“Monetize Me Cap’n!” How Far is Too Far When it comes to Monetizing Yourself?

3rd post- I'm going to try to stick to a consistent Monday/Wednesday (sometimes Friday) schedule, but I got too eager to monetize the blog, so I decided to post this a day early. I ran into a few formatting issues within the post (apparently "clear" isn't a background option), so apologies for the Blue on Gold quotation.
Once again...feel free to discuss

“Increase Your Network to Increase Your Net-WORTH”- Shawn Blake,
Colleague, Babson College, original source unknown (a.k.a can’t find it on Google)

                It all started as a joke between me and my friend Julianna (Poly-Sci major at Simmons College):

Me: "if I were to start a business where citizens with zero political preference could join together and collectively sell their votes to political candidates...how much do you think I could get paid per vote?" 

Julianna: "HAHA that's so immoral and illegal technically"

Me: "70-80% of the population does not hold extreme political views...I'm pretty sure that same segment would rather just bank on their right to vote than actually consciously exercise it"

Granted, I wish it were a legal prospect, but it still brings up a running trend that has become especially apparent in the digital age: Monetization, or basically how to convert ANYTHING (like one's right to vote) into a profit-earning operation.

            Let’s take a look at the Youtube.com model, fueled by AdSense. Youtube.com offers a free video content hosting site (if you’ve somehow managed to avoid visiting/frequenting it by now). After reaching a certain view quantity benchmark (unless they’ve changed it since my friend’s brother got asked to monetize when his video of goats “going at it” reached 30k views) you’ll be asked to create a monetization account, in which youtube.com gains the right to place advertisements in and around your video, while you receive a small cutback (really small) per-click and per-impression. AdSense is even available for blogs via Google-owned blogger (such as this one, which I will be attempting to monetize by the time I post this).

If you aren't familiar with this logo, you clearly haven't distracted yourself before

            The idea is simple, you have a social network of people you communicate with (friends/acquaintances/colleagues), people who see or listen to you (Twitter followers) and people who are simply aware that you exist (Facebook friends), and advertising/marketing agencies, politicians, and product developers want access to your popularity and things of that nature. Companies like Klout.com try to link you to those people, by measuring your social influence (through a calculation system which I still do not even remotely understand) and connecting you to companies that want access to it. If you’re wondering about the commercial value of a contact list, just look at the goodwill intangible assets included any business acquisition.

Klout: Apparently my score is 51...and I don't know why

            Your social influence isn’t the only thing companies are willing to pay for; sometimes they would just like to use your space. Think of it like a traditional sports sponsorship, NASCAR drivers get paid to plaster brand images onto their racecars, Brock Lesnar gets paid to wear an Affliction T-Shirt on the way to a televised UFC heavyweight fight. If people can see something that you own, and you have no preference either way with what you do with that space, chances are that you could sell the advertising rights (unless it violates a zoning code, or outside agreement). The primary idea behind monetizing a space (visual, audible) is how to do it effectively without completely compromising the integrity of the space or the advertisement

Personal Safety Hazard...when you might want to stop selling your space

           
The Future of Monetization:

Widespread consumer monetization plans…

            Looking for new shades for your window? Have absolutely no preference regarding what they look like? Then sell off your window space.

            Remember Verizon Wireless ringback tones?  They still exist, just haven’t been advertised in a while. At Verizon Wireless, you’re given the option of replacing the dial tone with a more audibly pleasing song of your choice. Something less pleasing than the song (depending on your music taste) but more pleasing than the dial tone (unless you’re into that sort of thing): Audio advertisements. Maybe you could save some money on your monthly bill.

Personalized…

            If you feel like this would be selling your soul to the corporations, then personalization might help this issue. In a world where people take pride in their brand loyalty (photographers like their Nikon cameras, Video Gamers love their Nintendo gaming systems, Apple users love…anything made by Apple), there could be a market for personalized advertisement plans. If you could be paid to have that window shade display a company that you embrace, would it necessarily be selling your soul if it’s also a method of personal expression? If an agency can discover the perfect balance between profit-maximizing space monetization and personal expression, then we may have found ourselves a winner (You CAN sell your soul, and keep it too! )

Slave to the corporation...and I love it

Potential Problems?

