Interregnum plc, charge high fees and equity percentages for providing this marketing and fund-raising to entrepreneurs.

Innovation is the New Marketing

The new school of thought is that traditional marketing is dead. In Seth Godin’s words, All marketers are liars. The best marketing is an exceptional added-value product or service.

We live in an increasingly efficient market. Information flows more and more perfectly. Marketing, the art of promoting your product in the market, is a commodity accessible to all. Disintermediation between client and supplier is prevalent. Successful differentiation of your company is about your product and service, not about your marketing plan.

You only have to note the lengthening queues of un-employed facilitator, coordinator, administrator management consultants. Advisory help for entrepreneurs is still a good idea, perhaps through an experienced non-exec director. But, the corporate skill set has ceased to be a differentiator; communication technology has made it a commodity.

In words of another entrepreneurship guru; “it is about engineers, not MBAs”.
Guy Kawasaki has a novel company valuation method; add $500K per fully employed engineer, and then subtract $250K for fully employed MBA

The partners at EUCAP are increasingly focused on core technology and service capabilities. Deep sector knowledge. An un-graceful total obsession with your client base, product and service. An Otaku cult of your market. That is the core capability of succesful company.

Build it, blog it, and they will come

Europe’s Online Advertising Should Top €10 billion by 2008

Forrester Research’s Jaap Favier predicts €100 billion will be spent online in 2006, growing to €263 billion in 2011:

In the coming five years, the number of Europeans shopping online will grow from 100 million to 174 million. Their average yearly Net retail spending will grow from around €1,000 to € 1,500, as UK Net consumers, who currently spend €1,744 each year, outspend even their US counterparts online. Overall, this will cause European eCommerce to surge to €263 billion in 2011, with travel, clothes, groceries, and consumer electronics all above the €10 billion per year mark.

As expected the growth is fueled first by early adopters, or technology optimists, half of the current body of internet users, who are broadening their spending into clothing and electronics.

But the bulk of the growth is to come from the mainstream users, who comprise 90% of the retail customers, are starting to have an impact in online spending. As broadband becomes widespread, the non-techie customers are being won over by convenience and price advantages offered by online retailers. Favian told ZDNET that

“Consumers take about a year after going online before they will purchase something online. The first thing they purchase is either a book, a CD or a trip.

All welcome news for all online businesses, including online publishers. Using the traditional 10% of sales is the marketing budget rule-of-thumb, the online marketing spend for Europe should top €10 billion in 2006. The prediction is below Jupiter Media Metrix’s forecast of €4,014 million by 2008. A reflection of the online advertising struggle to gain its proportinoal share of the overall advertising spend.

Nick Denton Struggling to Monetise with the Early Adopter Market

Nick Denton’s closure of two of his blogs in his blog media network has caused outrage among some of the blogosphere purists. A classic response from early adopters, who often ignore profit-loss concerns in the object of their affection.
We have had similar responses among our online communities, for instace the enthusiast members of our online financial information forum.
Many web2.0 companies, blog networks, and even A-list bloggers are struggling to monetise their brand asset. But, being popular among the early adopter consumer segment rarely generates the wished for revenues. Early adopters are too few, notoriously fickle, and do not buy everything they sample.
Crossing the chasm between the enthusiast and the mainstream users is an exercise in targeting, sub-segmenting and lots of patience.
It may take a year or two for blogosphere early adopters to be outnumbered by arriving mainstream users. Then the blogosphere will cease to be shocked by the reality of a profit-loss statement. Even smartmobs need to eat.

Is Electronic Trading the Future of Advertising Buy ?

Jonathan Wall, Marketing Director at the top online electronics store in the UK dabs.com, explained at Internet World 2006 that his marketing team is now composed principally of web analytics experts who are constantly trading on the screens for the best prices and return on investment for their advertising spending.With revenues in excess of €300m and an online marketing budget rumoured to in excess of €25m, can the dabs.com web analytics team be the future model of marketing teams?

