Some Possibilities for Re-inventing Video Advertisements

One of the most sacred piece of consumer advertising in the past was the 6 second spot in Television. Advertisers qued up to buy the spots and display their advertisements. Ad agencies and spot buyers were in vogue as they were the levers that enabled brands in their quest for more consumers.

All this is about to change and the advertising agencies are in for a disruption. This opinion of mine is based on the following trends that I see playing out in the markets:

• Despite having changed medium (Television to online streaming videos), video advertising did not change. They still play advertisements either at the start of the video or in the middle of the video, just as in Television, maybe with a little more control on the target audience.
• Compare this with the evolution of online advertisements. From the old banner ads to targeted, contextual advertisements even within your email client (Gmail) or promoted tweets in your twitter stream.
• Most brands have now become content creators and act more like media houses online. Most of the brands have their own content team and continuously generate content.
• Recent announcement of no-cash deal between Kit Kat and Google to name their latest Android release Kit-Kat.
• More and more brands want to create original content to get the attention of a specific niche of the consumer market. From streaming content created by the studios to creating their own original series, Netflix has come a long way. Same is the case with Coca Cola. The amount of original video content that they develop and share online has increased multiple fold.
• Advertisement free content (ad free HBO) is becoming more prevalent now than ever before.

All of these trends point to a future of video advertising which is very different from the current 6 second or 20 second ads.

I think that based on the existing trends, we shall see the following:

• More brands will come together and plan joint campaigns. For example a washing machine brand, a detergent brand can come together and do joint campaigns. IF brands can tie up with other brands that can be logically coupled (same consumer, part of the same “jobs to be done” family of tasks, similar positioning, etc).
• Brand placements inside of the movies and Television series has been around for a long time but never became mainstay. This will change. We shall start seeing more and more brand placements in original content.
• This could then potentially lead to original content being created around these brands. For example, there could be a series like Friends, where every time the friends sit together and share memories, they do it with a can of Coke. Every time they speak on a phone, they use an iPhone or a Samsung Galaxy S4. It the story requires them to go out for a trip, they could visit India (of course sponsored by the Indian Tourism Industry). You get the point. What is even more interesting is that It might even cost much less to create these content than to pay for a six second spot during the program for the brands. This also enables the brands to have control on the audience segment that they want to create the content for.

So, you can see a host of original video content being produced by some of the leading brands.

Is that good or bad for the brand, I don’t know. However, this is great news for all the artists who have ideas and want to convert them into original series. They will have a lot more people willing to invest in them to create good high quality content.

As a consumer, I don’t mind who creates the content as long as the content is interesting and engaging and I am not interrupted in between the program to show some advertisements.

So, this does create a positive cycle for everyone involved.

Do you think this is what we shall see in the near future or if my understanding is totally flawed? Lets discuss this as comments on this blog or on twitter.

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The Real Higher Education Challenge

Recently, there has been a lot of discussion around Higher education and how this is creating student debt at an alarming rate. There are estimates which out student debt in US alone at more than a trillion dollars. The common thinking seems to be to look at ways to reduce the overall cost of delivery of education. MOOC’s seem to be the flavor of the season as they can obviously reduce the cost of delivery by leveraging technology.

However, in my opinion, we are trying to address a symptom and not the root cause. I think that the root cause of the education problem is the reducing relevancy of the education provided in this course, that leads to lack of employment to all.

So, if we really want to disrupt the higher education industry and solve the challenge, we need to find a way to address this issue of relevance to businesses, that without burdening the students with debt and at the same time leverage the current institutions.

