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Alphabet, the holding company parent of Google, just announced earnings and they were amazing. Microsoft, too, announced earnings with which they were quite happy following some tumultuous, leggy years.  I’m no economist so the difference between revenue, net income and post-tax profit are a bit beyond me but I will make one observation, software is back and cloud computing is the haps, to quote Dave Robicheaux’s pal Cletus.

Of course, we still have to make stuff we can sit on (furniture), wear, eat and communicate with (telecoms), but it seems the business of hosting and information access is as profitable as ever. The margins associated with software and cloud computing are killer. The margins on content aren’t bad but a distant second. Companies like Google and Microsoft are closer to “pure play” software and hosting companies than most. too. Companies like Verizon, on the border of a deal with Yahoo! (content), and Netflix, smitten by Hollywood, are drifting away from their core – software and hosting.

For investors, code and iron are looking more and more attractive.



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I posted yesterday about Verizon’s purchase of AOL and how it begged the need for a “single user identifier” to maximize ad revenue across devices. A mobile phone number is an individual identifier, but it doesn’t integrate cleanly with that individual’s IP address or cable TV account number. I wrote a futures piece for Microsoft a few years ago in which I talked about the “Logged and Tagged Society.” Well, consumers are certainly tagged, but their log-ins are all screwed up. An analog for this is electronic medical records in the healthcare world. Also all screwed up. In the future each person will have a single user identifier and when that comes about, the ad platform people will have more context for smart sales than ever before.

An article in the NYT today quoted Facebook’s Andrew Bosworth (note to self, follow him on Twitter) saying “Are ads even relevant now? Do they even make sense on mobile? If all information is indexable and searchable, then what purpose does an ad serve?” He’s partly correct. But with a single user identifier in a logged and tagged society, ad serving will be more contextual and so much more powerful. Sadly, the nerds will take over and the creative people will be pushed aside to a degree. Creative selling is still a fundie of marketing and may take a hit in this mobile ad served/cookied era. But is will be back. We are not droids.


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BAM! (And I’m not talking Brooklyn Academy of Music.) Verizon has agreed to buy AOL for $4.4B and AOL’s stock price has jumped like a marlin. Here’s the quote announcing the deal from Verizon’s CEO:

“AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world,” Verizon CEO Lowell McAdam said in the statement.

A digital trailblazer? I haven’t seen a lot of trailblazing going on in 15 years. The purchase of TechCrunch was blaze-y enough, I guess, but that brand has laid fallow since Michael Arrington was moved aside. The story in Ad Age suggests a big part of the purchase rationale is AOL’s content, yet the real story is in the ad platform. Specifically, AOL’s ability to track users from desktop to mobile device. And now Verizon offers AOL the ability to collect data from mobile devices like few others. Also Verizon knows where you go on your desktop…and soon may integrate your TV.

The key to being able to do something smart with all of this data is having a single user identifier. A social security number, if you will, for each person on the web. My wife pays the Verizon bill and when I use my mobile to make business calls, her name comes up – so they have a long way to go.

Make no mistake, this deal isn’t about the content, that’s secondary.  It’s about advertising and data and analytics. Good work Verizon, this is a nice start. But don’t turn to AOL for you vision. Nuh uh!





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Born Again.

T-Mobile and Sprint are in talks to merge. The two mobile carriers, each with 50 million U.S. subscribers, have well-established brands. What should the resulting brand be? Some might say T-Mobile has a little more cache, mostly due to smart, flashy CEO John Legere. Yet Sprint has been around for decades; America’s first all fiber optic network. Some brand and naming experts will suggest combining the two names into some clunky hybrid and go all “one plus one equals 3” on us. I say it time for a new name. A new mark. And a fresh start.

AT&T and Verizon are really strong brands. Each is spending hundreds of millions in advertising. The work is likeable, but shallow and noisy. It’s either campaign-for-campaign-sake or product showcase. People don’t love selling or advertising, they love brands. And AT&T and Verizon are missing this point.

