Monday, October 11, 2010
Tuesday, March 23, 2010
DEVELOPING YOUR ADVERTISING PLAN
What is advertising?
Advertising is a way to get your message to your desired audience. But in order to do that, you must first have a plan. This plan has many facets, including your marketing goal, advertising strategies both creative and media, implementation, evaluation, and budget.
What is your marketing goal?
Your marketing goal is basically what you want. Do you want X amount of people to visit your city this year or season? Do you want to increase sales an X amount? Is there a problem you need solved? Once you determine what it is you’re looking for, you can then determine who you want to speak to and what you want to say to them. This then becomes your advertising strategy.
How do you build an advertising strategy? The first four questions you want to ask yourself are:
Who are you trying to reach?
What do you want to say to them?
How, when and where are you going to reach them?
Why have you chosen the steps you have selected?
Who are you trying to reach?
The audience you want to reach is your target market. In order to determine your target market, you will need to do a little research. You will want to know what the consumer thinks about your product and your competition. It is extremely important to know who your audience is, so you can create the right message for the right person. There are several ways to discover your audience. It may be helpful to categorize your consumer in order to market to the correct group.
Some questions to ask yourself during the research process are:
Location - where does your consumer live? Urban or rural environment? Out of State? In a specific city? Far away or close by?
Age - Is your consumer between the ages of 25-54 or 34-54? Are they younger or older?
Marital/Family Status - Are they married? Single? Do they have kids? How many? What ages?
Income - Does your consumer make $30,000 per year or $100,000?
Lifestage - At what stage of life are they? Are they newlyweds just beginning their life together, empty nesters (children are grown and gone), retired?
Travel Patterns - How many times a year do they visit and during what season?
Etc.
What do you want to say?
Now that you’ve narrowed your target audience, you can begin the process of deciding what it is you want the consumer to know or think about you. This is called the creative process or strategy. While there may be many ways to position your product or service, you should always try to appeal to the needs and wants of your target consumer, which again you will find from your research.
What does the consumer need to know about you?
It is important not to focus on too many things, because then your message gets too confusing. Pick a topic and focus on that.
Developing Your Creative Strategy
In its simplest form, your creative strategy needs three things:
What benefit are you promising, what’s your selling proposition?
Who are you making it to?
Why should they believe you?
How do you reach your audience?
There are numerous options to choose from when you are deciding how to advertise. What are your tactics? What approach do you want to use? This will become your media strategy.
Newspapers
Direct Mail
Brochures
Coupons
Handouts or Flyers
Radio
Magazines
TV
Outdoor, such as billboards and posters
Special promotions or packages
Internet Marketing
The medium you choose will depend on what your target audience will see and where they turn to for information, as well as your budget constraints.
What are your media choices?
Television
Television is a powerful medium because it communicates with both sight and sound. Network television, the most costly purchase, can reach up to 95 percent of the homes in the United States (same in France). Spot television, on the other hand, enables the advertiser to hand pick a specific audience in a specific area. By scheduling spots to air during certain times of the day or programs, you can reach your target market in a cost efficient means.
The major disadvantage of both spot and network television is cost. Because of high rates, many advertisers have reduced the length of their commercials from 30 seconds to 15 seconds. This practice, referred to as splitting :30s, reduces costs but severely restricts the amount of information that can be conveyed.
Another problem with television is the likelihood of wasted coverage -- having people outside your product's target market see the advertisement. Cable TV is another area to consider, since ad rates are often less expensive than the prime time on major networks. You may not be reaching as many people, but you likely have less waste since you can pinpoint audiences very precisely.
Radio
The major advantage of radio is that it is a segmented medium. There are all-talk stations, rock stations, jazz stations, news stations, etc. A media buy can be tailored to the profile of your audience. There is an immediacy to radio (visit this weekend, attend this event) and greater flexibility to your buy.
The disadvantage of radio is that it has limited use for products that must be seen by the audience. Another problem, not unlike TV, is the ease with which consumers can tune out a commercial by simply switching the station. Peak radio listening time is during the drive times (6 to 10 am and 4 to 7 pm).
Magazine
The marketing advantage of this medium is the great number of special-interest publications that appeal to defined segments. (For instance, if your target consists of avid runners, there is Runners World). In addition to the distinct audience profiles of magazines, good color production is an advantage that allows magazines to create strong advertising images.
While the cost of national magazines is a disadvantage, many publications publish regional and even metro editions, which reduce the cost and wasted coverage. In addition to cost, a limitation to magazines is their infrequency. Some magazines are only printed on a bi-monthly basis.
Newspaper
Newspapers are an important local medium with excellent reach potential. Because of the daily publication of most papers, you can place an ad that requires immediate action -- this weekend only, special event Saturday, call this 800 number now (toll-free number).
The disadvantage of newspapers is that they are rarely saved by the purchaser, so companies are generally limited to ads that call for an immediate customer response. Also, companies cannot depend on newspapers for good color reproduction.
Direct Mail
Direct mail allows the greatest degree of audience selectivity. By selecting names from your own database of interested people and past visitors or buy purchasing a qualified list from a direct mail company, you can reach an audience who is already interested in your offering. This is an excellent reason to start your own database if you don’t already have one. Later in this booklet, we’ll discuss the benefits, as well as how to develop and work with a database.
Another advantage of direct mail is that you can provide complete information on your destination or attraction, compared with that in a newspaper ad or a 30-second radio spot.
One disadvantage of direct mail is rising postal costs. Another limitation is that people view direct mail as "junk," and the challenge is to get them to open a letter.
Outdoor
The most cost-effective advertising vehicle is outdoor billboards. The visibility of this medium is good reinforcement for products, and it is a flexible alternative. An advertiser can buy space in the desired geographical market. It can be as specific as a certain expressway location, or proximity to a store, for instance.
The disadvantage to billboards is that there is not an opportunity for a lengthy message. The message has to stand out so it won’t be forgotten once the billboard is passed.
Transit
This medium includes messages on the interior and exterior of buses, subway cars and taxis. There is a great deal of selectivity with this medium, allowing you to buy space by neighborhood or bus route.
One disadvantage of this medium is that the heavy travel times, when the audiences are the largest, are not conducive to reading advertising copy. As with billboards, concise break-through messages are critical.
Internet
Advertising on the Internet is the fastest-growing media vehicle. This media vehicle has the advantage of active reader involvement and attention -- users have the capability of choosing different sites, and for that matter, viewing advertisements. Furthermore, the demographic profile of Internet users is desirable to advertisers -- 68 percent have household incomes of $50,000+ and 83 percent have a college education.
There are some disadvantages to using this medium. With technology constantly changing, it is difficult to completely control the user experience over time. Secondly, the return on investment is sometimes difficult to measure. Lastly, not everyone is online.
When are you going to reach your audience?
Timing is an important aspect when placing advertising. If you place an ad too soon, people may forget about your event. If you place an ad too late, people may already have plans or purchased another product.
How do you time the advertising?
There is no correct schedule to advertise a product, but two factors should be considered. The first is the purchase frequency -- the more frequently the product is purchased, the less repetition is required. Second, companies need to consider the forgetting rate, the speed at which buyers forget the brand if advertising is not seen nor heard. There are two basic approaches to setting advertising schedules:
1. Continuous schedule: Advertising of a product runs throughout the year, when demand and seasonal factors are unimportant.
2. Flight schedule: Advertising is distributed unevenly throughout the year because of seasonal demand, heavy periods of promotion, or introduction of a new product.
Evaluating Your Advertising
How successful is advertising? How do you know if your campaign worked? There are a few ways to go about evaluating your campaign:
Do a random research sample asking people how they heard about you or your product.
