Anuj Agrawal

Shopflick: Personalizing Online Selling

2008-08-25T06:32:47-07:00

There is a new service out called Shopflick, that allows online sellers to augment their item with a video ad. After poking around the site, I find it to be a fresh and entertaining way to engage buyers in the online shopping experience. Many of us have either bought or sold things on eBay and see the same stock product description and image that everyone else posting the same item has used. Now, video will be able to provide much more differentiated information on the product and allow a stronger connection to be formed between the buyer and seller.

Shopflick: Get Mini Smart Cars yourself!
See more of ShopflickTV Features on Shopflick!

With Shopflick, the seller can give the buyer a much more personal view into the seller and the item. Maybe I have been watching too much Mad Men, but we know that engaging a buyer and getting them to feel something for a product are critical drivers in selling success. With a video, a buyer can now get a sense of who they are buying from and sellers can attach a story to the product that is not possible with simple text and still images.

The videos are sometimes produced by the seller or made with the help of a service from Shopflick. The ads tend to have a reality show feel, where you still feel like you are buying from an everyday person, instead of celebrities who you know have been paid to pitch the product.

Since the site is new (it's in beta), there are not a ton of listings yet, but it will be interesting to see how this catches on. The main question in my mind is that if it does take off, how will they keep companies like eBay from replicating a similar experience? If they become a niche player, then they probably won't have enough traffic to build a big business. If they stay mass market, they will need to build their brand and compete with the eBays of the world. All in all, I really like the concept and innovation behind this new form of online sellling. I'm hoping Shopflick is able to gather and sustain a presence in the market.

The Line Between Gaming and Music Companies Is Starting to Blur

2008-08-06T06:42:49-07:00

It didn't take long for the recently merged Activision and Blizzard Entertainment to make some interesting strategic moves. They recently announced a plan to launch a new digital music store to compete with iTunes. Wait, aren't these two companies in the gaming business?

As we have seen, many of the recent blockbuster game titles have been music-focused. Rock Band and Dance Dance Revolution have been major hits over the past couple of years. Activision Blizzard's Guitar Hero is the hottest selling game over the past year and has shown to dramatically affect sales of songs included in the game. For example, the chart below (or in the extended post) shows the impact that the GH3 launch had on digital sales of songs in the game (chart courtesy of Ars Technica). Not only did song sales make a dramatic leap, that leap continued to grow and sales remained high even weeks after the launch of the game.

An interesting demographic metric is that the average age of gamers has grown to 35 years old. Things certainly have changed over the past twenty years. Grown-up 35 year-old adults are driving the gaming industry. But wait it gets better. 40% of these gamers are women.

What's interesting about this demographic information is that it's the same demographic that buys music online. We know kids and teenagers aren't buying their music. But for most of the 30+ group, buying music is still a normal thing and thus represent a great opportunity for Activision Blizzard to create a new business around music sales.

Activision Blizzard isn't the only gaming company mixing in a music business. EA has recently started their own music label called Artwerk. Gaming companies have been sourcing game soundtracks from independent artists and when it's included in a popular game, often times the soundtrack becomes popular as well. Now, EA wants to be able to reap the benefits of these tracks, as I'm sure many other game publishers will do very shortly as well.

It remains to be seen how successful Activision Blizzard's new music store will be. It certainly has built a solid relationship with people in the right target demographic.

HD Movies At Home Shortly After Theatre Release?: Make It Happen FCC!

2008-07-30T12:50:31-07:00

An interesting battle is going on in the movie industry. The Motion Picture Association of America (MPAA) has recently filed a petition to have the FCC waive its restriction on using selectable output control (SOC). SOC is used to restrict which output is used to transmit content out of a device.

The MPAA is advocating for the FCC to remove its waiver of these restrictions in order for theatrical movie releases to be distributed in high-definition to homes prior to their availability on DVD, which is generally 120 days after theatrical release. By removing the waiver, the MPAA can be assured that digital outputs utilizing copy protection would be used to transfer this content to displays, ensuring that illegal copies are not created and distributed before official DVDs hit the market. The MPAA is saying that removing this waiver would only affect content that is distributed prior to DVD release. After that, there would be no restrictions, similar to what happens now. Thus, there is little change in what the customer experiences, except that now consumers get to watch new releases at home much earlier than before.

