Technology

The Broad and the Beautiful

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It took awhile, but access to faster Internet service is finally beginning to even out across all geographic regions of the United States.

A new study on broadband growth conducted by comScore, Inc., a digital marketing intelligence firm, finds big gains for broadband in rural areas. As of the end of 2nd Quarter 2009, an estimated 75% of rural households with Internet access now have broadband service. (Rural markets are defined as those having less than 10,000 population).

Two years ago, comScore counted only 59% of rural households connected to the Internet having broadband service.

Not surprisingly, large metropolitan areas with populations over 50,000 have higher broadband penetration (92% of Internet households), but this percentage is up only a couple points in the past year.

Who’s providing these broadband services? A just released study by Leichtman Research Group found that 19 service providers account for well over 90% of the U.S. market – the largest among them being Comcast and Time Warner for cable … and AT&T and Verizon for telephone.

Indeed, some metro markets are beginning to approach broadband saturation. For instance, in the New York metropolitan area comScore finds 96% of all Internet households are using broadband. It’s 92% in Chicagoland, and nearly 90% in Philadelphia and San Francisco-Oakland-San José.

The Internet broadband penetration for the country as a whole — at nearly 70 million households now — is estimated to be over 85%, meaning that rural areas are still relatively under-served. But the differential is shrinking quickly. Chalk up yet another instance where regional differences are disappearing – thus making rural markets more attractive not just to consumers, but also for rural-based businesses and for companies that rely on far-flung employees who telecommute from home.

It makes saving money on gasoline and avoiding rush-hour traffic snarls more attractive than ever!

Click fraud: How much is really out there?

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One of the knocks against pay-per-click advertising is concern about fraudulent clicks being made on online ads that cost advertisers money and drain their account budgets needlessly. And while Google, Yahoo and various online publishers have long held that their SEM operations can detect patterns of fraud and then credit-adjust advertisers’ accounts accordingly, that hasn’t mollified the skeptics at all.

And now SEM critics have new ammunition in the form of two click fraud reports issued in July by Anchor Intelligence and Click Forensics, two of the industry’s leading traffic auditing and traffic quality management firms. Researchers at both companies have discovered that “scripted” programs that click on ads increased in volume during the second quarter of 2009.

Click Forensics estimates that the overall average click fraud rate was nearly 13% over the quarterly period. According to the firm, this also included an ominous rise in “collusion fraud” on advertising networks. That’s when publishers rotate IP addresses (botnets) to click on ads on their own sites to generate inflated commissions from unprotected ad networks. Many ad networks have difficulty differentiating these attacks from valid clicks.

Based on these results, Click Forensics estimates that the amount of money lost yearly due to click fraud exceeds $4 billion. And while a large chunk of those dollars are presumably reimbursed to advertisers in the form of discounts or rebates, it is impossible to know what portion that amount actually represents because SEM program providers don’t share that information with the outside world.

Anchor Intelligence reported even higher rates of attempted click fraud during the second quarter 2009: nearly 23%.

Where are the nefarious attacks coming from? Richard Sim, Anchor Intelligence’s vice president of product marketing, says, “Vietnam stands out in terms of the fraud as a percentage of all traffic. Nearly one out of every two clicks from Vietnam was registered as click fraud.” That’s nearly double the rate of attempted click fraud found by Anchor Intelligence for the next highest ranked countries – Canada at ~28% and the U.S. at ~26%.

What this says is that click fraud is very much with us, despite all of the best efforts that go into trying to root it out. This should be taken into consideration by advertisers when planning and executing an online advertising program. And it wouldn’t be a bad idea to factor in a 15% or 20% “degradation” factor on all advertising goals and results when evaluating clickthrough rates and calculating ROI.

The good news is that, even with this reduction factor applied, when you compare search engine advertising against alternative forms of promotion, it’s still one of the better buys in the business.

How “social” should your office environment be?

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In the early years of the Internet, companies worried about the loss of productivity if employees were tempted to surf online in amongst their work duties. There was also the issue of the “appropriateness” of the web content being viewed. In response, various web tracking capabilities were introduced that enable companies to monitor online activities on networked computers.

