Twenty Third Floor
Technical Business Advantage

The New York Times has a fascinating article about “Why are so many people in their 20s taking so long to grow up?“. It deals with the broader issue of how and when young adults move through phases of adulthood and how this has changed over the last 40 years.

It’s based on US research, so the parallel to South Africa isn’t perfect. On the other hand, it may prove predictive for our population.

A few snippets (it’s a long article, but well worth reading the whole thing):

1. The median age at first marriage in the early 1970s was 21 for women and 23 for men; by 2009 it had climbed to 26 for women and 28 for men
2. Definitions of adulthood vary widely – people can vote at 18, but in some states they don’t age out of foster care until 21. They can join the military at 18, but they can’t drink until 21. They can drive at 16, but they can’t rent a car until 25 without some hefty surcharges. If they are full-time students, the Internal Revenue Service considers them dependents until 24; those without health insurance will soon be able to stay on their parents’ plans even if they’re not in school until age 26, or up to 30 in some states.
3. Definitions of adulthood are clearly not just a function of age. (and so our marketing to them should consider more subtle measures than simply age ~ David Kirk) (more…)

There have been major developments in the broadband internet space in South Africa in 2010. Several major ISPs have started offering so-called “uncapped broadband” at surprisingly affordable rates.

The immediate astonishment and disbelief at the low prices was soon replaced by sulking and disbelief at the application of “fair usage policies” that restricts the speed at which certain ports run, and the speed at which the entire service runs after a certain (sometimes specified sometimes not) amount of data has been downloaded for the month.

I blogged a few weeks ago about the fundamental economic problems of shared, uncapped (or “common”) broadband access. This hasn’t changed the conversations happening in the wider world.  Maybe next time.

I thought I’d approach this from a completely different angle. Moneyweb has an article today “Is MTN’s uncapped broadband a con?” In reality, the article is taking a fair swing at most so-called cheap uncapped broadband, claiming that it isn’t really uncapped.

Which is ridiculous.

Of course it’s uncapped. You are never capped. You can download throughout the month and never be capped. The complainers are whinging about the wrong word.

What these services are not is broadband. They are uncapped, but the speed at which they are uncapped is too slow to be called broadband. MTN’s product could better be described as 128kbps uncapped, with a speed boost for the first 3GB (or 10GB depending on package). This is an uncapped account but it is not broadband.

The ASA has already had success in the past in preventing some companies from advertising internet services as broadband if they are not fast enough. This should be the angle taken to prevent misleading advertising.

They should charge more.  Hotels and B&Bs, your uncle’s Seapoint flat, airlines and taxis and the guys polishing shoes at the airport and garden services mowing lawns should all charge more during the world cup.

“But they’re profiteering” you cry!  Well, yes, in a word. But if the incredible expense of building stadia in the shape of donuts and white elephants is to be recouped, someone has to make some money out of the whole deal. (more…)

Socially responsible investing, according to wikipedia, “describes an investment strategy which seeks to maximize both financial returns and social good.” This typically includes not investing in tobacco, breweries, defence  contractors, gaming companies, those with poor environmental records  or operations in countries known for human rights abuses and so on. There are clear similarities with many of the requirements of Sharia’ investing.

The first interesting thing about this definition is that maximising two criteria is only very rarely possible. With two criteria there is usually a trade-off and one needs an objective function to determine the optimal combination of the two. I sometimes wonder whether it’s not often the case that the maximum social good would come from the donation of 100% of the invested  capital. (more…)

photo credit: richardmasoner

It’s been widely reported that the Competition Commission has been proving an alledged bicycle cartel. Retailers alledgedly agreed to increase prices to improve margins. This is not a strongly competitive market, which makes it quite an attractive market and good margins and profits should be available.

photo credit: shareski

Vodacom  and Cell C have joined MTN in offering discounted calls in a pre-paid price war. The was the result expected from Virgin with their rather unsuccessful foray into our market, with promises of shaking up the industry and cutting prices. I don’t know how much credit they deserve, but this shows that strong competition is brewing in this market.

Cellphone penetration in South Africa is very high by any standard. Thus the market growth from here on out will be moderate. With increasing competition, decreasing margins, limited growth prospects, the significant barriers to entry don’t seem like enough to keep strong returns to this sector.

As an aside, Vodacom  reported increased spend per subscriber on their prepaid book, but more cautious spending on the postpaid or contract base. It will be interesting to see how this develops over time as our market characteristics change.

