Life Without Ad-supported Products and Services

Got privacy concerns? In a recent study, 63% of U.S. adults (nearly 2 out of 3 people) said they would be unwilling to give a company access to their personal data for targeted advertising in exchange for a free service. Shockingly unbelievable! Despite all the recent consumer and political fallout about consumer privacy and ad targeting, what would life really be like without advertising-supported products and services?

Let's think about that, shall we? Starting with the 800-pound gorilla...

Google Search: You could probably still use this, but without behavioral targeting and tracking, paid search ads may seem less relevant because it'll be like going back in time 10 years when results were largely based on keywords and bids from the auction model. You may think you're mostly interested in organic search results and probably don't care about the paid listings. But don't expect Google to continue investing in indexing organic results if it can't pay its employees! Here are some alternative private search engines to Google.

YouTube: Google paid a lot of money for YouTube ($1.65 billion) and they have spent years trying to monetize it. Only recently, thanks to the growth of mobile and video advertising, does this acquisition appear to be paying off. YouTube has struggled for years to get consumers to pay for a subscription. Without advertising, YouTube would essentially be gone. There is really no alternative to this platform. Even Vevo realized this recently and announced the shut down of its consumer branded sites to focus on its YouTube channels!

Google Maps: This is the most popular mapping and GPS/driving direction service.  Google has tried to sell ads based on location and behavioral targeting. Other online maps also rely on ads. So if you want to avoid ads 100%, you will need to buy a Garmin or a similar device that makes its money from hardware sales, not advertising.

Gmail: You might think Gmail is ok as Google claims it no longer scans emails to serve ads. But it is still scanning emails in the name of personalization. For example, Google knows when your next flight is leaving, and whether or not it has been delayed, based on emails you get from airlines and travel booking sites. Also Gmail has an ad product, although you may never notice the ads if you have your settings set to not display Promotions. But Gmail ads do offer advertisers lots of targeting options. Where do you suppose Google gets those signals from??? Lastly, I feel Gmail is a Trojan horse play for Google to incentivize users to create a login (and stay logged in for checking email constantly) and user profile, which in turn can be used for your login across all Google products in order to track you with more precision across the web and across devices to serve better ads within its ecosystem. If you don't want an ad-based "free" webmail service, you may have to start using your ISP's "free" email address that came with your broadband service (e.g., Comcast, AT&T). The trade-off though is the switching cost is high if you ever want to leave your Internet service provider because you will have to tell all your friends they need to email you at a new email address. That happened to me years ago when I switched from Mindspring to Gmail.

Android Phones: Know that Android-based phone you have from Samsung, LG, or Motorola? While the operating system was free to phone manufacturers, Google uses Android as yet another Trojan horse to get mobile users to use its popular ads-based mobile apps, such as those described above, that are pre-loaded on the phones to protect its dominant advertising position in desktop and mobile devices. One alternative is to get an iPhone.

...And then there's Facebook

Facebook: By now, we all know how Facebook collects tons of data about users without their knowledge in order to provide incredibly powerful targeting capabilities for advertisers. As a digital marketer, I can attest to how precise and effective their ad products are. But as a consumer, you won’t easily find another social network where all your friends are.

Instagram: Thinking about leaving Facebook to Instagram like a teenager? Not so fast, Instagram has largely adopted the same ad platform as Facebook.

WhatsApp: How about WhatsApp? The founders built the app based on privacy concerns and started out charging 99 cents a year. When you have over 1 billion users, that's not a bad revenue model. Unless of course someone (i.e.. Mark Zuckerberg) paid you $22 billion for the company 😉 If you haven't heard, the founders of WhatsApp have fought Facebook executives for a while to keep ads off WhatsApp and are leaving Facebook over this philosophical difference. And it seems ads are coming soon to WhatsApp.

All other social networks, like Snapchat, are also ad-based. So there's no alternative service at scale really. Perhaps this will lead to a renaissance when people will actually call people on the phone again or meet friends face-to-face.

Other popular ad-based services

Yelp: Who doesn't love Yelp for recommendations? The company has ads, but it has limited targeting abilities, mainly based on a user's keyword search and location. So you can decide if that creeps you out. Also, Yelp has been building out other revenue streams targeted at businesses, like request-a-quote, that is not ad-based.

News sites: Most are ad-supported, but many don't make enough money to offset their declining print revenue. Savvy papers with loyal followers, such as WSJ and NY Times, charge a subscription and some have tested micropayments per article. But if you don't like ads, your selection of news sites is quite limited.

Mobile games: Many casual mobile games are still ad-supported. Part of the reason I think that's the case is because ad platforms have made it easy for developers to integrate ad units within their game for monetization. Many don't want to charge a fee for each download, thinking it will negatively impact app adoption. (True!) Some have found success with a freemium model, like Fortnite. But selling virtual goods does require developers to work harder to figure the "hook" to get users to pay and to develop a store in the app to sell these virtual goods.

