Todd Sattersten :: Astronaut Projects

Business Reporting

I read a lot of business press. I find most of it pretty boring.

I picked up a copy of Business 2.0 this week. I was prompted by this highlight article from CBS Marketwatch. I wanted to experience the hipper version of Fortune.

The feature this month is "How to Succeed in 2004". They talked to 18 people about everything from nanotechnology to bridge. I don't feel any smarter after reading these little snippets. I don't know what to do with business advice that is delivered as trivia.

The one article I did enjoy was "The Rise of the Instant Company". I am going to subscribe for a year and see if it is worth the time to find the one good article each month.

Here is what I am looking for:

I want a magazine that makes me smarter.
I want a magazine that will make me think about business a different way.
I want a magazine that will inspire me.

Fast Company used to do that. There was energy and excitement that fueled the magazine. They told stories about interesting people and their companies and you heard about them first in FC. I looked forward to every issue.

With the dot com bust, some say FC has run out of things to talk about. I don't think that is the case. There are always interesting things to write about, but something at FC has changed. All of the articles now are PR pieces for people who are releasing books. It also seems the new editor John Bryne has decided to make FC a magazine that reports about business. The Wal-Mart piece in this month's issue is a good example. Great reporting, not very inspiring. The one place you can still find inspiration is in Seth Godin's monthly column.

The Day After

As a keen observer of business, I felt I needed to experience the day after Thanksgiving shopping experience. I have not braved the crowds for a number of years and thought it was time to try it again.

This bad idea developed yesterday as I looked through the circulars my mother brought to Thanksgiving dinner. The Best Buy ad caught my attention with 256MB Compact Flash for $40. The 32MB card we have for our Canon G4 only holds about 30 pictures. I thought this would be a good opportunity to upgrade.

My nine month old son and I left the house about 5:45am. I knew there was going to be trouble when I drove past Wal-Mart at 6:00am and the line to go in ran the entire length of the parking lot.

Shaken but undeterred, we turned and headed towards Best Buy. As we approached, every car seemed to be turning into their parking lot. We had to park a block past the store and walk back. When we got to the store, a line was still filing in even though it was 20 minutes past six.

Chaos and pandemonium are the only appropriate words to describe what was going in that store. You couldn't move down the main aisles because of the shopping cart gridlock. People were trying to plow their way to the checkout with $79 televisions and $20 DVD players.

Ethan and I found only empty hooks in the portable memory section.

A few thoughts on the experience:

• These 6am promotions are extremely effective at bringing people into the stores. I honestly thought people were joking when they said the stores were packed.


• People are driven by price. That's what got me out the door this morning.


• Do people spend more because they start earlier and have more hours to shop?

It wasn't a total loss. The brightly lit "HOT NOW" sign at Krispy Kreme caused us to take a welcome detour on the way home.

Nice New Blogs

About once a month, I pick a blog that I read and look at all of the sites on their blogroll. Like most people who read blogs, I am always looking for new ideas that match my interests.

First, I need to mention Jeremy Wright's blog Ensight. I like the mix of tech and business and personal bits. I have been particularly interested in some of his thoughts on Open Source. As a matter of fact, I was able to addsomething to the discussion.

As I was going through his blogroll, I ran across a blog that Chris Shipley maintains. Her entries are essays. I really enjoy what she has to say about how technology is changing the way business gets done. She has also written some interesting entries on personal responsibility.

If you are looking for something new, I recommend you give both of them a try.

My Adwords Update

Back in July, I posted an entry about my use of Adwords to drive traffic to this site.

Here is the stats summary since August:

Month	Clicks	Impressions	CTR
August	239	278,701	0.086%
September	299	324,611	0.093%
October	178	217,258	0.082%
November to Date	54	66,122	0.082%

You can see that the number of impressions started dropping off in October. Based on where we are at this month, we'll be lucky if we do half the number of impressions from October.

Since I started, 99+% of the impressions have been coming from content targeting ads. It seems that Google has decided that my ads don't fit with some sites where they have been showing it. They must be changing algorithms to better match ads to page content.

Following that line of logic, I would think that the click-through rate would improve with better targeting of my ads. As you can see, the CTR is essentially the same over the time I have been advertising.

The argument could be made that the 54 people who came to the site this month are better qualified prospects and will become long term readers of the blog. No way to know.

I'd be interested in hearing others' experiences.

Game Theory II

One of the basis tenets of game theory is the idea that the players must be acting rationally. This lead to considerable discussion about how often times people don't act rationally in buying or selling.

Jim's response was:

Game theory makes the assumption of rationality because this makes it easier to study human behavior. There are so many ways people can be irrational, that when you abandon the rationality assumption it's very difficult to come to any conclusion. Economists would argue, however, that in business that firms which are not rational will tend to lose out to those which are.

Game Theory

As I have mentioned in the past, I am involved in the Milwaukee Chapter of Company of Friends. The topic of our meeting this month was Game Theory. We were lucky to have as our featured speaker Professor Jim Miller from Smith College.

Game Theory is a field of economic study, where economists work to predict how companies and consumers are going to behave. It has become popular in the business community to help guide strategy and decision making. It has even been talked about on the silver screen. A Beautiful Mind was based on the life of John Nash, a mathematical who won the 1994 Nobel prize in economics for his work on Game Theory.

