Growth5 Blog

Monday, November 30, 2009

Five Group Speaker Series

If you weren't able to stop by for our Five Group Speaker Series event last month, here is Greg's talk on the Blue Ocean Strategy.

Take a Dip in the Blue Ocean Strategy
Greg Conderacci – Chief Marketing Officer, Growth5 Venture Capital Marketing
October 22nd, 2009

The presentation will load below. Chapter headings are clickable but may behave erratically until the presentation is fully loaded. If you have trouble with the embedded video below, you can view Greg's presentation here.

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Wednesday, November 18, 2009

Maps & Google's "Less Than Free" Business Model

Great post from Bill Gurley of Benchmark Capital about Google's emergence in Maps/GPS and how that in part has led to what Bill dubs their "Less than Free" business model.

The highlights:
1. "...when I read this week that Google was including free turn-by-turn navigation directions with each and every Android mobile OS, I had an immediate feeling that I was witnessing a disruptive play of a magnitude heretofore unseen."

2. Originally, Google "licensed data from the two duopolists that ruled the mapping business – Tele Atlas and NavTeq."

3. "On July 23, 2007, TomTom, the leading portable GPS device maker, agreed to buy Tele Atlas for US$2.7 billion... shortly thereafter, on October 1, Nokia agreed to buy NavTeq for a cool US$8.1 billion."

4. Google has spent that last couple years building their own turn-by-turn database. "This October 13th, just over one year after dropping NavTeq, the other shoe dropped as well. Google disconnected from Tele Atlas and began to offer maps that were free and clear of either license. These maps are based on a combination of their own data as well as freely available data. Two weeks after this, Google announces free turn-by-turn directions for all Android phones."

5. "Android is not only a phone OS, it’s a CE OS. If Ford or BMW want to build an in-dash Android GPS, guess what? Google will give it to them for free. As we noted in our take on the free business model, “if a disruptive competitor can offer a product or service similar to yours for ‘free,’ and if they can make enough money to keep the lights on, then you likely have a problem.”

6. "While it is obvious that this maneuver creates a problem for the multi-billion dollar GPS market, it also poses real challenges for the leading smart phone players – RIM’s Blackberry and Apple’s iPhone. Without access to their own mapping data, these vendors now face an interesting dilemma. Do you risk flying naked without free navigation or do you suck it up and swallow the above average royalty fee for each and every handset? Neither option is stellar. This problem isn’t nearly as daunting as the one now faced by the Windows Mobile and Symbian teams. As software providers, they are lucky to get a per unit royalty equal to that extracted by the GPS data guys. If they are now forced to integrate this data merely to keep their product competitive, their gross margin just went negative. Ouch!"

7. Why is Google so interested in maps? "The geographic taxonomy is a wonderful skeleton for a geo-based ad network. If your maps are distributed everywhere on the Internet and in every mobile device, you control that framework."

8. Less Than Free. Why would the carriers partner with Google? "...because Google will give you ad splits on search if you use that version! That’s right; Google will pay you to use their mobile OS. I like to call this the “less than free” business model. This is a remarkable card to play. Because of its dominance in search, Google has ad rates that blow away the competition. To compete at an equally “less than free” price point, Symbian or windows mobile would need to subsidize. Double ouch!!"

9. Google could implement the same "Less Than Free" business model for Chrome OS. "If Sony or HP or Dell builds a netbook based on Chrome OS, they will make money on every search each user initiates. Google, eager to protect its search share and market volume, will gladly pay the ad splits. Microsoft, who was already forced to lower Windows netbook pricing to fend off Linux, will be dancing with a business model inversion of epic proportion – from you pay me to I pay you.”

10. Google's GPS is not going to be as good as what is already out there. I suspect subsequent versions will get better and better, especially with user input - "...when a product is completely free, consumer expectations are low and consumer patience is high. Customers seem to really like free as a price point. I suspect they will love less than free.”
Everyone knows Google owns search. What is impressive is how Google keeps finding innovative ways to provide additional efficient functionality to broaden their search capabilities. For the carriers and eventually the netbook makers, what's not to like about getting paid to implement Google's search technologies. "Less Than Free" is a great sales pitch, isn't it?

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Wednesday, November 11, 2009

Simplifying Your Mobile Marketing Campaign

You should check out Sean Carton's ClickZ article, "Four Ways to Simplify A Mobile Marketing Campaign."

With the launch of the Motorola Droid utilizing Google's Android 2.0 OS, Verizon customers might just have the best of both worlds, a smartphone to match the iPhone iComputer and a network that actually works.

Sean points out the Verizon still holds an 8 million subscriber lead over AT&T which means there will be many more smartphone users entering the market, contributing to a rapidly growing mobile advertising audience.