On the other hand, as the Internet became all-pervasive in daily life, many companies also adopted a policy of allowing a modest amount of web surfing during work breaks to allow employees to conduct personal business such as shopping and bill-paying.

Now, with the rise of social media, the whole issue has been brought to the fore once again. The proliferation of Facebook accounts in particular has resulted in a new spike of personal online activities at work. A recent study by Nucleus Research bears it out. Based on study findings, Nucleus deduces that companies allowing employee access to Facebook lose an average of 1.5% in total employee productivity. And in an era of cutthroat competition globally, 1.5% of productivity is no slouch amount.

To reach this conclusion, Nucleus Research found that slightly more than three-fourths of the employees surveyed have a Facebook account. Of those who do, nearly two-thirds admitted to accessing their account during working hours.

The average amount of time spent per day on Facebook on office time is about 15 minutes – although the study uncovered a few employees who spent upwards of two hours daily during work hours. (Shame on those employees … but shame on their employers, too, for being so utterly clueless about those employees’ behavior!)

Of course, some people’s activities on Facebook have a business purpose, don’t they? Well … it is true that some employees manage “fan” pages for their company as an adjunct of their personal Facebook account. But that shouldn’t represent more than a small portion of any firm’s workers – perhaps those in the marketing, sales, HR or shareholder relations departments.

And the Nucleus Research study findings reflect this as well, because nearly 90% of the respondents who access Facebook at work could not articulate a business justification for doing so.

Perhaps the study’s most surprising finding was the ~5% of respondents who never access Facebook anywhere but at work. What this may mean is that they built their entire Facebook profile on work-time as well. Chalk up some more wasted hours!

The Nucleus Research findings demonstrate that as time progresses and various social media platforms like Facebook and Twitter become even more pervasive communications tools for people at all levels in the organization, the old guidelines for balancing work and personal life must continue to evolve.

The kneejerk reaction is to simply block access to Facebook on all office computers. But there will always be some employees who have a legitimate business reason to be on Facebook. And then there are the the ever-growing ranks of telecommuters working offsite, who surely have access to alternate laptops or PDAs even if their company-issued equipment blocks access.

As is usually the case with situations like this, the easiest fix is sometimes not the best one. And at the end of the day, “big brotherism” could reduce employee morale even further — hardly the result one would hope for in the current difficult business climate where “improving company morale” is far more just an abstract concept in an HR textbook.

Johnson & Johnson Raises the Alarm about Counterfeiting

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Johnson & Johnson logoOne of the biggest benefits of the Internet has been the ability for consumers to research medical information for themselves. It’s not surprising that people would turn to the web for answers to health-related questions, particularly if they or a family member are suddenly faced with a serious health concern. And from WebMD to other sites, the web is full of valuable information that can increase someone’s understanding of a medical condition quickly.

Unfortunately, there’s a darker side to this, too. Medical product scammers and counterfeiters have found more than a few people online to be susceptible to their “cures.” They’ve surmised that it’s only natural for a person concerned about a medical condition or ailment to be interested in a cure – or at least to find a way to alleviate the pain and discomfort associated with it.

Because the web is global, there’s precious little any government or court jurisdiction can do to control the proliferation of counterfeit pharmaceuticals or other medical products. And the web is full of them – not simply bogus drugs but also counterfeit contact lenses, glucose strips, and a whole host of items let’s just refer to euphemistically as “virility and family planning products.”

But to do nothing isn’t a solution, either. Johnson & Johnson seems to feel this way, too, and is proposing a “Medical Device Product Protection Leadership Initiative” … and inviting other companies, including medical wholesalers, to join in the effort.

In addition, a new pharmaceutical industry initiative, dubbed “Rx-360“, is starting up. It’s focused on securing the integrity of supply chains that lead into manufacturing and packaging operations.

Will these initiatives work? Judging from the spotty success to date in curtailing the proliferation of counterfeit medical products being sold online, likely it’ll be only modestly effective at best. But since we’re dealing with potentially life-and-death matters here, any amount of increased effectiveness is highly welcome.