My suggestion to solve this would be following:

Higher education needs to be offered in two streams:

• Full time courses as offered now but with a slight change. Instead of just offering the course, the universities help set up businesses that are being run by the students. The businesses get passed on to every batch of students as the current set of students graduate. This coupled with the classes that they attend in the university can not only prepare them well for their subsequent future in corporates and at the same time provide them an option and experience of starting and running their own businesses. The students can then choose their path as per their individual choices.
• Offer life long memberships to students, who instead of paying their annual fee and studying, agree to pay a small amount monthly or annually in return of being able to come and attend a short term course (4 to 6 weeks) whenever they want to. This way, the college will continue to get funds to run the university and at the same time people will get to learn whatever is relevant and whenever they need it. This solves all the current set of challenges: Student debt (which will not pile on as the students pay a small fee over long periods of time), funds for universities (as the universities will be able to get the fee from a lot of students who are still not in the college) and the students get to learn what they want to, when they want to, so that their learning is relevant.

Once universities are able to do both of these options in place, they will start to become relevant again. Of course, they can continue to work on reducing the cost of delivery of the courses by using MOOC’s and other technologies as well. These will improve the efficiency of the universities thereby allowing them to survive with lower cash flow than otherwise.

Of course, these are just a couple of ideas. I am sure that if we agree that the most critical area where disruption is sorely needed in the current higher education is in its relevance, then we can come up with a lot more ideas which could be used to solve this challenge.

Whatever we do, we must hurry as I think that time is running out and we need to find a way to address this at the earliest or we might risk loosing some of the most important institutions in the world.

What do you think? Please do share your opinions so that we can continue the discussion.

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PS: Dr. Clayton Christensen discusses disruption in higher education

 

Going from Products to Services

One of the biggest challenges that most product organizations face is to constantly innovate and be a step ahead of their competitors.

Most of us tend to continue to remain in the boundaries of more features/functions or newer products, etc. Most of these changes will work for you for sometime, but soon your competitors will catch up. Then the whole cycle starts again.

One way to break this cycle is to package your product into a service. Though this may seem a very simple idea, it is very difficult to execute. And precisely for this reason, the pay-off for this is much higher.

Some examples:

– From selling cars to renting out cars (BMW is currently exploring this model in California).

– From selling movie tickets to selling monthly/annual cineplex viewer memberships (I am hoping that someone start this soon).

– From selling an ERP to managing business back-bones (for a piece of revenue). More on this in a subsequent post.

– From selling a home to renting a serviced apartment (this movement is gaining momentum in the big cities).

– From selling airline tickets to selling in-air concerts/exhibitions or selling private time with preferred people.

– From selling a 4 year college education, selling a life-long membership to learn (with a monthly fee post graduation and the option of coming back to college for a specific course over lifetime). More on this in a subsequent post.

Though you might think that this is not possible for your product as yours is a unique product, I can guarantee that it is definitely possible and someone somewhere is already working on the idea.

Same thing goes with services as well. The moment you are able to take a service, productize it, you are suddenly able to scale.

Do share your thoughts so that we can discuss this further.

You can connect with me on twitter, linkedin, facebook or email.

You can also subscribe to my weekly newsletter here.

PS: Listen to Anthony Mark Johnson, sharing his experience on “Transforming a Telecom Provider of Products to a Telecom Provider of Service”, leading to transformation.

New Business Model from Very Unlikely of Places #Publishing

I stumbled upon The New Enquiry by chance and was totally blown away, both by their content and their business mdoel.

They are an Ad-Free online magazine & survive by the way of subscriptions (2$ per month) & donations. And they don’t have a firewall.

So, for all practical purposes, they create and share content that is free for anyone to consume but still people are willing to pay subscription to receive the same content but in coherent, thematic clusters, which is more intuitive and easy to read.

In an interview given to “Columbia Journalism Review“, the founders claim that they recieve 30 to 50 new subscribers every week.

They also serve a very niche audience, the one’s that want to be at the intersection of culture, arts and politics.

They describe themselves on their about page as below:

The New Inquiry is a space for discussion that aspires to enrich cultural and public life by putting all available resources—both digital and material—toward the promotion and exploration of ideas.

Though these are early days for them, I am sure that they will find ways to not only survive in this hyper-competitive world, but will also become more and more relevant to thier tribes (as Seth would describe their subscribers).

This also reminds me of the TED talk by Amanda Palmer where she talks about her exeprience with her fans. She talks about the art of asking. Can this be a valid pricing model?