The opponents to this petition, mainly movie theaters who view this as a threat to their business, say that neighborhood cinemas will inevitably be shutdown and people who enjoy going to the movies will have lost out.

If you ask me, I am all for watching new movies at home sooner than I can now. My wife and I just went to see The Dark Knight, and after movie tickets, popcorn, and soda, it ran us $34. When I watch an HD movie On-Demand through Comcast, it costs me $5. It is great to see content distributors like MPAA developing new business initiatives that ultimately benefit the consumer. As for dealing with opponents, a few things could be done to make sure this becomes a win-win for everyone:

1. Make home viewing of HD movies available 60 days after theatrical release. This would keep movie theaters relevant as the die-hard movie buffs will still want to see the latest blockbusters on the first few opening weekends. This 60-day window should protect the majority of audience levels for movie theaters.

2. Set premium pricing for at-home viewing for the 60-120 day period between the time of home viewing release and the time of release on DVD. Thus, charging something like $12-13 (similar to pricing in hotels) would allow a family to be able to watch a hit movie for much cheaper than going to a theater. It would also allow the content owners to earn more revenue than they currently receive with standard On-Demand movies, which will help to offset their declining DVD businesses.

I also like how the MPAA is trying to entice the FCC to accept its petition by claiming that this new type of service will help to entice people to transition to digital TV by the February 2009 transition date. It's all about positioning...

Limiting the Downside: Finding The Best Time To Buy Stock

2008-07-24T04:11:30-07:00

Over the past couple of weeks, the Dow has taken a nosedive into sub-11,000 territory and is currently trying to fight its way back. However, this is still way off the highs it set just last October when it hit the 14,000 mark. Of course, the economic problems will likely keep the market from retouching those lofty levels, but it is safe to say there is probably more upside than downside at this stage of the game.

This is how I try to look at individual stocks. Upside vs. downside potential. I have had my fair share of bad buys over the years listening to the so called "experts" on CNBC. So I set out to educate myself on better understanding optimal times to buy stocks. Obviously, no one is able to predict which way a stock is headed, so the name of the game for me is to figure out the best time to enter that will maximize the upside/downside ratio. There are many sites on the Web to learn about the various candlestick patterns representing bullish and bearish signals which can be used to trigger appropriate buy/sell signals. I often evaluate these charts, but for me, I tend to keep things simple with 2 basic metrics:

RSI Indicator

This is an indicator of how overbought or oversold a particular stock is. You can overlay the RSI onto popular charts like those on Yahoo! Finance. You will notice that low RSIs generally coincide with down periods for the stock. I look for an RSI to reach about 30 before I buy. This gives me the confidence to know that a stock is already oversold and thus, its downside is probably limited.

PEG Ratio

This refers to the ratio of the PE to a company's earnings growth rate. The general consensus is that a PEG of less than 1 represents a company that is undervalued and a ratio of over 2 is considered to be overvalued. Usually, you will see the ratio falling somewhere between 1 and 2. It is good to look for a buying opportunity when the PEG starts going below 1.2 or 1.3. Again, the name of the game is to find an entry point that may limit big downside. As the PEG gets close to 1, the potential downside should decrease. An important thing to keep in mind is that since the ratio is using earnings estimates to calculate its value, you should keep track of any earnings adjustments made by companies during their earnings releases. This will shift both the PE and the earnings growth rate.

Of course, I am not advocating that these two things should be used to screen for stocks to buy. You should still understand the stock's sector and have a rationale for why you believe the stock will outperform its peers going forward. These metrics are solely used to figure out a good time to buy a stock which you've decided should be part of your portfolio.

