business


For my Digital PR class this summer, I wrote about the idea of “virtual insanity” and the strange ever changing online world. I’ve also blogged about Second Life and how this trend (well, trend would mean it’s somewhat temporary, but that’s another topic for debate…) has been on the rise lately.

And now, we’re reading Julian Dibbell’s Play Money which details Dibbell’s quest–and success–in becoming a millionaire by selling “virtual loot.” And I’ve got to say. . .this seems like BS to me.

Social networks, blogs, etc–that’s all one league of online behavior and habits that I enjoy and participate in. But the virtual communities and second identities seems beyond what my imagination can stretch to. Second Life and these virtual communities seem like outlets for people to escape their real lives and fantasize about an alternative identity for themselves. This all seems fine and dandy, but what about when it gets out of hand? There have been examples of rape and crime in Second Life–obviously people have taken their imaginations too far.

Dibbell has been able to make a living off of his virtual loot in second life. I agree with what John said on our Google Groups dialogue: “That being said, I think that virtual goods are a stupid idea. There is no reason anyone should pay cash for a free item (paying for entertainment is one thing, paying for non-existent items is beyondme). I dislike the idea of Microsoft points in the Xbox marketplace and I don’t like the idea of having to pay for second life dollars and real estate.”

The fact of the matter is, these virtual worlds aren’t real!!  It doesn’t seem entirely ethical to me to be making millions off of something that doesn’t even exist, and this is why I don’t agree with Dibbell’s business venture. It seems somewhat exploitative; on the other hand, however, people seem to be willing to buy their virtual loot online, even though it fails to actually exist.

What I have to say about this is simple: virtual communities foster some sense of togetherness, but once we go over the boundary of paying for these free good I think people have gone too far.  Go out and explore your real life! Don’t be so dependent on the computer screen and a fantasy world when there are real problems not only in the world but in your own life. I think the rising dependence on virtual communities is unhealthy for the overall online and real world communities.

I’ve heard this phrase–the long tail–tossed around, and I never fully grasped what it meant until I started reading the first four chapters of Chris Anderson’s The Long Tail. The long tail basically refers to niche marketing and its importance in our current economy. Thanks to online companies like Netflix and Amazon that rival their store-only competitors (well, what started out as store only), these online giants have perfected the idea that people can customize their profiles and have their choices actually come to them rather than seeking out movies, books, etc.

I loved the way Anderson opened his book with the example of the mountain climbing book. A twenty year old book has been given a second chance thanks to generous online distribution, niche choices, personalized suggestions, and its presence on the long tail. Amazon turned the book into a best seller by coupling it with a similar selection. Like this book? Try this one, too. It works. And so does the long tail.

long-tail-graph.gif

In a world where virtually everything–information, books, knowledge–is easily accessible, the long tail demonstrates that niche marketing and consumption is as important as ever. Everything around us is personalized now–from our Google homepages to our Nike shoes to the engraving on the back of our colorful iPods. Most of the websites I use every day require some kind of log in information, and continue to provide me with choices that will be of interest to me.

The long tail is important because we’ve come not only to expect a vast selection of choices but to demand it. It’s frustrating to go into a store and be turned away because the selection you want isn’t in there…and it’s so easy to log in to your Amazon account and find not only what you’re looking for, but also a few more options you didn’t even know pertained to your interests.

What’s popular in our culture (iTunes Top 10 Songs, and so on) will continue to attract the majority of people, but after a certain point the choices taper off. Those choices to the right of the graph–away from the head and defining the tail–contain niche fragments. Consumers can belong to different parts of these niches. The overload of information and the sheer volume of choice makes these niches absolutely essential to our lives as consumers and online users.

Amazon and Netflix both started out with overwhelming choices, personalization, and customization. Others such as BN.com–which started as physical stores and later tapped into the online world–have followed suit with more selections offered online than in the stores. Blockbuster succumbed to the pressure of Netflix by offering their own expanded online mail services for movies.

I’m all for the long tail and niche marketing, but I can’t help but wonder what will happen as more companies adapt a bigger inventory in an effort to customize and personalize the selections for their customers. Netflix and Amazon have been so successful because they were the pioneers of this new type of economy. I am interested to see what will happen as this slowly becomes the norm, and the tail might taper off for the big guys so that the newcomers can participate in the long tail.