Surprise! Deep down, we actually like the 24/7/365 work environment.

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It’s a common gripe you hear among business professionals: The proliferation of laptop computers and mobile communication devices has contributed to a “24/7/365” work culture, making it more difficult than ever to disengage from the office and putting bigger stresses on work-life balance.

The irony, people claim, is that laptops, PDAs and other equipment which promise to improve productivity and make daily work tasks easier, have actually created more work and resulted in longer hours devoted to the job. And you can’t escape it — at home, on vacation, or wherever you are.

But now, along comes a research study that gives the lie to these assertions. Manpower firm Kelly Services has just released the results of a massive worldwide survey of ~100,000 people in the workplace. Among the survey’s findings: Three-fourths of respondents appreciate the opportunity to remain in constant contact with work – even though one-third of them report working more hours each week as a result.

And among the North American survey respondents, 64% say they’re happy with their current work-life balance, and more than half claim their productivity at work is “much better” as a result of utilizing the new technologies.

So how do we explain the difference between all the negative “cocktail chatter” we hear … and the far more positive survey responses provided when no one’s looking?

It might be because people tend to exaggerate negative opinions – especially when surrounded by spouses and friends who are more than eager to lend moral support – all the while murmuring protestations of disapproval about the “big, bad organization.”

But I think the reason for the incongruity is more basic. On a theoretical level, most of us want to preserve the boundaries between our work life and our personal life. It just seems like it’s the correct position to take on the issue. But another part of us feels a need to stay connected … to be continually “in the know” and not miss a beat — even for an hour.

Moreover, in today’s challenging employment environment, being hyper-connected and super-clued in with the company is more crucial than ever, for self-preservation if for no other reason.

Besides, when it comes to being in control, most people just like that feeling — a lot.

The single most important success factor in e-mail marketing …

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Marketers are continually looking for ways to tweak e-mail campaigns to improve their success. From direct mail tradition, we know the “list” and the “offer” are highly important success factors, followed by the creativity and appearance of the promotional piece itself.

But what’s different about e-mail marketing campaigns? Doesn’t a compelling and informative “Subject” line in the inbox also have a lot to do with their success?

Well … yes. But in field research conducted recently by Epsilon, a leading direct marketing agency and consulting firm that queried more than 600 North American respondents, the findings revealed that there’s another factor that is far more important than the “Subject” line. It’s the “From” line on the e-mail.

In fact, nearly 70% of the respondents cited the “From” line as the single most important factor determining whether or not they’ll open an e-mail message. And this figure is up from 60% in Epsilon’s 2002 survey, so the trend is clear.

By contrast, the “Subject” line is the most important factor for only about a quarter of the respondents.

What this means is that people are looking to see if they know (and trust) the sender before they do anything else … even before reading the subject line of the e-mail. Thus, a poorly performing e-mail campaign might have less to do with the campaign’s specific marketing elements than it does with the sender’s familiarity and reputation.

With groaning e-mail inboxes, is it any wonder that people are inclined to eyeball the “From” column, quickly scanning for the (few) e-mails they’ll open as opposed to the scads of other messages they’ll delete without a second thought?

In short, the “From” line offers comfort. It’s the familiarity of people they know … companies with which they have a relationship … brands that they trust.

That’s also why it’s so important for marketers to send “welcome” or “thank you” e-mails to new registrants without delay. Why risk having someone forget they signed up, and then hitting the unsubscribe button (or worse, lodging a spam complaint) when your messages hit their inbox later? That’s snatching defeat from the jaws of victory.

Where are B-to-B buyers these days? Online, of course.

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Everyone knows that online consumer sales have exploded over the past five years. But what about B-to-B customers? Where are they going when it comes to buying the products they need?

Recent market research reveals that they’re going online, too … and they’re migrating there in a hurry.

In a survey sponsored by MarketingSherpa and ZoomInfo and conducted by Enquiro, a search engine marketing and research firm, a cross-section of B-to-B respondents was asked how they prefer purchasing the items they order all the time for their businesses.