Both Amanda and TNI have identified their niche audience and have sought their support successfully.

Their story also make me realize that we strive to find complex solutions for problems, while simple and easy solutions to the same problems could exist right infront of our eyes.

Almost every one complains about advertising and advertisors, the disruption in the advertising & publishing industry;  they just went ahead and eliminated advertisements altogether. What an idea!

How many such things do we complain about can be removed? A wise man once shared his wisdom about solving problems:

• Connect the un-connected & vice versa
• Bundle the seperate and unbundle the bundled
• Turn a product to a service and a service to a product

The best way to solve a problem is to “SKIP IT” and I think this is exactly what these folks did.

The question that you need to answer yourself is the following:

What problem or challenge are we struggling with and one that you would be better off SKIPPING? What product are you going to turn into a service?

Do join in the conversation by sharing your thoughts by commenting below.

You can connect with me at Twitter, LinkedIn or Facebook.

PS: Pay as you want pricing model has been around for a long time now. More information @ http://en.wikipedia.org/wiki/Pay_what_you_want. What happens when the newspaper industry adopts this model?

Elon Musk’s HyperLoop – Hope or Hype

At last Elan Musk unvieled his design for ultra speed travel system – HyperLoop. I think that the idea that he laid out in a 57 page document, is as good an idea as we might have currently.

However, After having read through the generic description, I think that this is a good start to the pursuit of sub-sonic ground transportation. However, in its current state, this concept is impractical due to the fact that the entire concept seems to have been designed with the Los Angeles to San Fransisco route in mind, which, is mostly without much curves in the route. I am not sure how many such routes exist across many different cities.

The design that has been shared has two options:

• Capsules that can take about 48 passengers, with a capsule leaving every 2 minutes
• Capsules that can take 3 fully sized passenger cars in addition to the passengers.

Now, Elan has already indicated that he is too busy to build the network himself and would like to see someone take this concept design, use open-source contributions and build the line. He also indicated that he  could build a working prototype in about  three to four years (if no one comes forward to build this).

Now, the design itself is of not much interest to me as I am sure that with any project that is as ambitious, this will not finish on time or on budget. However, what is interesting to me is the following:

• There seems to be a growing need for significantly safer, faster, cheaper and greener travel options between pairs of cities (Los Angeles – San Fransisco; Delhi – Mumbai and similar) which have a lot of traffic between the cities.
• The hype and interest that Mr. Musk was able to generate for the concept. There is a lot of learning for marketers here on how to build expectations and get media attention on their terms. This, I shall cover in a separate post shortly.
• HyperLoop is conceptualized assuming that the current mode of transportations (Air, Rail, Road & Boat) have reached their limits and can’t be improved further to make them significantly safer, faster, cheaper and greener. I do think that this may not be the case. There could be potential ideas on how to make one of these transportation modes significantly to enable us to travel at about 600 – 700 kms an hour. Now, the question is if we are even looking at these options as well before we set out to create a totally new network which will not only cost billions of dollars but will take years or maybe even decades to complete. As I had mentioned in one of my earlier post, the solution proposed by Elon might look sexy and innovative, but, in my opinion, is not the best solution to the transportation challenge that we face – Significantly safer, faster, cheaper and greener alternative to the current options.
• It would be interesting to watch this space to see if the idea of having an open-source concept development in such a large scale public project attracts interest. If there is significant interest in improving the concept and design from the community, this could also pave the way for a possiblity of a much more deeper engagement with the community in all future large scale public projects, which in a way could lead to a cheaper cost of the project and could also enable us to contribute in any which way possible. This will herald us in a true era of private-public partnership.

Having said all this, my opinion is that, this concept does fill me with hope that significantly safer, faster, cheaper and greener transportation options will be devised within this decade.

What do you make of this concept? Would you like to participate in an open-source project to enhance this design or even to work on creating ideas to significantly improve the current transportation options? Do let me know by commenting below or by tweeting to me at @rmukeshgupta.