Note the percentage your sales, visitors, or calls increased from the previous year without advertising and then with advertising. You should see a difference.
What will this cost?
Your budget will determine when and where you can advertise. There are four basic ways to determine what your budget should be. And don’t forget, your budget doesn’t just include media costs, but production costs as well.
1. Task Objective Method - This is just a way of saying, how much you have to spend to reach your objective. For example, you want to reach 50 percent of your audience. How many people do you have to reach? How many times do you have to run an ad? How much does each ad cost?
2. Historical Method - This method uses a base budget and then increases the budget each year by a certain percentage. For example you have $10,000 to spend this year, then next year you increase it 5% to be $10,500.
3. Percent-of-Sales Method - For this, you can take a percentage of your sales as your advertising budget. The tricky thing is that you have to forecast your sales. Here is the formula to help you along:
Step 1: Past Advertising Dollars = % of Sales
Past Sales
Step 2: % of Sales X Next Year’s Sales Forecast = New Advertising Budget
(Average advertising budget will run about 20% of your sales.)
4. Combination Method - You are never stuck with one method. Many companies chose multiple methods and pick a plan that is right for them. You need to evaluate your situation. How much can you afford and what will it take to reach your objectives?
Tips To Get You Started
Now that you’ve decided your goals, objectives, target audience, strategy, message, and tactics, you can finally put your plan into action. The media section that follows will have more detailed advice, but here are some things you’ll want to consider:
You can call newspapers and magazines directly. Many media reps will be happy to place your ad. Many times, they can assist you with the development of your ad.
Look into an outside media buying company. There are numerous free-lance media companies that will place your ad for you for a fee. Their expertise would take the guesswork out of you media plan.
Check with a local printing house to print flyers and brochures.
Choose an advertising agency. Small agencies will often put your plan together for you, design your ad, and implement it. Since this requires an additional investment in their time, it will depend on your advertising budget and specific needs.
To install an Internet home page, visit your local university or high school. Many computer classes teach kids how to build a home page and they are more than happy to produce one for a local business. This service could be free to you.
Advertising is a way to get your message to your desired audience. But in order to do that, you must first have a plan. This plan has many facets, including your marketing goal, advertising strategies both creative and media, implementation, evaluation, and budget.
What is your marketing goal?
Your marketing goal is basically what you want. Do you want X amount of people to visit your city this year or season? Do you want to increase sales an X amount? Is there a problem you need solved? Once you determine what it is you’re looking for, you can then determine who you want to speak to and what you want to say to them. This then becomes your advertising strategy.
How do you build an advertising strategy? The first four questions you want to ask yourself are:
Who are you trying to reach?
What do you want to say to them?
How, when and where are you going to reach them?
Why have you chosen the steps you have selected?
Who are you trying to reach?
The audience you want to reach is your target market. In order to determine your target market, you will need to do a little research. You will want to know what the consumer thinks about your product and your competition. It is extremely important to know who your audience is, so you can create the right message for the right person. There are several ways to discover your audience. It may be helpful to categorize your consumer in order to market to the correct group.
Some questions to ask yourself during the research process are:
Location - where does your consumer live? Urban or rural environment? Out of State? In a specific city? Far away or close by?
Age - Is your consumer between the ages of 25-54 or 34-54? Are they younger or older?
Marital/Family Status - Are they married? Single? Do they have kids? How many? What ages?
Income - Does your consumer make $30,000 per year or $100,000?
Lifestage - At what stage of life are they? Are they newlyweds just beginning their life together, empty nesters (children are grown and gone), retired?
Travel Patterns - How many times a year do they visit and during what season?
Etc.
What do you want to say?
Now that you’ve narrowed your target audience, you can begin the process of deciding what it is you want the consumer to know or think about you. This is called the creative process or strategy. While there may be many ways to position your product or service, you should always try to appeal to the needs and wants of your target consumer, which again you will find from your research.
What does the consumer need to know about you?
It is important not to focus on too many things, because then your message gets too confusing. Pick a topic and focus on that.
Developing Your Creative Strategy
In its simplest form, your creative strategy needs three things:
What benefit are you promising, what’s your selling proposition?
Who are you making it to?
Why should they believe you?
How do you reach your audience?
There are numerous options to choose from when you are deciding how to advertise. What are your tactics? What approach do you want to use? This will become your media strategy.
Newspapers
Direct Mail
Brochures
Coupons
Handouts or Flyers
Radio
Magazines
TV
Outdoor, such as billboards and posters
Special promotions or packages
Internet Marketing
The medium you choose will depend on what your target audience will see and where they turn to for information, as well as your budget constraints.
What are your media choices?
Television
Television is a powerful medium because it communicates with both sight and sound. Network television, the most costly purchase, can reach up to 95 percent of the homes in the United States (same in France). Spot television, on the other hand, enables the advertiser to hand pick a specific audience in a specific area. By scheduling spots to air during certain times of the day or programs, you can reach your target market in a cost efficient means.
The major disadvantage of both spot and network television is cost. Because of high rates, many advertisers have reduced the length of their commercials from 30 seconds to 15 seconds. This practice, referred to as splitting :30s, reduces costs but severely restricts the amount of information that can be conveyed.
Another problem with television is the likelihood of wasted coverage -- having people outside your product's target market see the advertisement. Cable TV is another area to consider, since ad rates are often less expensive than the prime time on major networks. You may not be reaching as many people, but you likely have less waste since you can pinpoint audiences very precisely.
Radio
The major advantage of radio is that it is a segmented medium. There are all-talk stations, rock stations, jazz stations, news stations, etc. A media buy can be tailored to the profile of your audience. There is an immediacy to radio (visit this weekend, attend this event) and greater flexibility to your buy.
The disadvantage of radio is that it has limited use for products that must be seen by the audience. Another problem, not unlike TV, is the ease with which consumers can tune out a commercial by simply switching the station. Peak radio listening time is during the drive times (6 to 10 am and 4 to 7 pm).
Magazine
The marketing advantage of this medium is the great number of special-interest publications that appeal to defined segments. (For instance, if your target consists of avid runners, there is Runners World). In addition to the distinct audience profiles of magazines, good color production is an advantage that allows magazines to create strong advertising images.
While the cost of national magazines is a disadvantage, many publications publish regional and even metro editions, which reduce the cost and wasted coverage. In addition to cost, a limitation to magazines is their infrequency. Some magazines are only printed on a bi-monthly basis.
Newspaper
Newspapers are an important local medium with excellent reach potential. Because of the daily publication of most papers, you can place an ad that requires immediate action -- this weekend only, special event Saturday, call this 800 number now (toll-free number).
The disadvantage of newspapers is that they are rarely saved by the purchaser, so companies are generally limited to ads that call for an immediate customer response. Also, companies cannot depend on newspapers for good color reproduction.
Direct Mail
Direct mail allows the greatest degree of audience selectivity. By selecting names from your own database of interested people and past visitors or buy purchasing a qualified list from a direct mail company, you can reach an audience who is already interested in your offering. This is an excellent reason to start your own database if you don’t already have one. Later in this booklet, we’ll discuss the benefits, as well as how to develop and work with a database.
Another advantage of direct mail is that you can provide complete information on your destination or attraction, compared with that in a newspaper ad or a 30-second radio spot.
One disadvantage of direct mail is rising postal costs. Another limitation is that people view direct mail as "junk," and the challenge is to get them to open a letter.
Outdoor
The most cost-effective advertising vehicle is outdoor billboards. The visibility of this medium is good reinforcement for products, and it is a flexible alternative. An advertiser can buy space in the desired geographical market. It can be as specific as a certain expressway location, or proximity to a store, for instance.