The majority of our discussion dealt with the Prisoner's Dilemma. This is a good description from Principia Cybernetica Web:

Imagine two criminals have been arrested under the suspicion of having committed a crime together. However, the police does not have sufficient proof in order to have them convicted. The two prisoners are isolated from each other, and the police visit each of them and offer a deal: the one who offers evidence against the other one will be freed. If none of them accepts the offer, they are in fact cooperating against the police, and both of them will get only a small punishment because of lack of proof. They both gain. However, if one of them betrays the other one, by confessing to the police, the defector will gain more, since he is freed; the one who remained silent, on the other hand, will receive the full punishment, since he did not help the police, and there is sufficient proof. If both betray, both will be punished, but less severely than if they had refused to talk. The dilemma resides in the fact that each prisoner has a choice between only two options, but cannot make a good decision without knowing what the other one will do.

This same scenario can take place between two companies when determining the price for a product. If both companies choose high prices, they will split the customers and receive medium profits. If they both choose low prices, they will again split the customers, but receive low profits. If the companies choose alternate strategies, the company with the low price with take all the customers and all the profits. The high priced company with end up with no customers and no profits.

The way this normally plays out in the marketplace is competition among companies drives prices down. We talked about the Wal-Mart cover story in December’s Fast Company. The story leads with the tale of Vlasic’s $3 gallon pickle jar. Wal-Mart’s tests showed they could move a lot of product at that price point, and they challenged Vlasic to provide them a product. Vlasic did and it was a tremendous success. 240,000 gallons of pickles per week were moving through stores. Wal-Mart quickly accounted for 30% of Vlasic’s business and the $3 jar was cannibalizing Vlasic’s other customers. When Vlasic looked for relief, Wal-Mart said no and hinted they could find someone else.

Game Theory proves something we all know – competing on price is very dangerous. Some of the strategies Miller suggests to combat this were:

• Make it difficult to compare your offerings with others - the airlines do this with frequent flier miles.
• Innovate and offer features others can’t – this is Rubbermaid’s strategy - they introduce hundreds of new products each year making it difficult for year-to-year price comparisons
• Build brand equity – this point was debatable, but you can see how people continue to buy Coke and Pepsi over America’s Choice and Jolly Good. It begs the question “How valuable was Vlasic’s brand?”

Extra notes:

Jim Miller’s book is Game Theory at Work: How to Use Game Theory to Outthink and Outmaneuver Your Competition (McGraw-Hill Trade, 2003).

Tom E., member of the Milwaukee CoF, provided some additional game theory resources at this link: http://www.fastcompany.com/cof/chat.jsp?messageid=29858

Thanks to Tim for catching a little error in the original post.

COTC at Professor B.

Check out this week's Carnival of the Capitalists at Professor Bainbridge.

As always, lots of good stuff.

Connections People Make

I don't think marketers fully consider the connections people are going to make with elements in their campaigns. I felt this way about Norwest Airlines using NWA in their advertising.

My latest gripe is MCI using the voice of Kiefer Sutherland in their commercials. Sutherland recently did a little movie called Phone Booth. For 80 of the 81 minute movie, we only hear his voice.

Celebrity voices have become common in commercials. I often find myself trying to figure out whose voice I just heard. In the MCI commercial, they have Sutherland use a deliberate and paced rhythm in the narrative.

I think it sounds too similar to the movie. Let me say it doesn't leave a positive impression. I actually get a little freaked out hearing the voice of a sniper trying to sell me a comprehensive phone package.

Jewelboxing

I have been following Jewelboxing since they launched their website a couple of weeks ago. Their product is a better jewel case for CDs and DVDs. The 'indestructible' case comes with perforated and scored paper inserts. The intended market is creatives and designers looking for a better way to present their product.

They have been using a daily blog to talk about their progress. They've talked about professions they should target. They have hinted at some promotions. They have discussed the merits of various payment methods. Since they have started shipping product, they mention the cities they ship to each day.

I think it is a great example of using blogging to pull prospects and customers into a company's story.

P.S. I also love 5inch.com for cool trigger CD cases.

Congratulations! It's A Boy!

By now, you have probably heard about the arrival of United Airlines' new offspring, Ted. The new low-cost flavor will be available in Denver and fly to nine destinations around the country. The better story is how everyone found out about Ted.

People around Denver started getting flowers and pizzas from someone named Ted. This report in the Denver Post is from last Wednesday (Nov. 6th) as the buzz was growing. It details some of the other Ted sightings from fans at the Nuggets game chanting "Go Ted" to town criers on street corners with signs saying "I'm not Ted".

This is a great summary of the campaign from Business 2.0 [subscription needed]:

Ted promises to be a textbook case in how an old, stodgy company can revitalize its image through innovative marketing. The key ingredient in this successful guerilla campaign was drama. United dripped out its mysterious message without ever tipping its hand -- a crafty approach designed to create buzz and curiosity in even the most disinterested consumer. (Who, after all, doesn't like a mystery?) So one day, out of the blue, a Ted marching band appears in downtown Denver. "Ted is a native" bumper stickers show up on cars and SUVs around town. Taxi drivers begin wearing "Ted" baseball caps. The next day a billboard blares, "Knock knock. Who's there? Ted." Other signs and posters follow with slogans like "Ted is fun" and "One word: Ted." Then someone named Ted buys lunch for everyone in a local Chipotle restaurant. As the sightings pile up, each is detailed at www.meetted.com, a website that, by deliberately playing it coy, itself adds to the overall mystery. A buzz ensues, media outlets pick up on the story, and suddenly, United has made a splashy entrance into a new market.

The campaign was brilliant. I think it shows the importance of company names in the creation of brands. It shows how effective word of mouth and viral marketing can be, especially in small geographic areas.

Marketing has done their job and delivered the audience.

I hope the rest of "product" is as creative. WSJ's article said reservation line is going to greet with, "Hello, this is Ted."

I think that is a good start.