Phorm Town Meeting

By the end of Phorm's "2nd Town Hall Meeting" it became obvious that the company is still trying to launch a product with both hands tied behind its back.

It's structure means that Phorm's online behavioural advertising service will only be successful if internet service providers implement it, then successfully market it to individual users, advertisers and web site owners. At that point, the company says, advertisers will experience less wastage in advertising spend, content owners will find it easier to monetise content, web site owners can charge more for space, and end-users will see more relevant ads as they browse.

Exactly what this means in commercial terms is naturally unclear. And Phorm rightly points out that it would be wrong for it to release the details of ISPs' trials or take-up incentives likely to be offered to ISPs' customers, at least until the ISPs are good.. and... ready..... to...... launch....... After 7 years of development, Phorm says it has learned to be patient - a revolution in the internet space.

It seems fairly pointless to have public meetings to talk about offering "choice" when you have no product in the market and the meat of your proposition is under wraps for commercial or regulatory reasons. Nevertheless, Phorm chose the opportunity to engage in further damage limitation on the privacy front and to set the commercial context for its service with a rundown on the online advertisting market.

All the legal points have been made on the privacy front, and don't bear repeating here - though I'll summarise them at the SCL's Information Governance conference. Phorm seems to think they've all gone away, or will be made to go away by launch. Network opt-out was mentioned. Network opt-in is preferred, as is a way to block the service altogether, so that I don't need to store either their opt-in or opt-out cookies. Having to choose whether to store Phorm's opt-in or opt-out cookies is only a choice about how you use Phorm's service, not a choice between using its service and not. Phorm says the current cookie practices are less transparent than its own service will be. From a user standpoint this doesn't deal with the point that I can choose not to go to certain sites, and to clear their cookies selectively, but I can't as readily avoid Phorm's service - or choose to use it on some sites and not others - if it's being run at the ISP level. That "choice" doesn't feel very personalised at all, and personalisation is at the heart of how the web is developing. Phorm asks why the likes of [Google and Facebook] don't have "town meetings" to explain their privacy policies and settings, but I can't think of a venue big enough - and of course they do constantly explain and respond to privacy queries from their massive, global communities in a very public way, online, where everyone can participate.

Phorm also appears to be creating some kind of moral panic by saying that it is part of the solution to preserving the humble newspaper - not to mention journalistic integrity. Shock, horror: journalists are apparently being asked to insert certain keywords in their stories to help attract the right traffic to their newspaper's online ads. Apparently, if Phorm were implemented and used by [everybody] content publishers would not [have to] do this. But the newspapers I read from time to time don't seem all that averse to coupling themes and stories with advertising in their offline manifestations, so it's hardly the end of the world as we know it. And I don't see how newspapers can escape people's desire to see their content unbundled any more than the record companies could. Their challenge is to keep innovating, as Eric Schmidt told US newspapers yesterday. Phorm suggests that the major ad service operators (Google, Facebook et al) aren't entitled to their current or growing flows of advertising revenues. The market will no doubt decide, but this suggestion ignores how those companies finance their own core businesses, which millions and millions of people clearly find very compelling - apparently more so than limited bundles of "news". It also ignores the importance of search and online communities for newspapers' content, not to mention ad deals.

Ulimately, comparisons with Google and Facebook highlight the fact that Phorm is not a bottom-up phenomenon. It's something that will only happen if big telecoms providers say so, and that collides with the Web 2.0 ethos. This, coupled with the Orwellian privacy issues - whether real or perceived - makes Phorm's marketing job very much harder.

Are You Dealing With Introverts or Extroverts?

Interesting piece on Mashable recently, suggesting that most social networkers are in fact introverts. That means they are driven by their own thoughts and feelings, whereas extroverts are driven by external interaction (I think you could be neither - i.e. somewhere in between on the continuum - but not simply "both", as the Mashable poll suggested).

For any online service provider this begs the question whether your customers are introverts, extroverts or neither, and how you should manage your marketing and communications for each type. However, assuming your objective is to generate passion and connection amongst your customers as a community, then perhaps its better to view your staff and customers as a team comprising all types who need to get along.

Further, as Idea points out, the introvert/extrovert dichotomy is but one aspect of personality and how personalities interact in a team scenario:

"In the Myers-Briggs assessment, personality characteristics are categorized along four continuums: Introvert/Extrovert; Sensing/Intuition; Thinking/Feeling; and Judging/Perceiving....

Whereas introverted team members need extroverts to initiate spontaneous verbal discussions, extroverts value an introvert’s capability for problem solving based on careful reflection and consideration of all ideas....

intuitive members need sensing personalities to remind them of facts and limitations. Conversely, sensing individuals need intuitive members to remind them to think outside of the box....

As team members, thinkers are effective in articulating logical reasons behind decisions, while feelers can bring people together....

A team needs the right mix of judging and perceiving personalities to ensure adaptability as well as adherence to project boundaries and deadlines."

Now I don't want to stifle debate, but some takeaways might be:

1. An extrovert staffer could be asked to initiate discussions and debates, but might need to take some care to leave the discussion and conclusion open to engage the introverts;
2. Provide opportunities for people to think outside the box;
3. Articulate not only the reasons for decisions but also acknowledge how the decisions make people feel;
   
4. Demonstrate flexibility, but set expectations about any constraints on flexibility, like resources and deadlines.

Discuss?