The disadvantage to billboards is that there is not an opportunity for a lengthy message. The message has to stand out so it won’t be forgotten once the billboard is passed.
Transit
This medium includes messages on the interior and exterior of buses, subway cars and taxis. There is a great deal of selectivity with this medium, allowing you to buy space by neighborhood or bus route.
One disadvantage of this medium is that the heavy travel times, when the audiences are the largest, are not conducive to reading advertising copy. As with billboards, concise break-through messages are critical.
Internet
Advertising on the Internet is the fastest-growing media vehicle. This media vehicle has the advantage of active reader involvement and attention -- users have the capability of choosing different sites, and for that matter, viewing advertisements. Furthermore, the demographic profile of Internet users is desirable to advertisers -- 68 percent have household incomes of $50,000+ and 83 percent have a college education.
There are some disadvantages to using this medium. With technology constantly changing, it is difficult to completely control the user experience over time. Secondly, the return on investment is sometimes difficult to measure. Lastly, not everyone is online.
When are you going to reach your audience?
Timing is an important aspect when placing advertising. If you place an ad too soon, people may forget about your event. If you place an ad too late, people may already have plans or purchased another product.
How do you time the advertising?
There is no correct schedule to advertise a product, but two factors should be considered. The first is the purchase frequency -- the more frequently the product is purchased, the less repetition is required. Second, companies need to consider the forgetting rate, the speed at which buyers forget the brand if advertising is not seen nor heard. There are two basic approaches to setting advertising schedules:
1. Continuous schedule: Advertising of a product runs throughout the year, when demand and seasonal factors are unimportant.
2. Flight schedule: Advertising is distributed unevenly throughout the year because of seasonal demand, heavy periods of promotion, or introduction of a new product.
Evaluating Your Advertising
How successful is advertising? How do you know if your campaign worked? There are a few ways to go about evaluating your campaign:
Do a random research sample asking people how they heard about you or your product.
Note the percentage your sales, visitors, or calls increased from the previous year without advertising and then with advertising. You should see a difference.
What will this cost?
Your budget will determine when and where you can advertise. There are four basic ways to determine what your budget should be. And don’t forget, your budget doesn’t just include media costs, but production costs as well.
1. Task Objective Method - This is just a way of saying, how much you have to spend to reach your objective. For example, you want to reach 50 percent of your audience. How many people do you have to reach? How many times do you have to run an ad? How much does each ad cost?
2. Historical Method - This method uses a base budget and then increases the budget each year by a certain percentage. For example you have $10,000 to spend this year, then next year you increase it 5% to be $10,500.
3. Percent-of-Sales Method - For this, you can take a percentage of your sales as your advertising budget. The tricky thing is that you have to forecast your sales. Here is the formula to help you along:
Step 1: Past Advertising Dollars = % of Sales
Past Sales
Step 2: % of Sales X Next Year’s Sales Forecast = New Advertising Budget
(Average advertising budget will run about 20% of your sales.)
4. Combination Method - You are never stuck with one method. Many companies chose multiple methods and pick a plan that is right for them. You need to evaluate your situation. How much can you afford and what will it take to reach your objectives?
Tips To Get You Started
Now that you’ve decided your goals, objectives, target audience, strategy, message, and tactics, you can finally put your plan into action. The media section that follows will have more detailed advice, but here are some things you’ll want to consider:
You can call newspapers and magazines directly. Many media reps will be happy to place your ad. Many times, they can assist you with the development of your ad.
Look into an outside media buying company. There are numerous free-lance media companies that will place your ad for you for a fee. Their expertise would take the guesswork out of you media plan.
Check with a local printing house to print flyers and brochures.
Choose an advertising agency. Small agencies will often put your plan together for you, design your ad, and implement it. Since this requires an additional investment in their time, it will depend on your advertising budget and specific needs.
To install an Internet home page, visit your local university or high school. Many computer classes teach kids how to build a home page and they are more than happy to produce one for a local business. This service could be free to you.
Thursday, April 24, 2008
Ambush Marketing
Ambush Marketing:
The Off-Field Competition at the Olympic Games
Jason K. Schmitz
I. Introduction
Athletes from around the world gathered in Athens for the 2004 Olympic Games. And while the athletes prepared for the competition of the Games, corporations prepared for the intense marketing blitz that accompanied the Games. As an event that commands the attention of the media and the entire world for two weeks every other year, the Olympic Games are the most effective international corporate marketing platform in the world, reaching billions of people in over 200 countries and territories. Some corporations, including McDonald's, Coca-Cola, Visa, Kodak and Xerox, paid a multi-million dollar fee for the right to be part of The Olympic Partner ("TOP") program. The TOP program, managed by the International Olympic Committee ("IOC"), grants sponsors the exclusive worldwide marketing rights in their product categories for both the Winter and Summer Games. Additionally, TOP companies are entitled to the use of all Olympic imagery as well as appropriate Olympic designations on products and acknowledgment of their support through a broad Olympic sponsorship program.Others will seek to associate their companies with the Olympics and capitalize on the attendant good will without authorization of the IOC or payment of the requisite sponsorship fees. This is commonly referred to as ambush marketing. This piece will identify the Olympic organizations that own and use the Olympic Games' intellectual property, how ambush marketing has been employed and challenged at prior Olympic Games and at the Athens Games, and the legal and ethical issues surrounding ambush marketing.
II. Olympic Organizations and Olympic Marketing
The goal of the Olympic Movement is to "contribute to building a peaceful and better world by educating youth through sport practiced without discrimination of any kind and in the Olympic spirit, which requires mutual understanding with a spirit of friendship, solidarity and fair-play." The IOC, a non-governmental, non-profit organization, is the supreme authority of the Olympic Movement. It was created in 1894 by Pierre de Coubertin, a French aristocrat and educator, and owns all rights concerning the Olympic symbol, the Olympic flag, the Olympic motto, the Olympic anthem, and the Olympic Games. Within the United States, the right to control the use of Olympic marks, images, and terminology resides with the United States Olympic Committee ("USOC"). The U.S. Congress granted the USOC exclusive control over the commercial exploitation of Olympic and Paralympic related trademarks, symbols, and terminology through the Amateur Sports Act of 1978. The U.S. Supreme Court later held in San Francisco Arts & Athletics, Inc. v. United States Olympic Comm. that the statute authorizing the USOC's exclusive use rights in "Olympic" trademarks does not require the USOC to prove that the unauthorized use caused confusion.8 Twenty years after the passage of the Amateur Sports Act of 1978, it was amended and recodified as the Ted Stevens Olympic and Amateur Sports Act of 1998 ("OASA").
A. The Marketing of the Olympics
As the USOC holds responsibility for funding the United States' participation in the Olympics, its authority to grant exclusive use rights to the Olympic marks and symbols greatly enhances its ability to attract the corporate sponsors, suppliers, and licensees necessary to finance an event as large as the Olympics.10Conversely, if the USOC were unable to enforce its exclusive use rights, there would be reduced incentive on the part of the financial participants. With this in mind, courts have concluded that the primary purpose of the OASA was to "insure the market value of licenses."
The five interlocking rings that comprise the Olympic emblem symbolize the continents of Africa, America, Asia, Australia, and Europe joining together irrespective of race, nationality, religion or economic difference. According to consumer research conducted in 1998, 1999, and 2000, underwritten by the IOC in eleven countries, unaided brand awareness for the Olympic Rings was ninety-three percent.As such, the Olympic Rings are indeed famous and have enormous licensing value.
