Inside Lucky Magazine's LiveToBuy

LivebuyitReaders of Lucky Magazine will be able to pay for goods mentioned in that publication by text messaging, thanks to a new program co-developed by Conde Nast, PayPal and NY interactive shop Anomaly.

Sephora VP of Retail Marketing Allison Slater -- clearly not afraid of new marketing approaches -- joins Avon, Liz Claiborne, Estee Lauder, L'Oreal, Perry Ellis, Target and Unilever's Sunsilk haircare line in LiveBuyIt. This story, which broke in the July 10 NYTimes, mentions that the companies that participate are among those the companies that are buying a full-page color ad - currently $165,000 for the 1x rate.

Unlike Conde Nast's earlier ShopVogue.com initiative -- which I estimated brought in $1 million in additional ad revenues -- this new initiative takes two major risks: will people (1) buy using their mobile phones, and (2) will they do it via PayPal?

Earlier research shows that the average shopper conducts 13 searches before making a purchase. If this trial shows that a single mobile search eliminates the need for 12 more comparison searches over the web, this could be a major development for marketers.

Text2Buy, which was developed by Anomaly with PayPal, represents a much more sophisticated approach than previous interactive media added-value programs. LiveBuyIt is a much more focused approach than the Hearst Co's $10 million 30 Days of Shopping campaign, which is reportedly combining blogs, podcasts, text messaging and other interactive marketing vehicles to capture information on what people are buying. Lucky Magazine publisher Alexandra W. Golinkin hopes to launch a "Text To Try" program where shoppers purchase samples of advertised goods using micropayments.

Anomaly reportedly receives a percentage of sales from purchases made through Text2Buy (see previous coverage including processing fee breakdown). 

PayPal has to move fast. Incremental promotions with marketers like Burger King may be useful at selling penny-ante merchandise but do little to change the rules of the game. The advent of Google Checkout - illustrating eBay's increasingly limited growth upside, relative to more traditional businesses - may have already played a role in precipitating the resignation of eBay COO Brian Swette.

Link: MediaPost interview with Anomaly Chief Strategy Officer Mark Kaplan on the future convergence of mobile and mass marketing.

IEG's Take on Emerging Sponsorship Categories

InspirationIEG released its list of emerging sponsorship categories, which destinations might find useful as they seek out nontraditional revenue sources:

  • Healthcare - nearly every sector of the healthcare industry is putting more focus on direct-to consumer marketing as changes in the industry push more decision-makiong responsibilities to customers.
  • "Cosmoceuticals" - companies that market prescription and over-the-counter skin treatments use sponsorship to educate consumers, sample product and build their brands. Strivectin - a top search term on mall web sites a few years ago - had purchased the title of an NHRA drag race team just recently.
  • Urgent care centers - Extended hour clinics are ramping up sponsorship to strengthen their positioning as lower-cost alternatives to hospital emergency rooms and demonstrate their commitment to local communities.
  • Online gambling - These online sites are trying to introduce the masses to the concept of gambling online. They may seek to work with restaurants, for example, for the purpose of "education".
  • Flash drive manufacturers - These smallish devices, capable of storing 256 megabytes to gigabytes are finding themselves in everything from key fobs to fashion statements.
  • Private jet services - William Chipps thought this service is becoming a status symbol among professional athletes, celebrities and executives that don't want to be subjected to the post 9/11 hassles of flying.
  • Internet telephone service - I think this category is broader than IEG realizes. VOIP is especially useful for chain retail, since phone numbers can easily be relocated anywhere Internet is available.
  • Microprocessor manufacturers - While the battle in the two-company microprocessor marketplace is heating up as Intel and Advanced Micro Devices (AMD) seek to demonstrate how their new products improve the computing experience, I think a nascent option in RFID chips - specifically Micron - may be a dark horse.
  • Flavored milk - An overall decline in milk consumption combined with pressure on soft drink companies for healthier lifestyle products has resulted in a bevy of new products. Chocolate milk is being billed as the "ultimate fitness drink", for example.
  • Department stores - something I've blogged frequently, mergers and acquisitions are driving management's need to find new ways to build personal connections with shoppers.
  • Digital music companies - as the number of format types proliferate, it becomes even more important for digital music providers like Napster or RealNetworks to demonstrate how their core proposition works for a mass audience.
  • Prepaid wireless companies - companies like Boost Mobile are offering unique propositions, using the mobile phone as a passport for VIP experiences. They are pioneering a pretty unique community service proposition: if a Boost sub works for four hours on a community project (creating artwork for a neighborhood, doing renovation or otherwise making a difference on pre-approved tasks), they'll be able to score tickets that would be otherwise unavailable. They seem to have had luck in major markets like NYC, Los Angeles, Minneapolis, Washington DC, Atlanta, and Minnesota -- it remains to be seen what other companies might be able to do.
  • Labor unions - some unions have turned to sponsorship for help in talking to consumers about the benefits of joining. As unions struggle to find their identity in an election year, this sector is likely to heat up even more.