The results were a blowout: nearly two-thirds (63%) prefer to order online. The remaining respondents are divided between preferring to order over the phone and ordering in-person from a sales representative.

Faced with such an overwhelming preference for online buying, the logical follow-up question is whether B-to-B firms are focusing their tactics and allocating resources to online sales in the same proportional effort. In many cases, it’s not even close.

As often as not, B-to-B firms have treated online not as the core of their sales engine, but more like an incremental revenue channel. Frequently, e-business is treated as a separate silo. This makes it less likely for online to interfere (or otherwise cause “issues”) with traditional sales channels. But it also makes it a lot harder for online to be treated with the critical importance that it clearly deserves in today’s sales environment.

And even if B-to-B firms don’t sell directly to end-users but rely on reps, distributors or dealers instead, they need to make sure that their marketing partners are making the necessary investments in online sales functions to support those end-users.

Consider how quickly B-to-B customers have moved online — not only to research products but also to purchase them. By moving too cautiously, B-to-B firms risk being outflanked by Internet “pure plays” — some of which seemingly spring out of nowhere to achieve prominence in only a few short months or years.

To quote a phrase from a nursery rhyme, “Jack be nimble, Jack be quick …” Hopefully, you have a Jack (or Jill) in your marketing department already. Now, give them the tools and the resources to succeed.

College Textbooks: It’s Time to Throw the Book at Them

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college textbooksConsidering that the digital revolution has dramatically improved access to information pretty much across the board, while also lowering the price of delivering the content to consumers, doesn’t it seem like college textbook publishing has been operating in something of a time warp?

Anyone with kids enrolled in college in recent years (present company included) has likely been confronted by obscenely high bills for textbooks. In fact, stats reported by the U.S. Public Interest Research Group reveal that college students spend an average of ~$900 per year on textbooks. When you consider that some courses don’t even have textbooks, the average cost for those classes that do is even higher than the overall figures would suggest.

What gives here? You can blame a number of factors. High among them are publishers that issue new editions of the same textbook every year or so; never mind the fact that 95%+ of the material is identical to prior editions. And so, perfectly good textbooks that could be used by different students over multiple years are instead relegated to the trash or a box in the basement. Or they languish, unwanted, at the book nook at the local thrift store.

And how about publishing books using expensive and high-margin hardcover binding when soft-cover would be more than adequate? That’s a common publisher ploy.

Finally, let’s not forget the “unholy alliance” between college bookstores and book publishers to try to corner as much of the college textbook business as possible. After all, those textbook sales represent a major contributor to college store profits.

Thankfully, recent developments suggest that real alternatives for students (and their beleaguered parents) have now emerged. Some of these resources are web sites like eBay’s Half.com where students can purchase books for substantially less than the published price. Or Chegg, where students can rent the books and return them following their use. Of course, this is assuming you know the correct ISBN number of the books in question and can be sure you’re ordering the correct edition. Often, that’s not an easy feat at all based on how hard some school stores try to hide the ISBN information from purchasers.

The ISBN information will also serve you in good stead when searching for used textbooks on sites like Amazon where the ISBN numbers are included in book listings.

But beyond simply finding sites to purchase books at a cheaper price, there are new digital alternatives that are also cropping up. CourseSmart provides digital versions of textbooks that are viewable online or can be downloaded. Not only is the cost much less, but students can choose to print out texts chapter by chapter or simply keep their textbooks on their computer, leaving more space in their backpacks for more important things like electronic gadgets, food and bottled water. For now, most of the CourseSmart choices are from major publishers like McGraw-Hill and Wiley, but these offerings are sure to expand in coming years.

Another interesting development is engaging the course instructors themselves in developing custom reading materials. That’s what Flat World Knowledge is doing: It’s an open-source textbook provider that offers online books through a web-based reader, free of charge. Professors can get in on the action by customizing what’s offered to their own specific course by rearranging book chapters and removing or adding text. Not only does it make their course syllabus more user-friendly for students, it’s a labor saver for the instructors as well.