B. Ambush Marketing at the Olympics
In a narrow sense, ambush marketing refers to the direct efforts of one party to weaken or attack a competitor's official association with a sports organization acquired through the payment of sponsorship fees. In a broader sense, rather than such direct and intentional misrepresentation, ambush marketing refers to a company's attempt to capitalize on the goodwill, reputation, and popularity of a particular event by creating an association without the authorization or consent of the necessary parties. Some popular indirect ambush techniques include buying commercial time prior to and during event broadcasts,sponsoring the broadcasts of events rather than directly sponsoring the event,16sponsoring individual teams and athletes,and using sporting events tickets in consumer giveaways, sweepstakes, or contests.
Purely defined, ambush marketing does not involve counterfeiting or the illegal use of trademarks, tradenames, or symbols. Companies simply develop a creative advertising campaign around the event, never use the event logo, trademark or tradename, and capitalize by association with the event without paying for "official sponsor" status.When effectively employed, ambush marketing is not illegal and is therefore difficult for legitimate sponsors and the USOC to combat.
III. Past Enforcement Efforts
Approximately seventy-eight percent of the 2002 Olympic Winter Games and Paralympic Winter Games budget of 1.31 billion dollars was to come from corporate marketing sponsors, broadcast rights fees, and royalties from official merchandise licensees.Accordingly, the USOC and Salt Lake Organizing Committee ("SLOC") took no chances in their battle against trademark infringement and ambush marketing. The USOC and SLOC entered into a Joint Marketing Agreement for the purpose of marketing the 2002 Winter Olympic Games. The USOC and SLOC formed "Olympic Properties of the United States ("OPUS"), a limited liability corporation, and granted to OPUS the right to license the various Olympic and Paralympic terminology, marks, and images to sponsors, suppliers, and partners who would finance the 2002 Winter Games.Between 1999 and 2002, the SLOC investigated over 431 cases involving intellectual property rights infringements, while in the second half of 2001 alone, the USOC investigated 246 cases.22By the end of 2001, more than half of the cases were "successfully resolved."
The SLOC sought to educate the public about the basics of intellectual property and ambush marketing in its battle against trademark infringement. The SLOC official website contained a "Frequently Asked Questions" page which answered questions such as "What is a Trademark?" and "What is Ambush Marketing?".24Additionally, the SLOC and the USOC launched educational campaigns that included print advertisements in trade and consumer publications; a mass mailing outlining trademark regulations aimed at the general public, athlete agents, retailers, National Organizing Committees, Olympic sponsors, suppliers and licensees; and sponsored brand protection workshops.The SLOC also released to the media a video entitled, "The Protection of Olympic and Paralympic Marks."Stories about the protection of Olympic marks appeared in newspapers and on television. The SLOC also publicized legal actions filed alleging trademark and copyright infringement of the Olympic symbols.
As part of a surveillance strategy, the SLOC used the technique of "mystery shopping" whereby brand protection agents made random, unannounced visits to area retail shops and e-commerce sites.Agents reported that about half of the shops they visited were carrying unlicensed merchandise bearing Olympic-related marks.In response, the SLOC sent an educational letter about brand protection to Park City retailers, asked the Chamber of Commerce to inform its members of the SLOC's intellectual property rights involved, and ran an article in the local paper about anti-counterfeiting.Within two weeks, the mystery shoppers found that approximately seventy-five percent of the suspected stores discontinued selling infringing items.
In Athens, strict regulations by the Greeks and the IOC dictated that spectators at the Olympics could be refused admission to events unless they discarded food or drinks made by companies that were not official sponsors.Fans were allowed into the Olympic complex with other food and beverage as long as it was the product of an official sponsor. Olympic staff was also trained to check for t-shirts, hats, and bags displaying the unwelcome logos of non-sponsors. Those spectators who appeared to be wearing merchandise from the sponsors' rivals in an attempt to catch the eyes of television audiences were required to wear their shirts inside out or were removed from the venue.
IV. Legal Challenges to Ambush Marketing
A trademark holder will most often invoke the protections and remedies provided by 15 U.S.C. §1114 and 15 U.S.C. §1125 of the Lanham Act to challenge an ambusher. One of the problems with challenging ambush marketers under the Lanham Act is that the consumer protection-oriented approach may fail to provide courts with an appropriate rationale to find for trademark holders. Specifically, the "likelihood of confusion" analysis often does not apply to the facts of ambush cases.34Ambushers often do not use or display the Olympic marks but instead create a false association with the marks and the Olympics. Additionally, survey evidence of actual consumer confusion may not be probative of whether consumers care about the identity of the actual sponsors or the impact it may have on their respective consumer behavior. However, § 43(a) does expressly limit the actions of competitors. Section 43(a)(1) protects trademark owners' sponsorships and endorsements by prohibiting a competitor's false designation of origin when it "is likely to cause confusion . . . or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person."35
The court's opinion in MasterCard International, Inc. v. Sprint Communications Co. demonstrates the willingness of courts to protect sponsorship and licensing contracts under § 43(a) even though there may be no actual consumer confusion. MasterCard, a 1994 World Cup sponsor, successfully enjoined Sprint, a 1994 World Cup partner, from issuing "card-based payment and account access devices" with "World Cup '94" trademarks based upon MasterCard's agreement with ISL that MasterCard had the exclusive rights to use the "World Cup '94" trademarks on "card-based payment and account access devices," which was interpreted to include any telephone credit card.36Although the court mentions consumer confusion caused by the public's belief that the World Cup approved of Sprint's use of its trademarks, in reality, consumers were probably not confused. Consumers could be confused about the sponsorship only to the extent that they thought about it. Likely, most consumers did not care whether Sprint officially sponsored the 1994 World Cup Games.37Instead, the court used § 43(a) to protect MasterCard's investment.38This is by no means a clear precedent for ambush marketing cases.
A. Ethical and Policy Considerations
Unless a clear decision is made by the courts or legislature, ambush marketing will continue and increase. The question arises as to whether or not practices such as ambush marketing are ethical, illegal, or simply smart business practice. Critics call ambush marketing "parasite marketing,"39claiming that companies are deliberately looking for ways to piggyback on their rivals' sponsorship of major events despite protests from sponsors and event organizers. The ambusher that gives the impression of involvement without payment is merely serving its own narrow self-interest and, in doing so, engages in behavior that is harmful to the greater good of sport.
Supporters of ambush marketing, including the author, see it as smart business.40Arguably, ambush marketing provides a positive free market force. By exposing to official sponsors and event organizers the true scope of exclusivity that any sponsor can reasonably expect to enjoy, ambushers in effect help quantify the true market value of Olympic sponsorship while participating in the marketing blitz in a manner they deem most cost effective for their company. As it becomes clear to potential sponsors of future Olympic Games that event organizers will not be able to stop all ambush marketing efforts, this should be a factor that is accounted for in determining the fees to be paid for official sponsorship. Critics of ambush marketing would suggest that the threat of ambush marketing could ultimately impair the ability of event organizers to host elaborate and successful Olympic Games if ambush marketing deters large multinational corporations from being official sponsors. However, the appeal to large corporations of the world-wide exposure that results from sponsorship of the Olympic Games will never be diminished by market imperfections such as ambushers to the point of threatening the budgets of event organizers. Additionally, as is evident from the ongoing efforts to stop ambushers, the practice of ambush marketing encourages organizers to work harder to thwart intellectual property violations, and raises the awareness of intellectual property rights globally—a long-term benefit to all intellectual property owners.
