Now we know the tech profitability formula: get a slew of free subscribers, then get a small fraction to pay.  Then, if you’re really smart, get the free ones to spend money without thinking about it: sell ‘em power ups, templates, or some other tiny add-on.  In stark contrast to the Dotcom ’90s when “we’ll make it up on volume” was more irony than accuracy, it’s now the reality.

Of course, this makes life that much more fun for those of us who consider ourselves quant geeks, and especially when the quant side can be combined with Marketing.  Oddly, not only do stats become more central, but so does sophisticated messaging: if you’re going to try and get consumers to slide into spending, you can’t take them on headfirst.  Rather, you have to create a narrative that they slipstream into.

Consider Zynga’s Facebook games - they don’t dive into getting you to pay.  Rather, they get you into the game, and dangle the opportunity to proceed more quickly by buying a little something here, a little something there.  

In fact, I was talking to the CTO of a large social network a couple weeks ago that has never actually taken money from their users - but who is now working on how to do so.  The challenge is to drive a revenue stream without busting their long-term narrative: users have an expectation of their relationship with the service, so while they’re likely going to be fine paying for premium services, this has to be a subtle addition to the offering.

And ultimately, this is the Marketing innovation that’s going to be required the next couple of years: building a narrative that attracts a bumper crop of free users, while leaving the door open to collecting a road toll of some sort later in the journey.  You can’t spend the first two years yelling nothing but “use this, it’s totally free!” then turn round and shut everyone out unless they pony up (ask the myriad online news sites who worked this out the hard way).  At the same time, you can’t open up yelling “it’s free now, but watch out, we’ll be charging you any time now” if you want to gather the optimum audience.

Craigslist actually did this really well - the core audience of traffic never pays anything, and most of us don’t think about what it costs to post a job (until we have to pay for it!).  By segmenting the users into those whose traffic is valuable even when unpaid, and those who place an economic value on access to that traffic, Craigslist kept their narrative consistent.  [Their ‘CENSORED’ approach to closing the adult services section speaks as much to maintaining the narrative and relationship with their users as it does to anything else.]

Facebook are also doing a nice job with their Facebook Credits - rather than charging directly, they provide a ‘virtual economy’ that users tend to buy into through 3rd parties providing apps, rather than being sold by Facebook - of all the controversies Zuckerberg et al have created, Facebook Credits seemed to create the least stir.

So if you don’t have a handle on your tech business’ narrative, now is the time to start.  If you want to make a shift, you need the right angle, and to build the story to the right place.  As much as we want to move at lightspeed, sometimes the best things take a little time…about which more later.

One of my pet peeves is when a company tells me that their stuff ‘allows you to…’ do something.  Hey - who died and made you Boss?  You don’t allow, or disallow, me to do a damn thing.

What you really mean is that your product ‘enables’ me to do something I could do before.  Subtle distinction?  Maybe, but it’s real, because selling is all about overcoming objections, and there’s nothing more likely to create an objection than telling someone what to do.

One of the great tricks of Marketing, when you can’t work out how to say something, is to turn it on its head - say, shift “reduces the pain of reporting” to “makes reporting a pleasure”.  Let’s try that with allow and enable.  Say your system makes it possible for a client to increase their web traffic.  The positive and opposite possibilities:

- ACME allows you to increase web traffic vs not having ACME means you are not allowed to increase web traffic

—OR—

- ACME enables you to increase web traffic vs not having ACME means you are not enabled to increase web traffic

There’s is no way not buying your product eliminates my permission to grow web traffic - but it may leave me inadequately enabled, so let’s talk.

Think this isn’t real - here’s a couple of quotes gleaned from the first page of a Google search for “allows you to”:

- [Our product] allows you to group employees, manage payroll calculations…[hey,I’m not allowed to do that on my own?]

- [This product] allows you to type without looking at your screen [wasn’t aware there was a ban in place]

Psychology is one of those things you can’t see, but telling someone they’re not allowed to do something without your product creates a psychological barrier - your prospect now just wants to stick it to you.  Telling them they won’t be enabled creates no emotional echo.