TV: TV shows are still largely ad-based. TV started that way and some could argue there is a sea change. Netflix has built a very successful subscription model with original content and zero ads. But most video on demand or over the top (OTT) TV streaming services are currently testing a hybrid model that includes a "modest" monthly subscription fee and targeted video ads. Think Hulu, Sling TV, Directv Now, and YouTube TV.

Not all hope is lost

Not to be all doom and gloom if you don't want to use ad-supported products, as there are a few companies that still offer products and services not based on advertising.

Amazon/Amazon Prime: If you're not one of the 100 million people on Amazon Prime, you should be! This paid subscription gets you so many benefits, that I can't even list them all. Go read it here for yourself. That being said, Amazon has been slowly developing a burgeoning advertising business on its site because most people start product searches on Amazon rather than Google. As this becomes a growing revenue source for them, how long before Amazon engages in behavioral targeting for advertising, much like how it has successfully mined customer browsing and purchasing data on its site for its recommendation engine and tested ad-supported, discounted Kindles?

Apple: Apple is the poster child for anti-ad-supported products, even if its legion of app developers depend on ads for monetization. Not a week goes by these days that CEO Tim Cook is not poking a stick at Facebook and its lack of consumer privacy practices. But Apple is a highly-profitable hardware and services company, not an advertising company like Google and Facebook. So product sales and subscriptions will dominate for a long, long time!

Microsoft: Many of us interact with Microsoft via its Windows and Office products. As such, it's primarily a B2B company and makes a ton of money from charging businesses and home users for subscriptions to Office and operating system licenses to computer manufacturers. And their Azure cloud computing business is growing like gangbusters that is also subscription-based. It sells some Xboxes to consumers at retail and also generates subscriptions from online gaming. It does have the Bing search engine and an ad business. But for the vast majority of consumer's interactions with Microsoft products and services, they're not really ad-supported.

Netflix: Unlike the OTT TV streaming services mentioned above, Netflix has scoffed at an advertising revenue model and is focused on subscriptions. If their stock price is any indication, they are doing just fine without ads!

Spotify: Spotify and other music streaming businesses all seem to have landed on a $10/mo subscription model. Some like Pandora still have an ad-supported "free" option. There is also talk of Spotify developing an ad business.


So there you have it. Can you 2/3 of Americans out there really live without these ad-supported services? And how much can your wallet take to keep paying for existing subscription-based services, like Amazon Prime, Netflix, Spotify, Hulu, etc.? The dollars add up quickly, don't they?!?

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Why Intel's Internet TV Business Had No Chance

This week, there were rumors that Intel was likely to sell its Internet TV venture to Verizon.

I am not surprised. Even with all of Intel's vast resources and over 300 employees behind it, the TV service is on the auction block. What went wrong? A lot!

I believe the service was doomed from the beginning. It probably looked great on a PowerPoint slide in the board room. A nice white space in the upper right quandrant of a 2x2 matrix that represented a big growth opportunity for the company.

If a proper Market Opportunity Assessment (MOA) was done years ago, by looking at the market/industry dynamics, competitors, customers, and the company's capabilities, Intel should have realized this was not a good idea. Here's my armchair strategic take on things.

Company

Intel is a hardware company no matter how you look at it. It's not a media company or a telecommunications company. Even its previous foray into communications (on the hardware side) didn't work out. It's really hard to be something different and hardware + service or hardware + software is one of the greatest challenges for any tech company. Look no further than Microsoft and its hardware ambitions (Zune, Surface). Samsung is trying now to build out its software capabilities, and just had its first developer conference in San Francisco last week. Few companies, like Apple, have pulled it off. Basically, media is not the company's core competency and its failure to secure any content media partners reflects that.

Competition

Has Intel learned nothing from watching media companies and cable/satellite companies fight and go into blackouts from soured negotiations? Why would you want to get into that space? Not only that, Intel would face additional competition from deep-pocketed tech competitors, such as Apple, Google, and Amazon, who also have their eyes on the same prize! But unlike Intel, these tech giants have experience negotiating and securing deals with music and media companies for their online app stores.

The supplier power from the oligopoly of the major media companies may have been underestimated. These media companies are paranoid and threatened from all sides. (Anyone appreciate the irony of Intel ex-CEO Andy Grove's Only the Paranoid Survive in this case?) Cable TV, satellite TV, Netflix, Aereo, Bit Torrent, and then Intel comes a-knocking. Is anyone going to return Intel's call? Some, like Netflix, have started to show their potential value as a partner to these media companies. But what did Intel bring to the party besides some buzz on the UX of its interactive TV guide?