(Thanks to William Chipps for giving me permission to liberally republish his findings in this blog.)

The New Payola: Online Hotel Reviews

TravelsitesThe hotel industry should be concerned about the number of hotels that are trying to pay online sites for positive reviews. Today's New York Times reports (subscription required) on the incentives hotels are currently providing to people that post "real" reviews on sites like Citysearch.com. For example, one NYC resort is "discreetly offering a free reflexology treatment to customers who posted a positive review of the establishment online."

Hotels run the risk of repeating the same mistake that the radio industry did. Let's look at the definition of payola, according to Wikipedia:

"...In the music industry, the illegal practice of record companies paying money for the broadcast of records on music radio is called payola, if the song is presented as being part of the normal day's broadcast."

Are people being paid - either in cash or for consideration for their "reviews"? The Times article is clear that the answer is "Yes". In response, the hotel industry rightly points out that the vast majority of comments on review sites are negative, which reflects basic psychology: you're more motivated to warn people about a bad experience than to share a good one.

But if readers were to ever believe they were being lied to -- there might be a backlash against both the sites and the hotels that paid for the reviews.

I think hotels should continue to encourage travelers to submit reviews, but should drop the requirement that the review be positive. Furthermore, if there are incentives involved in giving positive reviews, I think the online sites need to do a better job of informing their readers of potential biases.

Consumer Reports (subscription required) recently described the simply awful advice being given out by these so-called experts. Let's hope that the next expose isn't about outright dishonesty.

Inside the WB/UPN Merger: The Increasing Importance of Affiliates

CwThe WB and UPN television broadcast networks, having failed to improve their audience ratings, will merge to form the CW Television Network to lure younger viewers, to be owned 50-50 by UPN parent CBS and WB co-owner Time Warner. 16 stations owned by the Tribune Co. will become affiliates, but will lose the Philadelphia, Atlanta, and Seattle markets to CBS.

With the fragmentation of media, it is harder than ever to create a successful television series. Even Monday Night Football ceased to be as profitable as it used to. The NFL/ESPN deal provided a powerful way for ABC to sustain the franchise without losing the property to any of their competitors.

CBS has long struggled with developing additional networks beyond its flagship. ABC in particular zoomed off to a fast start with ESPN, and improved its position after Disney purchased it. Even NBC flourished after GE acquired it, building networks like Arts and Entertainment, Court TV, American Movie Classics, Bravo, Sports Channel America, and the History Channel. More importantly than economies of scale, these mini-networks provided a hedge against the biggest risk: the ability of any network to develop compelling programing. Both the WB and UPN were created at a time when the studios began realizing the value of so-called weblets.

But with affiliate agreements expiring, cost-cutting and pink slips rampant at the WB, emerging video distribution platforms hungry for content, and a newly energized CBS management willing to rethink how it ran its business -- there was an opportunity to make a change. Programming will be a merged effort, taking the best of WB and UPN, including "Smallville," "Gilmore Girls," "Everybody Hates Chris," "Girlfriends, "Veronica Mars" and "Smackdown."