Believe it or don’t, the question is why would you ever use allow if there’s even a chance it could annoy the other person?  

If you haven’t played Tap-Tap, then you pretty much don’t have an iPhone.  A genius take on the Guitar Hero-style of game, you tap along to the music.  It was the first big iPhone title, and it’s gone so viral that the expression ‘go viral’ doesn’t do it justice.

And now it’s part of Disney.  Along with Playdom, a publisher that Uncle Walt dropped a cool $763M to add to Scrooge McDuck’s collection.

Casual gaming has variously been said, of late, to be between a $3B and $4b global market this year.  Stipulating that that’s a pretty broad range, it still makes the space pretty huge: movie theater receipts in the USA aren’t that far north of $10B, and, by contrast, casual gaming is growing rapidly while even Real 3D and IMAX aren’t stemming the flow at your local Loews terribly impressively.

So does the big-time commitment to the space of a player like Disney mean the space has come of age?  Or does it mean that it’s jumped the shark, and the big money is getting in just as the smart money is getting out?

I don’t know that there’s a causative line to be drawn, but I’d say they’re making a great investment, and the money that will now flow in as other big players join the fray is likely to be very, very good for casual gaming, at least in the short term.  A new game doesn’t cost an enormous amount to build, so you can actually afford to build a dozen titles and wait to see which one takes off and still make money - as long as you’ve got the cash to fund the initial building.  More investment means more capital, and that means more great games.

I also look forward to the next evolution of the marketing and sale of these things.  As Tablet Xmas (the new name for Christmas ‘10) hits, and more people have iPads/iPad-like devices available to them, there’s going to be a frenzy of OEM deals going on, and a lot of noise generated by publishers getting Lite versions of their games to consumers, who convert well into playing punters when the game is good.

Thanks, Mickey - this time next year we’re all looking forward to referring to the $10B casual gaming market!

“Our problem is just communication”.  Ever heard that?  If you work high tech, I know you have.  And my response, 90% of the time is: no, it isn’t.

In 15 years of Silicon Valley jostling, I’ve heard this canard a lot, not least because my early career was based in groupware, email and other things that ended up being lumped in as “the Intranet”.  When I was selling and building the technical solutions, it was easy to follow the logic and point out to clients that, if they only had the pipes in place to ensure everyone could connect with everyone else, everything would run smoothly.

So then we connected everyone.  And, for the most part, they acted the same as they did when they could reasonably claim to be disconnected.  By which I generally mean, everyone reverted to email chains.

Now, if you know me, you know that I consider email to be literally the least effective communication medium ever invented.  Send one e-mail to ten people, and if each of them replies only once, you already have 11 different representations of the conversation.  A couple more swings round by a few more people, and it gets hopelessly muddled (and yes, I have GMail and its clever conversation view, but the reality is that responses are more often than not out of synch, as different players comment on different schedules).

For a long while I hewed to the belief that the Forum / Discussion DB / Wiki style approach, where all comments are centrally stored and synchronously available were the way to go: each time someone answers, everyone can automatically see their contribution before heaving to and having their say.  I still believe this makes email look like a silly idea.

But as time has passed, it’s become clearer that the opportunity and tools to communicate effectively are, as they say, necessary but insufficient.  This is for a very good reason, which is this: fully half of all communication is delivered by not saying anything at all.  The comic’s version of this is the exchange: “Q: Do these jeans make my butt look big? A: Oh look, ducks crossing the road….”.  The politician’s version is the back-pocket veto: receive an approved resolution, then kill it by simply not getting around to signing it in time.

Look at the last week at your job - I’ll bet you experienced at least one situation where the person/group/team you wanted to do something ‘communicated’ by simply dropping off the map.  heck, even at home we do it with the kids - “Q: Dad, can we go to the circus?  A: Let me think about that […and then I’ll spend the next three weeks trying not to use the word ‘circus’ so we all forget the vague suggestions we might go]”.