The combined Sprint/T-Mobile brand has a chance to start from the ground up. Break the mold. Find the sweet spot customers care about and move the product and experience in that direction. Mr. Legere gets this with his moves to offer no contract mobile service. Sprint/T-Mobile should do a little brand spanking research – spank the AT&T and Verizon brands around and find some product and emotional weaknesses. Then write a killer brief and start with a new name.

Rebirth opportunities don’t come along that often. Peace.

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In January IBM decided to sell its server business to Lenovo, China. Today about 15% of IBM’s revenue comes from hardware. Cloud computing and services are the ways to a smarter planet it seems. IBM has a well-established consulting business and a wonderful brand so this new approach will be an easy evolution for customers to understand.

The leader in cloud computing is, and will probably continue to be, AWS (Amazon Web Services.) They were the first big player in on-demand cloud services. Microsoft is doing cloud, as are Verizon, Google and lots of others.

One player doing a great job for a while but who lacks some brand strength is Rackspace. They’re not your average by-the-pound cloud provider. Sadly, their name suggests so. You’ve heard the term value-added-reseller? Well, the name Rackspace is about as far from value-added as possible. They may as well have called the company Cloud Vacancy. Hee hee.

Rackspace doesn’t need to change its name (though it wouldn’t hurt). What it needs is a plan to embed some serious meaning into the brand.  It could use an organizing principle that embodies all the smart people, processes and hardware/software advantages this company bestows upon users.

Brands are not empty vessels into which one pours meaning. They are full vessels — overflowing often — mostly in need of organization, an idea, and discipline. Peace.



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I’ve been thinking about a friend who has a clothing line catering to female teens and tweens in a particular sports category. A rich one. A co-worker earlier this year mentioned she spent more the $100,000 on this sports pursuit over the course of the child’s school years.

Knowing what I do about this target and its proclivity for texting — between competitions they sit in gymnasium halls and stare at their phones – there is huge opportunity to find “Posters.” Posters are original content creators, Pasters are their minions.

Were we to go all NSA and look at their (mom’s) cell phone bills, would be we able to tell Posters from Pasters? I’m not sure. Were we to go all Verizon on the bill maybe. Perhaps Verizon can figure out a “forwarded message” from an original picture or video post. Certainly the bills can indicates which kids are moving more media – more digits.

Then we need a Nielsen lens to look through so we can see how these young Poster ladies cluster. So  we can find what other media and products they consume and what behaviors they share. (Like listening to iPods while mom drives them to competitions. Hee hee.)

Once we cull the Posters from the Pasters we’re home free. Because, frankly, much of what they are sending across the ether is kids stuff. With a content marketing plan using a social twist, driven by a tight brand plan, we can fertilize this garden already poised to grow and grow. Peace!

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Do you know what is driving all the “free” on the Web?  Marketing. Not just advertising but marketing.  Why is Facebook so valuable?  Why does Google have more money than Allah? Where’s that money coming from?  Yep, Toyota and P&G and Verizon.

And as we glance beyond the dashboard at the future and see, as the iPad commercial puts it, newspapers with videos and magazines that sing, we see a world in which the Web and mobile devices are the primary instruments of marketers. The devices know what we like and where we are.  They know when we are sleeping. They know when we’re awake. Dare say, they know when we’ve been bad or good.

As the social web evolves and the big ad and marketing shops learn how to “map and manipulate”, it will become more apparent that people with influence are the drivers of marketing.  Kim Kardashian, for instance, earns $30,000 for a tweet.  To a tech start-up a Robert Scoble endorsement can mean the difference between being funded and being fun dead. So where am I going with this?  To Klout.

Klout is the new online oxy. It’s a drug…and more and more Posters will be talking about it. The Klout score will identify those people who advertisers want to target. And revere.  High Klout scores and predictions thereof will be the things around which ad agencies develop departments. Klout is on to something and they know it.  Get it right dudes and dudettes. And get it right soon before a competitors snaps it up. Peace!

