Yesterday, I had the honor of being part of the Privacy Roundtable put on by the Federal Trade Commission, held at the University of California at Berkeley.  The other 6 panelists were Chris Conley from the ACLU, Tim Sparapani of Facebook, Nicole Wong of Google, Erika Rottenberg of LinkedIn, Lillie Conley of the Electronic Privacy Information Center, and Ian Costello of Living Social. I want to thank Peder Magee and Michelle Rosenthal of the FTC for inviting me to be part of this esteemed audience.

Highlights and personal observations:

• To what degree is privacy an issue and what role should regulation have?  Google, LinkedIn, and Facebook echoed a similar response that users are, for the most part, quite savvy.  ”Users trust us” and because of that fact, they feel safe to share their lives with their friends and community. “And we trust them”, by allowing communication to flow relatively freely and to not have a heavy hand in regulation.  Technology changes so fast that it’s difficult to write rules that would inadvertently cause friction, since “data is the lifeblood of social networks”.
• Portability is key: Nicole mentioned that Google engineers have a penchant for starting their own movements– and one of them is the “Data Liberation Front”, where they want to allow users to be able to migrate or remove their data freely if they so chose.  Of the couple dozen services that Google offers, the majority of them do allow you to leave freely and easily.  For example, you can export all your gmail and relationships and move to a competing service.  Users knowing they can leave freely at any time, as opposed to having to act on it, has been important to transparency and growth of their services. Erika of LinkedIn and Tim of Facebook noted that there are many social networks– the bar for entry is low and users can pick up their data and go.
• “We absolutely compete on privacy“: There are dozens of social networks and search engines out there and the leaders are those that maintain user trust. Google has cross-functional privacy teams that meet regularly to review issues and ways to give more control to users. At the same time, implementing fine-grained privacy controls is difficult– to allow users to place their friends into groups and even place sharing rules at the individual message level is an engineering challenge.  
• No one size fits all: It’s nearly impossible to set smart defaults on what data is shared with whom. Chris Conley of the ACLU noted that a gay student was outed when friends in his hometown discovered that he was a fan of a GLBT page on Facebook.  As an aside, the relationships between people are so powerful that we can predict who you are just by knowing what your friends like and do– we don’t need to know much about you. 
• A free model creates incentives for advertising abuse: Third party developers often have to choose between playing by the rules or maximizing their earnings. There is certainly a trade-off.  This trade-off exists for the social networks themselves, too, as they do not charge a monthly membership fee (LinkedIn being an exception).  Yet, market forces encourage playing by the rules in the long run, since short term abuse by running deceptive ads will hamper long-term growth, as this Dennis Yu guest post details.  The crowdsourced feedback model, where users can report bad behavior, helps create a self-policing system.

I’m excited to see how regulation adapts to the growth of publicly shared data across an increasing number of devices.  Certainly, privacy is not “dead”, nor can it be unilaterally and suddenly be stripped away from hundreds of millions of users. The problem with regulation is that it applies not just to the bad actors hiding in the shadows, but also to the good guys.  And abuse may not necessarily be of malicious intent. Should there be sufficient examples of unintentional sharing– perhaps a senior citizen’s health records are accidentally revealed because a mobile app accesses that information on this person’s phone or a woman’s child is publicly revealed to be autistic– and we’ll potentially have laws like HIPAA come down.  Lack of harmonization across countries on privacy laws makes this even more complex.

I concluded in my final remarks that oftentimes regulation as a solution is a blunt tool– like trying to fix a broken watch with a sledgehammer.  Education is the right answer, as that will help minors and adults alike in being able to protect themselves.

I went through the trouble of clicking on the ad and installing the app so that you don’t have to (lot of work, I know).  Just print out this coupon and redeem it by January 31st to get a free bagel and shmear.  Better yet, print out 10 of these and share with your friends.  No catch and no purchase necessary.  Who says there’s no free lunch– I mean, bagel.  

If you like this, tell them BlitzLocal sent you!

An article in MediaPost today highlights why few companies are delivering upon their loyalty programs. In a nutshell, consumers want personalized rewards, whether it be through their grocery store cards, airline frequent flyer program, or other points-based system.  But marketing departments are not able to personalize because they are unable to collect the data needed to personalize offers and internal organizational hurdles prevent companies from unifying their data across multiple silos.