© Copyright 2005 by Northwestern University School of Law, Northwestern Journal of Technology and Intellectual Property Volume 3 Issue 2 (Spring 2005)
The Off-Field Competition at the Olympic Games
Jason K. Schmitz
I. Introduction
Athletes from around the world gathered in Athens for the 2004 Olympic Games. And while the athletes prepared for the competition of the Games, corporations prepared for the intense marketing blitz that accompanied the Games. As an event that commands the attention of the media and the entire world for two weeks every other year, the Olympic Games are the most effective international corporate marketing platform in the world, reaching billions of people in over 200 countries and territories. Some corporations, including McDonald's, Coca-Cola, Visa, Kodak and Xerox, paid a multi-million dollar fee for the right to be part of The Olympic Partner ("TOP") program. The TOP program, managed by the International Olympic Committee ("IOC"), grants sponsors the exclusive worldwide marketing rights in their product categories for both the Winter and Summer Games. Additionally, TOP companies are entitled to the use of all Olympic imagery as well as appropriate Olympic designations on products and acknowledgment of their support through a broad Olympic sponsorship program.Others will seek to associate their companies with the Olympics and capitalize on the attendant good will without authorization of the IOC or payment of the requisite sponsorship fees. This is commonly referred to as ambush marketing. This piece will identify the Olympic organizations that own and use the Olympic Games' intellectual property, how ambush marketing has been employed and challenged at prior Olympic Games and at the Athens Games, and the legal and ethical issues surrounding ambush marketing.
II. Olympic Organizations and Olympic Marketing
The goal of the Olympic Movement is to "contribute to building a peaceful and better world by educating youth through sport practiced without discrimination of any kind and in the Olympic spirit, which requires mutual understanding with a spirit of friendship, solidarity and fair-play." The IOC, a non-governmental, non-profit organization, is the supreme authority of the Olympic Movement. It was created in 1894 by Pierre de Coubertin, a French aristocrat and educator, and owns all rights concerning the Olympic symbol, the Olympic flag, the Olympic motto, the Olympic anthem, and the Olympic Games. Within the United States, the right to control the use of Olympic marks, images, and terminology resides with the United States Olympic Committee ("USOC"). The U.S. Congress granted the USOC exclusive control over the commercial exploitation of Olympic and Paralympic related trademarks, symbols, and terminology through the Amateur Sports Act of 1978. The U.S. Supreme Court later held in San Francisco Arts & Athletics, Inc. v. United States Olympic Comm. that the statute authorizing the USOC's exclusive use rights in "Olympic" trademarks does not require the USOC to prove that the unauthorized use caused confusion.8 Twenty years after the passage of the Amateur Sports Act of 1978, it was amended and recodified as the Ted Stevens Olympic and Amateur Sports Act of 1998 ("OASA").
A. The Marketing of the Olympics
As the USOC holds responsibility for funding the United States' participation in the Olympics, its authority to grant exclusive use rights to the Olympic marks and symbols greatly enhances its ability to attract the corporate sponsors, suppliers, and licensees necessary to finance an event as large as the Olympics.10Conversely, if the USOC were unable to enforce its exclusive use rights, there would be reduced incentive on the part of the financial participants. With this in mind, courts have concluded that the primary purpose of the OASA was to "insure the market value of licenses."
The five interlocking rings that comprise the Olympic emblem symbolize the continents of Africa, America, Asia, Australia, and Europe joining together irrespective of race, nationality, religion or economic difference. According to consumer research conducted in 1998, 1999, and 2000, underwritten by the IOC in eleven countries, unaided brand awareness for the Olympic Rings was ninety-three percent.As such, the Olympic Rings are indeed famous and have enormous licensing value.
B. Ambush Marketing at the Olympics
In a narrow sense, ambush marketing refers to the direct efforts of one party to weaken or attack a competitor's official association with a sports organization acquired through the payment of sponsorship fees. In a broader sense, rather than such direct and intentional misrepresentation, ambush marketing refers to a company's attempt to capitalize on the goodwill, reputation, and popularity of a particular event by creating an association without the authorization or consent of the necessary parties. Some popular indirect ambush techniques include buying commercial time prior to and during event broadcasts,sponsoring the broadcasts of events rather than directly sponsoring the event,16sponsoring individual teams and athletes,and using sporting events tickets in consumer giveaways, sweepstakes, or contests.
Purely defined, ambush marketing does not involve counterfeiting or the illegal use of trademarks, tradenames, or symbols. Companies simply develop a creative advertising campaign around the event, never use the event logo, trademark or tradename, and capitalize by association with the event without paying for "official sponsor" status.When effectively employed, ambush marketing is not illegal and is therefore difficult for legitimate sponsors and the USOC to combat.
III. Past Enforcement Efforts
Approximately seventy-eight percent of the 2002 Olympic Winter Games and Paralympic Winter Games budget of 1.31 billion dollars was to come from corporate marketing sponsors, broadcast rights fees, and royalties from official merchandise licensees.Accordingly, the USOC and Salt Lake Organizing Committee ("SLOC") took no chances in their battle against trademark infringement and ambush marketing. The USOC and SLOC entered into a Joint Marketing Agreement for the purpose of marketing the 2002 Winter Olympic Games. The USOC and SLOC formed "Olympic Properties of the United States ("OPUS"), a limited liability corporation, and granted to OPUS the right to license the various Olympic and Paralympic terminology, marks, and images to sponsors, suppliers, and partners who would finance the 2002 Winter Games.Between 1999 and 2002, the SLOC investigated over 431 cases involving intellectual property rights infringements, while in the second half of 2001 alone, the USOC investigated 246 cases.22By the end of 2001, more than half of the cases were "successfully resolved."
The SLOC sought to educate the public about the basics of intellectual property and ambush marketing in its battle against trademark infringement. The SLOC official website contained a "Frequently Asked Questions" page which answered questions such as "What is a Trademark?" and "What is Ambush Marketing?".24Additionally, the SLOC and the USOC launched educational campaigns that included print advertisements in trade and consumer publications; a mass mailing outlining trademark regulations aimed at the general public, athlete agents, retailers, National Organizing Committees, Olympic sponsors, suppliers and licensees; and sponsored brand protection workshops.The SLOC also released to the media a video entitled, "The Protection of Olympic and Paralympic Marks."Stories about the protection of Olympic marks appeared in newspapers and on television. The SLOC also publicized legal actions filed alleging trademark and copyright infringement of the Olympic symbols.
As part of a surveillance strategy, the SLOC used the technique of "mystery shopping" whereby brand protection agents made random, unannounced visits to area retail shops and e-commerce sites.Agents reported that about half of the shops they visited were carrying unlicensed merchandise bearing Olympic-related marks.In response, the SLOC sent an educational letter about brand protection to Park City retailers, asked the Chamber of Commerce to inform its members of the SLOC's intellectual property rights involved, and ran an article in the local paper about anti-counterfeiting.Within two weeks, the mystery shoppers found that approximately seventy-five percent of the suspected stores discontinued selling infringing items.
In Athens, strict regulations by the Greeks and the IOC dictated that spectators at the Olympics could be refused admission to events unless they discarded food or drinks made by companies that were not official sponsors.Fans were allowed into the Olympic complex with other food and beverage as long as it was the product of an official sponsor. Olympic staff was also trained to check for t-shirts, hats, and bags displaying the unwelcome logos of non-sponsors. Those spectators who appeared to be wearing merchandise from the sponsors' rivals in an attempt to catch the eyes of television audiences were required to wear their shirts inside out or were removed from the venue.
