Sunday, May 20, 2012

Intent is King

When Härnu's Facebook page reached 100 Likes, Facebook offered us a $50 credit to try out Facebook ads. Now that we've dipped our toes in the water, I thought I'd share some thoughts on the experience.

Wanting to get a really firm idea of not just clicks of the ad on Facebook but actual conversion as measured by new Härnu user sign-ups, I started off with a really niche ad - For the image, I selected our logo, wrote some text in English and then targeted it to users in Norway and Sweden. I layered in some demographic constraints such as wanting to target people between 18 - 35 but that was about it. Oh, instead of having users click thru to our Facebook page, I set it up to have the ad click thru to Härnu's home page.

Well, after running it for about a week and paying $0.67 per click we didn't observe any incremental user sign-ups attributable to the ad. Next, I thought maybe I should try writing the ad in Swedish to make it feel more localized. So, I did and this time restricted the ad to just Sweden, dropping Norway (sorry Norway!). Well, in the past month, I've seen 50K impressions, 18 clicks, a clickthru rate of 0.035%, and zero incremental users attributable to the tactic.

Thinking of ways to spruce up the ad, I replaced the logo image with a screenshot, I re-wrote the ad in English trying to be more direct and impactful, and this time I targeted it to NZ, Australia, and Canada. The thinking there was that maybe it was a cultural thing and English speaking countries might be more apt to try the service out. Well, this time I've observed a click-thru rate of 0.030% and zero incremental users attributable to the tactic.

Conclusion - Facebook ads are not working for us.

I'm sure there are ways we can make this better, and for a new entity, it doesn't help having so little name recognition. However, while I'm certainly not a creative expert, we could see a 10X improvement and it'd still only be a 0.3% click-thru. I've read that average click-thru on Facebook is somewhere around 0.04% - 0.05%. Contrast that with Google AdWords average of ~2% and I'm left scratching my head asking what am I missing?

Just this week, GM decided to cut bait with paid advertising on Facebook and I have to say I can't blame them. For a while now, we've seen Sheryl Sandberg tout the virtue of brands being a part of a user's life on Facebook, while shying away from metrics like CTR, never mind conversion metrics such as sign ups or sales lift:

"Facebook executives argue that the click-through numbers are not that meaningful; they say that people remember ads better and are more likely to make purchases when their friends endorse products." - Business Week, May 2011

If Facebook, with all of the mountains of data at its disposal can't hang its hat on hard metrics, and instead has to rely on some qualitative intercept study talking about recall, then they have a huge problem.

Frankly, I've been one of those sales guys representing ad inventory (not at Facebook) that every metric suggests is not working and it's your job to torture the data and come up with a story to get brands to buy. When it's a new venture, it's easy to make claims that this is a whole new class of ad inventory, and for a while, you feel like you've convinced the brands, but eventually every publisher has its day of reckoning and if the ads aren't working, the media agencies and brands eventually figure that out.

You might still be the smartest guy in the room, but at some point it just doesn't matter anymore. Large amounts of money are being spent and brands want results. You can talk brand equity, you can talk reach, you can even put some new spin on it around building fans but it eventually has to come back to sales, and that's where Facebook is stumbling pretty hard right now in my opinion.

When I am in product research mode, I go to Google or Bing - not Facebook. I triangulate my options using search engines and may subsequently check with one or more friends if it's a big ticket item. However, Facebook is now surfacing those friend recommendations off-Facebook via Bing! In other words, what Google likes to call the Zero Moment of Truth simply never happens on Facebook.

If Facebook's future contemplates the bulk of its revenue continuing to come from ads, surely it must wrest control of those ad dollars away from Google, and it's going to have to find a way to pivot its site to capture those moments of intent.

As brands shift their perception of Facebook from newfangled thing that they're are willing to experiment with to a mature part of the ad spending eco-system, no amount of squishy story telling by its ad execs, even if (s)he's a modern-day version of Hans Christian Andersen,  is going to convince major brands that Facebook deserves to be part of its marketing mix unless it can demonstrate that those dollars are resulting in incremental behavior.

Right now, this little advertiser is not convinced. Losing GM is one thing. Losing the long-tail of advertisers would be quite another...

Tuesday, May 15, 2012

The Value of Ephemeral Connections

The big news this week is Facebook's $100B+ IPO. Some deride it as a passing fad - not much more than a glorified address book. Others see its Social Graph as the next great monopoly - a dynastic operating system of a social generation. Whatever the case, 900M users gives Facebook almost limitless options and a better than 50/50 chance of succeeding in anything it decides to pursue.

Indeed, with the recent tie up of Bing + Facebook, we're now seeing the first credible social search product. Of course, Google's been at it for a while with Search Plus Your World but it doesn't have the scale of 900M Facebook users behind it.

For example, now when I go to Bing and search for Maui hotels, I now see 3 things: 1) Organic search results - in this case shows up first; 2) Paid search - Ritz Carlton shows up top; 3) The option to ask my friends on Facebook, or alternatively, where there's a match, Bing suggests friends who may know based on Facebook profile & timeline info.