Book Review: Invisible Engines

2008-07-22T11:02:48-07:00

Invisible Engines (MIT Press) is an interesting look at how companies develop two-sided software platforms to drive business growth. The term "two-sided" refers to a platform delivering value by having two sets (i.e. sides) of customers where each side finds the other valuable. For example, online auctions such as eBay are only valuable for sellers if there are a lot of buyers bidding up the price of an item. Similarly, it is only valuable for buyers if there are a lot of sellers offering a broad depth of items for sale.

The authors take a look at a variety of high-tech industries driven by two-sided platforms including video game developers/game consoles and operating systems/software applications. They also discuss the three-sided Internet media player platform (i.e. Real Player) with end-users/content providers/developers relying on each other to build a high-value offering.

The two-sided platform is difficult to build, but once done, it lends itself to tremendous network effects. The trick is to figure out how to build the first side in order to attract the second side. For a large company with an established brand, this can be significantly easier. Think about how when Microsoft releases a new OS, there are already a plethora of software titles available on the day of the launch. Developers know Microsoft's product will sell well in the market, so they have no hesitation in investing resources to develop applications prior to Microsoft building an installed base of customers.

However, if you aren't a heavy hitter like Microsoft, your best bet may be to invest your own resources to develop one side of the platform. An example of this was when Nintendo released its first gaming platform. They developed games for their console and Super Mario Bros. was the killer app that drove sales of the platform. Once the console was in the hands of a mass market of consumers, software developers began to offer games on the platform.

I would highly recommend this book for anyone involved in a two-sided business or for those in the software industry. Understanding two-sided strategies may be the trick to drive further sales growth and lock-in customers to your platform.

Nokia: Expanded Services Portfolio Is Starting To Come Together

2008-07-18T11:48:33-07:00

With all the noise Apple is making around the 3G iPhone, Nokia has been making tremendous waves recently that should leave the company in an interesting position to maintain its relevance and spot as a major player in the mobile market. One of its primary new initiatives is Ovi, geared at providing new Internet based services to mobile devices. They have also been on an acquisition spree to strategically expand the range of its businesses. It will be interesting to see how Nokia is able to integrate these various components into a cohesive customer experience. Here is a quick rundown of some their major announcements over the past year:

1. Comes With Music

For starters, they will soon be releasing their "Comes with Music" initiative, a subscription music service that will waive the fee for the first year with purchase of a new Nokia music handset that supports the service. The big attraction is that for the first year, a customer can download as many tracks as they want and store them on their PC even after their subscription expires. There is a hot debate on the "catch" to this. There must be some sort of DRM that limits the amount of songs you can download, otherwise everyone can go out and buy a huge hard drive and go nuts. In any event, Nokia can now have a stronger hold on the customer experience by selling the hardware and supporting it with music content.

2. Navteq Acquisition

Acquiring the leading map information service in the world leaves Nokia with a wide range of possibilities. It can now create a more tightly integrated GPS/phone product so consumers can have a compelling GPS experience on the one device they always have with them. This, together with the fact that Garmin is coming out with its own phone, Nuvifone, means we can expect GPS to take a more prominent position in marketing messaging around new phones going forward. Up until now, most of the hype has been around music.

Beyond just the device implications, Nokia now broadens its services business by generating revenue from all the various products and services on the market using Navteq maps. Now even if someone doesn't purchase Nokia hardware, they could still be a Nokia customer.

3. Enpocket Acquisition

The next strategic move was the acquisition of Enpocket. With this move, Nokia is adding the ability to have stronger control on mobile ad delivery to handsets. Given the expected growth in this market, Nokia is further differentiating its revenue sources as well as providing itself a way to enhance their relationships with carriers and content publishers.

Nokia has made many other moves, especially in the social media realm in acquiring startups such as Plazes and Twango to add social networking applications to its portfolio. I am personally excited to see what type of user experience Nokia can now create with all of these various services in one device. It's safe to say the device wars are certainly going to heat up over the next few years.