Jonathan’s vision could not be more different from the traditional marketing department, with its one-stop-shopping of TV upfront and the big-media lunch circuit. Compared to the accountability forced onto internet marketing, the TV advertising industry is wasteful, untargeted, irrelevant, and ultimately damned irritating to your customers.

advertising screen web analytics trading

The change has similarities with the modernisation of financial market trading. Traditional buying and selling of financial assets was based on open outcry system. The prices at which customers were able to sell their assets depended on a chain of human interaction which ended in the open outcry buying and selling trading pit.

The open outcry system was plagued by inefficiencies, trader cartels which pre-arranged price and articificially increased price spreads and margins for the traders and banks. As a result the price spread, difference between the buy and sell price for the clients and suppliers was large.

Talented traders could read their fellow traders and manipulate larger spreads for themselves.

Most of these human intermediaries have been taken out of modern financial trading. Open outcry trading has become mostly extinct, replaced by electronic trading. The buy sell spreads, and the cost of trading have dropped dramatically.

The inefficiencies and huge cost of face to face trading has been replaced by zero overhead direct screen trading. The client has real-time access to real prices and can trades directly with suppliers.

Google Adwords bidding is a copy of financial screen trading. Though the spread, the margin retained by Google is still a large inefficiency, that will come down as other online advertising networks, like Yahoo Search Marketing start to compete on more level basis.

The world of advertising is heading towards a big change. Gone are the days of inefficiency and un-accountable media channels. The new trading in advertising buy is electronic and transparent, and completely accountable.

Lord Saatchi:”Ruthless Clarity in Branding”

For decades, Lord Saatchi has been an icon of the advertising and marketing industry in the UK. The company he co-founded with his brother, Saatchi & Saatchi, is notorious for managing the conservative government comeback in the 80s and 90s. Baron Maurice weighs in on the death of the TV-industrial complex with insightful tips for brand owners

TV Advertisign at its worst will be killed off by the internet

With the fragmentation of media, TV adverts are no longer having any impact, only the efficient, the brutally concentrated thought will survive.

Only the most brutally simple ideas will be survive in the complexity and confusion of the digital marketplace.

Its the modern equivalent of having the best site on the high street, except the location is in the mind.

Precision is better than greed The strongest brands are defined by their ownership of one thought; it is best to be unique and precise in owning one word than overlapping in concept with others through greed.
Favorite word: Simplicity
the new generation of digital consumer multi-tasks and has a brain programmed to edit ruthlessly

Biggest marketing problem in the 21st century, people’s protective filtering from media intrusion; Malcom Gladwell’s “Blink”, Seth Godin’s “All marketers are liars”.

Media fragmentation can be navigated by Unifying your Brand Concept and Meaning. It doesnt matter what the medium is that carries the message.

Advertising agencies struggling with ever fragmenting media and demographics can use the “One Word” Simplified-Brand as a Unifying concept which clarifies, redefines and re-unites their target audience again. Demographics is about meaning, a Word, a Concept and less about channels and age-groups.
Reminds me of the Daniel Pink’s “The Concept Age”

Broadcast advertising will remain a dominant feature of the overall advertising landscape provided

Simplicity will save TV advertising. Strong simple concept will punch trough the media noise and save TV advertising.
Mmmm….not sure about this one.

Damn, he is good; there is life left in the old dog yet. Maurice’s “one-word” branding and strategy has similarities with Seth Godin’s uniqueness, “subsubsegmenting” and nicheing thesis. Lord Maurice is a little unclear on the mechanics and detail of how to segment the demographics. But he states that select the word and meaning right, and segmentation takes care of itself.

For an old dynasour of the TV-industrial complex, with an estimated $600m made from TV advertising and marketing, he is not resting on his laurels. Seth Godin should make him an emeritus member of his fabled Big-Moo-33 for evolving above and beyond any need to.

The next Google will come from outside the US

A great quote from Danny Rimer, the EU venture capital partner behind the Skype company. But, if not from the US, will the next Google come from Europe ?

Danny is getting a huge amount of mainstream Julie Meyer has been trying to close a fund since she exited from “First Tuesday” 6 years ago. Similarly Jon Snyder and Marting Bloom at Cambridge Accelerator Partners, and Marc Goldberg at Occam Partners.

