Where do Podcasts fit in a company’s marketing communications strategy?

I’m a big fan of podcasts. I subscribe to 15 podcasts and listen to one or two a day during my commute. But as an MBA student I wonder about the business model behind podcasts and if they will prove to be valuable marketing communications tools, considering that they still reach only a small amount of users.

Some companies have been adding podcasts to their marketing strategy. News and entertainment companies have been using it as an additional source of revenue. BusinessWeek, for example, creates a weekly podcast by interviewing the journalists that wrote its cover story, and names the sponsor at the beginning. Other media companies use it as a promotion for its full, paid episodes.

Non-media companies have been using it as an entertaining and educational way to create customer loyalty. Lowes and Home Depot have step-by-step guides for do-it-yourself projects and using tools and gadgets around the house. Besides the obvious pitch for their products, podcasts are a way to become a trusted voice for consumers, especially if the podcast is targeted enough to reach a niche of followers that will find value in podcasts vs other media forms.

But podcasts are not necessarily cheap to make, especially for companies that are not in the business of making media content in the first place. Most companies that make them are careful about editing and have high quality videos. Most podcasts are also free, which means that consumers don’t pay for them. Companies have been trying to find creative ways to make a business model out of them, from joining a podcast network that provides individual podcasts sponsors to combining free and paid episodes and throwing in HD or other perks for paid subscribers. But the advertising model is not very profitable, according to a report published earlier this year by research firm E-Marketer.com. Podcasts come in 22^nd place in the list of most-viewed forms of online and offline media, and adspend is also very low. This could change in time, if podcast meet optimistic growth expectations and manage to move from a niche following into a more mainstream product.

Professional insights

To get some feedback from marketers who are actually using podcasts as part of their strategy, I began a discussion on LinkedIn. One marketer said she has found them especially useful for internal purposes like training and to explain complex ideas which would be difficult to understand in written form. Another professional said that it has been a good tool to create awareness about his business and get new customers. He says that podcasts have grown his business by 300% in the past two years (he says he measures growth through podcasts by tracking clicks on the links to his website and by asking new customers where they heard about the business).

In a coming blog, I’ll use podcasts as part of what I see as a successful internet marketing strategy for a company in one of the industries that I’d like to work in after my MBA: Consumer Goods.

Book Review:”What would Google Do?”

As someone who avidly follows online conversations about marketing, it seems that everywhere I go online, marketing professionals are trying to figure out how to incorporate online marketing to their integrated marketing communications strategy. But it seems like over 75% of the time the buzz and excitement seem to hover around one online phenomenon: social media marketing. Though I’m a huge fan of social media, I’m surprised that so little of the online discussions I see are directed towards the most exciting change that the internet brings to marketing: a complete transformation of the business model of so many industries.

This is why I picked “What Would Google Do?” by Jeff Jarvis for my assigned book review for my Internet Marketing class (part of my MBA at the Sauder School of Business, UBC). Jeff is not a marketer, and doesn’t speak like an MBA. But his book is easy to read and does a good job of exploring what the world would be like if many traditional industries adopted the business models of Google and other successful Web 2.0 companies. It’s business as we know it turned on its head.

Jarvis’s book has two sections. The first one lists the “Google Rules”, like the new, interactive relationship with the customer. This is the world where a bad review on Youtube goes viral and can live to haunt you for months on end, as United Airlines learned last week (see my last blog). Other rules include the new architecture built around the link, collaboration and the new economy built around free-to-users and sponsored and mass niches vs. mass media.

The second section is an exercise of applying elements of Google’s business model to different industries like media, retail, manufacturing, finance and public health. Like Jarvis, I was also a journalist, so I would like to give you my points of view on his pitch about the changing media business model.

Media 2.0

Jarvis imagines newspapers that really don’t have much of news or paper anymore. Instead of monopolizing the right to write news, he imagines news sites as a platform where people can find information created by thousands of users: blogs, social media sites, etc. He advises them to learn to listen to what people have to say. Namely, to allow collaboration and two-way communication –an area in which traditional mass media outlets have done very poorly. He recommends forgetting the idea of a mass market and focusing on niches.

