Thoughts From The Cake Scraps

From my previous post on Swoopo I generated a small bit of confusion because Swoopo has several types of auctions.  Here they are directly from the Swoopo site (though I rearranged them a bit for my comments):

Fixed Price Auction
If you win a Fixed Price Auction, you only pay the price indicated in the heading of the auction (plus delivery costs), regardless of the level the bidding reaches.

100% off
Where an auction is marked “100% off”, the winning bidder does not have to pay the final price. That’s right: the price is zero! You just need to pay the delivery charges.

These are basically the same thing and makes this site seem a bit more sleazy.  Here’s why.  With a fixed price auction or a 100% off auction you don’t pay the value of the auction, just the fixed price or nothing, respectively.  That seems straight forward until you think about it.  If they already know what they are selling it for (or that they are giving it away free) the users are basically just giving them money.  They are literally proclaiming “Here is something free, what will you pay me for it.”  Can you really even call that an auction if the bidders are not actually impacting the price?

Penny Auction
In a penny auction, the price rises by just one cent with each bid placed (whereas in a normal auction, it rises by 15 cents).

Well this is nice of them.  In case you were able to hold off yourself from bidding when the price went up 15 cents with each bid they have auctions where it only goes up a single penny.  Thus, you look at the price and want to jump right in not realizing just how much money Swoopo is going to take you and other fools like you for.

NailBiter Auction
During a NailBiter Auction, BidButlers aren’t allowed. Users may only place single bids by manually clicking or calling. Don’t walk away or you miss the next incredible deal!

This would be interesting except that the time goes up with each bid (see below).  So instead of a “NailBiter” you have a sit around all freaking day bidding and waiting for the thing to end.  Good times I’m sure.  Too bad I’ll miss it.

Open Auction
Anyone can bid on an open auction, even if they have already reached their eight auction limit. Open auctions do not count towards your auction limit. See ‘How many auctions can I win a month?’ for more information.

Wait, I can only win so many auctions in a given time period.  Doesn’t this sound a lot like what a casino can do if they think you have a gambling problem?

20-Second Auction
All auctions start as 20-second auctions. The countdown increases by a maximum of 20 seconds each time that a bid is placed.

15-Second Auction
You guessed it – with these the countdown increases by a maximum of 15 seconds with each bid placed.

10-Second Auction
You guessed it – with these the countdown increases by a maximum of 10 seconds with each bid placed.

Wow.  What variety.  It is like the Jelly Belly of auction sites.  Really guys, do we need a different line for each you guessed it – X second auction type.

I hope that clears things up a bit for people.  In my original post I did have my math with the winner having to pay for the final price of the auction.  While this isn’t always the case, it often times is.  I’m not going to waste my time looking around for exact examples, but if you want to Swoopo does feature a list of completed auctions.  Please remember what Thomas Tusser said: “A fool and his money are soon parted.”

In a recent article by the Wall Street Journal Activision’s CEO, Robert Kotick, hinted that instead of the current structure for the Guitar Hero franchise – where Activision must pay for the use of an artist’s song – the tables should be turned. The idea being that Guitar Hero is such a great channel for distribution of songs that it is actually saving rock ‘n’ roll.

It is worth noting that Activision – and video games in general – are different from radio in that Activision has a contract with the owners of the song whereas in radio royalties are paid.

This seems like a classic game of chicken. As you may have guessed, the argument of promotional value is not new to the industry. A band needs to get play time to become famous, though the internet is changing that slightly, and the radio station needs bands to make music otherwise the radio station has nothing to play. They both depend on each other to make money.

I think that the main difference in Activision’s situation is that they are not worried about bands trying to ‘make it’. They are giving new life to bands that were fizzling out in the next generation. This puts them in the unique position to make this work. The Guitar Hero brand is heavily, though not fully, dependent on good songs. People love the concept of the game and having classic rock songs is just a perk. Therefore, I would argue that while it may be difficult to have the next release of Guitar Hero be a smash hit with no headliners it would not be impossible. They could easily release some sort of “Tomorrow’s Rockers” edition that featured unsigned bands and sell plenty of copies.

Overall, this is a great move on Activision’s part because they know what their distribution channel is worth. The tricky part is to state your worth and not overstate your worth and be caught with your pants down. I think the music companies are dangerously close to the latter. The resurgence of some of their artists is because of Guitar Hero and more artists want a piece of the action.

This is why the music companies are in such a tough spot. They want to get paid for the songs, but I’m sure there is pressure from the artists just to get them in the game. They see it as a great avenue to get a new fan base. Now you also have Activision pushing back to the music companies and saying “why should we be paying you for promoting these fizzling bands?”. The music companies are being pressured from both sides and they don’t really have solid ground to stand on.

This is going to be very interesting to watch. Who’s going to win and who is going to chicken out?  And can you really apply this to your blog writing?

Thanks for reading the thoughts of The Cake Scraps.

Microsoft is trying yet another approach to get you to use Live Search.  Previously they have tried everything under the sun, including giving miles for flights such as Midwest Airlines.  Sadly the games there are nothing to write home about and it isn’t surprising that Microsoft went back to the drawing board.