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Okay, check it out.  Credit and debit card purchases work like this: you buy a $100 dinner and the restaurant gets $97, the card issuer (Visa, Amex) gets $2 and the restaurant’s bank takes $1.  On a per transaction basis it doesn’t sounds so onerous; credit cards are complicated, bankers have to make a buck, restaurants love the convenience and so long as there isn’t any technological fallout (sorry) everyone is happy.  But this whole electronic payment thing reminds me of the landline telecommunications industry.  To make a long distance phone call you have to pay your local telephone company, the long distance carrier, and the local telephone company on the terminating end.  ‘spensive.

Rethinking Mobile Electronic Payment

It doesn’t take an MIT grad to see that there are some inefficiencies in the current tripartite payment system, especially since nothing but data is changing hands.  So who is going to remove the first and last mile of money transactions as we move to smartphone payment technology? Google is thinking about it.  JPMorgan Chase is debating it.  Mr. Zuckerberg wonders. Verizon, too, has dreams. (Phone companies billing systems are very bank-like in their complexity.)  Don’t forget, American Airlines once made more money on its first-to-market reservation system than it did flying planes.

This electronic wallet, direct from consumer payment system is a comin’.  Question is: Who will be the winner? Thoughts?

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Advertising used to make us get off our asses and go buy something. Or, call someone to talk about buying something. That was its job.  Retail advertisers understood this better than most, watching the cash register ring when ads activated customers.   

In the NY market AT&T and Verizon used to be able to tell how many new cellular customers they were going to add based upon how far forward their ads were in The New York Times

The Web has changed all that.  Social media pundits and digital strategists tell us we turn to one another to learn which products to buy. Consumers believe consumers, they say, not ads.  The web facilitates this consumer-leading-consumer behavior.  Through community and ratings machines, consumers can certainly gather information to help them with purchase decisions. No argument from me. But these online tools that gather and parse consumer attitudes, with no organizing principle behind them, are eroding brand strategy.  And brand managers are allowing it. 

Good advertising and market professionals find “reasons to buy” that are way more powerful than those offered by John and Mary Q public. Professionals are trained to prioritize and organize reasons to buy.  If we let consumers decide, and then employ the algorithm to drive our decisions, there is no art or science. We cede control of the brand strategy. It may even alter product design, so everything moves toward the middle.

Marketers who let consumer do their job for them are lazy. Great brand strategy comes from consumer insight, no doubt. But a consumer collective as brand manager? Nuh uh.  Peace.

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Poor Sprint.

I feel for Sprint, I really do.  They were the first and only top-tier national fiber optic voice and data network yet they never made it past #3. They started when analog telephone calls and digital data packets were coin of the realm.  Today, when speed is needed more than ever, when iPhone users are complaining about dropped calls while sitting in front of computers with sluggish load times, poor Sprint and its lightning fast fiber still aren’t getting any respect. Fiber is an idea consumers understand. Sadly, the story has never been correctly told.  

FIOS, a Verizon product built on Fiber, is gaining mindshare in NY as a faster means of digital transport. (Fiber into the house makes machines scream.)  Sprint, on the other hand, is airing a TV spot promoting the HTC EVO mobile phone running over its 4G network — the world’s first 4G network – using a strategy about “firsts.”  The TV spots borrows a visual idea from Honda and Google (so much for firsts) showing other technology innovations tipping over in dominoes fashion. A Model T, knocks over a bi-plane which knocks over a steam locomotive, etc. It’s so far removed from fiber, a medium that connotes speed and clarity, you might as well be watching a Fruit Loops commercial.  

Verizon, via Droid, is implying “futures” in its TV work. Sprint focuses its images on the past. Quick, close your eyes. Visualize which company gets credit for speed? No contest.

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