Danny concludes with

Innovation is not a problem in Europe. But the lack of a unified market to sell that innovation, or even give it away, is a problem – and so is the paucity of investors willing to back it. “The next Google is more likely going to come from outside the US,” says Rimer. “Whether it’s in Europe, I am not sure. A lot of things have to change

European entrepreneurs will have to work extra hard if the next Google is up to them.

Google strikes distribution deal with Dell

The deal, reported by The eStrategyOne Buzz, Dell will bundle Google Desktop software on its PCs, the open source Firefox browser and the Google toolbar. Under its terms, Google pays Dell an undiclosed sum per PC sold, and will last three years.
Bundling google software benefits the users. Microsoft’s Internet Explorer and msn landing site are acknowledged to be poorer than their google counterparty. Firefox browser and the google desktop search and particuarl favorites among converted users. The only reason for Microsoft’s dominance of the browser market is the precisely this pre-bundling its of the software. Dell users are unlikely to look back.

One in ten UK retail sales now online

ecommerce onlineretail

The UK’s “Office of Fair Trading has launched a fact-finding market study into online shopping Around 130,000 UK businesses now sell online. Internet sales are on a rampant growth curve. Further figures have been published by the IMRG, Netimperative – One in ten UK retail sales now online
The results show that 10% of all sales are now influenced by the internet, the breakdown is as follows:

£30bn of retail spending is online, while £20bn of non-traditional retail such as gambling and banking is online.
a further £30bn of offline retail sales is influenced by information gathered online
in other words, £80bn of consumer spending is either online or influenced by the Web

Furthermore, the trend is growing faster, more than half of shoppers said they are planning to reduce their High street spending in 2006 while 45 per cent say that they are willing to increase their spending with online shops.
In addition, nine in ten (90%) shoppers researched goods online before buying them on the high street.

Early Adopters of Technology Do Not Make a Market

crossingthechasm geoffreymoore web2.0 earlyadopters startups

Web 2.0, the current frenzied trend in online technology is having difficulty attracting the majority of the market. In spite of the success with technology enthusiasts and early adopters, their share of the total online market remains low. Hitwise has just published market share statistics for internet search, email and news, which throws up a few surprises.

Note that the older services like, mapquest mapping services, get 10 times the traffic of google maps. Another surprise is that Yahoo Mail gets 20 times more traffic than Google’s Gmail, in spite of the more rudimentary features.
Many blog authors, who are a success among these early adopters, still need to attract mainstream visitors to make a living from their blog. Similarly, the popularity of web2.0 services like youtube and flickr is limited to early adopters , blog-users, causing the referred blog echo chamber effect. But, as the hitwise statistics show,
no impact on the mainstream so far.
The big mistake for web2.0 startups is that they are ignoring the mainstream market, not realizing that early adopters are a fickle customer segment when it comes to building profit. The rule of thumb among VCs is that the first 25,000 subscribers are irrelevant.
The big threat for web2.0 startups are that the mainstream online players like Microsoft, Yahoo and Google, who already have one foot on the mainstream market. They can adapt web2.0 ideas, make them easily understandable for the pragmatist, skeptical mainstreamers and make an easy introduction to their existing subscribers. A classic set piece scenario in Crossing the Chasm between early adopters and the pragmatist mainstream market.

London Internet World Exhibition – Internet Boom is Back

London Internet World exhibitors have filled three quarters of London Olympia 2 hall for the first time since the 1999 and 2000. That is 171 exhibitors, and a projected 10,000 visitors. With no less than three mapping services in attendance; streetmaps.co.uk, multimap.com and mapsolute, compared with only mapquest.com in 1999.

The figures touted by most presenters today were

28m UK online shoppers
£30bn in online UK sales
30% yearly growth rates
65% of car owners to re-insure online
Amazon.co.uk set a record of 480,000 shipped in one day, on the 18th of December 2005

Heady stuff. The rumor is that boo.com, the £185m disaster the UK internet bust flagship, will be resurrected this year.