‘Communication is the issue’ is simply a cop-out, because, especially in the hi tech world it is a vague promise that if we put in some more technology we’d be OK.  The truth is that the issues that cause us to use the phrase are not really about the ability to deliver proactive language - they’re about a misalignment of goals, preferences and desires.  Once you remember that the most definitive communicative gesture is just to clam up and wait for something to go away, it becomes clear that technology is not the solution, just the vehicle that the solution arrives on.

You hear about the dog days of Summer in baseball, but I’ve come to notice they’re all over.  As the Summer starts to close in on Autumn, everyone’s a little sluggish and slow…yes, even here in America where a preferred Summer entertainment is making fun of the Europeans for shutting down for July and August.

First, let’s acknowledge the irony that people here who work for a salary and get minuscule vacation allotments actually mock those who get paid nicely and get literally orders of magnitude more time off.  If you own a company, go ahead and make fun, but if you’re a worker bee (solidarity brother!), seriously, you’re going to want to re-think this.

But it really does seem to be true that things run very slowly over the Summer, regardless of the trudgingly vacation-less workforce.  Wall Street has it right,slipping off to the Hamptons and letting (so far as I can tell) the interns run the market while the mercury heads north so they can come back and invent new ways to sell air as the leaves turn brown and the temperatures dip.

The only conclusion I can draw is that there really is some correlation between the Summer and the need to take a break - and we’re hurting ourselves by not acknowledging, and acting upon, this basic need.  Perhaps it’s ingrained during Summer breaks from school through our formative years; perhaps it’s a need for the Sun; perhaps it’s the tides…I have no idea, but I do know it’s time for people to suck it up, trade in those stored-up vacation days, and get out to somewhere different.

As your grandma always used to say, “a change is as good as a rest” - you don’t have to go to Hawaii to re-charge.  All the people I know who’ve taken a break are feeling much more energized.  So don’t let the dog days beat you down, nor try to get satisfaction from having worked more than those crazy Frenchmen…it’s time to take 40 winks.

I’m at a trade show right now that I’ve attended 4 consecutive times.  It’s shrunk substantially in size, and as a result the sponsorship money it can raise has dropped.  This got me to thinking - can game theory predict an end result, and can it be used to change that result.

As the funding for the show goes down, the perceived value goes down for attendees: there is a smaller pool of interesting speakers, there are less fun parties to attend and the prestige of being present slips downward; this leads, progressively over time, to less attendess wanting to be here.

Simultaneously, the smaller attendee pool makes the value of funding the show lower for sponsors, who calculate a diminished return on investment in participating.  Thus some traditional sponsors drop out, and those who do participate reduce their investment.

In principle, this qualifies as a death spiral: less money means less people, and less people means less sponsorship money - the only logical consequence is that ultimately the show is facing certain death.

But the real question is: can a death spiral be reversed?  I’d argue so, if we can solve the age-old question of which came first - the chicken or the egg?

We can provide the logic that less money equals less attendees and less attendees equals less money, and ultimately solve for an infinitely diminishing result, to the point where staging the show becomes futile.  On the other hand, the corollary of the prior equation is that more money equals more attendees and more attendees means more money.  Frustratingly (for the sake of this thought experiment anyway), we have to choose to increase one or the other first, because it is in that action that we increase the other.  Which to target - money or attendees?

Attendees have a negative incentive: they must pay something to come.  Even if the show itself were free, they would still have to use up opportunity cost for being here rather than somewhere else - short of paying them to attend, it’s hard to increase their incentive to attend in an economically-feasible way.  For an attendee, not attending this show is a singular decision: there is no particular reason to believe they will substitute another show.

Sponsors take a fairly calculated approach to deciding the shows they’ll attend - the more prospective customers they might be able to sign, the more they are willing to spend.  Their incentive is less negative, in the sense that they can control what they’re willing to pay per prospective customer, and the money they spend will likely be simply moved from another, similar option; so costs remain essentially static, regardless of whether the sponsor attends this, or another, show.  As the economic impact is one of substitution rather than elimination, this is the area where we are forced to focus.