Over-proliferation:

When is a lot of advertising considered too much advertising? Let’s say that in the future every piece of available space has been monetized by its owner to the point where its integrity hasn’t been compromised (so…obviously excluding fine art and remarkable architecture). If every owner is trying to earn a little extra cash on the side, then it will become a societal norm and thus there wouldn’t be too much opposition…but opposition is still very possible (My personal problem with product placement is when it isn’t done well, not when it’s generally done). The bigger problem comes from the reduced effectiveness of advertising when it’s available EVERYWHERE.

It’s a fundamental concept of entrepreneurship, turning a concept into a profit earning venture…but when does monetization go too far?

Should loyalty programs be included in every volume-based competitive industry?

Second post- decided to try a new format. 

Once again, feel free to comment below and offer your own opinion on what firms would benefit from a loyalty program, or if/how loyalty programs have affected your purchase behavior in the past.

“A 5% increase in consumer loyalty will lead to a 25-80% increase in profit.”- AC310 Lecture @ LSE

Loyalty reward programs have found a way to enter a wide array of retail sectors. From Best Buy’s popular RewardZone program for consumer electronics, to my recently joined Starbucks Rewards card for coffee purchases (a product with a relatively inelastic demand), it would be difficult to find an industry sector that hasn’t employed one of these programs, or difficult to find a reason NOT to employ one.

Best Buy RewardZone

A loyalty program seems like a pretty simple concept, right? At its core, the program is designed to slightly reduce one’s profit margin in exchange for higher sales volume from repeat customers. A traditional program works like this: let’s say for every dollar you spend at a retail chain, you’ll be rewarded with a point, and once you receive 100 points, we’ll reward you with a $5 gift card. Not only are you more inclined to purchase at my store, but when you do receive your reward, you can only redeem it on things that are available at my store (gift card =/= cash).To add a little more frosting to the cake, most reductions in profit margin (referring to the actual “rewards,” and conveniently neglecting the other costs like advertising and maintenance costs for the program itself), only occur after the increase in sales has already occurred; you can’t get your free smoothie at Freshens until after you’ve already purchased 10 other ones. Even if you have a current customer locked in to your brand, the loyalty  program also has the additional benefit of increasing the frequency at which that locked customer will buy your products. You’re also provided with an extensive amount of data regarding an individual’s spending habits; you usually would only have end-result inventory counts and sales numbers to tell you how well your product mix is doing, but with a rewards-card you can monitor a purchase-trend on an individualized level, which could be invaluable data for getting that competitive edge.

Some reasons why this works

1.      Humans are creatures of habit: We all have our frequently visited stores. Once you visit initially, you’re very likely to return…especially with an incentive (unless your experience was unsatisfactory)

2.       Humans are goal-driven: A loyalty program effectively sets a benchmark for purchase quantity. You can’t get rewards until you purchase THIS much...and just in case you’re wondering how long it’ll take, we included the number of points you currently have on your receipt, online, or the amount of stamps on your card.

3.      Customer Incentive: If I had a choice between purchasing my TV at Wal-mart, or earning points and redeem a few gift cards at Best Buy…I’d probably choose the latter.

4.      Increased barriers to entry/higher switching costs: “I could start buying coffee from Dunkin, but I already have this reward card with Starbucks, and it already has points on it, and I if I buy my coffee from Dunkin from now on, then I just wasted my time setting up that account.
Program Suggestion- Scale the quality of your rewards with the overall quantity purchased by the consumer. E.g: provide better rewards to the guy who has purchased 1000 cups of coffee than the guy who has only purchased 10. Effectively transform the purchasing pattern into a time investment…it’s the same reason why you don’t see too many people switch Massively Multiplayer Online Role-Playing Games (MMORPGs) when they already have a level-85 Holy Paladin in World of Warcraft.

 Well level 85...I've officially sealed my addiction

Big players that could benefit from a reward/loyalty program

1.      McDonald’s Restaurants (or any fast-food): Yes, they already have a massive market share…and as mentioned in the film Super-Size Me, they already have a high frequency of repeat customers, but why hasn’t the big McD’s employed its own rewards scheme yet? It could give them a significant edge in the fast food industry over competitors like Burger King, Wendy’s, etc. By employing a reward scheme, you’re inserting a favorable wedge into the consumer’s decision process.
I recently frequented McD’s just because they were offering commemorative Coke glasses with every meal purchase (and I happened to need a new set of glasses for my abroad dorm), and apparently I wasn’t the only one at LSE who did the same. If a program like that could work in the limited-term, why not use a long-term loyalty program?