Customer

I don't believe the Intel brand has brand credibility or license to go into consumer living room. Remember how Viiv failed and quietly went away? Viiv was Intel's attempt to be a home entertainment hub. Intel also has a poor track record in consumer electronics. It used to sell digital cameras, MP3 players, and Intel Play PC toys. That business was eventually shut down. Intel Inside, despite being one of the greatest branding stories of all time, has its limits.

Conclusion

While I am impressed by how Intel continues to innovate in the microprocessor space and I personally prefer Intel Inside my PC, it's a whole different story to want it in my TV.

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Two Months In with my Windows 8 PC

When Windows 8 launched at the end of October, my wait to get a new PC was finally over. I was really looking forward to the upgrade. I ended up buying a mid-range Dell laptop...but without a touchscreen and not a convertible.

The Metro UI is the first thing one notices after boot up and is certainly different for a PC. At first the live tiles were neat. However, I soon realized its diminishing value since my desktop screen is not idle a lot. Unlike a tablet or mobile that likely sits idle for a period, when I am on a PC, I am actively doing stuff and not wasting time staring at live tiles updating. I could also see this being great for a touchscreen kitchen appliance (or having a tablet propped up serving the same purpose). As a result, I always immediately pop out of Metro and back to the classic Windows desktop mode after boot up.

Speaking of boot up, I am so glad the boot up time is under a minute now. I also like the fact that you can have a nice background image greet you on the login screen. I've been staring at the beautiful skyline of Seattle the past few weeks because I haven't figured out what I want to replace this default image with yet.

I also like the built-in integrated email program, allowing me to sync up and see my various email accounts in one place. The same is true for the built-in calendar program. Neither of these however is a new innovation as this has been around forever on smartphones for a few years. It just took Microsoft to get it right on the desktop.

One downside I've noticed is my Google Calendar doesn't sync well with the built-in Calendar program. Old items don't get deleted in Windows 8 and new items I add in Windows 8 don't show on my Google Calendar -- even hours later. So, I only use it to check something quickly, but I more often just launch Google Calendar from my web browser.

Windows 8 also has Microsoft Essentials, which includes a photo manager and Movie Maker, is ok, but it feels like they are paying catch up to other programs like Picasa and iMovie.

"Under the hood," the operating system seems more stable (knock on wood!). It doesn't seem to crash as much and when I went into Task Manager, there's a new UI and a lot more features.

My 3 biggest pet peeves are the following:

1. Why did they take away the Start menu in the lower left that also had the list of all Programs? How am I supposed to launch the programs I use, like PowerPoint? This took me a while to figure out some options. I ended up creating a new custom toolbar on the task bar that basically pointed to the Programs folder. A very easy trick. I also realized I could customize tiles on the Start screen to list my favorite programs, but the beauty of having the Programs menu was it had everything and didn't require me to do any customization!

2. I also don't like the menus and screens that pop up from swiping from left to right that switches apps accidentally. Or some times when I am working in Word or any program that has scroll menus on the right, I accidentally activate the "hot" menu on the right because my cursor is too close to the edge. Annoying!

3. Without my familiar Start menu in lower right, I couldn't figure out how to shut down at first. Then I discovered it's less intuitive now and feels like it takes more steps. You have to pull up the "hot" menu on the right of the screen, then click Settings, then Power, and finally choose Shut Down. I also discovered I can do Ctrl-Alt-Delete, then select Power button on lower right, and then choose Shut Down.

What am I going to do about all this? Nothing. Just get used to it until I discover a hack to change things. =)

What do you think of Windows 8?

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Good Move: Re-branding Hotmail as Outlook.com

Microsoft announced it is going to re-brand its hugely popular Hotmail web mail service as Outlook.com. That's a great move from a branding perspective.

Hotmail has gone through various brand names from a brand architecture perspective. When it was founded in 1996, it was just Hotmail obviously.

When Microsoft bought them in 1997, it was a great strategic move to enter a hot (no pun intended) space. Hotmail got an updated logo.

Then in 1998 it was co-branded MSN Hotmail when it was integrated better with other Microsoft online services. I would've co-branded it with MSN sooner to transfer the brand equity from Hotmail to Microsoft and MSN sooner, but I suspect it wasn't a branding decision but a technical decision (when it was better integrated to MSN) that this was done later.

Then in 2005, when Windows Live was introduced as a new platform for Microsoft's online services, MSN Hotmail was going to be Windows Live Mail, which I thought was a mouthful. But during the beta test, they realized users still preferred the Hotmail name. So what happened? The name go longer and became Windows Live Hotmail. It was bet at the time by Microsoft that the Windows brand could extend from desktop PCs to online. I'm not so sure Windows Live achieved that.

  

And here we are today. Hotmail is now Outlook.com.