Dash Express: Still A Few Turns From Its Destination

2008-07-08T09:35:56-07:00

I recently came across a new GPS device from Dash called the Dash Express. It is marketed as the first ever Internet connected GPS device. Given that it uses both Wi-Fi and GPRS, users are almost guaranteed to always have access to the Internet and can use the embedded applications such as local Yahoo! search for movie times and restaurants, real-time gas prices, and over-the-air map updates. The last one is great for convenience so that you don't have to connect your device to a PC to get your updates. The other interesting feature is Send2Car, where you can send an address from your PC to the device over-the-air.

But the most intriguing use of the Internet capability is the Dash Driver Network, which uses real-time information from Dash Express users to update traffic conditions. This supplements the historical traffic data and sensors that Dash uses to provide an additional layer of precision to its traffic results.

However, based on initial reviews, the accuracy of the traffic information leaves something to be desired. It seems the traffic information is not as up-to-date as the leading device makers. This is somewhat surprising given its Driver Network provides real life data to the traffic maps. Of course, the Driver Network relies on users having the Dash Express, so given the product was released this past March, it is understandable that not enough users may be available yet to really see the true benefits of this feature.

Another interesting development with this product is the optional $12.99 ($9.99 with 2-year contract) monthly subscription charge to access the Internet driven features (traffic, Yahoo, gas prices). I have long since wondered why GPS makers have not charged a service fee for the GPS navigation. They are continually having to update their maps and are providing software upgrades of map information to users. In the software world, this usually comes with a fee attached, but for some reason GPS makers have not taken advantage of a potential recurring revenue stream from their customers. The primary mainstream value-added offering is XM's NavTraffic, but that hasn't reached mass market yet. I wonder if Dash's additional services like Yahoo! and over-the-air access will help to entice more people to start paying for services.

It is clear from all of this that Dash is changing the landscape of the GPS market, but they still have a little ways to go to get to its destination of a top-notch product. The sub-par traffic accuracy is fixable and may have to do with the low number of users of a newly launched product. The real opportunity is that with the ability to now offer Internet connected devices, Dash should use its first-mover advantage into Internet connectivity to figure out a way to build positive network effects around their service and become a sustainable player in the market. How can Dash make the product more valuable as more people use it? They could have IM type functionality where you find other Dash users by zip code and can press a "Traffic" or "Accident" button when you hit traffic that alerts all other Dash users within a certain radius of your zip code. This way a driver could better plan for traffic in advance of being stuck in traffic. Dash could then layer on voice functionality to allow users to send voice messages via VoIP to other users for "secret" back roads to take. These types of extensions to the current offering would go a long way in convincing people to start paying monthly fees for value-added services and start a new innovation path in the industry for Internet applications in the car.

The Top 5 Most Influential Products of the Last Decade

2008-07-03T08:06:31-07:00

I went to Best Buy last weekend even though I didn't need to get anything specific (do you really need a reason to go and play with gadgets?). Even though I was disappointed that there doesn't seem to be a gadget these days calling my name to "BUY ME" (hopefully this will change as holiday season rolls around), I left with a real appreciation of where the digital media industry has come.

As I thought about how I took the current products on the market for granted (HDTVs, snazzy cell phones, and digital cameras), it made me appreciate how far technology has come in the past decade. The last decade has seen some amazing breakthroughs in consumer products that have changed the landscape of the industry and what users have come to expect in their products. Here is my list of the top 5 products and services of the last decade that have had a lasting impact on the market:

TiVo (March 1999)

Our short little friend has had quite an impact on how we watch TV. Now, our entire TV experience is effectively an On-Demand experience, letting us watch "time-shifted" content whenever it's convenient. Of course, the impact its had on the ad industry is well-documented. It still remains to be seen how the advertisers will deal with this. I've started to notice ads created with the characters from the show I'm watching, making me think my show is resuming. Sneaky, but ultimately, they'll need something better than this to get me to see ads again.

Napster (June 1999)

They may not have been the first peer-to-peer network, but Napster is the brand name that everyone remembers that really turned the music industry upside down. The music industry is still trying to figure out how to grow profits in a world of highly available pirated music. Even though the original version of Napster is long gone, many others such as BitTorrent have taken its place. A recent report from Sandvine just came out showing that 44% of North American traffic is peer-to-peer file sharing. It's safe to say the original Napster has left its mark on the content acquisition world.