This kind of combination may have gotten its start from long-standing discussions on combining the newsgathering operations of CNN and CBS News, which as I've noted before, is torn by the economics of maintaining local news bureaus around the world, that are actually staffed by people that know the local lay of the land.

Bottom line: the financial contribution made by ancillary video distribution platforms - whether cable, satellite, IPTV or iPod - is only going to increase in years to come. And, like it or not, this is going to create more tension between the networks and affiliates.

Digital Music: More Portable, Higher Quality

Mediaflophone The evolution of digital music marches on in one expected direction - video and music on mobile phones (the image to the right comes from PaidContent.org's coverage of last week's CTIA show) - and one less obvious direction - the audiophile market.

I've previously mentioned the high-end opportunity in digital music - new companies like MusicGiants (which just launched last week - congratulations!) are building a vision of value, not around the radio quality (48-96 KBPS) of XM or most podcasts, nor the near-CD quality (128 KBPS) that you get from Napster - but instead, much higher quality (a staggering 470 to 1100 KBPS) as rated by Stereophile Magazine.

This opportunity, small as it may seem right now, may be a repeat of history. There were those that scoffed at FM radio, opining that AM was always going to be "good enough". Likewise, vinyl and cassettes gave way to CDs. With higher-quality audio reportedly to be available at the same price point as store pricing - and the promise of multichannel music support for all the HD and home theatre equipment by January - this could be the beginning of something unexpected.

Link: Video demo of Qualcomm's MediaFlo phone by PaidContent.org (large 17 MB file, QuickTime required)

Men's Vogue to Launch

Vogue_hommeIn a little over two weeks, Men's Vogue will be at your friendly neighborhood newsstand, begging the question of Vogue's strategy in an age of luxury.

So what's new?

The Seven Sisters have become The Gang of Four (People, US, In Touch and Life & Style generated over $295 million in retail revenues, or 18 percent of the $1.6 billion market), taking away the oxygen of lesser titles. At the same time, you're seeing many similar magazines targeting an upscale audience given away for free - especially to the right clientele, as I've noted before. And Vogue's online initiative? looking at ShopVogue's numbers, merely listing the URL in the magazine clearly isn't driving the traffic.

Shopvogue_trafficSo what is there to do?

Conde Nast will have a more nuanced approach to the male market with Cargo at the sub-35 crowd  who's looking to accessorize their identity and now Men's Vogue targeting the guy who makes over $100K a year and pretty much knows what he wants out of life.

And as for the mass giveaways, magzine audit bureau ABC changed its rules governing agent sponsored-circulation last month, causing a stir among publishers, many of whom sought clarification. As many pioneers of web content found out the hard way, you can only give things away for free for so long.

As for ShopVogue.com, after a brief run, it's been taken down again, to be relaunched at a later time. I think it was brilliant to give advertisers an incentive to become more involved with the publication, but I think given the magazine's Manhattan-centric perspective, they might have done well to emulate their little sister Lucky in providing basic level of information on a much broader base of retailers, regardless of whether they are or have been advertisers.

Sprint Nextel in NFL Exclusive

NflFresh from announcing the creation of the third-largest wireless company on Friday, Sprint Nextel Corp. announced Monday it has signed a five-year deal with the National Football League to become the league's official wireless sponsor. The company said it will use the estimated $600 million arrangement to provide exclusive game highlights, updated scores, live game video and Fantasy Football statistics to its wireless customers. It said it is working with the NFL to develop much of the original programming, which will feature content from the NFL Network and NFL Films.

Expect this to affect the fortunes of two major initiatives: ESPN's MVNO deal with Sprint whereby ESPN wants to become its own mobile carrier in the same mold as Virgin Wireless and Boost; and efforts by SBC and other carriers to deliver television over Internet protocol (IPTV).

