Tuesday, September 20, 2011

Social Media, Consumer Behavior and the Internet

For more and more aspects of our lives, the Internet is the "everyday
answer." For travel, almost everyone uses the Internet over a travel
agent or calling an airline directly. Surprisingly, financial services
have overcome privacy and security concerns and now most people bank
online. This follows the acceptance of the ATM in lieu of branch
visits, so perhaps is not too surprising. We see that people are
managing their careers online, whether with job search (Careerbuilder)
or resume management (Linkedin). Even finding love (Match.com) or
other relationships (Craigslist or hookup.com) is more and more the
mainstream. We read that most people buy goods in stores, but Amazaon
and other shopping sites are generally accepted. Most people do not
use Skype to call, but more people adopt it for one-on-one connections
with distant friends and family.

The power has certainly shifted over the past decade. Comfort with the
Internet has grown dramatically, as fear has subsided. Usage is
growing steadily, but that usage is not uniform. Most people do not
blog, but people increasingly "post" their status on Twitter, Facebook
or Linkedin. Indeed, for those under 18, over 50% receive their "news"
from blogs and message boards. Even journalists promote blogs as they
seek an audience and freedom from the newspaper owners they generally
despise. Blogs are no longer the online equivalent of "public access
cable."

Think about how we increasingly investigate what ails us. There is so
much information, both pedestrian and highly technical, about medicine
and our health. More and more people use the Internet to try and
self-diagnose. What does this say about our confidence in our General
Practitioner? I hear more and more Doctors complain that their
patients don't tell them their symptoms but rather tell them the
various things they think they have and why.  How will this change the
way that pharmaceutical manufacturers promote their drugs and
therapies?  Will they continue to press the flesh of Doctors with
their free samples and sales representatives?  Will they need to
change to a more direct model based upon the power of our connected
world?

The other major change in the past decade is that we no longer "surf
the web," we "search the web." Unlike TV where people will turn on and
browse about for something to watch, going to the web is less and less
an experience without a specific purpose or destination. Let's
contrast this with our television viewing behavior.
We generally do not "watch a show; we watch TV."  A similar behavior
occurs people peruse Facebook or Twitter just to see what people are
doing and talking about.  But this tends not to be best for
advertisers because the level of engagement is shallow.
Interestingly, with "appointment video viewing," whether on demand, or
recorded, the internet behavior of "point and shoot" is slowly
migrating into our television behavior.  This has profound
implications for media and advertisers.

I am very confident that the practical aspects of the Internet will
insure continued growth -- gathering information and transacting. My
word of caution for all this is over the very nature of consumers. We
are comparative (good for the web), compulsive (good for the next cool
thing) and satiable (bad for doing the same thing over and over
forever). Basically we like choice. If we don't have something, we
want it. But once we have it, we don't want it anymore. Where this
becomes problematic is for social networks like Facebook. So long as
the community can sustain itself with interesting things, then it will
work, but like so many others...when it is no longer "cool" because
"everyone is doing it" (especially for the next young generation),
then a new "exclusive and cool" network will emerge. Remember, great
consumer marketing always seeks to segment the audience to improve
sales and margin. The social network "market" may well do the same --
consolidate and fragment. It is in the very nature of capitalism as
Schumpeter taught us in his theory of creative destruction.  Just as
we are seeing the struggles at Netflix after being the "it" streaming
company, we must remember that true barriers to exit and entry are
difficult to maintain in a digital world.

So how are we consuming entertainment and media? Initially, when we
accessed the Internet with dial-up, media usage was limited. Today,
with broadband "always on" and with high speed service, we see that
media consumption is rapidly changing. There are several interesting
trends. First, young people are watching TV and movies on PCs, laptops
and Tablets (legally with Netflix and illegally with Surf the
Channel). This is a natural evolution from the "time shifting" of
DVRs. We expect to watch what we want when we want thanks to TIVO.
Second, more and more people are watching television with an iPad,
smart phone, PC or laptop in the same room or literally in their hand.
Call it multi-tasking, but for more and more people, the Internet can
enhance the TV experience (answer questions, communicate with other
fans, etc). Third, the future of TV is that TV will become more like
the Internet. Next up will be tCommerce, where we will be able to
purchase directly from our remote control. All the cable and satellite
companies are working on this. Fourth, there is no good news for news.
All demographics are getting information from the Internet and their
mobile phones. Newspapers will need to drop "papers" from their name
soon enough. Radio is ok because of the car, but that's about it.
Internet radio is even better at discovery, the key to radio's
success. Magazines may be ok for a while, but now that iPads and
Tablet PCs can give us the big photos and big ads (interactive), they
too will be forced to exit the "cutting down trees and printing with
ink" business.

In summary, people are increasingly living their lives on and through
the Internet. My advice to advertisers, publishers and businesses is
to think of the Internet no differently than any market. Focus is
better. Keep it simple and effective. Understand that every consumer
is unique, that segmentation is required, and that choice is good.
Next, everything we expect from the web on a PC will move to mobile
phones, tablets and our big-screen television.  Finally, I share two
words of caution.  First, the most technically advanced are already
beginning to push back against too much tech and intrusion into their
lives. People are becoming reflective about being tethered to devices
24/7. Many are saying "enough already." As a consequence, advertisers
must be careful to establish when and where they will be so people can
understand and accept. Control must remain with the individual.
Second, the medium for media is rapidly becoming the application.
When content is completely immersed within the application (see
Oolaya.com) then how people become aware, consider, share, form
preferences, purchase and are serviced radically changes.  People get
ready!

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