Tuesday, March 29, 2011

Getting in Front of Negative Media Attention

“United, United . . . You broke my Taylor guitar.”  I have had that line stuck in my head for almost a week now.  If you have no idea what I’m talking about, go to YouTube right now and search for United Breaks Guitars.

In a time when catchy videos go viral, any person with a computer and just a little time on their hands can become a company’s greatest promoter or greatest foe by simply posting a video about their experience.  Such was the case when Dave Carroll posted a song about his ordeal with United Airlines in July of 2009.  Carroll’s song, United Breaks Guitars, tells the story of how his guitar was damaged by United Airlines baggage handlers during a layover in Chicago.  As of this posting, the video has been viewed more than 10 million times.  But how much can a funny YouTube clip really cost a company?  In United’s case, Carroll’s song ignited a firestorm of negative attention and the company lost around $180 million in market cap.  While this is an extreme example, it been well documented that consumers share their experiences with others.  The only difference is now consumers have the tools to reach hundreds, thousands, even millions of others instead of just a handful of friends.

Perhaps even as little as 10 years ago, a company like United Airlines could have ignored incidents like Carroll’s because consumers did not have a platform large enough to reach the masses and share their experience.  Now there is an entire industry organized for the single purpose (if you exclude selling ad space) of providing a forum for users to post their thoughts.  Yelp has helped many small businesses prosper as a result of a few unsolicited, positive reviews.  However, it has created hard times for many others that did not provide the level of service that the reviewer had expected.  Consumers have demonstrated that they are more willing to trust other consumers, especially ones like themselves, than they are willing to believe any corporate ad.  So how can companies leverage this phenomenon?  There are technologies out there to enable the truth to be brought to light, maximize the positive attention and deflect the negative such as Reputation.com.  It enables users to create a profile that depicts how they want to be seen (only flattering of course) and then seeks to protect that carefully crafted image against malicious (or potentially accurate) postings.

But does this really solve the problem?  No, sites like Facebook, YouTube, Yelp, and Twitter only provide consumers a platform to share their experiences with a larger audience but before they existed, consumers shared their experiences with others albeit on a smaller scale.  So the problem is not at all technology based and so the solution should not be technology based.  There is no replacement for quality customer service.  Simply put the ability to deliver what consumers expect is what keeps a company in business.  If it fails to meet consumer expectations, consumers generally share those experiences and the company suffers.  Dave Carroll’s song would have never been created if United had atoned for damaging his guitar or better yet, did not break it in the first place.  The real way to get in front of negative press in today’s digital age is to treat consumers with respect and deliver what you promise.  Anything less than that . . . well you can read about it on Twitter or maybe watch a video on YouTube.

Tuesday, March 22, 2011

How does Hulu’s value proposition differ from traditional broadcast and cable television?

Hulu CEO Jason Kilar has been quoted as saying that the company’s objective is “helping users find and enjoy the world’s premium, professionally produced content when, where, and how they want it.”  This statement highlights Hulu’s competitive advantage over traditional cable and broadcast companies and other web based content providers like YouTube.  Cable and broadcast companies have literally networked their way into consumers’ living rooms in order to provide professionally produced content over their many channels but their strength is also their weakness.  Having invested so much capital in creating and maintaining their cable or fiber-optic networks, they are either unwilling or financially unable to develop new means of delivering that content.  Other web based competitors do not have access to “premium, professionally produced content” and instead offer thousands of short clips created and uploaded by other users.  While some are well made and many are enjoyable, very few appear professionally produced.  Hulu exists between these two spaces.  Major media companies News Corp and NBC Universal partnered to create Hulu in 2007 as a means of distributing their premium content to users not necessarily in front of a television set.  Hulu benefitted from this pedigree by immediately gaining access to the content of Fox, NBC, Warner Bros, and Lionsgate.  The newly formed company quickly set about creating a platform that would enable users to view content not only at Hulu.com but at hundreds (later thousands) of partner websites.  The company has since focused on distributing content to smart phones, allowing users to stream to their television, and entered into an agreement with Disney that provided Hulu access to Disney’s content in exchange for an equity stake.  Hulu has developed ways to position its premium content to users wherever the user is using whatever device the user has available.  It even allows the user to select the program(s) they wanted to view on demand.  This set the company apart from other cable or broadcasting companies that aired a set line up on various channels via connections to televisions.  While many cable companies have developed on demand features that enable users to select when they want to view specific programs, they still limit their distribution to television. 

Tuesday, March 8, 2011

What are the factors behind Google’s early success?

As with any start-up that ultimately succeeds, Google was founded to solve a problem that was causing the masses pain.  In 1999, internet search engines were designed to return pages that had the most instances of keywords.  The pages with the highest instances of the keywords were returned first.  Web developers used this design to their advantage by loading illogical combinations of words on their pages to create high counts of many words.  This resulted in low quality results being returned at the top of searches.  By the time Larry Page and Sergey Brin unveiled their PageMark algorithm to power search engines, users were ready for a new solution.  PageMark relied on the number of inbound links a site has rather than the number of keyword occurrences to rank results.  Brin and Page figured that other web developers had already valued a target site by linking their site to it and so returning targets with the most inbound links at the top.  In doing so, PageMark would also return the most valuable sites.  The technology quickly caught on and empowered the company to experiment with paid listing models for selling ad space.  The focus on innovative ways to grow ad revenue led Google to create AdSense, an advertising system that places ads where users find similar content.  AdSense enabled Google to grow beyond search and it quickly became a web-based juggernaut by adding Google Maps, Docs, Finance, and Gmail to name a few.  The more free platforms Google delivers to users, the more ways it can sell content based ad space with AdSense.