HDTV (1998)

ABC was the first broadcast network to showcase HD, back on November 1st, 1998 with "101 Dalmatians". Now, it's gotten to the point where I will refuse to watch a game on standard def. It's amazing how HDTV has completely changed the expectations of the video consumer. Even though the first network broadcast was in 1998, it wasn't until sports programming was broadcast in HD in 2004 that the market for HDTV's turned mass market. That in turn has led to a broad variety of sit coms, news, and cooking shows sprouting up in HD. All of this available content is certainly having a profound effect on other industries. I won't go into my views on Blu-Ray right now, but my initial thoughts are around the impact HDTVs will have on the theater viewing business. Home audio systems are now rivaling the theater experience and now the picture I get on my HDTV is better than what you get at the theater (digital cinemas will be here soon, but mass market availability is still a couple years away). And at $10 a ticket, $8 for popcorn, and $7 for a coke, my $40 trip to the movies for two can be had for $5 with On-Demand, all from the comfort of my living room and a better visual experience.

iPod (October 2001)

The iPod was officially introduced in 2001, and has been on a tear ever since. Of course, other MP3 players were on the market prior to the iPod, but the iPod's intuitive user interface made the gadget a must-have among music listeners and really propelled the advent of portable digital music. To this day, Apple effectively controls the digital music ecosystem by consistently improving the product and continuing to make it seamless to use with iTunes. And with iTunes proprietary format, Apple has locked-in customers to its platform, creating a big headache for anyone who wants to leave the Apple ecosystem. But why would you? Their products continue to out-innovate their competition and provide the most user friendly interface on portable devices.

Nintendo Wii (November 2006)

It's only been less than 2 years, but the gaming console industry has taken quite a shift. The Wii has expanded the customer base for gamers by bringing the simplicity and fun back that we hadn't seen since our our original 2D NES hit the scene with the best game of all time, Super Mario Bros. Now, kids and adults who aren't interested in complex RPG have a casual platform to interact with. And for anyone who's played Wii Boxing, it's a great workout! Trust me, you'll be sore after you play it. The premise of motion control has clearly hit mainstream. As I mentioned in an earlier post, the iPhone has elements of motion control built in that application developers can take advantage of to now bring Wii-like experiences to other devices. We've only scratched the service of motion control applications and it will be interesting to see what else is around the corner.

It will be interesting to see what products make "most influential" lists over the next decade. I fully expect a product that finally makes content management and ubiquitous access throughout the home to be on the list.

Microsoft Live Search: New Dog, Old Tricks

2008-06-24T13:01:01-07:00

It's been about a month now since Microsoft launched its Cash Back promotion around its new search engine, Live Search. When I first saw the promotion, I found it to be an interesting concept. Setup a standard affiliate program (although MS probably gets better rates than others) and pass back the affiliate commissions back to the consumer. However, in looking at the rates on the Cash Back offers vs. the affiliate rates posted on their retailers sites, clearly Microsoft was giving more than standard affiliate rates.

In actuality they're giving consumers a portion of their ad revenue. They are applying a new model to search by collecting payment from advertisers after SALES instead of CLICKS. This is clearly a strategy to differentiate from Google and lure advertisers to the Microsoft engine. But my question is, what is the sustainable advantage for this model? If this turned out to have traction in the market, Google could simply create a similar program to eliminate any incentives advertisers have in going to Microsoft. And all this would lead to eroding profits in the online ad world as all the search engines one up each other with cash incentives.