Pundits are predicting mobile marketing spending in the billions by 2012. Google agrees. Yesterday, Google announced it was buying AdMob Inc., a developer of technology that allows for ads to be placed within thousands of mobile phone applications, for $750 million in Google stock.
"Despite the tremendous growth in mobile usage and the substantial investment by many businesses. . . the mobile web is still in its early stages," said Susan Wojcicki, Google's vice president for product management. "We believe that great mobile advertising products can encourage even more growth. That's what has us excited about this deal."
What's your plan for reaching this mobile audience? Here are Sean's suggestions for simplifying your approach to mobile marketing:

If you're going to develop mobile marketing that works, you have to pay attention to four simple things:

  • Where is the person you're trying to reach? Location-based technologies (such as those found in the iPhone and in Android phones with Google's new location-finding technology) mean that you can take advantage of someone's physical location when targeting your messages.

  • What are they doing? A businessperson trying to figure out where to get a cab, take a client to dinner, or find their way to their hotel in a strange city is a much different target than some 20-something out for a night on the town. Targeting messages based on the context of the consumer's situation makes your message much more effective.

  • Who is the person encountering your mobile marketing? While figuring this out isn't all that different from what we normally do when developing ads in any medium, understanding who you're trying to reach in the context of where they are and what they're trying to do is vital for reaching consumers.

  • Why are they using their device? Are they trying to communicate with their friends? Are they trying to find something? Are they trying to entertain themselves while sitting on the subway?

Make no mistake about it: mobile marketing is different than any other form of marketing because it's the context that matters as much as the content. As we move forward in our efforts to reach consumers with mobile marketing, developing campaigns that address these four simple questions will help you develop mobile marketing strategies that work.

Sean's point about context is an excellent one. When thinking about search, mobile or desktop, the user's intent is what needs to be considered. To be effective, mobile search advertising will need to generate intelligent non-disruptive responses that are within the context of the user's intent while searching on the go.

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Friday, November 6, 2009

Google Commerce Search

Google introduced a new Commerce Search tool for retailers this week in an effort to make the online shopping experience easier for consumers.

According to Google, Web users spend an "average of just eight seconds" on a retail site before deciding whether to stay. This product is designed to improve search on retailers' individual sites by "improving the online shopping experience with fast, intuitive Google search technology."

  • Enable visitors to find the right products faster
  • Filter results by category, price, brand or other attributes
  • Provide user-friendly spelling options and synonyms
  • Increase website conversions and sales
  • Boost or promote chosen products within search results
  • Deploy search solution in days, and scale effortlessly
  • Customize, track, and optimize performance
Pricing starts at $50,000/yr and is based on on "the number of products/items (SKUs) in your data feed and the number of search queries entered on your site each year."

Google realizes that there is a vast difference between the "intent to purchase" search audience and the search crowd that is looking for information (not shopping). This product will help retailers better capitalize on the former.

Chris Dixon gives a great example of the "intent to purchase" audience here. He points out that with only 15 million visitors per month, comparison shopping site NexTag will likely be in the ballpark of Facebook revenue this year, even though Facebook averages over 4 billion visits per month.

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Wednesday, November 4, 2009

Kleiner Perkins: Five Investment Factors

Ever wonder how a VC firm decides to invest or not? Beth Seidenberg of Kleiner Perkins Caufield & Byers lays out the five factors her firm looks at when deciding whether a start-up deserves funding in the following "thought leader lecture" given at Stanford University.

You can watch the full video here. The 4:29 Five Investment Factors section is embedded below.

Here are the Five Factors:
1. A+ Leadership, Passionate Founders

2. Large, Fast-Growing, Under-Served Market

-leveraging network effects
-building authoritative, trusted brand
-obsess on customer experience

3. Reasonable Financing

A lot of startups see a high valuation as a badge of honor, but is usually ahead of what the product is worth. If we can't come to terms on valuation, it's probably not the right entrepreneurs.

4. Sense of Urgency

-does the market have a burning desire for the product? The leaders need to have the same sense of urgency.

5. Missionaries, not Mercenaries

-commitment to technical, marketing excellence

"it's not about I'm going to do this and make a lot of money, it's finding a great product with excellent market potential and driving that forward."

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Monday, November 2, 2009

NPR's Climate Race: Deutsche Bank's Carbon Counter

NPR ran a series last week called The Climate Race. On Friday, they covered several topics, including Deutsche Bank's Carbon Counter clock near Penn Station in New York. You can read or listen to the NPR piece here.

The Carbon Counter tracks the world's emissions of CO2 and other greenhouse gases in real time. The 67-by-32 foot electronic billboard stands outside Madison Square Garden where 500,000 people see it every day. You can read more about the Carbon Counter at Deutsche Bank's site.


-Our case study on the Carbon Counter clock.
-A video of the Carbon Counter from the NPR story is embedded below.

Carbon counter from Marketplace on Vimeo.

Photo credit: Bill Dugan, idfive

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