Marketing in the Age of Fragmentation Mapping Digital Marketing Media and What can we learn from an Youtube/ebay/Facebook world?
Monetizing Youtube • FROM A MARKETING PERSPECTIVE: • What did Youtube revolutionize? • How could we justify the value the market placed on the company after only 18 months? • What do you think of Google’s strategy to monetize the service? • Give other examples of companies that have been successful with the “youtube model”?
Now the Goldcorp Challenge • form two groups of 3 and 4. • 1) Describe McEwen's problem and strategic issue. • 2) Analyze the challenge for reaching Goldcorp's strategic objective. • 3) Based on your knowledge from other industries and Chui et al.’s points, recommend a course of action for McEwen.
21ST Century Marketing Challenges • FRAGMENTATION!! • Attention • Demand • Community and Communication
Attention Economy • Fragmented media • Consumers tuning out or completely skipping messages • 61% of consumers say that marketers and advertisers do not treat them with respect • 69% are interested in products or services that would help them skip or block advertising • Poor Information/Metrics on effectiveness
Long Tail (Chris Anderson) • Fragmented Demand • Niches are Riches
What is “Natural Demand”? • The “Head” of the Demand Curve: • Pre-Internet, old economy firms turned out a small number of “hits” or blockbuster products • The “Tail” of the Demand Curve: • Internet-era, new economy firms offer a broader range of niche products.
The Head • Prior to the Internet, production, distribution, and consumption focused on a few hits because of scarcity of resources: • there simply was not enough time, space, or money for businesses to offer everything for everybody. • The 80/20 rule was the dominant model—20 percent of a business’s products accounted for 80 percent of its sales (and usually 100 percent of its profits).
The Long Tail • In markets where technology dramatically reduces the costs of reaching niches through one or more of these powerful forces: • democratizing the tools of production greatly expands the universe of content • democratizing distribution greatly reduces the costs of consumption • connecting supply and demand by lowering search costs of finding niche content drives demand down the tail. • But how do you lower the search costs?
The Long Tail • In the long tail model, these forces allow online businesses to greatly increase the variety of their products. • Anderson argues that 98 percent of a long tail business’s products sell at least one unit in a quarter • on a cumulative basis, these small numbers of sales of large numbers of niche products generate enormous revenues and profits.
Is there a Long Tail? • www.rogerebert.com hosts more than ten thousand reviews and its Web traffic statistics show that even the most popular film represents less than 1 percent of their business. • In June 15, 2006, "The Da Vinci Code" and "Brokeback Mountain" were tied at 0.8 % of page views • the next most requested reviews in 2006 were for "V for Vendetta" (0.7) • "X-Men: The Last Stand" (0.6) • "An Inconvenient Truth" (0.5). The lesson: People are curious about a lot of different movies."
Is there a Long Tail? • The Long Tail of Holiday Music. • eMusic had 1,226 holiday albums in the catalog • 1,128 had been downloaded over the Christmas season. • That's 92% of the catalog! Source: Digital Audio Insider, 2007
To Summarize: • In virtually all markets, there are far more niche goods than hits • The cost of reaching those niches is now falling dramatically. • Simply offering more variety does not shift demand by itself. Consumers must be given ways to find niches that suit their particular needs and interests. A range of tools and techniques—from recommendations to rankings—are effective at doing this.
To summarize con’d • Once there’s massively expanded variety and the filters to sort through it, the demand curve flattens. There are still hits and niches, but the hits are relatively less popular and the niches relatively more so. • All the niches add up. Although none sell in huge numbers, there are so many niche products that collectively they can comprise a market rivaling the hits. • Once all of this is in place, the natural shape of demand is revealed. That shape is far less hit-driven than we have been led to believe.