Taking pro football - the best performing sports franchise by most any calculation - out of ESPN's platform is like imagining ABC without Monday Night Football. It's not an absolute deal-killer, but it potentially robs the nascent platform of what should have been its number one draw. I say "potentially" because Sprint Wireless, with its heritage and ongoing commitment to cable operators (Adobe Acrobat required), understand TV programing trends better than the other carriers.

And as for IPTV, which I've blogged here and here - I think a critical aspect of tomorrow's IPTV platforms isn't going to be "how" the programming is delivered to the home, rather "how" and "where" and "when" the consumer is going to choose to watch the video. The early successes of TiVo demonstrate both the consumer appetite for being able to choose when to watch, and also the ease with which the market may be lost. Sprint's less-heralded efforts in IPTV may have a leg up, as they learn how consumers prefer to consume mobile video.

26 Million Text Messages Can't Be Wrong

ReutersReuters reports over 26.4 million people sent text messages in support of Live 8, a worldwide campaign to cancel the debt of the world's poorest countries. The event obliterated the previous record of 5.8 million text messages set by an episode of American Idol.

Irish singer Bob Geldof and U2 frontman Bono have found support from World Bank president Paul Wolfowitz for the measure. The BBC reports finance ministers from the world's richest countries, grouped together in the G-8, agreed Saturday to cancel US$40 billion (euro33 billion) worth of debt owed by 18 of the world's poorest nations, most of them in Africa. Much of the canceled debt was owed to international institutions such as the World Bank.

At the same time, AOL.com also claimed a world record, saying that more than 5 million logged on globally to watch streamed video of the concerts, making it the biggest streaming event ever.

History Repeats Itself: Learning From Transistor Radios

Steve Outing points to a new piece by Poynter blogger Rich Gordon, which describes the fall of the U.S. electronics industry to cheap Japanese radios, and how newspapers are making the same mistake.

Newspapers and malls alike are focusing on their existing businesses because that's where they get their money. Gordon is absolutely terrified because he sees how much money online operations are making...and despite the very clear trends in the growth and influence of online media, how little it is affecting the way these companies do business. 

Follow the money, follow the power.

Outing goes on to quote Gordon: "Thinking back to the lessons of rock 'n' roll radio, portability may be the most important media attribute for young people. And a new generation of portable devices -- cellphones, iPods and PlayStation Portables -- might be today's transistor radios."

Silicon Valley: Supreme Court "Doesn't Know Jack"

Editorial or news? I get mixed signals when I read SiliconValley.com's analysis of today's MGM vs Grokster decision. You'd think the author of that blog, John Paczkowski, had an interest in staying on the good side of the VC community or something.

Agreed, the study is decidedly non-alarmist in tone, and does conclude that the impact of file sharing on the music industry is unclear. However, it appears the Court ruled that just knowing about noninfringing uses of P2P wasn't enough to offset actively encouraging people to steal files. Lots of us - Grokster, Streamcast and Paczkowski included - knew what kind of reputation Napster had. So after Napster went down, why did some marketing genius at Grokster decided to promote the service as a Napster alternative?

The American way of life includes an approach to English law that provides incentives for entrepreneurs. Paczkowski and I have won the genetic lottery, living in a time and place of tremendous opportunity. Value is created by understanding how many forces, including regulatory ire, factor in. You may be upset that the guys who manufacture air bags for autos basically won a license to mint money when laws to mandate air bags went into effect. But to someone's credit, someone saw a need, took some risk, and the rest is history.

Maybe I'm looking at this the wrong way. Maybe I should be egging authors like Paczkowski on, in hopes that more people will come to the wrong conclusion. I'm sure that's exactly what Shawn Fanning, Jordan Mendelson and Ron Conway are doing at this red hot moment.

Congratulations, guys. You learned, and you're in a far better place for all that.

Link: FTC P2P Study (Adobe Acrobat required)

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