Brian Zafron: I Eat Web 2.0 for Breakfast

Action: Yahoo went looking for a “White Knight” to save them (all suitors listed below). They looked for a deal that would keep Yahoo in tact by either infusing cash or merging into a similar-sized company. They basically wanted a deal that didn’t involve Microsoft. However, after talks fizzled out for various reasons they decided to try and institute a defense plan. You’re probably asking yourself “how do you defend yourself from money?” Here’s the answer: by making yourself less valuable to potential suitors. So, they instituted a classic “Poison Pill” defense (a term used and coined by I-Bankers during the era of Wall Street raiders) by giving sizable pension boosts to employees and management in the case of a merger or acquisition. This essentially adds several billion to MSFTs costs if they want to proceed with the takeover.

The deal as it stands for MSFT:

Pros:

• Best of Class web properties (Yahoo, Flckr, Delicious, ect…).
• Chance to take out a long time competitor
• Good R&D
• A whole pipeline of products and services
• Top engineers
• An online presence they haven’t been able to achieve organically, even after very sizable MSN and Live campaigns.
• Save tons of money in operating costs with their new acquisition due to “synergies in operation” (ie. being able to fire everyone at Yahoo whose job already exists at Microsoft – management included).

Cons

• Have to pay for duplicate products (dozens of competing products need to be merged including Mail, IM and News)
• Big premium (40B+ is a sizable premium to pay on what Yahoo’s revenues are)
• A great deal of time/costs in combining operations from companies with very different cultures
• Layoff costs, especially after increase in pensions (“Poison Pill”)

Do you remember that feeling when you realized that Santa Claus was actually your overweight cousin or uncle? Or when you discovered that your father, your idol through infancy and childhood, was just an ordinary dude, capable of making mistakes?

I personally never believed in Santa Clause or in the perfection of my father (I was a cynical kid, I confess), but I honestly did believe Kevin Rose, the Founder of Digg, was a real-life superhero…until recently.

Rose has consistently maintained a popular ratio (percentage of articles that reach Digg’s front page) of at least 99%. Like a superhero, or at least a superhero of the Internet, he can pull a lever and initiate massive floods of traffic.

However, the recent Digg algorithm change, which is intended to create a more level playing field amongst Digg’s users, might be a mild form of kryptonite. Rose’s popular ratio has recently dipped to 98%, with four articles in the past three weeks failing to reach the front page. To give you some perspective, Rose has submitted a total of 347 articles since he birthed Digg in December 2004, and a whopping 341 of them hit FP.

So which articles have come up short? I’m glad you asked. I’ve dug them up (no pun intended) and compiled them for your curiosity and viewing pleasure. Check it:

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So what’s the deal? Why are Rose’s submissions underperforming?

Well, for one, the algorithm change seems to be making a discernible impact. It’s no longer as easy for a top Digger, like Rose, to reach the front page at will. Many armchair Digg experts and bloggers now point to the need for an increased diversity of diggs. In other words, the new algorithm puts even more weight on diggs that come from users who do not typically digg each other’s submissions. 10 diggs from strangers, for example, is more meaningful than 25 diggs from friends- now more than ever. This change displaces power from those users with tight-knit followings, often built up through track records of quality submissions.

But the algorithm encompasses more than vote diversity: the number of submissions, and the number of submissions that reach the FP, are also widely accepted as important factors. Both these numbers feed into a user’s popular ratio, which many consider to be the preeminent factor. This ratio is lowered for every submission that does not reach the front page, creating a negative snowball effect for a user who continues to submit articles that come up short. In this light, I ask the following question: is it a coincidence that Rose’s valley in FP success occurs simultaneously with a peak in the number of his submissions?

Since the algo change came into effect on January 22nd/23rd , he has submitted an uncharacteristically high 16 submissions. As JD Rucker, a popular Digger and blogger, pointed out in a recent Soshable column, “that’s more than [Rose] submitted in November and December, 2007, combined.”

Below are two graphs that illustrate Rose’s submission activity for both 2008 and 2007. Take note of the activity’s recent elevation.

Rose submitted a personal high of 22 submissions this January, closely followed by 21 subs in August of 2007 - when the algorithm change wasn’t even a bleep on anyone’s radar.