The Long Tail: Define "Head" and "Tail"

Fascinating post by Chris Anderson responding to a Harvard Business Review analysis of sales patterns in the music and home-video industries to see if they support or undermine the Long Tail theory.

In short, depending on your definition of "head" and "tail", the data could be used either way. A somewhat obvious point to make about any stats, but nice to see the pro's slanging it out, and good ammunition for responding to use of "Long Tail" buzz words in pitches.

The slightly longer version is that HBR finds that the "blockbuster theory" holds even for e-commerce:

"A balanced picture emerges of the impact of online channels on market demand: Hit products remain dominant, even among consumers who venture deep into the tail. Hit products are also liked better than obscure products. It is a myth that obscure books, films, and songs are treasured. What consumers buy in internet channels is much the same as what they have always bought."

Hence, even online businesses should focus their resources on promoting hit products rather than obscure products.

However, Chris Anderson points out that:

""Head" is the selection available in the largest bricks-and-mortar retailer in the market (that would be Wal-Mart in this case). "Tail" is everything else, most of which is only available online, where there is unlimited shelf space."

Using that definition, the data supports more "tail heavy" consumer demand on the sites analysed.

View or join the ongoing debate!

Consumer Protection from Unfair Trading Regs 2008

I've given up my attempt to independently summarise the Consumer Protection from Unfair Trading Regulations 2008 ("CPRs" in the trade), and am simply going to refer you to what the OFT and BERR seem to make of them.

Oh, alright then. To summarise briefly:

• Regulation 3 bans unfair commercial practices - basically anything unacceptable from an objective professional standpoint which is (or is likely to) change an economic decision of the "average" consumer. In other words, because of the practice the consumer buys (or sells) what they would not otherwise have bought (or sold), or fails to cancel a transaction that they would otherwise have cancelled.
• Regulations 5-7 prohibit commercial practices which are misleading (whether by action or omission) or aggressive, and which cause or are likely to cause the average consumer to take a different decision.
• There are 31 practices that are prohibited in all circumstances - regardless of whether or not they actually affect a consumer.
• Oh, and this is all backed by criminal and civil enforcement powers and remedies.
  

Of course, this is fantastic example of EU overkill. There is simply no major consumer problem in the UK that deserves a whole swathe of new regulation which is harmonised with Greece.

Okay, so there are still dodgy traders, but we have TV shows that doorstep those guys for fun.

But some lawyers are getting pretty worked up about these regulations from a compliance standpoint (did I mention the criminal and civil enforcement provisions?). But this misses the wood for the trees. Any consumer-facing business that is reliant on these sorts of practices for its bread and butter has heavy cultural issues to contend with, and these issues could go right to the top of the tree. Cultural change is tough, and it isn't driven from the compliance coal face alone.

Which is why I enjoy advising Web 2.0 businesses - as they are predicated not only on treating consumers fairly, but enabling consumers to ensure that they are treated fairly.

Interesting issues for some eBay power sellers, though, and I guess there may be some old sharks who'll find themselves with a fine or making licence plates.

Lest we forget, there are also changes to the comparative and misleading advertising regulations. Basically, the Business Protection from Misleading Marketing Regulations 2008 ("BPMMRs"):

• prohibit advertising which misleads traders (Reg 3);
• sets out the conditions under which comparative advertising is permitted (Reg 4) - including the condition that the ad must not be misleading either under Reg 3 or the CPRs (see above);
• requires traders and bodies responsible for codes of conduct or monitoring compliance with such codes not to promote misleading advertising and comparative advertising which is not permitted (Reg 5).

And, unlike the rather limp Advertising Standards Association advertising codes, these puppies have teeth - criminal and civil enforcement remedies and nasty accompanying powers.

West End ad agencies will never be the same again.

The Open Internet Exchange

According to the FT:

"The new marketplace, called the Open Internet Exchange uses anonymous information about internet users’ browsing activity to serve up more relevant adverts.The system tracks recent sites visited by the user and any keywords they have entered to search engines to identify their interests, but replaces their identifying details with a random number that cannot be traced back.“We cannot know who you are or where you’ve been,” said Kent Ertugrul, chief executive.

The supplier of the technology, Phorm, says that consumers are given an opportunity to opt-out of having their browsing activity (anonymously) tracked.

The service is being promoted by participating ISPs - currently BT and Carphone Warehouse at Webwise.com: as their "response to consumers’ growing concerns and frustrations with the Internet. Webwise can help protect you from fraudulent “phishing” websites that may put your financial and personal data at risk. It also helps reduce the number of irrelevant, untargeted ads you see."

That site it is offering people the opportunity to opt-in as well as opt-out.

Question is will it be defaulted to "opt-in" when users sign up or next fire-up their internet connection?

And what will this mean in terms of advertising revenue?

"...analysts at Investec estimated that BT and Carphone Warehouse could see revenue benefits of £85m and £65m respectively.

The high margin nature of online advertising revenues meant this could benefit their 2010 earnings by about 1.3 per cent and 10 per cent respectively, Investec said."