Future of The NewsPaper Industry

Jeff Bezos has stirred up a lot of interest in the News Paper Industry by acquiring “The Washington Post” in his individual capacity. There are a lot of expectations now from him and Washington Post to define the future of this industry. If he succeeds to turn-around the loss making paper, that could pave the way for the other players in the industry to follow suit. If he fails to turn this around, people think that it could very well signal the end of an era.

As part of an experiment, I thought what would make me love my newspaper again and I came up with the following description of the newspaper of the future.

• The newspaper is not more than 10 pages long.
• It is personalized based on my preferences (which I can set-up online or through the app). I only receive the news that I want to know about (except for may be the first and last page).
• It is in color, has a lot of pictures, infographics and is a treat to watch and read.
• It also provides me an option to go online (could use QR Codes which I could scan using the app to dive deep).
• It also provide me an opportunity to interact with the colomnists and other readers with similar taste as mine (could be through apps or physical in-person meet-ups)
• Gives me an option to go ad-free (at an additional cost) or only opt for specific kind of ads based on my current interests.
• I get an option of the frequency of the paper (once or twice a day)

Now, to achieve this, there are many assumptions that need to be questioned and re-looked at:

1. Newspapers can’t be personalized as they need to be printed at centralized print facility and distributed
2. The control of what gets printed rests with the editor
3. We can only have daily, weekly or fortnightly editions
4. The layout of the newspaper changes depending upon the news stories, almost every day and which requires a team of people who could do that.
5. The medium is only 2-dimensional (Text and Pictures)

Assuming this vision is brought to reality, both the newspapers and the advertisors whom they serve will benefit hugely.

This is of course if profitability is the main goal of running a newspaper. There could be other reasons to run a newspaper, Shaping public opinion, being one of them. In which case, we need to re-look at the content strategy of the paper.

Currently, there are some interesting developments in the industry that would be worth following:

• Jacek Otko has been quietly leading the revolution of changing the design of the newspapers, to make them more interesting and pleasing to read.
• Times of India has an app (Alive) which we can use to watch videos and link to websites that we might want to explore if we want to dive deeper.
• There are others who are becoming more local and cover their local communities and depend on them for survival.
• Some like NYTimes charge the readers for online access.
• Almost all the newspapers have a digital version.

Another interesting dimension to this entire discussion is the future of advertising itself. The advertising industry itself is going through a fundamental shift and since advertisements constitute almost 70 – 80% of revenues for the newspapers, the shape that the advertising industry takes will have a big impact on the newspaper industry as well.

These are my thoughts. What do you think? Do you think that the vision that I have painted for the newspaper of the future is feasible, desirable? Please share your thoughts by commenting on the blog or by tweeting to me at @rmukeshgupta.

PS: Another thing that can really disrupt the entire industry and take it to a totally different direction is the availability of a smart material that could replace paper as the medium to be used for print.

TED Talk of Jacek Utko – Can Design Save News Papers

 

 

Some Advice for Start-ups with Ad based Biz Models

I believe that start-ups that are working on ad-based revenue models are in for a rude shock.

In my opinion, this model has lead to the demise of one too many interesting start-ups.

Some reasons for me to having arrived at this decision are as below:

• Advertising industry itself is going through a major tectonic shift and will need to re-discover itself in a new avatar before it can support any new business model.
• Having an ad-based revenue model is worse than having no revenue model at all as it provides start-ups with an illusion of revenue sooner than it will ever come.
• Not betting on ad-based revenue model, will force a start-up to think about other revenue models and if thought well, there are always other models that can enable them to survive. Also, this puts a serious cap on the burn rate as they will spend much more carefully and give more time for their products/services to gain traction in the market.
• There are very few start-ups which are able to consistently get funded so that they can keep working on product that will need some serious traction before they can expect to generate any revenue at all, which in turn means, that a bulk of new start-ups will need to think of revenue models other than advertisements.

The advertisements, if and when they come, can be the icing on the top.

These are some of my thoughts. What do you think?  Do you agree or disagree? Please share your thoughts by commenting on this post or by tweeting to me at @rmukeshgupta.