So, in spite of regular complaints from forum posters (not this website) that cellphone companies (along with banks and motor distributors) aren’t competitive, it seems there is at least some clear evidence of intense competition in the mobile telephone market.

Profit margins are being squeezed by decreased spending power of consumers. That is true, but it is also not the full story. Competitive pressures, buyer and supplier power dictate sustainable margins in the medium to long term.

photo credit: abooth202

Fin24.com has a story this morning around Shoprite’s results and pricing strategy going forward.

The CEO of pan-African retailer Shoprite, Whitey Basson, says the company is prepared to sacrifice profits to remain “the cheapest food retailer in South Africa”.

So far that sounds right honourable, but let’s see what comes next:

“We can’t afford to let that area of our branding slip,” said Basson

Which makes sense. This is not a question of sacrificing profits to benefit struggling consumers. This is about reducing margins now in a price war with other retailers so that they maintain their strong market share and increase margins in future, leading to higher profits. Strategically accepting lower profits now for higher profits in future is smart, but it’s not about helping the consumer. (more…)

Search Engine Optimisation (SEO) is an unfortunately necessary part of driving traffic to discover a website. Good content is necessary but not sufficient.

Why SEO is necessary

A large percentage of web traffic is directed by search engines. After all, this is how Google has become the giant company that it is. I tried to track down some hard statistics on this, but they varied widely and didn’t seem all that credible. Nevertheless I think it is clear that this traffic is signficant.

Search engines use algorithms and automated scripts (“spiders”) to understand the importance, quality, relevance and popularity of content on the web. A radiographer takes xrays without being able to see directly the same picture as the xray will produce. A photographer taking black-and-white photographs needs to ignore the colour in the viewfinder and imagine the light and shadows and shapes of the final photograph.

If your website has excellent content, but structures it in a way that is not readily accessible to a search engine’s spiders, then the spider will pass on by without sending humans to visit your site. Two easy examples may help:

1. Flash content – the content may look great and be ground-breaking and useful, but since most spiders don’t currently “understand” Flash content, it will be ignored.
2. Login, registration and forms – if large parts of a website are accessible only after filling information in a form or registering and logging in, the spiders won’t get in the door.

There are other considerations that are postulated to be relevant:

• Duplicate content “dilutes” the scores of any individual page
• Many links to irrelevant, poorly rated pages can suggest that your site is not providing useful info to the user. This effect is stronger since search engines try to separate “link farms” and rings and other methods to make a collection of websites appear more connected than they are in reality.
• Poor choice of keywords that searchers may often use, or targeting terms that are widely targeted by a range of other websites.

A typical SEO strategy is quite complex and takes times, effort and money

A typical SEO strategy would cover analysing the target audience of a site, understanding the site content, understanding the site structure, doing keyword analysis, checking out competitors, generating a few good quality inbound links if applicable, possibly generating some linkbait content, installing appropriate tools (e.g. Google Analytics) to monitor traffic and then repeating the cycle once the customer behaviour is better understood. Key metrics are site traffic generated, low bounce rates, long time on the site, repeat customers, higher sales (or more contacts if online sales aren’t part of your service) and higher search rankings.

All of this takes time (both from the SEO but also from the website owner). There are many fly-by-night organisations claiming to do SEO with neither the knowledge or the business ethics to get it right. It is probably because it is a poorly understood, sometimes arcane speciality, that these companies get into business with low starting capital costs.

How not to do SEO in ten easy steps

I received an unsolicited email from Zenteq recently. I’m not providing a link to their website as I have no reason to believe they can deliver anything useful.

1. Sending unsolicited email (aka SPAM). This is typically a bad idea. Best case scenario you get a few new customers. Worst case scenario you irritate a huge block of potential customers, have your mail server and/or IP blocked as a source of spam, have your ISP close down your website for abuse and so on.
2. Use bright (as in reflective safety wear) green text and truly ugly formatting. Not a professional image by far.
3. Offer to “SEO” the website by submitting to 600,000 search engines monthly. This is irrelevant and a giant waste of money.
4. Charge R350 per month. In the short-term, this is far too little. The work involved at the outset of optimising a website for search engines requires several full days of work. However, in the long-run, this may well be too much. Since there appears to be no reason for the client to stay with Zenteq, we have a familiar problem where the business model doesn’t make sense for a serious operator and thus it’s likely that it isn’t a serious operator. (on trawling their webpage I see there is a R1000 upfront fee as well. Nice not to include this in the email. It still isn’t enough for serious upfront work)
5. No description of other components of SEO strategy, or examples of prior successful work.
6. “From” email is marketing@fire-equipment.org, “Reply to” is newheights70@telkomsa.net but the content directs the reader to info@zenteq.co.za. So which is it?
7. Structure your email so that it gets stopped by the spam filter built into both Thunderbird and Apple’s Mail application.
8. Include icons on their site claiming valid XHTML code, but then fail the test when the button is clicked.
9. Analysis of google results shows no links to zenteq.co.za.
10. And my favourite – a search on google for “seo site:za” which searches for the top websites relating to “seo” within the “za” domain doesn’t have zenteq listed in the top ten pages. A first-page listing is almost an requirement if you expect any number of click-throughs.

