The Economics of Online Music

Short & sweet today. I’ve been talking with a new on-line music portal www.bandit.fm being pioneered by Sony BMG here in Australia. Downstream are looking at potentially partnering with Sony to help build an audience for their new service.

Now anyone that knows me, knows how much of an Apple fan I am. I think anything Apple touches, generally turns to gold. Apple have successfully become the trail blazer in almost every product category (think iMac, iPhone, iPod, Mac Books of all types and descriptions). They’ve also revolutionised the consumer software market with easy to use intuitive applications (think iPhoto, iMovie, iDVD and before anyone cans me the whole iWork suite, awesome productivity suite for $99! Let’s also not forget iPhone apps – just brilliant way to build and scale your mobile platform).To date no brand really comes close to Apple’s innovation and foresight.

But when it comes to music, I think there is a true challenger that could really take it to them. Sony have developed what I believe is the BEST music site / portal on the market today.

New iTunes killer

I think it is the best for the following reasons:

1. Great content – they’ve developed the site intuitively with a mixture of channels, artist specific pages, video, news feeds etc. You can engage in specific genres like R&B, Hip-Hop, Rock, Pop or you can navigate to specific content rich artist pages like N.E.R.D, John Legend, Duffy etc etc.
2. Great site build – mixture of indexable HTML & interactive flash elements, URL structures, title tages, H1 tags etc
3. Downloads are easy after simple registration process
4. Music & videos are DRM free
5. Great experience – you can listen to a whole song or view a video in high quality full screen mode vs. Apple’s 30 second preview function
6. Not constrained by an app like iTunes – you can access it from any browse
7. Easy content network integration (PPC) into YouTube & Myspace. They are “THE PLACE” to view music related content.

Specific Music Genre Channels

Usher on Bandit.fm

The site will work very, very well for Paid Search / PPC campaigns, the site structure allows you to deep link to exact content as well as being able to achieve great quality scores which impacts highly on economical bid prices and as content is more compelling than iTunes, I believe with a much higher conversion process too.

The site also has very high potential to work very very well for Social Media, as the site structure let’s consumers be very specific about their Tweets, blog postings etc and create specific interest in genre based content communities. One area they could approve is allowing their content to be aggregated and syndicated on other sites, think embedding audio files or video files to MySpace or Facebook profile pages with pre & post roll Bandit.fm ads promoting their service – very economical way to drive new subscriptions, downloads or cross sell new artists / releases / albums.

So the product I think is truely world class, if this is release 1.0 I can’t wait for new versions updates. Bandit.FM can successfully take on iTunes and Apple in the market they really pioneered and commercialised (on-line music), and hopefully give consumers a compelling reason (safety – no viruses / Trojans, reliability ets) to BUY music rather that steal it from sites like Limewire.com. They only have to carve out small incremental percentages of the on-line global market to create real value & high return for their pioneering investment in on-line music. Congrats to the whole team at Sony BMG!

If you are into music give it a go.

Economics of the Superbowl & Search Marketing

We all know the Superbowl is famous for advertising, it is the single biggest event or forum where the great North American ad agencies can flout their talent strategically and creatively to a reported audience of over a billion people. Clients like Pepsi, E-Trade, Sony Pictures, Budweiser and Audi (to name but a few) spend upwards of USD$3M (AUD$4.651M) a spot to engage an audience and create an impact for their brand or product. With an audience of well over 100m alone in North America, cost (think USD$3M+ for the TVC, plus media) and you’d think in today’s world of integration every brand would be seeking to leverage the event and extend the engagement potential of such an expensive and potentially high yield opportunity…yes?

Well unfortunately the answer is NO for some of the brands that took part in the Superbowl. Some major brands missed the opportunity to drive people on-line and extend the brand experience from TV to digital, one of the easiest forms of integration that delivers a significant punch for an advertiser.

A cost of entry in the “Big Ideas” business is a micro-site these days, at least a 2 second URL at the end of the TVC, or if you’ve woken up to the consumer of the 21st Century maybe even a Search program with a simple keyword that relates creatively to the idea.

The benefits:

1. Extended brand immersion / experience / time with the brand
2. Extension of the creative idea into a more personal self directed environment
3. A captured profile, conversion or viral element etc – you choose
4. A proxy for the effectiveness of the media placement / creative idea (i.e. what % of the audience did you engage within 24 / 48 / 72 hrs etc)
5. An amplified campaign with a greater ROI for a marginal increase in investment.

Adage reports only one in five (circa 20%) of advertisers directed viewers with a specific call to action in the TVC, miraculously the highest in the past five years. Conversely, Gartner reports 65% of advertisers did construct specific Search strategies to leverage the opportunity (up around 20% on last year).

The reported Search integration winners included E-Trade, Cash4Gold, Frosted Flakes, CareerBuilder, Diet Pepsi Max, GoDaddy and Pepsi. The losers; Budweiser, Chase Bank, Denny’s, Pixar, Vizio, “Year One,” “Angels & Demons,” Taco Bell, Bud Light, Bud Light Lime, Heineken, “Transformers 2″ and Coca Cola, they missed it by a mile.

Here’s how Super Bowl advertisers ranked based on the change in Daily Reach on Super Bowl Sunday.

Download the full TNS report on Superbowl effectiveness here.