If we know that the pool of prospective customers drives sponsor value, and the provision of sponsorship money determines the appeal of the show to those customers, we must solve by exchanging a promise of attendees in return for sponsorship.  We then demonstrate the potential appeal of the show to those attendees based on that promise.  Sponsors A through E may be willing to spend $50k each in return for 250 highly qualified attendees; show organizers must therefore assume they have $300k to play with and publicize widely the high-value benefit of attending.  Perhaps later we’ll chase down the specifics, but for now, let’s perhaps agree that it’s securing a commitment from sponsors in return for a commitment of delivered opportunity that re-charges the batteries.

It’s a risky game, though: if the commitment of attendees is not met, the sponsors will be disappointed and may opt to not pay - and almost certainly won’t pay next year, as all credibility is now gone.  So it’s a risky, bet-the-farm kind of move.

Exactly the kind of move one needs, I’d suggest, to avoid the long, painful demise of the death spiral.

This week I start on a two-headed trip to trade shows in Dallas and Seattle.  Plenty of people ask why go, starting with my children, who are particularly puzzled, but including executives, salespeople and everyone else you can imagine.  Underneath the question is the core essence of what they’re really saying: isn’t this just a mammoth waste of time?

To which I’d say - sometimes, it really is….but other times, it’s about the best way to get your message out to the right people.  To be effective, though, you have to know why you’re going to which events - simply tipping up to something that seems pretty close to your market with nothing interesting to say is a terrific way to waste a whole bunch of money.

The first show I’m hitting, this week, actually, is a gathering of some of the original pioneers of shareware, as well as their ‘descendants’ in the space.  It attracts great customers and prospects, as well as substantially all our competitors.  Ours is not a cut-throat industry, for the most part, and this is as good an opportunity as there is to find out more about where everybody stands.  I’ve always said that I like my competition to know pretty close to everything I’m doing (what’s released, you understand, not the futures that I hold close to the chest): I’ll compete every day on what is real, rather than dealing with ill-informed FUD.

The second show is a fantastic collection of the world’s leading Casual Gaming companies and thinkers, from the artists to the scripters, programmers, executives and service providers.  There is no better place to ensure that our message is out there - and that, if it isn’t resonating properly, we can tweak it to ensure folks understand the distance we’ve gone to ensure that we’re offering what they need.  You can release blog articles till you’re blue in the face, but nothing will replace presenting to a room of dozens to hundreds of decision-makers and leaders to work out where you really stand.

As to how much these things cost, well, the truth is that budgeting is HARD.  You can go small and focus on the interactions; or go large and try to get some value out of making a loud splash.  I’m pretty even on both, though I prefer to cut a middle path, where the splash is more about the message than the booth design, but any budget that effectively balances cost against projected gain has potential for me.

So is it worth it to go?  Absolutely.  As expensive as it is, in dollars and in time, there’s no better way to find out how you are perceived, and how successful you are being at shaping that perception.  And if that’s not a valuable piece of information, I for one don’t know what is.

Saw this article this morning: http://searchengineland.com/eu-upholds-ruling-that-trademarks-in-search-ads-do-not-infringe-45944.

The short version is that the EU has confirmed you can bid on someone else’s trademark in Search marketing without infringing on their rights.

I feel truly ambivalent about this: we have a competitor who consistently buys our company name on Adwords, then puts headlines like “Alternative to [Us]’ or ‘Dont’ pay [Their] Rates’.  It’s all a little bit creepy, IMHO…but I can’t claim never to have done it myself, which is why I find myself of two minds.  I’d almost rather they’d ruled the other way so we could all agree it’s not cool - now they’ve said it is, which means we all have to do it.

I do wonder, though, how effective an approach it is.  in my experience, you can drive traffic - but you don’t tend to convert that traffic by a direct assault as well as when you attract traffic based on your own offering’s own benefits.

Anyone disagree?

By now, we all know that the iPhone 4 is a big hit.  We also know that if you hold it just right you can kill off the 3G reception.  Did you also hear that Jobs called this a “non-issue”?  His advice - hold it differently and you won’t have a problem.

Huh?  One of the most sophisticated Marketing outfits in the known universe recommends simply working around an industrial design SNAFU to end all SNAFUs?  You gotta believe heads are going to roll on this one - but with Steve out front and center, who do you whack?