Until then, this is the guide for fast-food decisions

2.      iTunes Music Store:  The success of this store is already riding the coattails of the mp3 player revolution (Discuss: Is iTunes success directly dependent on the success of the iPod?), but couldn’t Apple receive an even bigger edge over physical-format CDs and other digital media distribution if it rewarded its consumers for staying loyal and frequently purchasing?

3.      Wal-Mart

4.      ETHICALLY QUESTIONABLE- Alcohol, Tobacco, Pornography: As suggested by my OEM team at Babson regarding the operations of ABInBev, in such a consumer-loyalty, high volume, inelastic-product demand (most of these things are addictive, right?) with low product differentiation (you’ll need more than two hands to count the number of existing light beers)…why not solidify customer loyalty with incentives for buying YOUR product over the competitors

Where I see the future of loyalty programs

1.      Single-platform, consolidated loyalty cards/applications-                                                                                    
So, what does that mean? Rather than having 20 different cards for 20 different reward schemes, you reduce the space required in your wallet to a single card…or better yet, remove the card and have it all done through  inputting a receipt-code into a smartphone application.  Rather than having to develop its own program from scratch, complete with producing its own membership cards, a firm can just support an existing program , using a different firm’s card. It would be like saying: “You can now earn rewards for Best Buy, Starbucks, McDonald’s, and Wal-Mart individually, and it will all be done through your Starbucks Rewards Card.” Similar to the way retail outlets are licensed for credit-card usage, a firm can choose to license itself with a particular reward program/card.

2.      Badge/Achievement System-

A company already has access to your individualized spending data through the use of these reward programs, why not offer additional recognition for certain benchmarks, or possibly even use this recognition to promote change in purchase habit?

      The primary pioneers of the “Badge/Achievement” movement are Foursquare, a smartphone application that gives you recognition via clever badge titles for checking in to certain places, and Xbox Live, an online gaming service that provides gamers with achievements (visible on their user profiles) for achieving certain tasks within a video game (Throw for 400 yards in Madden 12, Beat “X” shooter on “Makes you want to cry” difficulty in under “Y” hours).  I have friends who go out of their way to use Foursquare just to see what badge they’ll earn, and as an avid gamer, I have gone out of my way to accomplish or strive to accomplish certain achievements in a video game.

XBL Acheivements

Why not apply this system to something as simple as consumer spending? Using Starbucks as  a primary example of a globalized mega-firm, the achievements could range from global purchase recognition (“Purchased from a Starbucks in 5different countries”) to variety recognition (“Purchased 25 unique product, syrup, milk combinations”) and even promote consistent purchases ( “Purchased 5 Orange Mocha Frappuccinos”). 

Zoolander & Friends: 80% of the way towards earning a badge

Is there operational value in keeping a human workforce in the deskilled labor sector, or are we progressing toward a world of fully machine automated processes?

     FIRST POST! The original idea for this blog was to create a starting point for discussion and entrepreneurial idea generation. For the most part, it consists of my personal take on the situation through excessive and sometimes pointless rambling. 

If you have your own take on the subject at hand, or want to address anything that I have stated please feel free to comment in the section below.

Well, here goes nothing...

 The fact of the matter is, technology is advancing at a near-exponential rate, whether you’d like it to, or not.  Innovations in operational processes have changed the face of what we view as the consumer experience.  The suggestions provided by a clerk at a local video store have been substituted by Netflix’s own recommendation service, which uses algorithms and data trends combined with your own viewing habits to create enjoyable recommendations with exceptional accuracy. The bank teller of years past has been replaced by an ATM, which in some cases has been replaced by a mobile banking application. Simple roles which have previously been fulfilled by humans are slowly working their way towards full automation. Putting the Terminator conspiracy of machines taking over the world aside, is this necessarily a bad thing? In an ideal, utopian world where the unemployment issue doesn't exist, and thus society would not need to cripple itself technologically in order to create jobs, and putting all personal opinions towards technological dependence aside, is there any concrete benefit to maintaining a human work force over a fully automated one?

       Today’s topic will address that question, and conclude with a starting point for generating ideas on how to innovate between McDonaldized & traditional business experiences.