So who guards the guards, and who optimises the optimisers?

Marketing is naively thought to be mostly art and very little science. While it is true that there is are elements of inspiration and creativity and passion involved, the balance of an effective strategic marketing role is heavily in favour of science.

As a further point to consider, I put forward the proposition that much of really great science involves inspiration and creativity in passion in more than equal measures to a successful marketing decision. Newton’s development of the laws of motion and gravity, Copernicus’ solar-centered world, Pasteur’s painstaking experiments to support and understand germ theory are all well known examples of brilliance and flair combined with method and rigour.

But where does science contribute to marketing? Is it possible to reap the benefits of logic and analysis and rigour without damaging the creative process?

The answer is “absolutely without a doubt” for numerous reasons. I will touch on just one in the next few paragraphs to demonstrate the idea.

Introducing analytics

The most commonly thought of analytics when it comes to marketing is customer analytics. Better understanding of customer behaviour, preferences and ultimately buying decisions is enormously valuable. Take what was done in the past, compare the success rates of the different initatives, and stop doing the ones that don’t work.

Any organisation can benefit from understanding what works and what doesn’t, and shifting resources to those functions that work. Good organisations also understand the value of play and experimentation, and will continue to allow an element of trial and error. Truly excellent organisations combine experimentation with analytics to truly understand on a measurable level which experiments work and which should be tossed.

A real life example of the place of analytics

Let’s consider a very specific example. An old university friend of mine has started a new venture with a unique offering that clearly means a great deal to him. He has the passion, and presumably the product, to make his idea a success. He also had the good sense to plug into social networking platforms such as Facebook to spread the word of his new website and associated content. So far we have an excellent platform for success.

Mistake #1: Ignoring pre-existing science and analytical results

However, the design of the website appears to have been performed without understanding the hard, measurable evidence from a range of pre-existing studies and material. The website makes it difficult to buy. A long slide-show intro precedes access to the main page, frustrating regular visitors to the page (the intro cannot be skipped) and severaly damaging the ability of his site to be spidered and highly ranked by search engines.

So several mistakes have been made by disregarding the clear evidence that has been accumulated through analysing customer behaviour on similar projects.

Mistakes #2: Not performing analytics on web page at the outset

An excellent first step in understanding how customers will interact with your sales channel is to watch customers interact with your sales channel. Before a site goes live, invite some representatives from your target market (friends and family will do in a pinch if budget is tight, as long as you are confident they will give honest feedback).

Watch them interact with your website (or other sales and information channel). Where are they confused? Do they ask many questions? You won’t be there in person for most of your customers. What do they say is good, what do they say is ugly. If one guinea pig says something doesn’t work, that could be personal preference. If all 3 or 4 give similar feedback, the scientific evidence is mounting and a wise marketer would make changes.

This can be a very quick and easy, but amazingly valuable way to understand the strengths and weaknesses of your approach. Don’t assume you are just like your customers.

Mistakes #4: Not starting to collect analytics and data from the start

It is so easy to collect useful information, if you plan it in from the start. Once the system is set up and the process is working, invaluable information will flow with every visit, every call, every surf and every purchaser.

Not setting up to collect data is usually the first sign that the marketer doesn’t understand the value of understanding the customer.

Mistake #5: Thinking science cheapens the experience

Perhaps this should be mistake #1. Many people with great ideas feel that their ideas should sell on their own merit. They view logical, analytical understanding of customers to be beneath them. If the product is good, if customers will benefit from purchasing the good or service from you, then you owe it to them to make it as easy as possible for as many as possible of them to effortlessly find their way from oblivious potential customer to satisfied repeat customer.

If your aim is to build the perfect mousetrap, perhaps it is worth finding out what customers want in a mousetrap, where they like to buy it and how they like to buy it.