He does not clearly state how the revenue model would work (would users pay?) but mentions advertising. Earlier in the book, he titles a section “free is a business model”. With that he refers to giving content away to users and charging advertisers.

But this may be easier said than done. It’s true that many of the traditional media giants have had a terrible time adjusting to new media. At most, giants like The New York Times have a web site with lots of videos and interactive graphics; they link to blogs and allow comments on their articles; they also have discussion forums, which encourage public discussion on a topic like Room for Debate. But in essence it is still controlled by its own journalists and it’s pretty much business as usual.

But in the middle of the Great Recession and a foreseeable decline in readership, media companies are facing decline so rapidly, that they are beginning to realize that they must reinvent themselves or die. Some have died or are agonizing. Conde Nast has shut down some of its publications this year and two of the biggest business magazines, Forbes and BusinessWeek have slashed employees and are looking to cut costs further after losing a third of their advertising spend this year. According to industry experts, advertising won’t return after the recession.

The problem with free

There are two issues about Jarvis’ suggestion for media that I believe may not be viable, at least for the time being. First of all, free content won’t necessarily bring in enough revenue, especially because online adspend fluctuates so much during bad economic times and online advertising is increasingly being spent on social media sites. This trend away from media websites and onto social media sites is understandable, considering that people are spending more time online and less on webpages like newspapers. As a GenYer, I admit that I’ve found out about more breaking news from my Facebook newsfeed than from newsmedia sites this year. Low ad revenue is even making an entertainment hit like Hulu to consider switching to a subscription model. News companies, including the New York Times, have been looking to replicate the success of the Financial Times in charging for content. Funny enough, Google is planning to create a tool that will help newspapers charge for content.

The second issue is that as traditional media outlets lose power, other sources will have to emerge to create a sense of “official” and “credible” information. Though blogs are increasingly becoming a trusted source of information, Google search results can be baffling. It is hard to discern between the true and the false in a Wiki. Government and other institutions will have to find a way to become trusted sources of information in a sea of disinformation. Having been a journalist, I remember the rigor of our research. Granted, not all journalists are ethical in their sourcing or framing of information. But when you say “I saw it on CNN” or “I read it in the paper”, it sounds like fact. That’s not the case of saying “I saw it on this blog that Amy had posted on her Facebook profile”… or worse yet, a RT (re-tweet) on one of the 2,000 feeds you are following on Twitter… I believe that the need for a credible voice will continue to exist. The question is whether media companies will be able to continue being that voice. To do it, they will have to transform and adapt their business models in order to resonate with a younger, more diverse and geographically disperse online audience that loves free stuff.

Internet Marketing: United's lesson on how to get WOM terribly wrong

United Airlines has a lesson to teach us: How to turn a case of bad customer service into a snowballing negative PR case. After being the star of a musical rant by an angry customer whose guitar was destroyed by personnel, they made headlines again by losing his luggage and... get this: just when he was arriving at a conference about customer service, where he was going to tell his story.

Dave Carroll was on a United Airlines plane last year when he said he saw baggage handlers carelessly throw his $9,000 guitar around the airport. He later found that it was damaged and demanded compensation from United. After a year of calls and dead-ends he gave up and wrote a song about it. The video, uploaded on Youtube has had almost 6 million viewers and the song, "United breaks guitars" is available on iTunes. Last week, Carroll was traveling to a conference on social networking and customer service, where he was going to play the song and tell his story. He says that the audience laughed when they heard what had happened.

Though the internet has been around for over 15 years, companies are still struggling to get internet marketing right. Some have hired GenYers or a PR company to set up a Twitter account. Others have gone on Facebook and are sending their executives to conferences on Social Media marketing. Others are limiting themselves to ignoring Social media altogether, and are just sticking to a webpage.