            For the remainder of this discussion, I will use global fast-food behemoth, McDonald’s, as a primary example, seeing as how my original topic of conversation stemmed from a sociology class at the London School of Economics & Political Science (LSE) about the expansion of McDonaldization and the pitfalls of McJobs. The main argument against McDonaldization, the business focus on efficiency, calculability, predictability, and control, is that it promotes the “deskilling” of the laborer. The role of human labor is restricted to so many control systems, so streamlined, and so technologically dependent that it is essentially reducing (or empowering, if you take pride in being able to do things efficiently) the worker into a “human robot.” The job turnover, and the ability to replace employees is so high that some McDonald’s chains (particularly in regions of Europe) have installed Easy-Order kiosks with credit-card readers to replace the job of the traditional cashier. Some people (primarily Marxist thinkers) view the act of deskilling the laborer as a method of exploiting the lower-class worker, but if the wages of a worker could be replaced by a fixed-cost kiosk and maintenance fees (presumably smaller variable cost than the wages of the employee), why haven’t they?  To assess whether or not the work is really considered “deskilling” I asked myself the following question: Is there any particular benefit to having a human preform the job, over a machine? In my answer I found three areas that partially address the counter-argument: human comfort, bottom-up innovation, and ambience.

            The first argument to the contrary is the desire for comfort. If the dining options of Reynolds Campus Center at Babson College have taught me anything, it’s that the ideal temperature for cooking a hamburger is 155 degrees Fahrenheit. With this knowledge in mind, and with the progression of assembly line technology as we know it, a fully-automated, made-to-order, fast food restaurant is very possible; but the question still remains, do I really want to eat food that was made by a machine? Granted the probability of machine malfunction or failure is roughly the same as the chances of receiving food poisoning from an undercooked burger, there still seems to be a stigma against any sort of artificiality in the food & restaurant industry.  Whether or not it makes any sense, there is still a comfort factor when it comes to ordering food from, or observing the food preparations made by a human, even if their tasks have become automated and scripted to the point of near-robot behavior.

            The second benefit that I recognized from the power of a human-fueled workforce, and quite frankly the one I view as the most important in a McDonald’s-like business, is the potential for bottom-up innovation, as it reduces the availability of human mind-capital. If we’ve learned anything from the Apple business model, it’s that in a competitive environment, one can employ a “run” strategy for success if innovation is constant. As much as machines can perform a task efficiently, they ultimately lack in the “feedback” department. If an employee notices something that can be done to improve the system, or comes up with a new recipe/product idea, he might go out of his way to inform a superior. Although a machine can take all the available resources and ingredients in a restaurant and deliver all the possible permutations, combinations, and related products, only a human employee would be able to create a product that separates the firm from the competition.

The third key point as to why McDonald’s hasn’t completely taken over the restaurant industry is the importance of ambience in the eating experience. The reason why McDonalds has succeeding as much as it has is due to its ability to attract a segment of the market that cared more about receiving their warm food in a timely & convenient fashion than they did about the eating experience.  Although McDonald’s has dominated the food service industry since Ray Kroc established the franchise in the 1950’s, there is still a significant segment of the market that would rather have their dining experience be defined by exquisite dishes (in terms of both food and plating), and general restaurant lighting & setting. Granted, it has still attempted to improve the quality of their recipes; a recent McDonalds campaign in Germany has introduced bi-monthly “chef creations” inspired by famous chefs, but still produced in a streamlined fashion. Even though McDonald’s has made efforts to improve the integrity of its food options, fast food still isn’t appropriate for every dining situation. To put it simply, the average suitor or businessman would not take a potential date/client out for dinner at McDonald’s.

                Although traditional restaurants and McDonald’s appeal to two different demands in the restaurant business, there could possibly be some overlap that has not yet been exploited. What if a sit-down restaurant could eliminate the use of a wait-staff by creating a direct-link between the kitchen and the individual table (tube + pager system from drive-through banking comes to mind), thus maintaining the length, experience, and food quality of a traditional restaurant, while only mildly compromising the “feel” of it. The idea is relatively far-fetched, but it the key point when combining the two segments is to streamline a process without putting integrity completely into question.

            Take any of the structural/operational aspects of a McDonaldized firm (efficiency, calculability, predictability, and control) and combine them with the qualities of a traditional firm. Maybe you’ll discover an untapped market.

Discussion Points:

- Is there operational value in keeping a human workforce in the deskilled labor sector, or are we progressing toward a world of fully machine automated processes?

-Putting the employment issue aside, is there any rationality behind the fear of having an entirely machine automated fast-food restaurant?

-Can some principles of the McDonalds model be applied to a traditional restaurant experience, without compromising the integrity of the restaurant?

- Would the giant succeed if it attempted to tackle the traditional restaurant segment in the same way it has addressed coffee shops with its McCafe’ outing?