Lessons from a Failed (Billion Dollar) Business Model Innovation Attempt

In May this year, Better Place, an auto tech company filed for bankruptcy, burning close to a billion dollars. They had a brilliant solution to a complex problem.

Their idea was to replace fossil fuels with batteries – literally. What this meant was that as you re-fuel your cars with gasoline, you could get your batteries changed at a fuel station. This was in stark contrast to all the other start-ups in this space, who have been working on increasing the range of their batteries to go longer distances or increase the speed at which one could charge the batteries on-the-go. 

There has been enough written about their strategy and why it did not work. Some of the reasons that have been proposed for the failure of the business model are: 

• The most important cause was the fact that the very need to create a network of fuel stations where battery could be switched was very expensive and was a pre-requisite to start acquiring customers.
• They got too ambitious by expanding to other markets even before they won in their home market (Israel).
• They were not able to offer choice of different car models to their customers, which was a mistake.

However, no one has written about what would have given them a fighting chance at success.

I would like to stick my neck out and outline what I would have done if I were running the company.

I think that the business model that they were pursuing was and is still a great model. This ensures that the behavior of the end customer does not change and with the improving quality of batteries, my cost over time would reduce while my revenue would continue to increase, which is a perfect situation to be in.

One of the most important lessons that we can learn from this exercise is that the choice of your initial market is the most important decision you have to make. The choice of markets (Australia, California, Canada, Denmark, Hawaii and Israel) in this case was a mistake.

If I were in their position, I would have chosen a city based approach rather than pick a country as a market. I would have also chosen a city in densely populated area where, the populations do not generally drive very far (thus reducing the number of switching stations necessary to serve the market.

I would have franchised these switching stations (just like Shell or other Oil players do, mostly to the same franchisees) and signed a revenue sharing agreement with them, thereby eliminating a lot of cost in creating a network of switching station. Also, this would have been much faster and would have provided the momentum to the start-up.

Instead of trying to get Auto manufacturers on-board as a partner, I would have signed-up with them as a customer. I would have co-designed a few models along with the auto manufacturers and placed an order for these cars, thereby eliminating the risk for them, thereby creating choice for the customers.

Once the auto companies have made the models, adding or improving them is not much cost or effort and would lead to them developing more models by themselves (if the initial model was successful in the market).

I would then lease or if possible rent these models (co-branded with the auto manufacturers) on a rental based on either the kilometers driven or for every battery being replaced. This makes it more attractive for a customer to rent a car than to buy it (capex to opex).

This would have allowed me to win one city at a time and then expand to an ever larger network. Once the concept is validated in a few cities, I would then scale like hell and create a network (again franchised) across a nation. If the revenue sharing is fair for the franchisees, it would be easy to create a nationwide network.

This would have allowed me to iterate and learn about the operational challenge and find answers to these challenges with the least risk exposure and perfect the model to enable fast scale.

This would have also reduced my total cash burn and given the start-up a longer play in the market.

I believe 6 years is too long a time to prove your concept, which led to Nissan moving out and others not too keen. The key in this case was the inability to win a single market that led to the fall-out of the business model.

Also, I think that one of the key aspects of business model innovation is the velocity with which you are able to execute and validate your business model in the market, failing which you will find ever increasing resistance from the ecosystem and inertia will kill the project.

What would you have done differently if you were the CEO of Better Place? Do you think that someone should still pursue the business model that they were pursuing?

Let me know your thoughts by commenting below or tweeting to me at @rmukeshgupta. 

PS: Interesting news about speed charging your electric vehicle. 

First Step in the Journey Towards Becoming a Real-time Business

There is a lot of talk about Real-time data and how real-time data can provide organizations to be able to respond in near real-time to business events.

However, to realize such a vision, there is a lot that needs to change in the way we do business. One of the most basic thing that needs to change is how we run our business itself.

Most organizations currently operate in the mode where the decision making sits at the top of the hierarchy. We have a C-Suite where we have the Chief Executives, who decide the strategy and roll-it out for others in the organization to execute.