But when companies think of internet marketing they think Marcoms: ads, getting fans on Facebook, etc. and forget some of the basics. Internet changes the way that people interact with your company, or the touchpoints. United ignored this customer and channeled him through their usual, highly bureaucratic, painful, telephone customer service center. The reason that the song has become such a hit is that so many people feel the same way (I had a wheel taken off a suitcase in a recent trip to China by another airline). Maybe overhauling baggage handling will be hard an expensive... but this case makes you think: did United really need to take a whole year to face this?

The internet can give customers a sense of empowerment, especially when cases like this become so famous. But many companies want to play the game the way they've always been playing it. Unfortunately, no mobile apps, Facebook ads or email newsletters can compensate a strategy that doesn't attack the heart of the problem: improving your product and the customer's experience of it.

I'll write more about this in an upcomming book review: "What Would Google Do?"

The Science of Success

Who doesn't want success? And better yet, who wouldn't want to know the formula for it? I recently read the book "Outliers: The Story of Success" by Malcolm Gladwell, which attempts to do just that: to explain the logic of success.

In a nutshell, Gladwell says that success is an equation of having the right skills and talent + being in the right place at the right time + cultural and socioeconomic background + hard, hard work.

Gladwell uses a variety of proof points for this, some of which include hockey (he's Canadian) and Bill Gate's story. The title refers to a statistical concept: those few people who are far from the average (and he's referring to the ones at the very top of the charts). Anyone who's had some basic training in statistics knows that in a normal distribution (bell curve) most of the people will be in the center. So a first conclusion is that it is difficult to be really, really successful; that is as successful as Bill Gates.

So what can people closer to the top of the bell curve do to move farther out? Obviously not everyone can be at the right place at the right time, like Bill Gates was in the 1970s. But knowing our qualities, advantages and disadvantages and really understanding our industry and trends in our global world could pave the way to very successful careers, especially for people with my profile: GenYers who are educated, technologically savvy, globally connected and aware and passionate to make a change in the world.

What have I learned from this book? First, I have had a chance to understand the advantages and disadvantages of my cultural background. For example, I've had the experience of growing up in a country where solving problems from scratch and being resourceful is a strategy for survival (consider doctors operating without modern equipment or my experience of working during a national strike, when gasoline was scarce and public transit is practically inexistent in some areas). For me, there is always plan B and C and D and E. I am also flexible with resources and used to changing circumstances. Being Latin American makes me an innate people person. I make relationships easily and working with others nurtures me. At the same time, being from the Andes Region of Venezuela, and the daughter of especially hardworking parents who have worked for North American firms, I learned the principles of hard work very early in life and adapted easily to North America.

I was born in a culture where women are often the center of the household and in a family where women were expected to be as educated, smart and outspoken as men. Since I learned to read a map (around 7 years of age), I was the official map-reader of the family on our trips and they trusted me completely. This made me strive to be better and I rarely led my family astray on our road trips. This showed me to take on responsibility early and to voice my opinions even in the presence of high-level management -which can be difficult for many Venezuelans, who tend to be very hierarchical.

The next step for me? A brilliant opportunity.

Succeeding in the green market II: Marketing Strategy

In part one of this series on marketing green products (see below), I gave some insights on consumers and their perceptions regarding green products. Now I will share some recommendations for going to market with organic and fair trade products, which are the result of my research into marketing fair trade chocolate for Sustainability and Environmental Marketing courses as part of my MBA at the Sauder School of Business (UBC). The research included secondary research and a survey to MBA students.