Of course, it’s possible that the only reason Rose isn’t making FP as consistently is a decline in the quality of his content, or perhaps in the gusto of his popularity. However, my bet is that the algorithm is simply leveling the playing field, exactly how Rose and his Digg homies intended.

But at the end of the day, even if Rose isn’t a superhero, he’s still pretty awesome. I mean…. he did invent Digg.

* By the way, we’re running a caption contest for the following Kevin Rose picture (courtesy of his Facebook profile). Please submit the best/funniest captions to me at brian.zafron@gmail.com, and we’ll let you know the cream of the crop next week.

[Your Caption Here]

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Not all marketing pays dividends. Here’s an example that’s bound to bring a delicious smile to your face:

Despite a jam-packed three weeks of promotion for Paris Hilton’s new film The Hottie and The Nottie, the opening weekend numbers were complete cow dung. A romantic comedy starring Hilton, Joel David Moore, and Christine Lakin, it opened Friday to $9,000 on 111 screens, or $81 per screen, according to Box Office Mojo.

For those keeping track on the Paris Hilton temperature scale, that’s NOT hot. In fact, it’s colder than a Eskimo’s refrigerator. Basically, 2-3 people were watching her film, on average, each screening. The weekend gross tumbled in at $27,000. Meanwhile, according to the New York Post, she got “paid $100K to have her 25th birthday at the Hard Rock Hotel in Vegas.” So don’t worry about the princess going broke.

The only comparable box office disaster is Jessica Simpson’s 2007 “star vehicle” Blonde Ambition, which averaged $48 per screen on a Friday opening for a total box office of $384. The film grossed $6,422 domestically before – thank God!/ at long last!/please kill me! – it came to DVD.

Paris had premiered the film in Hollywood and Dallas, appeared in Philadelphia, at Harvard University, and the Sundance Film Festival, and even shmoozed on talk shows such as the Late Show with David Letterman. And even with all that marketing effort, she still couldn’t get people to watch her movie. What did I tell ya? Marketing ain’t easy.

So what does all this mean for the old marketing adage: does sex still sell? Probably. But sometimes content gets in the way.

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“Interactive marketing is the ability to address the consumer, remember what the consumer says and address the consumer again in a way that illustrates that we remember what the consumer has told us.”- John Deighton, Harvard, 1996

With the growth of portable and on-demand technologies, marketers are forced to deal with an increasingly elusive consumer. Bombarding consumers with advertisements is unfortunately not the easy, fix-it-all solution, but rather, it makes matters worse – causing further desensitization and sometimes flat-out resentment.

The trick, evidenced by trends in marketing departments and acquisitions across the world, is including the consumer in the conversation. Here we find the most effective breed of targeted advertising – where the target is also the one taking aim. No one likes being spoken “at” or spoken “to.” Adults, children, extra-terrestrials. No one.

Take Friday’s acquisition of Hot or Not as evidence to the effectiveness of interactivity. The website’s excruciatingly simple functionality is based upon users ranking randomly selected pictures of men and women according to hotness (or notness.) The buyers are investors connected with Avid Life Media, and paid somewhere around $20 million for the site. Moreover, Hot or Not has spurred many generations of knock-offs, most recently Web Hot or Not, created by Technorati founder, David Sifry.

Interactivity is even bleeding into Superbowl commercials. (Click here to watch dem suckers). Sit tight, and let me hit you with some examples:

• The cute girl who sang “Message From Your Heart” in the Doritos spot was featured because she won an online, consumer-generated video content.
• Tide’s talking stain commercial, promoting the Tide Pen, called upon consumers to participate online by sharing their own stories.
• GoDaddy’s spot showed someone at a Super Bowl party visiting their website in order to see content that could not be shown on TV, a subtle little invitation to do likewise. The result: GoDaddy turned a 30 second TV spot into a significantly more lengthy engagement. They recorded a half-million site visitors in the first 30 minutes after the spot, with traffic up 2,434 percent compared to last year’s Super Bowl.

So what does all this mean for marketers? Well, it’s simple: engage the consumer. How? Well, that’s a bit more complicated.

Check back for tomorrow’s article: “10 Outrageously Helpful Tips To Succeed At Interactive Marketing”

www.brianzafron.com/blog/2007/02/12/Interactive-Marketing-Is-The-Tsunami-Of-The-Future:-Take-Shelter! 