I posted a question about texting on this week’s Google Group and it really got me thinking: texting has evolved so much over the past few years in our country, but it’s still sub par compared to other places around the world. Why is this? Rheingold‘s book is a little outdated when it comes to texting since it was printed in 2002, but at the time the reason was that you couldn’t text with consumers of other cell phones providers (Verizon could only text with Verizon, Sprint with Sprint, and so on).

But I’m not just talking about the sheer numbers of texts we use every month. Sure, texting has increased in the US and is almost matching Europe, but other countries have taken it to a whole new level. Rheingold opens up Smart Mobs by discussing the power of texting in Japan. Young people gather at places because of widespread text messaging. This trend has hit other parts of the globe, too. Protests in Chile and unrest in France have both been attributed to the influx of texting habits in those countries. Asia leads the international pack in terms of texting, with Europe following behind. The US has been catching up, but not quite to the extent that the rest of the world is dominating.

Rheingold’s explanation doesn’t hold up for today–now we’re able to text all of the phone service provider networks, but we’re not surpassing countries. We don’t have subway meet up initiatives like in Tokyo. There seems to be a lack of urgency with texting in the US.

I think the reason for this is that, in Europe for example, people have been reliant on texting as their main way of communicating. Everybody has cell phones, but these phones come with cards that have to be charged when the $20 or whatever runs out. Calling other cell phones is expensive and the price is docked from the money that you put on the card. Texting is the cheapest option.

And what do we have in the US? Well, now we have unlimited IN texting so that it’s literally free to text with anyone in your network–and these usually come with texting bundles with an additional 50o or 1500 free texts. And who doesn’t know or love this commercial with the old grandma saying “IDK, my BFF Rose?”

But even with all of our free messaging, however, we are still falling behind. True–video and picture messaging has gone up, but why hasn’t texting in the US soared given all of the seemingly high advantages? As the younger generation gets older, it has become their norm–but not as much for those just a few years older. As for Europe and Asia, seemingly everyone is using texting to communicate.

We haven’t become dependent on it because we haven’t needed it. While other countries were using texting to communicate, we had Free Nights and Weekends on our cell phone. Now it’s the norm for almost every member of a family to have their own computer and use it for AIM, G chat, and other messenger services. Blackberries are buzzing at every metro and Starbucks around the district. With this overload of utilities at Americans’ disposal, there hasn’t been a dire need for texting. Sure, it’s a nice thing to have and companies are capitalizing on giving it to their consumers for free, but now it’s more of an added perk than anything else.

Scoble and Israel’s focus in Naked Conversations is on how companies can integrate blogs into their businesses and make them more successful. But what happens when this goes awry?

The authors discuss L’Oreal’s Vichy blog campaign, which focused on the character of Claire. After Claire debuted in the blogosphere, bloggers were up in arms about the credibility of Claire as a consumer. Was she real? Was she merely the production of L’Oreal advertising? Vichy reacted to the outrage by ultimately shutting the website down, apologizing to their customers, and starting over from scratch.

But it’s interesting to see what the drama said about blogging culture. When it comes to consumer products, people want to know the truth–they went to know what’s real. They want the Avon Lady to give them her honest opinion on new products, and they want Claire to be a real person and NOT just the faux spokesperson of a new marketing campaign. People feel deceived when blogs are anything less than real and tangible reflections of a person or company.

Hmm…interesting, especially considering the popular surge in CEO blogging. Do we really believe that CEO blogs are the handiwork of a reputable CEO? That’s like saying that speech writers don’t exist, and that everything politicians say is straight from their own mouths. As students in a Communications program, we know the value of press secretaries and speech writers. Since blogs are quickly becoming the staple of communication, it would be hard to believe that a CEO doesn’t get any help with their own blogs. Are we holding CEOs of companies to a higher standard than we do to PR and advertising campaigns?

The issue comes down to trust. We want to believe that a CEO or politician is sitting as his desk pouring his or her heart out. Nice thought, isn’t it.