1. Positioning
As mentioned in my previous post, there are two promising markets for fair trade and organic products: ethical buyers –who highly value the green quality of products– and those who buy it for selfish qualities which can be related to health, quality or taste, depending on the product. In my research into fair trade chocolate, for example, I realized that though “ethical buyers” in my survey highly valued the environment and sustainable practices, fair trade and organic qualities rated 5 and 6 in a list of 8 qualities that they valued most when shopping for chocolate. Considering that chocolate is a low-risk purchase and involves little time and thought when purchasing, it is likely that even these buyers would prefer a known brand, a preferred variety of chocolate, or better yet, the quality and taste of the chocolate. So even with ethical buyers, green qualities are not enough. The brand must also build the perceptions of high quality, health/indulgence depending on the product (which green buyers also rated highly) and other functional qualities (like different flavors, in the case of chocolate). For indulgers, a promising positioning strategy would be to use the “single source” quality that fair trade products can offer, because they are usually sourced by specific cooperatives and bought directly by the manufacturing company, as opposed to commodity cocoa, which is bought from distributors from all over the world at the cheapest prices possible.

2. Price and Distribution
As I mentioned in my previous entry, though ethical buyers and indulgers are willing to pay a higher price for the green qualities/experience of the products, a promising strategy is to create a line of products that is affordable and accessible to the general population. Divine Chocolate, a successful non-for-profit based in the U.K., has achieved successful growth thanks to a strategy where it places its chocolate products in popular retail chains and sells at affordable prices*. Placing organic and fair trade products in supermarkets and other accessible retail locations (instead of high-end and specialized boutiques only) also helps sales**. Of course, if the strategy is to compete in the fast-growing high end chocolate segment, fair trade is also very promising. In that case, as mentioned above, single-source qualities and percentage of cocoa are important qualities when demanding a premium.

4. Promotion
From my research I came up with many recommendations for promoting and communicating the value of fair trade and organic chocolate. Advertising should be focused on educating people on the benefits of fair trade, which even the ethical buyers I surveyed were not very aware of. This means not only expressing the social benefits of cocoa bought at above-commodity prices from poor farmers in developing countries, but also the environmental and health benefits that it can bring because of the reduced use of chemicals and growing the plants in a forest, rather than in a dedicated cocoa plantation. PR and events are also key. Divine Chocolate Company, for example, has created buzz by using comedians and celebrities to talk about the cause on TV. It even managed to get then Prime Minister Tony Blair to visit the farms where the cocoa was grown in Ghana**. Another promising opportunity, especially for indulgers, are chocolate tastings and wine pairings, which have become more popular in the recent years.

In conclusion, organic and fair trade products –like many green offerings– are not as easy a sell as we wish they could be. The big lesson from this is that green qualities are not enough. Though they are increasingly important to consumers, and a key in any corporate social responsibility program, green products must also have functional qualities that benefit consumers directly. It is important to price them competitively, and assure that distribution and promotion contribute to making them more accessible and creating value in the buyer’s minds.

*Doherty, B., & Tranchell, S. (2005, July). New thinking in international trade? A case study of The Day Chocolate Company. Sustainable Development, 13(3), 166-176.
**Regmi, A. (2001) Changing Structure of Global Food Consumption and Trade. Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, Agriculture and Trade Report. Retrieved from the USDA Website on March 10, 2009.

Succeeding in the green market I: Consumer Insights

These days it seems that everyone wants to get into the green market. Whether it’s environmentally friendly or ethical products, there is a lot of optimism about the high growth in these categories. But products with “green” labels can be challenging to promote effectively, as I learned during research into marketing fair trade chocolate for Sustainability and Environmental Marketing courses as part of my MBA at the Sauder School of Business (UBC).

During my secondary research and a survey, I learned about the expectations that people have about green products and their willingness to put their money where their mouths are. I also learned about marketing practices that have helped organic and fair trade brands succeed in this difficult market.

Here is my first of two postings: Insights into the market for ethical and green products.