How Important is Kindness to Success?

Let’s face it: the world is full of jerks.

Everywhere we go, online and offline, we encounter people who are solely looking out for their personal interests, immune to the emotional fluctuations of strangers, friends, and sometimes, even family.

From an intuitive standpoint, it seems obvious that jerks are putting themselves at a disadvantage. For every bridge they burn, every person they piss off, they are making their future successes all that much more difficult to achieve… right?

Well, in a word, or two words if you’ll be so kind, not always.

Some people, whether consciously or not, are attracted to jerks. You know that really hot, blonde girl in high school who, by some miracle, also happened to have a charming personality? Guess what? She still only dates jocks with egos bigger than their BMWs.

To take a more concrete example, look at Alec Baldwin. The star of NBC’s comedy series “30 Rock” was widely criticized after the abusive tirade he left on his eleven year old daughter’s voicemail, which was subsequently leaked onto TMZ.com. (As if it wasn’t enough that he and Kim Basinger named the girl “Ireland.”)

However, the underappreciated “30 Rock” experienced a tremendous onslaught of recognition within the following months, including 10 Golden Globe nominations, including one for best actor, the certified jerk, Alec Baldwin. Many in Hollywood questioned the future of the foul-mouthed star, particularly after he parted ways with CAA (Creative Artists Agency), his rep for the previous 30 years, but his immediate future, we now know, turned out to brighter than ever imaginable.

Want some other examples of jerks being rewarded for their jerkiness? Well, here you go: Donald Trump, Howard Stern, and Hillary Clinton, all of whom, by no inexplicable coincidence, reside at the very top of their respective industries. (C’mon. Even if you support Clinton, you must at least sense she’s a jerk.) By the way, the vast majority of Hollywood’s A-list agents and managers could be included on this list.

So what now? Does this mean I’m going to start behaving like a complete jerk? Quite the opposite actually.

This past week, I read an article by an up and coming blogger named Tina Su, the inspiration for this post you are currently reading. She runs a site called ThinkSimpleNow, which, in the span of three months, went from zero to over two thousand subscribers. Not too shabby. (Before I proceed, let me shout out to Jeff, my buddy who pointed me in Tina’s direction.)

Aside from quality content and intelligent marketing, the secret to Tina’s success is that she’s a tremendously nice person. Now, I don’t know Tina personally, but I could quickly discern that she genuinely cares about her readers. Here’s a quote from last week’s article:

“Connecting with readers and potential readers is an essential part of my blogging success. Not only does it help my blog grow, but I absolutely love it. I have made many good friends this way. When people like you and feel that your content is valuable, they will tell their friends about it. I quickly discovered that many of my readers were emailing links to others, and referring many new subscribers.”

So what’s the difference between Tina and Trump, Stern, and Clinton? Why is she successful due to her kindness whereas the others are successful without any whatsoever? (Just roll with me Clinton fans.)

Well, to be honest, I can’t say for certain, but here’s my best guess: the medium.

The Internet, and blogging in particular, holds people accountable in a fashion that is both direct and immediate. If I’m pissed at a blogger, for example, I can write him/her a nasty email and stop reading his/her garbage. But if I’m feeling frisky, I could post a nasty article on Digg, Stumbleupon, and Reddit and form a movement that causes others to stop reading his/her garbage, as well. Now, that’s powerful.

Certainly, any person could form - and has formed - such a movement related to the Trumps, Sterns, and Clintons of the world, but the users that comprise the blogging community are already exceptionally integrated and technologically savvy, therein increasing their chances of creating a discernable impact. Additionally, as a newcomer to the world of blogging, one can only sustain a limited amount of negative buzz.

Like a true jerk, I now ask myself: what does all this information mean for me?

For one, I’m going to be sure I’m not a jerk.

Secondly, I’m going to make a commitment to respond to any and every email that you guys send my way. Moreover, I would like to strongly encourage you send me emails because I would like to get to know you as much as possible. Ask me for advice, an opinion, a favor, or even a date. Whatever. Just email me.

By tonight, there’ll be an easy “contact” link on the homepage.

Thirdly, I’m going to get some dinner. I know dinner has nothing to do with being/not being a jerk, but I’m hungry, and I’m tired of writing.

http://brianzafron.com/blog/?p=23