Let’s take a look at lonelygirl15. This started out as an online YouTube diary featuring a teenage girl. After popularity and fame, it was discovered that it was all a hoax. Multiple YouTube videos emerged saying what a fraud lonelygirl15 was. Again, the issue came down to trust. People who tuned in to watch lonelygirl15 believed that she was a real teenager discussing her life; exposing something otherwise caused feelings of deception. One might think that whoever was behind lonelygirl15 would be paralyzed by this scandal…but far from it. Now with a functioning website and new acting careers, the actors and crew behind lonelygirl15 were able to turn a bad blogging fiasco into a phenomenon. Had people known from the beginning that it was all an act, would as many people tune in each time? And as something so informal, should lonelygirl15 have displayed a caveat?

It’s hard to separate fact from fiction in the blogosphere. Some things are purely for entertainment (think: Dwight’s Blog from The Office, an obvious way for viewers to stay engaged in the TV show) while others require trust from the readers. With so much information permeating from every computer we look at now, I think we need to absorb everything with a teeny tiny grain of salt. We can’t hold CEO blogs to a higher standard that advertising or public relations campaigns because we have to keep one very important thing in mind: the CEO blog is itself the product of a PR campaign in some shape or form.

Gone are the days of one way memos and letters from companies to customers; ushered in is an era of two way communication and consumer feedback. This has become the crux of the internet revolution.

Scoble and Israel’s Naked Conversations tap into the online phenomenon of blogging for business. According to the authors, businesses can benefit exceptionally from this method of communication.

Scoble and Israel list six pillars of successful blogging:

  1. Publishable: the consumer has the ability and freedom to publish their voice
  2. Conversational/social: a two-way method of creating and sustaining a dialogue
  3. Findable: the information on the blog is indexed in search engines
  4. Viral/Shareable: making things shareworthy; information that is spread through multiple blogs
  5. Syndicatable: RSS friendly
  6. Linkable: the ability to link to other bloggers

SpreadFirefox, or SFX, is a great example of taking a marketing campaign and letting it excel through blogs. Just a few years ago, Mozilla Firefox was a no name company attempting to make their internet browser the new Microsoft Explorer. Through the SpreadFirefox campaign, they were able to use the six pillars of a successful blog to let the internet browser spread organically through cyberspace. The success of SFX is attributed to sustainable word-of-mouth and not to buzz marketing; the difference between the two shows a marked difference between SFX and other followers that unsuccessfully tried to spread their initiatives organically as well. Companies have been made or broken in the past few years, depending on their ability (or inability) to blog.

Microsoft started a blog called Channel 9 to help humanize their big company. Channel 9 fosters a sense of community among Microsoft employees and customers alike, and encourages an ongoing conversation and a collaborative wiki that users can participate in. This discussion forum model has been extremely popular, with all sorts of users participating on the website. The most successful blogs seem to be those that deliver information to consumers, while also allowing customers to contribute to the conversation. This allows for a dynamic exchange and sets a platform for feedback and support. As Ben McConnell and Jackie Huba discuss in Citizen Marketers, it is this exchange between the company and the consumers that generates the power and importance of citizen marketers.

CEO blogging has also flourished in the past few years. Corporate blogging is the pipeline of success between a company and their consumer. Companies from GM to Whole Foods have all actively engaged in this level of blogging by putting their CEOs at the forefront of their image. CEO blogs are the closest that people will get to seeing the face of the company–the importance of corporate blogs shouldn’t go unnoticed.

There are so many aspects to business blogs–whether it’s a CEO blogging about the daily goings on of a company, the spread of new initiatives and ideas through viral blogging, or creating a platform for developers, employees, and consumers to get together, business blogging has proved that communication is a two way street.

It seems like everybody is a blogger these days. With so many citizen journalists online, PR professionals have to cooperate with bloggers more than ever before. Building long lasting relationships with journalists is still important, but building those same relationships with bloggers is just as vital to a PR campaign. So many people check out blogs every day, so it’s crucial to get news about a product and company into the hands of those avid bloggers.

Pitching bloggers doesn’t differ too much compared to pitching the traditional forms of media. The key to establishing these relationships with bloggers is to be casual yet professional. Understanding the landscape of the blogosphere will help PR pros build those solid relationships, while continual interaction with the bloggers—whether you have a story coming out or not—will ensure that the relationship has been cultivated and secured.