All of that taken together is much more powerful than simply a paid search result from Ritz Carlton for example, right? However, the success of Facebook enabled social search hinges on two things 1) Our continued sharing of every aspect of our life and 2) The assumption that we are like our friends.

I'm not about to argue with Harvard researchers on the first assumption. However, the second assumption suggests room for further opportunity. That is, while I of course have things in common with my friends, there also many differences - enough to suggest that simply knowing who my friends are is not always enough to infer what I'm likely to consider relevant.

So, if enduring relationships can't always guarantee relevant content, might there be value in ephemeral connections? After all, it happens all the time in the offline world - random encounters at restaurants, in bars, at the movies, in the supermarket, at the park with kids etc. result in conversations with strangers that influence whether or not you buy a product, watch that movie, or go to that bar. These are not friends in the classic sense. Rather, they're people in passing that you struck up a conversation with and trusted enough to listen to what they had to say and valued their opinion, but you're not necessarily likely to add them to your Facebook friend list any time soon.

With that in mind, social search will become much more powerful when it progresses beyond simply mining my friends' likes and comments to actually putting me in touch with potential trusted sources wherever they reside be they friend or stranger. Add in a layer of anonymity so I don't need to become Facebook friends with every ephemeral connection, and now we have a product that truly taps into the potential of the Social Graph.

That vision is very much at the forefront of where we're taking Härnu - a recognition that sometimes seeking out a stranger's opinion or getting a local's perspective can be much more valuable than those available from existing friends.

Thursday, May 3, 2012

Dispensing with Matryoshka Dolls

When we initially thought about starting Härnu, it was easy to dimensionalize the social & media landscape to fit within a construct that suggested a new service like ours needed to exist. In fact, in a burst of midnight PowerPointery, my assessment ended up looking something like this:

The point of view expressed above is not that controversial, but with the benefit of hindsight, nor is the situation quite that simple either. Basically, my initial assumptions could be summarized into the headline that we need to cut out the middle man. That is, the primary ways in which we consume media today have made us more insular, less informed, less empathetic, and big media isn't going to change any time soon.

Our goal from the beginning has been to act as an accelerant for empathy - connect people across the world in an authentic way and you can start to chip away at the biases that our media has helped reinforce. Connect people one-to-one and suddenly a like or a share is exposed as embarrassingly inadequate when trying to express solidarity for our fellow man / woman.

Basically, our solve for this was not to build out more nested Matryoshka dolls such as a mobile app on top of a social network on top of a relevance engine on top of an aggregator on top of a search engine on top of content for example, but to simply dispense with the nesting paradigm altogether - enable and encourage direct access to people in locales everywhere and anywhere. Simplify. A battle of Turkey versus Turducken if you will.

Want to know what's happening in Syria? Don't just watch CNN or read about it on [insert social network here]. Instead, actually talk to some Syrians and hear from them directly with Härnu translating all the conversations on the fly into each other's preferred language. Having done so, are you now better informed? Are you inspired to act?

Of course, not every interaction is going to result in someone taking the next plane to Damascus or lobbying the White House for action and in fact, a lot of the interactions are often seemingly mundane - where do you live?, what do you eat?, where do you work? etc. However, all of those interactions together have the capacity to add up to something more than a nanoKardashian.

So, those were the original assumptions. Now that we actually have a service out there, I've learned the following three things so far:

  1. As much as we thought we needed to make Härnu completely private to offer a level of comfort to people in countries where censorship is de rigeur, we've realized that sharing features everywhere is simply a must-have for any online community. Perhaps everyone that reads this is saying "duh idiot!" but the point is that people talk about wanting more privacy but what they really want is more control and those two terms are not the same.
  2. There's actually a lot of good content out there being produced by citizen journalists everywhere. An example would include GlobalVoices and Twitter is a great way to broadcast that content out into the Internet. However, the trick is still to close the gap between awareness and action. While tools like Twitter and Facebook enable awareness and engagement to some degree, I'd suggest that the missing link is still empathy such that the path to action looks like this: awareness-->engagement-->empathy-->action. More one-to-one conversations can balance the many-to-many speed of light content delivery and consumption tools we have out there today.
  3. There's no substitute for face to face interaction...yet! While Härnu may or may not be able to deliver on its promise of instilling empathy for other cultures in a massive way some day, the 15 minutes I spent  last week at the Seattle Globalist launch chatting with a Pakistani editor who's now a refugee, gave me enough of a jolt to realize how lucky I am to be talking about building an online service versus fleeing authorities intent on killing me because I had the temerity to speak the truth as a journalist. If our media in this country were half as brave, perhaps we'd have a press more people would be satisfied with. As it is, a lot of brainpower is being spent trying to fix it or circumvent it entirely. 
I think that part of the solution involves connecting ordinary citizens everywhere and giving them the power to triangulate multiple perspectives. I don't believe it's simply a binary choice between people versus machine-learning algorithms, but rather that in a world of filter bubbles the ability to connect to anyone anywhere as we are to our friends and family today may prove to have merit.