IV. Legal Challenges to Ambush Marketing
A trademark holder will most often invoke the protections and remedies provided by 15 U.S.C. §1114 and 15 U.S.C. §1125 of the Lanham Act to challenge an ambusher. One of the problems with challenging ambush marketers under the Lanham Act is that the consumer protection-oriented approach may fail to provide courts with an appropriate rationale to find for trademark holders. Specifically, the "likelihood of confusion" analysis often does not apply to the facts of ambush cases.34Ambushers often do not use or display the Olympic marks but instead create a false association with the marks and the Olympics. Additionally, survey evidence of actual consumer confusion may not be probative of whether consumers care about the identity of the actual sponsors or the impact it may have on their respective consumer behavior. However, § 43(a) does expressly limit the actions of competitors. Section 43(a)(1) protects trademark owners' sponsorships and endorsements by prohibiting a competitor's false designation of origin when it "is likely to cause confusion . . . or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person."35
The court's opinion in MasterCard International, Inc. v. Sprint Communications Co. demonstrates the willingness of courts to protect sponsorship and licensing contracts under § 43(a) even though there may be no actual consumer confusion. MasterCard, a 1994 World Cup sponsor, successfully enjoined Sprint, a 1994 World Cup partner, from issuing "card-based payment and account access devices" with "World Cup '94" trademarks based upon MasterCard's agreement with ISL that MasterCard had the exclusive rights to use the "World Cup '94" trademarks on "card-based payment and account access devices," which was interpreted to include any telephone credit card.36Although the court mentions consumer confusion caused by the public's belief that the World Cup approved of Sprint's use of its trademarks, in reality, consumers were probably not confused. Consumers could be confused about the sponsorship only to the extent that they thought about it. Likely, most consumers did not care whether Sprint officially sponsored the 1994 World Cup Games.37Instead, the court used § 43(a) to protect MasterCard's investment.38This is by no means a clear precedent for ambush marketing cases.
A. Ethical and Policy Considerations
Unless a clear decision is made by the courts or legislature, ambush marketing will continue and increase. The question arises as to whether or not practices such as ambush marketing are ethical, illegal, or simply smart business practice. Critics call ambush marketing "parasite marketing,"39claiming that companies are deliberately looking for ways to piggyback on their rivals' sponsorship of major events despite protests from sponsors and event organizers. The ambusher that gives the impression of involvement without payment is merely serving its own narrow self-interest and, in doing so, engages in behavior that is harmful to the greater good of sport.
Supporters of ambush marketing, including the author, see it as smart business.40Arguably, ambush marketing provides a positive free market force. By exposing to official sponsors and event organizers the true scope of exclusivity that any sponsor can reasonably expect to enjoy, ambushers in effect help quantify the true market value of Olympic sponsorship while participating in the marketing blitz in a manner they deem most cost effective for their company. As it becomes clear to potential sponsors of future Olympic Games that event organizers will not be able to stop all ambush marketing efforts, this should be a factor that is accounted for in determining the fees to be paid for official sponsorship. Critics of ambush marketing would suggest that the threat of ambush marketing could ultimately impair the ability of event organizers to host elaborate and successful Olympic Games if ambush marketing deters large multinational corporations from being official sponsors. However, the appeal to large corporations of the world-wide exposure that results from sponsorship of the Olympic Games will never be diminished by market imperfections such as ambushers to the point of threatening the budgets of event organizers. Additionally, as is evident from the ongoing efforts to stop ambushers, the practice of ambush marketing encourages organizers to work harder to thwart intellectual property violations, and raises the awareness of intellectual property rights globally—a long-term benefit to all intellectual property owners.
© Copyright 2005 by Northwestern University School of Law, Northwestern Journal of Technology and Intellectual Property Volume 3 Issue 2 (Spring 2005)
Wednesday, April 16, 2008
Media Plan
The largest category in your advertising budget is likely to be your media costs--the dollars you spend for air time on radio or for ad space in newspapers, magazines, and more. Because of this, it makes sense to have a sound plan to manage that investment. You'll want to set goals. You'll want to describe strategies for achieving them. You'll have to organize the day-to-day tasks of carrying out the strategies. The tool you'll need to do this is a media plan that begins with an overview and works its way down to the details. It will help you with every phase of your advertising.
Here's how many businesses manage their media buying. The person in charge of the budget starts saying yes to the salespeople who call. Advertising appears here and there as a result. When the budget's gone, the person in charge starts saying no, and the ad campaign is over. It's a method, but you wouldn't call it a media plan. And if that approach sounds familiar, you can bet you're passing up opportunities to maximize your return on investment.
Media planning is the process of choosing a course of action. Media planners develop yearly plans that list each media outlet--print or broadcast. Planning then gives way to buying, as each separate contract is negotiated, then finalized.
The media plan is a document in sections. A ring binder notebook is a good way to keep a media plan, because it's easy to update and easy to refer to. Or if you prefer to work on computer, simply think in terms of folders and files. The sections in your notebook will be:
Media outlets (newspapers, etc.). This section lists all of the media in which advertising will be placed.
Goals. This section describes the goals of the advertising, and explains why and how this plan meets these goals.
Audience. In this section, collect all the information you can about your target audience. You will want statistics by demographics or lifestyle; your professional association can help you find this information, as can trade journals or your banker. Look for any relevant articles or information about your potential buyers. Pay attention to everything that helps you imagine an individual buyer who is typical of the whole.
Strategy. You will write a statement of strategy backed up by a rationale. The action steps you describe here will guide a year's activity.
Budget and calendar. Your media plan will outline what money is to be spent where, and when.
The document you've compiled in this notebook guides you in the execution of the plan throughout the year.
Over time, these plans provide a history of your advertising. If you make alterations to the schedule in the course of the year, be sure to record those decisions in your notebook. Ring binders make it easy to update your plan as it evolves.
When you've finished this section, you will have an overview and the tools you need to create a media plan for your business. Let's start with basic vocabulary. The term you'll hear most often is CPM, or cost per thousand. CPM analysis is the method media buyers use to convert various rate and circulation options to relative terms. CPM represents the cost of reaching one thousand people via different types of media. To calculate CPM, you find the cost for an ad, then divide it by the total circulation the ad reaches (in thousands). By finding this information and calculating this cost for each of your options, you can give them a numerical ranking for comparison. CPM is a basic media concept.
Print advertising prices are based on the circulation of the publication in question. Publications will quote you a circulation figure based on paid subscribers. The audited circulation figures are verified by monitoring organizations. The publications will try to convince you that actual circulation is higher by including the free copies they distribute and the pass-along readership they claim. Sometimes these claims of "bonus" circulation are valid--for example, magazines distributed on airlines get at least eight readers per copy. Still, you should be wary of inflated circulation figures.
Audience is the equivalent of circulation when you're talking about broadcast media. Audience size varies throughout the day as people tune in and tune out. Therefore, the price for advertising at different times of day will vary, based on the audience size that the day-part delivers.
Penetration is related to circulation. Penetration describes how much of the total market available you are reaching. If you are in a town with a demographic count of 200,000 households, and you buy an ad in a coupon book that states a circulation of 140,000, you're reaching 70 percent of the possible market--high penetration. If, instead, you bought an ad in the city magazine, which goes to only 17,000 subscribers (households), your penetration would be much less--8.5 percent. What degree of penetration is necessary for you depends on whether your strategy is to dominate the market or to reach a certain niche within that market.
Reach and frequency are key media terms used more in broadcast than in print. Reach is the total number of people exposed to a message at least once in a set time period, usually four weeks. (Reach is the broadcast equivalent of circulation, for print advertising.) Frequency is the average number of times those people are exposed during that time period. To make reach go up, you buy a wider market area. To make frequency go up, you buy more ads during the time period. Usually, when reach goes up, you have to compromise and let frequency go down. You could spend a lot of money trying to achieve a high reach and a high frequency. The creative part of media planning comes in balancing reach, frequency, and budget constraints to find the best combination in view of your marketing goals.