So how has the promotion affected market share in the search industry? As you can see from the comScore May 2008 numbers below, Microsoft's share actually went down. Granted, the Cash Back promo started on May 21st, but that is still 1/3 of the month and should have at least helped to slow the declining share of Microsoft. It will be interesting to see how things are going when the June numbers come out.

comScore Core Search Report* May 2008 vs. April 2008 Total U.S. – Home/Work/University Locations Source: comScore qSearch 2.0
Core Search Entity	Share of Searches (%)
Core Search Entity	Apr-08	May-08	Point Change May-08 vs. Apr-08
Total Core Search	100.0%	100.0%	N/A
Google Sites	61.6%	61.8%	0.2
Yahoo! Sites	20.4%	20.6%	0.2
Microsoft Sites	9.1%	8.5%	-0.6
AOL LLC	4.6%	4.5%	-0.1
Ask Network	4.3%	4.5%	0.2

When it comes down to search engines, its a matter of search engine quality and brand that is going to lure consumers to the portal and Google has both. Heck, they have created the very verb to search for things, Googling stuff! Consumers will still be driven to Google and the ads go where the consumers go.

We've seen these cash incentive programs before and know they have a short term impact on consumers. Can you remember iWon.com from back during the tech bubble? They used to give away $10,000 every weekday to a lucky searcher with a $1,000,000 grand prize given out once a year. Obviously, they aren't around as a search engine anymore which shows you need more than a short-term cash promo to build a long-term customer base.

For An Effective Mobile Ad, Send a Text

2008-06-19T07:02:05-07:00

Up until the last few years, the majority of non-voice revenues from mobile phones has been in the form of SMS and mobile content such as ringtones, games, and more recently, ringback tones. But now that the market for mobile advertising is starting to become real, we can start to assess which modes may be the most effective in terms of both customer experience and click through rates. Having managed products in the mobile content industry, I am a stickler on keeping an optimal customer experience on a mobile phone and to me, understanding the mobile customer experience will be the main driver in determining which ad formats will ultimately prove to be successful.

The majority of ad placement is currently distributed via banner ads on popular WAP sites or applications (as in the picture above). For me, these are ineffective for 2 reasons: 1) waiting for banner ads to load on WAP pages detracts from the experience of the WAP page and 2) given the already limited amount of relevant information on a WAP site due to a lack of screen real estate, if I need to spend additional time waiting for subsequent pages to load, I am highly unlikely to spend the time clicking on an ad vs. clicking on more info from the WAP site I am visiting. Also, on a handset, I don't have the luxury of clicking through to advertisers sites and clicking back to the publisher site easily due to the fact that pop-up windows are not prevalent on handsets (yet). This all makes banner ads ineffective for the publisher, advertiser, and consumer.

That is why I believe SMS based ads are the most effective method for ad placement, at least in the short to medium term. It remains to be seen how 3G+ networks and larger screens from smart phones may alter the customer experience of WAP browsing, but there is no doubt that SMS is not going anywhere anytime soon. In terms of implementation, hitting consumers with SMS ads needs to avoid the feeling of spam. There are a few companies trying to entice consumers to allow SMS ads within their received text messages from friends by giving them freebies or credits. I find this to be a very interesting concept. SMS messages have a 95% open rate, meaning you won't suffer the same issues seen on the desktop with unopened emails. This high open rate is because the sender is known. Thus, advertisers can be assured their message is being seen. Virgin Mobile has shown that consumers are willing to view advertising for free airtime through their Sugar Mama program. Applying this type of interaction for SMS ads should also find similar traction.

An SMS ad platform/network like this would certainly help to establish ad viewing on mobile devices and drive higher click through rates. When people interact via SMS with a friend, they are not actively engaged in a web browsing experience and thus, are more inclined to view or click on the SMS based ad to see what the advertiser has to offer. It's also a good way for people to kill time while waiting for their friend to respond back to their SMS reply. Of course we can't forget about the traditional SMS-based off-deck pull advertising (i.e. American Idol voting, sweepstakes, etc.) that is becoming much more popular as companies learn and adapt to new mobile marketing practices. These programs have also shown SMS to be an effective method to engage with consumers.

It is important to remember the reach of SMS is more than double that of WAP at this time (SMS usage penetration is 56% in the U.S. vs. 26% for WAP), providing a wider range of eyeballs for advertisers. And once consumers get used to these types of non-intrusive SMS based advertising vehicles, bigger screens are more prevalent, and higher mobile bandwidth rates are available, more elaborate and rich ad formats (images/video) can then find more success. Until then, SMS should be a key part of any mobile marketing strategy.