This the aptly named SearchPerks is set up to give away tickets that you can the trade in for stuff (the perks).  Sounds alright in concept, but it is poorly structured.  Right off the get go you notice to win anything worthwhile takes forever (though they say during the promotion they will give away extra).  Here is a simple breakdown from Search Engine Land:

• 105 tickets (4 days worth of searches) = 1 ringtone
• 250 tickets (10 days worth of searches) = 100 frequent flyer miles
• 5,500 tickets (7 months worth of searches) = xBox wireless controller

The length of time is determined because you can only get 25 tickets a day.  Oh, and the promotion only runs until April sometime.

I wonder if they are taking the wrong approach to this altogether.  I really liked Yahoo’s “Search For A Cure” program.  The money is going to breast cancer research.  I also noticed that on a survey at Banana Republic the reward for filling out the survey was not a percent off or dollar off perk.  Rather it was some amount would get donated to a charity of your choice -from a list of 5 or so.

The fundamental question here for me is what are you really trying to do with these programs and who are you targeting?  It seems like with a program that rewards the individual user that when the perks end they will just stop using it.  When I consider the promotions that donate the money I think that the user gets to feel good about doing it.

Why is this such a big deal?  Easy, because when the promotion ends and the user was getting the perks they now have no reason to continue to use the service.  But if the perk goes to a charity, the user was not getting anything, but rather giving something, when using the service.  When the perk ends they are no longer ‘giving’ anything but also there is nothing that will make the user feel like something is being taken away from them – as is the case in a perk that rewards the user.

Another important point, in my view, is that the perk for charity is more likely to be picked up on a larger news site because the company is giving to a good cause rather than greedy users (from a public perception standpoint).  I think that promotions that give stuff away on the web generate a big surge of people trying to play the system and then just fall off.  No loyalty.  No long term PR to point to for the company.  Compare this to a news story about how the company is “doing their part” to help the world.  The company can use the promotion as a platform to point out that they helped while also promoting whatever service they were trying to get you to use.

So is this going to work this time?  I don’t think so because there is no long term perk for the user and I don’t see any reason to switch other than to “watch out for number one” and the stop after the promotion ends.  That is the thought from The Cake Scraps.

10/4 UPDATE: While I never said that Live Search was a failure – just that Microsoft is trying everything under the sun – there is evidence from Hitwise that shows that the Cashback promotion Microsoft is running may be increasing Live Search’s use.  Extra information can be found here and here but I still stand by my post that these are short term gains and use will fall off if/when these promotions are discontinued.

I just had the opportunity to watch Episode 97: “Airplane on a Conveyor Belt” and it was very interesting.  The question they were out to answer was “Can an airplane take off if it is on a conveyor belt that is moving the opposite direction from where it is trying to take off?”  Without much thought a person would say no.  I sure did.  My thoughts being that with the conveyor belt moving in the opposite direction the plane would just sit still.

WRONG

This brings us to 2 questions “why is it wrong?” and “how is that related to marketing?”

The first question takes some getting used to.  The Straight Dope has a good explanation and I will attempt to summarize it here.  The answer is in short that the speed of the conveyor belt does not matter.  A plane forces itself through the air via the engines.  The wheels spinning on the conveyor belt merely provide a way for the plane to have less friction with the ground.  The plane is not using the wheels to push itself the way a car does.  Essentially, the plane will move forward no matter what.

The best visualization I can give you is this: Picture a plane flying in the air.  Now imagine that its wheels are down.  Now put a conveyor belt in your picture moving in the opposite direction the plane is flying.  Does the plane slow down?  No, the wheels will just spin like crazy.  It has no effect on the plane flying in the air because the wheels are free spinning and are not a means of propulsion.  Get it?  The dynamics don’t change on the ground.

Here is another way to think of it.  If you were on roller skates and moved yourself by only pulling on a rope you would not have to exert any more effort to pull yourself forward on standard ground than on a conveyor belt.  The reason is that you are moving because of pulling on the rope and therefore even with a conveyor belt on the ground you will not move backwards, the wheels will just spin and you pull yourself forward as normal.  Replace you with a plane and the rope with an engine and you have this one all wrapped up.

So now on to the second question, how this has to do with marketing.  It reminded me of a simple fact of marketing: things are not always as they seem.  And beyond that even when you have the information it might be difficult to understand.

This all revolves around one thing: what is driving this?

The reason the plane example is hard to understand is because people think a plane moves like a car – which uses the ground to propel itself – when it, as obvious as it may seem, moves like a plane – which is not driven by the ground.  Understanding what is driving the plane is fundamental to understanding the answer as a whole.

This is the same as with marketing and web analytics.  It is great that people are coming to your site or people love your marketing, but finding out why they love it is the only way you can repeat it.  If you sell clothing and a particular ad drives people to the site you have success.  But what if the reason isn’t the product but who the product was on or what the setting was of the photo shoot.  Trying to turn that into a campaign – which you should be tracking – is going to be impossible if you don’t know what is driving the sales.  If you feature the same product but on a different person does it still sell?  Or perhaps is was the combination of all 3 that did it and you can’t reproduce the same thing no matter how hard you try.  You will be left spinning your wheels.

Whenever you start to read data coming in from your various campaigns, remember that that is all it is – data.  Data does not become information until you have context.  And context is only actionable if you know what is driving the whole thing.  The answers may not come easily, and it may be a ton of work, and even then you yourself and/or others may question the results, but if you have solid reasoning and understand what is driving it you are in a very powerful position; the position of having not data or even information, but knowledge.