It’s mindboggling to see that the Apple Machine has screwed the pooch so hard on this one.  There is absolutely no way they didn’t see this coming during QA; I simply don’t believe it.  But somehow they went ahead and released…Gizmodo, I’m looking at you, because you revealed the blasted thing ahead of time (yes, I know you’re journalists, owe the public the truth, blah blah blah), and I suspect Apple simply couldn’t imagine pulling back once the cat was out of the bag.

I’m not one who’s really fussed about what’s right and wrong, morally; I’m mnore concerned with Apple making a world class mistake and looking loose and fluffy in dealing with it.  Eventually, I think we can all agree, they’re going to face reality and hand out those $30 bumper jobbies for free; they always see if they can get away with stuff for one news cycle, then fold if they think they’re not winning the PR battle (remember the $100 rebates for those who bought the 3G at its initial ridiculous price?).

As popular as the phone is, and as uniformly orgasmic as the reviews have been, I wonder if we’re seeing a tipping point for Apple here, as they have pulled a lazy move that has them regressing to the rather disappointing mean of corporate behavior.  I’m going to go out on a limb and say we have…it’ll take a few months, because we’re all still getting excited about the iPad and the iPhone 4, but I’m guessing by Fall we’re on a little bit of a downswing for Apple.  Time will tell.

Many times lately, I’ve noticed that technology marketing seems to revel in self-defeat: we give away the punch-line in the setup and make the whole message flat.  It’s like telling the joke “Why did the chicken cross to the other side of the road…um…to get to…um…the other side”.

It’s not just the titles to press releases, though these are really fabulous displays of trying to fit everything into one sentence: my favorite culled from PRWeb this morning was “Coreworx’ ITAAC Solution for Nuclear Delivers Quickest Path to NRC Compliance, ITAAC Closure and Fuel Load”…sheesh, that sounds impressive - wonder what it means?

But that’s not really what I mean, because in a sense a Press Release is not really intended to be a content-rich item - it’s just chum in the water to try and attract attention, so wackiness is reasonably acceptable.  No, what I’m talking about is absolute throw-aways of potential greatness.  There’s some doozies out there

- One game distributor has copyrighted the phrase A New Game Every Day. Wait till you see it in a sentence followed by ®…the concept, which is actually good, falls on its face as the copyright symbol simply busts up the sentence.

- Autonomy (whose stuff I love, by the way) makes the, to my mind, indefensible decision on its About Us page to start with a blasted great long paragraph that fails to mention…um..what in the heck they do.  Here’s their opening gambit: “Founded in 1996 and utilizing a unique combination of technologies borne out of research at Cambridge University, Autonomy has experienced a meteoric rise. The company currently has a market cap of $6 Billion, is the second largest pure software company in Europe and has offices worldwide. Autonomy’s position as the market leader is widely recognized by leading industry analysts including Gartner, Forrester Research, IDC and Delphi, with the latter referring to Autonomy as the fastest growing public company in the space.”  A rise in what area?  A leader in what?  Come on Autonomy, don’t hide the goods….’cos goodness knows they’re there!

- Microsoft - seriously, go try to find Sharepoint…it has its own cool site area (I’ll cheat and tell you it’s at sharepoint.microsoft.com), but go on in through the www page, and I defy you to dig it up.  Sure you can search for it, but you need to be awful careful you don’t hit the ‘Web’ button and end up searching OUTSIDE of their site…in fact you can end up hitting one of their sponsored links to a partner…come on guys, Bing is cool, but do you really want to be sending folks out of your site?  Come to think of it, perhaps they do….

There’s so many more, and as most of the really good ones show up at trade events, and I’m going to a few this Summer, I’ll try to keep a running tally.

I’m not just poking fun, I’m making a point: if you have the opportunity to setup a concept, go ahead and do so, and recognize that, just like a joke, if the setup is rubbish, the reception of the rest of the communication is going to fall flat.  As with all the writing stuff I’ve posted lately, this isn’t about magic, it’s about recognizing that putting th written word into play for a purpose requires time, effort and a lot of re-writing…it simply never ‘just happens’.