How does Flat World make money doing this? Students can pay for “premium” upgrades such as PDF printing, audio files, and interactive quizzes that are offered along with the free basic text information.

As to which of these new services will turn out to be tomorrow’s standard way of acquiring course instruction materials … who knows? But one thing’s for certain: the cost of buying textbooks won’t be nearly the monetary challenge it’s been for students and parents up til now.

Twitter’s Law of Unintended Consequences

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As I’ve outlined in a recent blog post, where Twitter has shown it has “legs” isn’t in the area most hyped by its founders.

As it turns out, “What are you doing?” hasn’t been much of a foundation for building a money-making social media platform. And in fact, the inevitable media backlash has now set in — even as the number of new Twitter users have begun to plateau and the majority of current members use the service hardly at all.

But hard on the heels of the Iranian and Moldovan unrest, in which Twitter played an important role facilitating the organizing of anti-government public demonstrations, comes another use of Twitter that few could have foreseen.

A recent article by Steven Sears in Barron’s Magazine outlines how Twitter is being used to affect the share price of stocks. According to Sears, “Before the market opens and throughout the trading day, Twitter lets you tap into market-moving news .. and link through attached URLs to more detailed analysis … You can control your information streams by deciding who to follow, and who can follow you.”

That’s hardly revolutionary behavior. But here’s the interesting part: By law, brokers must save instant messages and e-mail correspondence, but no such mandate exists for tweets on Twitter.

What this means is that some of the more sensitive information or speculation about a company makes it onto Twitter long before it’s broached elsewhere.

One example noted in the Sears article was Matrixx Initiatives, the manufacturer of Zicam nasel spray. Speculation that using Zicam might damage people’s sense of smell started to circulate on Twitter. The result? The stock price fell dramatically from $19 to $13 … and those following the news about Matrixx on Twitter were “in the know” a lot sooner than others.

So here we have yet another example of the unintended consequences of adopting new communications techniques. Twitter is effectively replacing instant messaging capabiliites — without the attendent legal paper-trail requirements.

I wonder what’s next?

Spam-a-lot? You Bet-a-lot.

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It’s no secret that corporate inboxes are stuffed with e-mail messages that are – let’s be kind here – unneeded or unwanted. And the latest report from anti-virus software maker Symantec Corporation confirms this in spades.

The report, covering April activity, claims that unsolicited e-mail makes up nearly 91% of messages on corporate networks. And it turns out this is nothing unusual, as earlier surveys have shown that spam makes up anywhere from 80% to 95% of all e-mail volume on the Internet.

So when you look at your own inbox, you might be pleased if your spam volume isn’t that high. And probably it isn’t, because corporate spam filters are blocking a big volume of e-messages before they ever hit your own inbox.

So where is all of this spam coming from? Symantec reports that nearly 60% of it comes from botnets, which are networks of hacked computers that can do all sorts of mischief – not only e-mailing spam, but also swiping financial information or launching cyber attacks. The “worst of the worst” are donbot spammers, which are computers that are available for rent on the black market. According to Symantec, those represent more than 18% of all spam e-mail volume.

But of course, nothing stays the same for long in the cyber environment. A new, even more alarming trend is being noted with an increase of non bot-driven spam. In those cases, spammers are renting legitimate network services (usually located offshore) and blasting huge amounts of spam at large individual Internet service providers. The objective is to push as many messages as possible onto the network before the ISP’s filtering software is able to detect it.

How much of this is going on? Hundreds of thousands of messages each day, and getting greater all the time.

And if that wasn’t enough, just like flies at a Fourth of July picnic, spammers have now discovered social networks, taking over an alarming number of Facebook and Twitter accounts and phishing for user passwords. These swiped passwords are then used to spam the friends of victims with obnoxious unwanted promotional mail about various products let’s just refer to euphemistically as “personal” or “intimate.” Experts say these types of attacks are particularly effective because they can’t be filtered at a corporate firewall level, and because any such message looks like it’s been sent by a friend of the recipient.

So if you’re on any of these social networking platforms, despite their apparent safety, the watchword should still be: “Caution.”