I was fortunate to spend a few years at American Airlines to perform analysis on the AAdvantage program– to learn firsthand how the granddaddy of loyalty programs operated. Some challenges and how we overcame them:

Incomplete customer data
The website, reservations deck and gate agents all had separate customer databases. If you were a smart customer, you could complain at all three locations and earn triple the points. So if a bag supposedly fell on your head from opening the overhead bin, you could get miles for the inconvenience and the agents at the airport, on the phone, and from the website wouldn’t know that you were already compensated. 

The solution– create a unified customer database. This is quite expensive, has political issues to solve, but is well worth the effort.  When you can create a single view of the customer’s activity, you can measure their overall profitability and create programs to incent the right kind of behavior.

Mass blasting (spamming) customers

Email marketing is so easy and inexpensive that SVPs of Marketing are tempted to spam customers.  After all, if sales increased from changing the newsletter frequency from monthly to twice a month, why not weekly? We’ve seen this approach taken at a number of large brands.  Not only is this a customer turn-off, but goes against the whole point of offering personalized offers that are most appealing to where a customer is in your lifecycle and their stated preferences.   Part of status is being remembered for your particular likes (mints on your pillow and extra towels, if you’re a hotel customer), not to get the same message delivered to everybody.

The data crypt

What used to be called a data warehouse, then later called a datamart, then called business intelligence, then enterprise analytics is really just the same thing with a new name each time. Even if you can embark on a $20 million project to consolidate customer data into one spot, the bigger issue is actually getting it out.  Most marketing managers believe they have to speak a special prayer to the high priests of IT to be granted access to the database. The inability to easily access the data– no matter what expensive analytics tool you might have bought– prevents marketing manager from being able to do the analysis necessary to create a tailored menu of rules. Without a menu of actions and corresponding points, and then being able to adjust payouts based on what’s working, a loyalty program bleeds.  And the more data you have in your scoring model, the complex it is to calculate status, as you’re dealing with an increasing number of empty fields for variables and bad data.  So perhaps you were able to get a data append from a third party– let’s say Acxiom– and now you have gender, income, and the type of car they drive.  How is that affecting the ways to earn and burn points in your loyalty program?

IT doing Marketing and Marketing doing IT

Managing a loyalty program is really an exercise in user psychology, but which requires some technical execution.  You’re really looking at video game design and trying to influence their behavior.  An average IT administrator is not going to understand this, nor is a traditional brand marketer that has done media buys for 20 years. If you have a loyalty program in-house, ask yourself who is running it?  

The answer is finding folks who are well-versed in data analysis (crunching SQL statements in the database) and also understand user psychology.  Writing SQL is for engineers, you say?  Look at Amazon, where they require marketing managers to know how to query a database.  It’s not that hard.  How are you going to structure and adjust rules for earning and burning points by customer segments if you’re not able to go in there and hands-on be able to run reports? 

Summary– the weakest link

Well there you have it– all it takes is one break in the chain and your loyalty program has a problem.  If you aren’t able to collect user data– transactions and preferences, you can’t create personalized offers. If your marketing people can’t properly access the data, that expensive database just sits there. If you have the wrong people trying to solve the problem, it’s a guy with a hammer who thinks everything looks like a nail.

I’d say that brands would be well-served to hire folks from Nintendo, Blizzard, and other companies in the gaming industry to help revamp their loyalty programs. This is nothing more than a video game.

Gather some interesting statistics and then make a chart out of it– and you’ve got yourself an Infographic.  Examples are showing a map of the world and income for each country displayed by green bars.  Or perhaps it’s the price of gasoline over the last 2 years graphed against milk prices to show some interesting trend.  The goal of an InfoGraphic is to visually stimulate people with statistics and get them to tell their friends or blog about it.  A few days ago, I saw an InfoGraphic showing the percentage of times people tweet after having sex. Certainly that drew some attention, although I’m not sure how accurate their methodology is.  It’s not as if you can set up hidden cameras in bedrooms across the world to measure this.  The percentage is 36% in that study, by the way, if you’re wondering.

