Long Tails, Ant Circles, Razorfish & Other Takeaways

The material this week really showed the impact that consumers actually have on the firms where they decide to shop, or not to shop...

The Long Tail
The week-end started with the Chris Anderson interview and the 98% rule:  Merchants will sell at least one item of 98% of the products they offer.  This led him to develop the theory of the long tail.  Essentially, he starts by drawing a Pareto chart of the sales, and notices that the chart is flattening out, and that the tail is getting longer and longer.  He then concludes that focusing on the top 20% of products no longer generate enough revenue for a business to thrive, and that merchants should not narrow their focus to these.  Adidas has adopted a strategy of extreme customization with its miAdidas brand.  Buyers can go in, and completely customize the colors of all the elements that make up the miShoe. Adidas might very well sell 98% of all the possible combinations.  Talk about a win-win:  I get to design my own shoe, and Adidas gets access to our tastes.

Chris goes on to make several interesting points about "Hit" products:
1.  Hits are typically loss leaders
2.  Social communication works along the long tail, essentially concentrating things towards the hits.  Essentially, if enough people like a product, the product will hit a "tipping point" and become a hit
3.  Heavy users end up in the tail, while mainstream is in the hits.

Ant Circles
Of course, I am referring to the James Surowiecki video.
The concept of "Wisdom of crowds" particularly resonated with me.  He describe blogs as giving us access to a collective intelligence previously untapped. He goes on to say that "Readers know more than the media."  I do believe that a team will reach a better decision/outcome than the average outcome arrived at independently, but it is also true that some members of the group will reach better decisions than the team.  Apparently that shows up over and over in research...  He does have a great caveat: "Groups are only smart when the members think independently," essentially avoiding "group think"

Tweeting/Blogging does not make me weird... That's a relief!
The Evan Williams interview by Charlie Rose was both entertaining and insightful.  Charlie did figure it out, since I was able to find him on Tweeter and am now following him.  So Evan was simply looking to create a new way to communicate.  I think he succeeded.  I love it when he says that blogs, facebook and tweeter are things "normal" people do.  He describes it as an "open way  to live your life."  When he talks about countries where tweeter is big, the list was a little surprising.US, Japan, UK, sure, but Germany and Brazil?
Whether or not he is able to monetize tweeter is the big question.  Evan says he has some ideas; I bet he does...  He places himself on a continuum between social communication ($0) and information ($$$).  The closer he can place tweeter into being a purveyor of information, connecting people to information they value, the greater the potential for profit.

Blog Swarms
Any body can write a blog about anything.  I would suspect this follows the 98% rule:  98% of all blogs are read by at least 1 person other than its originator... and if enough people do and create a buzz, the readership will reach a tipping point, and you'll have a hit blog.  "The origins of social media" gives us a introduction into the blog landscape, what it, what it does, how it does it.  "It's informal but inform" has to be one of my favorite sentences form the chapter.  The author makes a great point on the inter-dependency of bloggers and media.  One does not trump the other, they compliment each other.  Blogs rely on media coverage in order to create commentary, and at times, blogs might break the news because of their proximity to events.  Information, information, information...
What does it mean for businesses:  "This premium on transparency may be the single greatest cultural shift that businesses will face as they engage with social media."  Note that the author does not say "if they engage" but that this engagement is a foregone conclusion.

Razorfish
That name just sounded cool, so I wanted to see what this was about...  What a vast amount of information...  So I've selected highlights that I thought were particularly interesting...
"Ownership of the brand no longer resides in the hands of the brand itself, as consumers and potential consumers are beginning to shape brands as much as brands shape them."
1. Brands must socialize with consumers
2.  Brands must develop a credible social voice
3.  Brands must provide a return on emotion (ROE) to their customers
Because word of mouth (on or offline) is a key influence on customers:
1.  Brands must know who influences perception
2.  Brands must know the effect of influencers throughout their marketing funnel (or the product stages as we saw in last quarter's class)
3.  Know peer influencers matter most at the bottom of the funnel
Social ads need to be relevant, actionable, interactive and personal.  I love Diana Stepner's "10 first steps" for companies to take control of their tweeterverse...
Customers look for brands that help them connect, Brands aren't connecting enough with consumers in a social environment, "fans" of brands visit, and re-visit those sites...