In developing your media plan, you will:
Review your marketing objectives through the "lens" of media planning.
Review the options available.
Evaluate them against your objectives.
Set your minimum and maximum budget constraints.
Create alternative scenarios until you uncover the strategy that accomplishes your objectives within those constraints.
Develop a schedule describing ad appearances in each medium.
Summarize your plan in the form of a calendar and a budget.
Negotiate with media representatives to execute your plan.
WEB 2.0
Does "Web 2.0" mean anything? Till recently I thought it didn't, but the truth turns out to be more complicated. Originally, yes, it was meaningless. Now it seems to have acquired a meaning. And yet those who dislike the term are probably right, because if it means what I think it does, we don't need it.
I first heard the phrase "Web 2.0" in the name of the Web 2.0 conference in 2004. At the time it was supposed to mean using "the web as a platform," which I took to refer to web-based applications. [1]
So I was surprised at a conference this summer when Tim O'Reilly led a session intended to figure out a definition of "Web 2.0." Didn't it already mean using the web as a platform? And if it didn't already mean something, why did we need the phrase at all?
Origins
Tim says the phrase "Web 2.0" first arose in "a brainstorming session between O'Reilly and Medialive International." What is Medialive International? "Producers of technology tradeshows and conferences," according to their site. So presumably that's what this brainstorming session was about. O'Reilly wanted to organize a conference about the web, and they were wondering what to call it.
I don't think there was any deliberate plan to suggest there was a new version of the web. They just wanted to make the point that the web mattered again. It was a kind of semantic deficit spending: they knew new things were coming, and the "2.0" referred to whatever those might turn out to be.
And they were right. New things were coming. But the new version number led to some awkwardness in the short term. In the process of developing the pitch for the first conference, someone must have decided they'd better take a stab at explaining what that "2.0" referred to. Whatever it meant, "the web as a platform" was at least not too constricting.
The story about "Web 2.0" meaning the web as a platform didn't live much past the first conference. By the second conference, what "Web 2.0" seemed to mean was something about democracy. At least, it did when people wrote about it online. The conference itself didn't seem very grassroots. It cost $2800, so the only people who could afford to go were VCs and people from big companies.
And yet, oddly enough, Ryan Singel's article about the conference in Wired News spoke of "throngs of geeks." When a friend of mine asked Ryan about this, it was news to him. He said he'd originally written something like "throngs of VCs and biz dev guys" but had later shortened it just to "throngs," and that this must have in turn been expanded by the editors into "throngs of geeks." After all, a Web 2.0 conference would presumably be full of geeks, right?
Well, no. There were about 7. Even Tim O'Reilly was wearing a suit, a sight so alien I couldn't parse it at first. I saw him walk by and said to one of the O'Reilly people "that guy looks just like Tim."
"Oh, that's Tim. He bought a suit." I ran after him, and sure enough, it was. He explained that he'd just bought it in Thailand.
The 2005 Web 2.0 conference reminded me of Internet trade shows during the Bubble, full of prowling VCs looking for the next hot startup. There was that same odd atmosphere created by a large number of people determined not to miss out. Miss out on what? They didn't know. Whatever was going to happen—whatever Web 2.0 turned out to be.
I wouldn't quite call it "Bubble 2.0" just because VCs are eager to invest again. The Internet is a genuinely big deal. The bust was as much an overreaction as the boom. It's to be expected that once we started to pull out of the bust, there would be a lot of growth in this area, just as there was in the industries that spiked the sharpest before the Depression.
The reason this won't turn into a second Bubble is that the IPO market is gone. Venture investors are driven by exit strategies. The reason they were funding all those laughable startups during the late 90s was that they hoped to sell them to gullible retail investors; they hoped to be laughing all the way to the bank. Now that route is closed. Now the default exit strategy is to get bought, and acquirers are less prone to irrational exuberance than IPO investors. The closest you'll get to Bubble valuations is Rupert Murdoch paying $580 million for Myspace. That's only off by a factor of 10 or so.
1. Ajax
Does "Web 2.0" mean anything more than the name of a conference yet? I don't like to admit it, but it's starting to. When people say "Web 2.0" now, I have some idea what they mean. And the fact that I both despise the phrase and understand it is the surest proof that it has started to mean something.
One ingredient of its meaning is certainly Ajax, which I can still only just bear to use without scare quotes. Basically, what "Ajax" means is "Javascript now works." And that in turn means that web-based applications can now be made to work much more like desktop ones.
As you read this, a whole new generation of software is being written to take advantage of Ajax. There hasn't been such a wave of new applications since microcomputers first appeared. Even Microsoft sees it, but it's too late for them to do anything more than leak "internal" documents designed to give the impression they're on top of this new trend.
In fact the new generation of software is being written way too fast for Microsoft even to channel it, let alone write their own in house. Their only hope now is to buy all the best Ajax startups before Google does. And even that's going to be hard, because Google has as big a head start in buying microstartups as it did in search a few years ago. After all, Google Maps, the canonical Ajax application, was the result of a startup they bought.
So ironically the original description of the Web 2.0 conference turned out to be partially right: web-based applications are a big component of Web 2.0. But I'm convinced they got this right by accident. The Ajax boom didn't start till early 2005, when Google Maps appeared and the term "Ajax" was coined.
2. Democracy
The second big element of Web 2.0 is democracy. We now have several examples to prove that amateurs can surpass professionals, when they have the right kind of system to channel their efforts. Wikipedia may be the most famous. Experts have given Wikipedia middling reviews, but they miss the critical point: it's good enough. And it's free, which means people actually read it. On the web, articles you have to pay for might as well not exist. Even if you were willing to pay to read them yourself, you can't link to them. They're not part of the conversation.
Another place democracy seems to win is in deciding what counts as news. I never look at any news site now except Reddit. [2] I know if something major happens, or someone writes a particularly interesting article, it will show up there. Why bother checking the front page of any specific paper or magazine? Reddit's like an RSS feed for the whole web, with a filter for quality. Similar sites include Digg, a technology news site that's rapidly approaching Slashdot in popularity, and del.icio.us, the collaborative bookmarking network that set off the "tagging" movement. And whereas Wikipedia's main appeal is that it's good enough and free, these sites suggest that voters do a significantly better job than human editors.
The most dramatic example of Web 2.0 democracy is not in the selection of ideas, but their production. I've noticed for a while that the stuff I read on individual people's sites is as good as or better than the stuff I read in newspapers and magazines. And now I have independent evidence: the top links on Reddit are generally links to individual people's sites rather than to magazine articles or news stories.
My experience of writing for magazines suggests an explanation. Editors. They control the topics you can write about, and they can generally rewrite whatever you produce. The result is to damp extremes. Editing yields 95th percentile writing—95% of articles are improved by it, but 5% are dragged down. 5% of the time you get "throngs of geeks."
On the web, people can publish whatever they want. Nearly all of it falls short of the editor-damped writing in print publications. But the pool of writers is very, very large. If it's large enough, the lack of damping means the best writing online should surpass the best in print. [3] And now that the web has evolved mechanisms for selecting good stuff, the web wins net. Selection beats damping, for the same reason market economies beat centrally planned ones.
Even the startups are different this time around. They are to the startups of the Bubble what bloggers are to the print media. During the Bubble, a startup meant a company headed by an MBA that was blowing through several million dollars of VC money to "get big fast" in the most literal sense. Now it means a smaller, younger, more technical group that just decided to make something great. They'll decide later if they want to raise VC-scale funding, and if they take it, they'll take it on their terms.