There are 4 steps to getting this done:

1. Get the raw data-- some folks will do a survey, which is easy enough to do via Facebook and twitter.  Just do a web search and you’ll see a number of sites that allow you to create free or inexpensive polls. The plus– polls are easy and you can get data fast.  The cons– massive sampling bias, as you’re not getting a random sample, plus your sample size is likely too small to have statistical significance.  The best results are where you can scrape from a large dataset– but this may require you to spend money to get that data via a gnip, addtoit, or other service. Some are free and some require no programming.
2. Crunch it– slice, dice, and manipulate the data.  Some Excel wizardry– or SQL queries if you have a larger data set and need to load it into a database– and you have your aggregates.  Group by keyword, geography, type of user, or other attribute.
3. Make an image-- Easiest and most common tactic is to do a map overlay. For example, look at the beer drinkers in America by state.  Or you can do something silly, such as The Onion’s mockery of MySpace’s privacy. Not a great designer?  Just find someone on rentacoder or odesk for $100, telling them what imagery to imitate.  If you’re doing an Infographic on how many cups of coffee Americans drink, broken out by state.
4. Promote the heck out of it: If you’ve done the previous 3 steps right, you’ll go viral. Make sure that nobody can nail you on poor methodology– bad sampling, incorrect assumptions, or other flaws in your research. Blog about it, get your friends to Digg it, post it on your Facebook and Twitter.  A good headline here can make or break the result. 

If you generate enough controversy or have something hilarious and/or interesting, then watch this go viral– and the links to your site will start flowing.  Brent Csutoras, the best social media linkbuilder on the planet (in my opinion), told me that he can sometimes get tens of thousands of links from a single post.  That includes a smattering of PR7 and PR8 links– if you hit a home run. But perhaps a typical viral campaign will generate just a few hundred links– you never really know. 

Now compare those results against trying to buy links or reaching out to bloggers one at a time. Even if you could buy links without getting in trouble, what would the comparable cost be?  Matt Cutts, the Google spokesperson for SEO, says that this link building methodology is completely white hat and legitimate.

So what are you waiting for?  What interesting factoids and tidbits can you assemble for the website that you’re trying to promote?

Here is an article from TechCrunch showing Sully’s crash-landed plane in the Hudson.  Above it is an ad for United Airlines, which shares a miles program with US Air.  Is that good ad targeting or perhaps not?

If you’re a stay at home parent, your job options are typically quite limited.  There are a range of multi-level marketing opportunities,  get rich quick schemes, insourced call centers, and general selling of questionable products. But a few major trends have converged:

• In the last year, we’ve seen stay at home moms become addicted online gamers, playing daily for hours a day.
• Mobile has become huge– look at Google’s acquisition of AdMob and the rise of FourSquare and Gowalla.
• Social networks such as Facebook comprise up to 25% of pageviews in the United States.
• Small businesses are fleeing the yellow pages and moving ad budgets online.

Thus, the confluence of local, social, and mobile is a “perfect storm” for stay at home parents to service this flood of small businesses. The tightened economy has accelerated this shift, as businesses are scrutinizing their dollars more carefully. The lower cost of getting online and tools that provide more effective advertising further the trend.

And moms are going to be there to benefit from this. To serve local businesses, you need local resellers.  And those folks– the hidden army of local entrepreneurs– are already in their communities.  They will be more effective at selling and servicing the people they already know and trust.  Would you rather buy from a hard pressure sales guy calling from a NYC boiler room or from the person your kids have known for years and lives next door?

Add to that the fact that small businesses are starting to demand transparency, and you have stay at home moms that can show how much business their online marketing efforts are driving.  If you’re a business owner and your analyst can show you what you spent (down to the keyword and click), as well as how many calls it drove (down to the actual recording of the call), how can you argue the ROI versus another form of advertising?

In a few weeks, the folks at BlitzLocal will be unveiling the new Blitzlocal platform.  Yes, it slices, dices, and chops– but more importantly, it’s a user-friendly interface that nearly anyone can use.  If you can play Farmville, you can play BlitzVille– the game is slightly different, plus you earn real dollars instead of virtual ones.

If you are a stay at home mom, stay at home dad, or someone who is looking for a bit of extra income, shoot me an email at dennis@blitzlocal.com and you can get on the waiting list.  

In the last couple months, we’ve been testing with some alpha users of our system and I’m quite impressed with the results.  A lot of people said that having an external analyst force was not as reliable as having an internal sales force that bangs on the phones. Others said that it was impossible to find folks who could both sell and service clients– that the operational efficiency of having one contact was a cost savings not possible.  And most folks said that our model of being transparent with our pricing and actual spend (we spend 70% of every dollar we collect) was suicide, since the other guys spend half that and are able to maintain a healthy margin.