In simple terms the failure to think of constructing a Search strategy around a specific creative idea / execution had a high probable  opportunity cost. Think of driving just 0.5% of your available audience on-line – 500,000 users @ est. $0.45 / click is a small additional marginal investment of $225k. Maybe less than 2.5% of the total TVC program cost.   Scale this at 1%, 1.5% and the opportunity cost is significant and the potential ROI is off the chart. The equivalent cost to generate that audience through traditional digital media would be 20 to 40 times the cost.

Here in Australia, this level of thinking hasn’t even yet started to permeate advertiser or agency thinking. Connecting Search to ATL activity is seen as bleeding edge, let alone including a specific keyword as the CTA in an execution. Google’s research indicates on average only 2% of consumers can recall a campaign URL as a CTA , vs. 55% from a specific keyword. Good news is there is a massive first mover advantage in this space.

View the winners & losers below and just think how easy it would have been to construct a great Search program & maybe even incorporate a keyword as a CTA. Lets hope we see this soon in Australia.

Brands that hit it!

Cash for Gold

E-Trade

Frosted Flakes

Careerbuilder.com

Pepsi

Brands that missed it!

Budweiser

Dennys

Movie – Angels & Demons

Bud Light

Audi

Economics of site design

Today it seems every integrated campaign has a micro-site, as it should. Having a great digital experience that consumers can navigate to increases brand engagement, understanding, preference, consideration and should provide entertainment or a compelling experience that enhances a brand or products success. On-line success can be defined by a multitude of different metrics or on-line success events. The real question is how to create a disproportional impact from a creative idea, media budget or campaign mechanic.

What I find surprising though today are the number of sites that can’t be found by consumers through Search engines. The offending culprit all to often is bad site design, a lack of understanding in how the Search engines index and rank sites and more often then not a digital creative directors complete obsession with flash, justified by “creative priorities” outweighing effectiveness goals. The truth of the matter though is creativity and consumer experience does not have to preclude a sites ability to found and indexed.

Why is Search so important?

Like it or not, Search is the primary way consumers choose to navigate the web. In Australia more than 90% of consumers find new sites through Search engines, not expensive banner ads or sponsored emails with very high CPC’s and low CTR’s. Having to rely on expensive, low yielding digital media makes a campaigns life span finite and limits reaching the heights of ROI.

Search engines are also the easiest point of interaction for consumers, “I see an ad (TV, print, outdoor, on-line content, work of mouth – WOM etc) and I go straight to a query box and get exactly what I asked for. Search engines provide engaged, relevant results for engaged consumers when they are actively seeking out specific information. Search (both SEO & SEM) is also the lowest cost channel to engage consumers. Effectiveness studies, has proved time & time again that Search is 10 to 15  times more cost efficient and creates more value than digital display or other types of digital media.

Even if the channel planner has been insightful enough to include paid Search (SEM / PPC) the campaign will suffer from a low quality score as the site will not be able to be spidered, indexed etc and this leads to a poor quality scores from the Search engines. This then results in artificially high CPC’s and will burn budget very quickly. The whole quality score issue though is a topic for post, so more on that later.

The Answer

Ensure any new site build is built in a HTML with flash elements embedded within site. Also make it a mandatory for the site have a full HTML back up version for non flash users (even though flash penetration is 97%+). Also ensure all sites have HTML site maps the spiders and bots can read and index.

This will allow:

1. Site to be indexed properly for natural Search purposes, if it is full flash it NEVER will be indexed. Take advantage to the low / no cost traffic available. Remember around 70% of consumers click on natural Search rankings and 90%+ of all consumers use Search engines to navigate the web. You do the math, this is a big audience you can’t neglect through bad process, development skills, creative priorities and decision making.
2. Better SEM / Paid Search results as the site will be awarded a positive quality score – your budgets will go considerably further, resulting in larger more engaged audiences and better ROI for your total campaign. Great for effectiveness case studies and your client will think your working in their best interest, not yours or the media agency’s.
3. Take advantage of the massive trends in mobile device web surfing. As devices such as the iPhone get better and better, penetration increases and mobile data costs fall more consumers will be both Searching and visiting sites away from the desktop. Complete flash sites can’t be read on any mobile device currently. Take advantage of this huge consumer trend and don’t neglect your traffic.
4. You to justify larger creative / development budgets because your campaign will be more effective. Break the 80/20 rule where the majority of a client budget goes into costly inefficient media. The fact is you can probably do an even better job with 50% of the budget going into performance media and Search, while allocating the remainder to a better more engaging site.

Great examples of Campaign Micro-sites

Optus Broadbandmenu.com

Optus Broadband Menu

Optus Broadband Menu

What the Search Engines can see

Optus Broadband - Search Engines can index content

Macquarie Bank - Platinum Credit Card

Macquarie Bank - newformofcurrency.com

Macquarie Bank – discoverable by Search Engines

What the Search Engines can see

Room for Improvement

The Lynx Effect

Search Engine – Google Snipett (no site description)

Lynx - Googles page description

What we see

The Lynx Effect

What Search Engines can see & index

Lynx Effect - Search Engines see nothing

Rexona Million Balls

Search Engine page description

Rexona

http://millionballsmission.com.au/

What the Search Engines see

millionballsmission.com.au - Invisible to Search Engines

You be the judge on what makes more sense from a marketing ROI perspective.