1. Though environmental and altruistic benefits are termed as very important by many green consumers, “selfish benefits” are more effective in achieving adoption. As opposed to organic brands, which consumers perceive to have personal benefits like better taste and health benefits, fair trade products claim mainly altruistic benefits: you pay a premium price for a product that has been bought at fair prices from poor communities in developing countries. Organics have become big not just with the environmentally conscious, but also with people who want healthier, less processed foods. It’s become a “catchy” label, and people are more likely to associate it to “health” or “environmental qualities” than what it actually means: products made with no added chemicals like pesticides and fertilizers (Try this: ask a person in a supermarket with organic produce in her cart what "organic" means... even the MBAs in my survey had a hard time defining it). Fair trade is even harder to understand and the premium price is not always valued by consumers, who make most of their purchasing decisions based on direct benefits to themselves rather than to other people who’s country they may not even be able to point to on a map.

2. There is willingness to pay for ethical products, but competitive pricing is key to market-wide adoption. Though people are used to seeing organic and fair trade products being priced at a premium, research shows that even people who place a high value on ethical qualities of a product are willing to pay a lower premium than what is set by the manufacturers*. Pricing at competitive prices has turned out to be a successful strategy for market and revenue growth for Divine Chocolate Company in the U.K.**

3. Ethical consumers are a key target, but “health buyers” and “indulgers” can also be key. Research shows that consumers who highly value the ethical qualities of a product will pay more for them, especially if their expectation for that product and brand are especially high. However, they will also “punish” unethical companies by demanding a steeper price reduction for their products***. If premium pricing is the strategy, then key demographics are those that value the health or taste/quality of the fair trade product. In the case of fair trade chocolate, women and Generation X consumers –who are accustomed to paying a premium for luxury experiences– are good targets.

In my next entry, I will give discuss some tactics that have led to success in the marketing of fair trade and organic products.

*Didier, T., & Lucie, S. (2008, September). Measuring consumer's willingness to pay for organic and Fair Trade products. International Journal of Consumer Studies, 32(5), 479-490. Retrieved March 12, 2009 from Wiley Interscience Journals webpage

**Divine and Dubble go mainstream :But fair-trade chocolate keeps its integrity. (2008). Strategic Direction, 24(10), 13-15. Retrieved March 12, 2009, from ABI/INFORM Global database.

***Remi Trudel, June Cotte. (2009). Does It Pay to Be Good? MIT Sloan Management Review, 50(2), 61-68. Retrieved March 12, 2009, from ABI/INFORM Global database.

MBAs: Adding value in a time of recession

I'd like to share this blog with you that I originally posted on the Toronto-based Financial Post's Executive Blog: http://network.nationalpost.com/np/blogs/executive/archive/2009/04/30/mbas-adding-value-in-a-time-of-recession.aspx

Tell me what you think!

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This is not a good year for MBAs. On one hand, more people are applying for an MBA than ever, as a way to get out of a bad job market and improve their skills at the same time. On the other, new MBA grads and interns are concerned about being able to demand higher salaries and even to find a job, when so many businesses are struggling to weather the recession.

But I also believe that this is a time of great opportunity for those of us who can be creative, and use those tools we learned in Business School to really impact the bottom line. A lot of businesses are finding that business as always is not effective anymore and may be more open than in times of success to listen to new points of view.

I used my LinkedIn network to ask people from different businesses about what they valued in an MBA. Here are the qualities they said they valued the most:

1. Being able to work independently: with all the current layoffs, this is no time to make managers babysit new employees.

2. Quantitative analysis: Turning projects into measurable results that can be compared and decided on.

3. New ideas: creativity for solutions, bringing in the latest business solutions that are being discussed in the classrooms.

4. Proven business skills: previous experience can be key in making a decision.

5. Ability to work under pressure and in uncertain situations: “We can begin with what the “M” in MBA stands for: Master. The MBA connotes a mastery of business beyond experience alone. I think the foremost thing it means is that the person is prepared to deal with ambiguity and so is comfortable with a lack of certain and definable answers”, says Ron Cenfetelli, Professor of IT Management at the Sauder School of Business (University of British Columbia).

I even had a recommendation about what companies don’t need from MBA’s: a “know-it-all” attitude and substituting quantitative skills for observation and communication.

What do you think?