Well, it’s good to know that we have some early success here– that you can find those eager, dedicated moms out there that might not initially know much about SEO, PPC, or any of those acronyms. They have kids to take care of and other responsibilities, so they’ll put forth great effort.  If you believe in them and also give them the right systems, they can succeed and place the high dollar consultants to shame.  What a way to root for the little guy (or girl)!  Our experience so far has affirmed my belief in the goodness of humanity– that success is possible for anyone given the right attitude and effort.

I stopped in at a Jack in the Box today and noticed no employees at the register.  Customers were ordering through a kiosk.  This beautiful touch-screen marvel spoke in English and Spanish and upsold you at every turn– would you like bacon on that?  How about upgrading to a large?  Just a little more for seasoned fries! 

A couple hours ago, I had a similar experience checking in at the airport– except I had to swipe my credit card first and then they asked if I wanted to upgrade to first class.  Same thing at the supermarket, where they eliminate clerks (who aren’t going to reliably and aggressively upsell every customer in that cheery voice), but also will tell you that there’s an unexpected item in the bagging area.

  If you’re at least in your 30s or have watched older cartoons, you might remember the Jetsons.  They had a touch screen display where the family could order dinner items, too. To make the analogy complete, Jack in the Box would merely have to automate the back of the store, too– to have a factory method as efficient as Toyota making Camrys with robotic precision.

Trouble is, as great as this utopia sounds (if you’re a fan of Deming or other efficiency gurus), in practice, it’s not so simple. The fellow ordering above tried to order a value meal no less than 4 times– not being able to navigate the menus and submenus and finally giving up.  It’s not easy for everyone, even with picture menus.  Sometimes you just need a human involved.

But in the long run, I believe that social game dynamics will simplify a complex process, whether it’s buying a hamburger, checking in at an airport, getting your annual physical at the hospital, or configuring your local search campaigns. Games and points will make complex processes easier, especially those that don’t appear to have video game dynamics at first thought.

Watch the gaming models permeate nonprofit fundraising, factory methods– or maybe even serious stuff such as CPR training.  Do you remember when McDonalds first implemented those timers next to each cash register, so that everyone could plainly see how many seconds the average order was per cashier?  You’ve taken a mundane, hourly job and turned it into a video game because now there’s a score.  No other process improvements or bonuses for better service– there’s just an added element of measurement. And that’s enough.  Imagine adding a timer next to airport check-in counters. Think it would work?

Any system or set of processes is really nothing more than a video game– as it contains a series of rules with rewards and punishment, with accompanying stimulation. A Las Vegas slot machine is nothing more than a malfunctioning ATM.  That blue collar timecard punch clock is the most boring video game ever— as it doesn’t blink, make satisfying sounds, or dump coins into the collection tray in exchange for good work.  

Is there something in your business or your life that can be made more pleasurable or efficient by re-evaluating it from the lens of game dynamics?

Want to know what’s one of the hottest areas in local?  Medical marijuana dispensaries.  I read in today’s Denver Post that dispensaries are popping up everywhere. The license fee is only $3,000 and there is no cap on the number of dispensaries that can open.  This land grab is a result of Amendment 20, passed a decade ago.  

So if you want Denver medical marijuana, it’s easy. You can fill out your forms online and even have your pot delivered to you.– maybe they’ll have a 30 minute guarantee to see if it can beat the Dominos guy.  And there’s even a referral program, where you earn free pot for referring friends– no limit on referrals either. I don’t see this program being a part of Commission Junction or Affiliate.com anytime soon, but you do have to consider what the economic impacts of this are.

The fact that there’s no limit in Colorado on how many dispensary licenses can be granted is in favor of the consumer– there is more competition.  However, should there be a price war, it would cause a shift in the illegal market for marijuana, forcing drug dealers to get licenses and, in effect, legalizing the sale of marijuana.  One dispensary even has a low price marijuana guarantee.  Not sure how that works– perhaps you have to bring in a coupon from a competitor or a note from the guy on the street corner?

And what about advertising?  Will all these new businesses advertise on “pot” versus “marijuana”, since most stoners can’t spell properly?  I can just imagine all the people shopping for pots and pans now seeing a sale on pot– but not getting what they expected.  It’s just like my friend who wanted to buy sporting goods at Dicks and typed in dicks.com– oops.

