The following post is from my colleague and our CMO Group Advisor, Erin Streeter. I thought this topic was critical to our community of marketing leaders. If you have any questions for us, please comment below, reach out to me, or contact Erin at email@example.com.
As the Senior Advisor for Forrester’s CMO Group, an executive peer networking organization, I field strategy questions from senior marketers on a daily basis. And while I’m constantly getting questions about social media (“How do we get started?”, “What is its place in our marketing mix?”, “Can we even play given our regulated industry?”), one CMO Group Member recently asked a very straightforward, but extremely challenging, question: “What proof does Forrester have that social media adds to the revenue stream?”
It's late, this is just a short note to let you know that today I saw the future and what I saw was so stunning I couldn't go to sleep without telling you about it first. The future is the new Xbox 360 that debuted at Microsoft's E3 press conference today -- not just the improved hardware which ships to stores today and costs the same as the previous hardware -- but Xbox Kinect. This is Microsoft's long-awaited full-body natural user interface (NUI) for the Xbox 360, previously codenamed Project Natal and now branded as Kinect.
Kinect is everything. Kinect is the future of everything. Kinect is to the next decade what the operating system was to the 1980s, what the mouse was to the 1990s, and what the Internet has been ever since. It is the thing that will change everything. Once we've all been Kinected, we will never go back. You'll shop, communicate, chill out, engage, and debate using technology that can see you, image you in three dimensions, and interact with you in ways that are cooler than the most far-out science fiction, yet completely natural.
I could explain it, I could try, but I won't. Instead, I'll just encourage you to watch the last hour or so of the press conference yourself (though if you follow my link, you may also want to watch the first few minutes just to catch the pre-game interview with Felicia Day -- isn't she adorably nerdy?).
It has only been a few weeks since Google announced it would create a brave, new world with its Google TV platform. In all the reactions and the commentary, I have been amazed at how little people understand what's really going on here. Let me summarize: Google TV is a bigger deal than you think. In fact, it is so big that I scrapped the blog post I drafted about it because only a full-length report (with supporting survey data) could adequately explain what Google TV has done and will do to the TV market. That report went live this week. Allow me to explain why the report was necessary.
Some have expressed surprise that Google would even care about TV in the first place. After all, Google takes nearly $7 billion dollars into its coffers each quarter from that little old search engine it sports, a run-rate of $27 billion a year. In fact, this has long been a problem Google faces -- its core business is so terribly profitable that it's hard to justify investing in its acquisitions and side projects which have zero hope of ever contributing meaningfully to the business (not unlike the problem at Microsoft where Windows 7 is Microsoft). So why would Google bother with the old TV in our living rooms?
Because TV matters in a way that nothing else does. Each year, the TV drives roughly $70 billion in advertising and an equal amount in cable and satellite fees, and another $25 billion in consumer electronics sales. Plus, viewers spend 4.5 hours a day with it -- which is, mind you, the equivalent of a full-time job in some socialist-leaning countries (I'll refrain from naming names).
Google's goal is to get into that marketplace, eventually appropriating a healthy chunk of the billions in advertising that flow to and through the TV today with such painful inefficiency.
It's the most common question I get in my travels: Will people ever pay for content again? See what I had to say about that in a recent interview below (as posted on Paidcontent.org)
Implied in the question is a belief in some yesteryear in which people did pay for content. But the good news is, they never have and never will. That's the good news? Yes, because once we stop imagining that people will someday pay for content again, we can focus on giving them what they will pay for -- access to content.
It's what people have always paid for and it's clearly what they pay for now. Look deeper into the past and you find that people did not underwrite all the pages of content in their daily newspapers. Yes, they paid for the newspaper, but that's just because the newspaper was the only way to get efficient access to that much news and information. Today, instead of paying for newspapers, they pay for high-speed data plans to their homes and on their mobile devices as well as subscriptions to content from Netflix and their cable companies, accounting for 77% of their monthly spend on content. And they will pay even more for that in the future as 4G becomes a reality.
But there's another big story behind this Flash fiasco that has successfully remained off the radar of most. It's the answer to this question: How do the media companies -- you know, those people who use Flash to put their premium content online everywhere from Wired.com to hulu.com -- feel about having their primary delivery tool cut off at the knees?
Answer: Media companies hope to complain all the way to the bank.
First, a bit of disclosure. I'm the one who went on record explaining that the lack of Flash is one of the reasons I am not buying an iPad. So I'm clearly not a fan of the anti-Flash rhetoric for selfish reasons: I want my Flash content wherever I am. But I've spent the last few weeks discussing the Apple-Adobe problem with major magazine publishers, newspaper publishers, and TV networks. Their responses are at first obvious, and then surprisingly shrewd.
The Hulu-will-charge-you-money rumor mill is churning once again and the blogosphere has lit up with preemptively angered Hulu viewers vowing that they will never darken Hulu’s digital door again. Some call it greed, others point to nefarious pressure from ailing broadcast and cable operations, while some decry the end of a freewheeling era. They are all wrong.
Hulu charging for content is a good thing. In fact, it’s a necessary next step to get us where we need to be. Let me explain.
This comes at an awkward time, to say the least. The site’s CEO, Jason Kilar, admitted just weeks ago that the free site is profitable, taking in more than $100 million last year and on a run-rate to more than double that this year. Blunting that momentum would be foolish. But letting it run absent the burden of helping to pay for the shows it profits from would also be irresponsible, and not in a Father-knows-best “charging for content builds character” kind of irresponsible, but in a more “not taking advantage of the opportunity to take Hulu to the next level in benefit of the consumer” kind of irresponsible.
Throughout, as various members of the press have mused about the death of Amazon's Kindle, I feel compelled to point out that, contrary to popular belief, Amazon is in a better position now than it was before the iPad. That's right, if Amazon comes out swinging, Round 2 will go to Amazon. Here’s why:
Forrester has relauched its blog platform to allow you to follow individual analysts and streams of research more easily. Here is what Cliff Condon, our guru of the new platform, has to say about the new platform. Please let me know what content you would like to see from the Marketing Leadership team as we build our individual and group voice on this new and more flexible platform.
Just came off the stage at PaidContent 2010, a day-long summit here at The Times Center near Times Square, dedicated to the question of if/how/when people will pay for content. The timing is good -- as I wrote in January, The New York Times is planning to charge for content within a year or so, Hulu is considering a subscription model (not necessarily in place of but, I believe, in addition to its free service), and the eBook pricing dilemmas are causing sleepless nights.
I opened the conference with a brief assertion that fretting over whether people will pay for content is based on a mistaken assumption: that people have ever paid for content in the past. They actually haven't. Instead, people have paid for access to content. But in an analog world, access was gated by physical form factors like vinyl, newsprint, and movie theaters. As a result, the coincidence of form factor and content made us believe that people pay for content.
But people have never paid for content. Even when a daily newspaper was a necessity for the average home, the dime you paid a day (in the 70s) for a newspaper did not cover the print cost, much less the reporting. Instead, it was classified ads and auto dealers who footed most of the bill. And the hours we spent on TV and radio every day through the last half of the last century until the explosion of cable in the 90s, were all free. When cable finally asserted itself, people did not pay per show or even by channel (with the exception of premium movie channels). Instead, they paid for overall access.