3. Don't Maltreat Users
I think everyone would agree that democracy and Ajax are elements of "Web 2.0." I also see a third: not to maltreat users. During the Bubble a lot of popular sites were quite high-handed with users. And not just in obvious ways, like making them register, or subjecting them to annoying ads. The very design of the average site in the late 90s was an abuse. Many of the most popular sites were loaded with obtrusive branding that made them slow to load and sent the user the message: this is our site, not yours. (There's a physical analog in the Intel and Microsoft stickers that come on some laptops.)
I think the root of the problem was that sites felt they were giving something away for free, and till recently a company giving anything away for free could be pretty high-handed about it. Sometimes it reached the point of economic sadism: site owners assumed that the more pain they caused the user, the more benefit it must be to them. The most dramatic remnant of this model may be at salon.com, where you can read the beginning of a story, but to get the rest you have sit through a movie.
At Y Combinator we advise all the startups we fund never to lord it over users. Never make users register, unless you need to in order to store something for them. If you do make users register, never make them wait for a confirmation link in an email; in fact, don't even ask for their email address unless you need it for some reason. Don't ask them any unnecessary questions. Never send them email unless they explicitly ask for it. Never frame pages you link to, or open them in new windows. If you have a free version and a pay version, don't make the free version too restricted. And if you find yourself asking "should we allow users to do x?" just answer "yes" whenever you're unsure. Err on the side of generosity.
In How to Start a Startup I advised startups never to let anyone fly under them, meaning never to let any other company offer a cheaper, easier solution. Another way to fly low is to give users more power. Let users do what they want. If you don't and a competitor does, you're in trouble.
iTunes is Web 2.0ish in this sense. Finally you can buy individual songs instead of having to buy whole albums. The recording industry hated the idea and resisted it as long as possible. But it was obvious what users wanted, so Apple flew under the labels. [4] Though really it might be better to describe iTunes as Web 1.5. Web 2.0 applied to music would probably mean individual bands giving away DRMless songs for free.
The ultimate way to be nice to users is to give them something for free that competitors charge for. During the 90s a lot of people probably thought we'd have some working system for micropayments by now. In fact things have gone in the other direction. The most successful sites are the ones that figure out new ways to give stuff away for free. Craigslist has largely destroyed the classified ad sites of the 90s, and OkCupid looks likely to do the same to the previous generation of dating sites.
Serving web pages is very, very cheap. If you can make even a fraction of a cent per page view, you can make a profit. And technology for targeting ads continues to improve. I wouldn't be surprised if ten years from now eBay had been supplanted by an ad-supported freeBay (or, more likely, gBay).
Odd as it might sound, we tell startups that they should try to make as little money as possible. If you can figure out a way to turn a billion dollar industry into a fifty million dollar industry, so much the better, if all fifty million go to you. Though indeed, making things cheaper often turns out to generate more money in the end, just as automating things often turns out to generate more jobs.
The ultimate target is Microsoft. What a bang that balloon is going to make when someone pops it by offering a free web-based alternative to MS Office. [5] Who will? Google? They seem to be taking their time. I suspect the pin will be wielded by a couple of 20 year old hackers who are too naive to be intimidated by the idea. (How hard can it be?)
The Common Thread
Ajax, democracy, and not dissing users. What do they all have in common? I didn't realize they had anything in common till recently, which is one of the reasons I disliked the term "Web 2.0" so much. It seemed that it was being used as a label for whatever happened to be new—that it didn't predict anything.
But there is a common thread. Web 2.0 means using the web the way it's meant to be used. The "trends" we're seeing now are simply the inherent nature of the web emerging from under the broken models that got imposed on it during the Bubble.
I realized this when I read an interview with Joe Kraus, the co-founder of Excite. [6]
Excite really never got the business model right at all. We fell into the classic problem of how when a new medium comes out it adopts the practices, the content, the business models of the old medium—which fails, and then the more appropriate models get figured out.
It may have seemed as if not much was happening during the years after the Bubble burst. But in retrospect, something was happening: the web was finding its natural angle of repose. The democracy component, for example—that's not an innovation, in the sense of something someone made happen. That's what the web naturally tends to produce.
Ditto for the idea of delivering desktop-like applications over the web. That idea is almost as old as the web. But the first time around it was co-opted by Sun, and we got Java applets. Java has since been remade into a generic replacement for C++, but in 1996 the story about Java was that it represented a new model of software. Instead of desktop applications, you'd run Java "applets" delivered from a server.
This plan collapsed under its own weight. Microsoft helped kill it, but it would have died anyway. There was no uptake among hackers. When you find PR firms promoting something as the next development platform, you can be sure it's not. If it were, you wouldn't need PR firms to tell you, because hackers would already be writing stuff on top of it, the way sites like Busmonster used Google Maps as a platform before Google even meant it to be one.
The proof that Ajax is the next hot platform is that thousands of hackers have spontaneously started building things on top of it. Mikey likes it.
There's another thing all three components of Web 2.0 have in common. Here's a clue. Suppose you approached investors with the following idea for a Web 2.0 startup:
Sites like del.icio.us and flickr allow users to "tag" content with descriptive tokens. But there is also huge source of implicit tags that they ignore: the text within web links. Moreover, these links represent a social network connecting the individuals and organizations who created the pages, and by using graph theory we can compute from this network an estimate of the reputation of each member. We plan to mine the web for these implicit tags, and use them together with the reputation hierarchy they embody to enhance web searches.
How long do you think it would take them on average to realize that it was a description of Google?
Google was a pioneer in all three components of Web 2.0: their core business sounds crushingly hip when described in Web 2.0 terms, "Don't maltreat users" is a subset of "Don't be evil," and of course Google set off the whole Ajax boom with Google Maps.
Web 2.0 means using the web as it was meant to be used, and Google does. That's their secret. They're sailing with the wind, instead of sitting becalmed praying for a business model, like the print media, or trying to tack upwind by suing their customers, like Microsoft and the record labels. [7]
Google doesn't try to force things to happen their way. They try to figure out what's going to happen, and arrange to be standing there when it does. That's the way to approach technology—and as business includes an ever larger technological component, the right way to do business.
The fact that Google is a "Web 2.0" company shows that, while meaningful, the term is also rather bogus. It's like the word "allopathic." It just means doing things right, and it's a bad sign when you have a special word for that.
Notes
[1] From the conference site, June 2004: "While the first wave of the Web was closely tied to the browser, the second wave extends applications across the web and enables a new generation of services and business opportunities." To the extent this means anything, it seems to be about web-based applications.
[2] Disclosure: Reddit was funded by Y Combinator. But although I started using it out of loyalty to the home team, I've become a genuine addict. While we're at it, I'm also an investor in !MSFT, having sold all my shares earlier this year.
[3] I'm not against editing. I spend more time editing than writing, and I have a group of picky friends who proofread almost everything I write. What I dislike is editing done after the fact by someone else.
[4] Obvious is an understatement. Users had been climbing in through the window for years before Apple finally moved the door.
[5] Hint: the way to create a web-based alternative to Office may not be to write every component yourself, but to establish a protocol for web-based apps to share a virtual home directory spread across multiple servers. Or it may be to write it all yourself.
[6] In Jessica Livingston's Founders at Work.
[7] Microsoft didn't sue their customers directly, but they seem to have done all they could to help SCO sue them.
Thanks to Trevor Blackwell, Sarah Harlin, Jessica Livingston, Peter Norvig, Aaron Swartz, and Jeff Weiner for reading drafts of this, and to the guys at O'Reilly and Adaptive Path for answering my questions.
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