Nikon D80

Nikon took an interesting approach when they wanted to gain media attention for their product, Nikon D80. According to Jaffe‘s blog, “this has been the best example of blogger outreach I have either experienced (first hand) or read about.” Nikon originally sent a bunch of Nikon D80 cameras to Flickr users and emphasized consumer generated content (CGC). The pictures were then used in a three page spread in BusinessWeek (among other pubs and mags).

Engaging the consumer obviously paid off, and Nikon followed up by giving the camera to fifty bloggers. Jeffe argues that this act “helps continue to legitimize the blogosphere and the new influencers.” With minimal effort, Nikon successfully participated in rebranding their camera and their overall image. The distribution of their cameras encouraged recipients to take pictures and share their experiences online.

Nikon benefited from this project because they made their product relevant to the consumer—and to the blogger. By reaching out to 50 influential bloggers (instead of journalists), they were setting a standard for this new type of blogger/marketing/PR relationship. Nikon has made known their blogger outreach efforts, and are therefore being heralded for trying out new ground with their product. Unlike the Edelman and Microsoft partnership before it, Nikon and MWW Group made sure they understood the blogosphere by first testing out their trial on the Flickr users.

Nikon was sure to cover any and all ground:

“…The only request we have of you is that you please make sure that, if you choose to write about the camera, you make it clear how you got it. We would never ask you to cross any ethical lines, so openness and honesty on all our parts is in everyone’s best interest.

The camera is essentially being loaned to you for six months at which point you have three options:

1. Return it to us
2. Re-up for another six month loan period, or
3. Buy the camera at a significantly reduced editorial discount.

Should you opt for #1 or #3, the camera or the purchase price will then be donated to a photography education program that Nikon supports. That’s it.” (retrieved from http://www.whatsnextblog.com).

Nikon wanted the camera to do its own advertising once it was in the hands of bloggers. This marketing approach may have gained more attention than the actual product– which will inevitably lead to more interest about the product. These bloggers have become brand ambassadors for the program, whether they choose to blog about the product or not. Other companies and PR/marketing professionals can learn a a lot about blogger outreach from this program—the number one rule being: know the blogosphere and you’ll know your audience.

If business ethics refers to the goings on in the typical corporate world of cubicles and corner offices, where do we extend the practice to the online world?

It’s pretty ironic that Whole Foods—a brand synonymous with organic and wholesome foods and general “goodness”—would be the latest topic of an online business ethics debate. From 1999-2006, Whole Foods’ CEO John Mackey used a pseudonym in which he bashed Wild Oats, a competitor, on Yahoo!’s finance message board. Whole Foods has recently proposed to acquire Wild Oats, which has caused the message board scandal to come to light.

Was this Mackey’s way to boost his own brand, or are we dealing with deeper issues of business ethics? WOMMA, or the Word of Mouth Marketing Association, clearly dictates a cut and dry philosophy when it comes to blogging and online word of mouth. While Mackey’s comments were not necessarily “blog posts”, they still fall under the guideline of online communication and general word of mouth information. In fact, Mackey clearly violates the second rule of ethics on WOMMA’s website: “I will fully disclose who I am and who I work for (my identity and affiliations) from the very first encounter when communicating with bloggers or commenting on blogs.” WOMMA suggests configuring an ethics code that follows a basic business model of ethics.

It’s hard to think that Mackey was just trying to champion his own product, when his motives seem remarkably evident. Coming down on Wild Oats in an effort to lower their profits for an inevitable buy out violates all sorts of business ethics—whether online or off. Mackey obviously attempted to capitalize on the online world to maximize his company’s image and promote their products; in doing so, he violated a very simple code of ethics.

Despite what Mackey says did or did not happen (that he wasn’t representing the company, that he was sometimes playing the devil’s advocate, blah blah blah…) the entire situation raises the bigger issue of business ethics online. This crisis demonstrates the sheer ease with which anybody can create aliases and personas (if Second Life wasn’t already a bizarre indicator of that). As The New York Times put it “On the Internet nobody knows you’re a dog — or the chief executive of a Fortune 500 company.” But with this anonymity, where do ethics come in? With so many companies reaching out online to their potential consumers, it is crucial to perfect this new kind of Business Ethics 2.0.