I think it's a good move to concentrate their web mail brand equity around Outlook as the online communication hub. Outlook already has that equity from the desktop. Windows Live never really stuck when it was applied to online (Windows Live Hotmail) and desktop (Windows Live Mail Desktop replaced Outlook Express). I always thought Outlook Express was a better name for the consumer email application vs. Outlook for the corporate email application.

Since Outlook is so well-known for corporate email, one could argue it does not need strong Microsoft, Office, or Windows brand linkage. And not even Hotmail. Let's see what happens...

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Major Web Portals Running Logout Ads

Big online properties, such as Google, Facebook, Yahoo!, and Microsoft are trying to further monetize the millions of eyeballs who visit their sites every day. In particular, web mail services are used multiple times a day by users. Google (Gmail) and Yahoo! Mail have employed behavioral targeting ads based on scanning email contents for a while. Microsoft (Hotmail) has recently started to do something similar. I don't know about you, but I've developed ad blindness to these ads which often appear on the right hand rail and can be creepy to some users.

Recently, the major "portals" have created ad spots that appear when you login or logout of webmail or Facebook.

Actually, Yahoo! has done this for a while. And it's a good brand advertising unit because you definitely can't miss it when you go to login to Yahoo! Mail:

But when you logout of Yahoo!, it goes back to the regular home page, with its standard ad placements:

As for Gmail, Google's ad sales teams have been promoting an ad unit (i.e. State Farm ad) that appears once a user logs out of Gmail:

And unlike Yahoo!, Google doesn't currently have ads on the Gmail login page:

Hop over to Microsoft's Hotmail and there does not appear to be any advertising units when you login: 

...Or when you logout. Hotmail throws you back to MSN home page, similar to Yahoo!:

What about Facebook? It's not a webmail service, but it certainly has millions of users communicating with each other on it daily. Facebook recently announced log out ads at its first Marketing Conference. Come April it could look something like this when you log out:

Also, there doesn't appear to be any changes to its familiar home page for logging in:

But here's the big question: How many people ACTUALLY logout of webmail or Facebook?

Facebook claims 37 million people logout daily. Assuming there are 483 million daily active users, that's almost 8% of active users who logout each day and may see an ad. Certainly a respectable number of impressions when you are as large as Facebook. But I'm still shocked people logoff. I, like most people, are always logged in and only logoff when I have to shut down the browser tab or window, in which case I would not see the ad.

But let's say I DID want to log out. I am usually doing that intentionally in order to accomplish another task. Sometimes it is so another user or I can login as a different user. So, how long am I really paying attention to that page? Also, I can see another use case where one logs off because s/he is on a public machine (e.g., library, school computer lab, Apple store) in which case you'd probably close the browser window completely ASAP and go on your merry way. Are you really going to pause and say, "Oh wait. I think I'll watch that State Farm video on YouTube before I go..."

Moreover, beyond ad impressions, I'd like to see click-through rates for these ads. Yes, I'm skeptical about the effectiveness of these logout ads. Are you?

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My 2 Favorite Mobile Infographics This Week

I'm an infographic junkie. I thought I'd end the week by sharing 2 great infographics recently released with great stats for mobile marketers.

The first was put together by Chomp, 148apps.com, and Chillingo that commemorates Apple approval of 500 million apps for the App Store. It offers a walk down memory lane of Apple's highly successful App Store and key milestones, as well as great stats on the distribution on the types of apps, price of apps, most popular apps, etc. You can click on the image below for the full size of the super-long infographic.

Click image for full-size

The second infographic is from our friends at Microsoft. The Tag team compiled stats on mobile commerce and offers some interesting insights on how mobile fits into the customer shopping journey.

Click image for full-size

Enjoy and TGIF!

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Encarta Shuts Down, But What About Student Impact?

Today I learned Microsoft was shutting down Encarta. Growing up with my physical 29-volume set of encyclopedias, I've long accepted the fact that the web has transformed the encyclopedia business.

Many cite Wikipedia contributing to its demise. No surprise. I like Wikipedia, but I also see the value of an officially published resource. TechCrunch jokes about how the Wikipedia entry about Encarta's demise is already updated, while there is no update on Encarta's own site about its own fate.

Even though Wikipedia leverages the wisdom of crowds, should it always be treated as a "legitimate" referenceable source in a student's report?

I am more worried about the broader impact on students and their digital literacy. Are kids today being taught to discriminate between fact and opinion online? I worked with K-8 students a few years ago, and I would see students list Google as a source in the References section at the back of reports. Hello, that's a search engine, not a source! Or educating kids on the fact that just because it's online, it's not always true.

Should teachers accept Wikipedia as a citable source? Whether you liked Encarta or not, it is sad to see a trusted resource shut down because it is students that lose.

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