What’s also interesting is that the $3,000 annual license fee was set based on what they charge Denver strip clubs– which maybe says something about their feelings toward this type of business.  And the requirements for getting a license are somewhat loose– you can’t have a criminal record and also have to be of good “moral character”.  At least folks can’t open dispensaries within 1,000 feet of a school or daycare– else the city I love is quickly going to pot.

Update: In 2008, the Colorado Department of Health processed 5,000 new medical marijuana cards– and it took them 10 days to process cards.  In just this past week, they have received 1,800 applications and are now backed up to 12 weeks to process card.  It would appear that something is out of control. Are there really that many more people suffering from cancer, AIDS, or another type ailment?

On November 4th, 2009, the new Facebook promotional guidelines took effect with little notice.  Whether you’re selling Maggianos or marijuana, the rules have a major impact on you and are strict.  For example:

• You can’t require the user to post, friend, or comment as part of being entered into your contest.
• You can’t notify winners via Facebook’s platform– comments, posts, email, whatever.
• You have to even place this specific text as part of your promotion:
  • “This promotion is in no way sponsored, endorsed or administered by, or associated with, Facebook. You understand that you are providing your information to [recipient(s) of information] and not to Facebook. The information you provide will only be used for [disclose any way that you plan to use the user's information].”
• You can’t mention Facebook anywhere, as people may easily be confused into thinking that Facebook is sponsoring it.
• You have to get written approval from Facebook at least 7 days before you run a contest.

I’m paraphrasing here, so you should read the whole article in its entirety itself.  It’s well-written and clear.  Most of the brands I see running promotions and contests on Facebook are breaking these rules. Now let’s see whether Facebook actually enforces these rules.  If the past history is an indicator, Facebook writes policy more to allow enforcement against the bad actors, than to try to bust anyone that may run afoul, but doing so in a non-spammy way.

Confused by these changes?  Need help from a Facebook advertising agency?  We might be able to help.

If local advertising companies aren’t already quaking in their boots with Google’s recent blitz of new enhancements in local– Place Pages, Favorite Places, Caffeine, ad extensions, sitelinks, Fixed Fee Listings (yes, the beta was over due to poor performance), and so forth.  

We’ve known for a few months that you can do Pay Per Call on Google AdWords.  You merely set up a mobile PPC campaign targeting anything but phones that have rich web experiences– so basically anything but an iphone.  And then you can specify a phone number instead of a url.  Thus, a click is a call– and now you’re doing Pay Per Call.

Today, Google AdWords Support sent out a blast email saying that your phone number can appear in your mobile ad on full web browser phones– so they’re extending this feature to iphones.  Now that’s scary.

// begin AdWords letter

Dear AdWords Advertiser,

We’re pleased to announce that beginning in January, your location-specific business phone number will display alongside your destination url in ads that appear on high-end mobile devices. Users will be able to click-to-call your business just as easily as they click to visit your website. You’ll be charged for clicks to call, same as you are for clicks to visit your website.

How will phone numbers appear in my ads?

Based on the customer’s geographic location, the phone number and closest business address will appear as a fifth line of ad text when the ad appears on mobile devices with full HTML browsers (e.g. iPhone, Android, Palm WebOS).  

Where will I be able to see the results?

At launch, you’ll be able to view calls from your ads on your Campaign Summary page within AdWords from the “click type” segment option under the “Filter and Views” drop down. 

How will I be charged for phone calls I get from my ad?

The cost of a click to call your business will be the same as the cost of a click to visit your website.

What actions should I take?

If you’d like your ads to show location-specific phone numbers when displayed on mobile devices, make sure that your campaign is targeting iPhones and other mobile devices with full HTML browsers, and that you have included phone numbers with your business addresses in the locations under your Campaign settings.

If you would prefer your ads not show phone numbers, simply remove the phone number from the business listings included in your campaigns targeting mobile devices.

We hope this new feature enables you to connect more easily with your potential customers. If you have any questions or feedback, please email us at ctc-feedback@google.com. 

Sincerely,

The Google AdWords Team

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

// end Google AdWords letter

Also consider also how Google’s market share in Local has increased from 15% to 26%, making them the clear leader in local now (they weren’t last year– it was SuperPages).  See TMP Direction Media and Comscore’s findings.  

Google can easily increase their market share if they decide to force more Local 7 pack or Local N pack into the search results.  Many SEOs have lamented how soon all real estate on Google will be for sale.  Looks like Google can take a page (pun intended) from Baidu, even though Baidu is taking a page from Google and reducing the number of ads and identifying paid ads.