• The strategy is designed by the C-suite and cascaded down for execution.
• The KPI’s are defined (annually, in most cases) and cascaded down.
• Bonus structures are defined (annually, in most cases) and cascaded down.

What this means is that there are multiple layers of management (depending on how big an organization is) before any true decisions are being made.

In a vision of a real-time enterprise, this needs to change completely.

The front-line employees, people who are interacting with your customers, partners, suppliers,

• the sales executive who sells your products and competes with your competitor or
• the support executive who supports your customers when something breaks down or
• the engineer or product/service developer who designs and produces the products

are the one’s who get to know if something in your business environment has changed. They are the one’s who need to respond to these changes.

In order to realize the vision of a real-time enterprise, we need to be able to spend time training these people to identify such shifts and provide them the real-time information that organizations are capable of in a way that they can make sense out of the data and respond appropriately, without having to go through a series of approvals, et al.

What would help organizations become real-time would be:

• Move from a pyramid shaped organization structure to a concentric circles shaped organization, where, the customer is at the core of the organization, surrounded by the customer facing employees (sales execs, support engineers, product development folks, etc). Each outward circle represents a layer of people who shall support these customer facing employees in serving the customers needs in the best way possible.
• The core employees are trained in identifying trends and insights and create the strategy with the guidance from the other execs in the organizations.

This more like improv theater. Just like in a theater performance, the actors (in front of the customer) are the most important people when it comes to the audience (as they execute the vision of the writer and the director). Every one else is there to enhance or complete the experience.

So should organizations realize that the true heroes or stars for your customers are the folks who perform in front of them. The role of the others is of support cast and need to find, train the best actors and put them in the spotlight.

Also allowing the actors to improvise (if needed) has the potential to improve the overall experience for the audience substantially, similarly empowering your front line employees to improvise can improve the ability of the organization to adapt to any situation that they can come up with.

This will be the first step that an organization can take to move towards becoming a real-time enterprise.

This is not easy, but as people say – “Simple, but not easy”

PS: The best improv show that I have seen – “Whose Line is It Anyway”

 

Crowd Funding Platforms and Banks

There has been a consistent growth in the number of Crowd-funding platforms all around the world. This is quite understandable given that they address a niche segment of the market that no other financial system has been able to address well.

Some of these crowd funding platforms are now moving from crowd-funding (in lieu of kind & merchandise) to becoming crowd investing platform (in lieu of equity).

What surprises me is the fact that banking institutions have not led the way and adopted this model so far but look at these as competition or threat.

If I were leading a digital channel for a banking institution, I would have already launched my own version of the crowd-funding platform.

As a bank, I already have access to

• Customers who have cash and could be potential investors (depositors)
• Prospective customers who want money (Seeking loans)
• I have access to a lot of cash which i could invest as well.

By launching the crowd-funding or crowd investing platform, some of the things that the bank could do are:

• Use the platform for all lending below a specific thresh-hold.
• Open up the non-secure lending market by routing all such requests via this platform.
  • The bank could either use the “Wisdom of crowds” to decide which projects get funded and which don’t.
  • We could even go to the extent that the bank commits to fund an amount equal to the amount that the project secures from the other investors.

This could potentially spread the risk on such investments and open up a new large market for the bank.

• As a bank, it would be easier for us in terms of regulatory approvals in place, so that the entire model could scale much faster than it has so far.

I am sure that the first bank that is able to introduce this and scale fast would definitely enjoy the first mover advantage and open up a big market.

The precedence is already set by Volksbank Bühl, one of the 1,100 cooperative Raiffeisen banks, when it became the first German bank to offer their customers a regional crowd-funding platform.

Now the question is if any of the larger banks would take this up and launch their own crowd-funding platforms or acquire any of the existing platforms.

What do you think? Would you go ahead on this route if you were heading the digital channel of a large bank? I am very much interested to know your thoughts. Please share them by commenting below or by tweeting them to me @rmukeshgupta.