Commentary: Its digital-only sales have hit 100,000

Yes, it is a lightning rod. Like a lot of other well-known enterprises, it is admired by its fans and widely despised by detractors. They carp that the Economist is overrated, prissy and dogmatic.

The critics demean the Economist by saying that much of its popularity in America stems from people who want to look smarter than they really are. That’s the price of success.

Nevertheless, if you happen to work for an American magazine company these days, chances are good that the Economist is eating your lunch.

The proof is in the numbers. This week, the Economist announced that digital-only sales of the magazine hit 100,000 for the first time, complementing growth on the print side.

The Economist

The Economist’s Paul Rossi.

The Economist’s executives cited long-term investments in editorial content and digital distribution, underscoring a conviction that the tablet revolution in electronic publishing are significantly changing the behavior of magazine readers.

“If you go back a year,” Paul Rossi, the managing director and executive vice president of the Economist Group, Americas, told me, “we didn’t have any kind of a firm opinion of how readers’ habits were going to change. The iPad  is the perfect device (for readers). One in four of the Economist’s readers owns one and (another) one in four will own one in a year’s time.”

Readers embrace tablets because the instruments “offer huge advances in giving the reader what he wants when he wants it. Many people who are now taking digital subscriptions were historically not print subscribers,” Rossi pointed out, obviously pleased by this development.

The milestone, reached in October, of 100,000-plus paid digital-only circulation of the Economist, was more than double the figure 12 months earlier. In addition, another several hundreds of thousands of print subscribers also read it digitally each week.

The Economist

A recent Economist cover

The Economist also boasts more than three million downloads of the Economist app to tablets and smartphones.

The magazine has seen an increase in sales of print copies, as the print circulation has grown by 3% to 1,486,838 copies in the January-to-June 2011 ABC audit period, compared with the same span a year ago.

The Economist is not exactly reinventing the wheel, I understand. You don’t have to be a rocket scientist to become successful in digital publishing

— and it sure helps to be peddling a magazine that the public has already anointed as being somehow hip.

Nor is the Economist the biggest-selling magazine in the U.S. But it’s established itself as being a tastemaker, whether its cover headlines are breezy or blunt. Many editors have openly expressed admiration for its style.

Much of the Economist’s success is simply based on applying your strength in an adventurous manner to the digital medium. “We have a site where people can build a community around the economic commentary,” Rossi said.

The Economist has experienced a jump in the number of monthly visitors online with more than seven million unique monthly users, up 45% from a year earlier.

Predictably, Rossi’s response was concise and illuminating. It gave me an insight into how a successful brand approaches a challenge. It identifies an opportunity and applies a workable solution to fill a need in the marketplace.

“The winners will be the people who understand that the readers’ tastes are changing,” Rossi shot back.

In a press release, the Economist Group’s chief executive Andrew Rashbass, said: “We are discovering great opportunities in digital. Digital editions of the Economist reach new readers all around the world as well as providing even more value to our current subscribers. For us…digital is not a zero-sum game.”

Clearly, the sun never sets on the Economist’s empire.

FOOTNOTE: MyCMO views The Economist as the closest thing to a bible for world new and insights. Digital and Print can work together for a brand and the business can profit. Publishers who do not “get it” have written their own obituaries in YESTERDAY’S news.

 Source: Social Media Today - Posted September 30, 2011 by Christophe Mallet

This is a good article that does not just talk about Social Media Strategy and organisations – it actually covers different ways to do Social Media and then shows how to incorporate this into your business in a flexible and pragmatic way that is more likely for success.

You might have heard of Jeremiah Owyang’s model, “The Five Ways Companies Organize for Social Business”. His framework presents and details 5 organisational models illustrating how companies structure their social media activity across the organisation. Summing it up broadly, here’s how it goes:

The Organic model is where companies usually start from: multiple, uncoordinated and decentralized initiatives. In terms of content & resource synergies, brand control, not to mention reputational risk and reporting…this model is far from optimal.

In the Centralized model, one department manages the overall company’s social media activity, distributing content across various business area-specific channels. While ensuring greater control over the message and maximisation of resources’ use, this model seriously limits business-area autonomy and might be less reactive than the following ones due to its “process-heavy” nature.

In the Coordinated model, the central team provides resources to various nodes to empower them to become fully autonomous (yet consistent across the organisation) when managing their social media activity.

The Dandelion is probably the most advanced structure. In this model, the central node only serves for central reporting and resources, with each hub acting as a fully autonomous Coordinated-type structure. This particularly fits multinational organisations that have very diverse “companies within companies”.

In the Honeycomb, every individual plays a role in customer facing interactions. It requires an advanced and open social media culture, and only fits B2C organisations. As Jeremiah Owyang concludes, “very few companies will actually achieve this”.

Overall, this is a powerful framework which can help organisations figure out where they are and what they’re aiming to achieve. Significantly, Owyang doesn’t present any model as being the ideal one, acknowledging that different organisations have different needs/objectives in social networks.

However, this framework is static and doesn’t really draw a roadmap explaining how to go from, for example, Organic to the Dandelion / Hub & Spoke. Implementing a successful social media strategy – on top of the necessary skills, policy, training and so on – requires a massive cultural change. Putting it simply, taking a multinational organisation’s disorganised social media presence with myriads of poorly-managed and barely controlled/monitored channels, and turning it into an efficient, flexible, global Dandelion model delivering clear ROI is not going to be achieved in a day, a week, or a month.

The real question when trying to socialise your organisation – and realise the benefits therein – is therefore not “What’s the right model for us?” but “How do we implement company-wide change”.

From an organisational point of view, turning your company social represents a behaviour-disrupting innovation. In a nutshell, every approach taken to tackle the latter question stands somewhere between the “Blitzkieg approach” and the “Guerrilla approach”.

The Blitzkrieg approach is the one most commonly used by organisations when implementing innovation; it’s an “all in one go – get used to it” approach that consists of imposing the change to the whole organisation following a tight schedule…this type of approach virtually always fails to generate “internal buy-in”

The Blitzkrieg approach is the one most commonly used by organisations when implementing innovation; it’s an “all in one go – get used to it” approach that consists of imposing the change to the whole organisation following a tight schedule. Most social media consultants will tell you things like “Resources Mapping, Social Media Policy, Training, Engagement Map and you’re good to go”. Well, this doesn’t work, mainly for one simple reason: most people hate change. As a result, this type of approach virtually always fails to generate “internal buy-in” and the shiny Social Media Revolution ends in an inconsistent, marketing-driven “let’s use twitter to broadcast corporate messages just like the old days” mockery of what was supposed to be “engagement”.

On the other end of the spectrum, we have the Guerrilla approach. This consists in taking only a small number of well-trained and highly motivated individuals to make the company social, department by department, one campaign at a time and recruiting new devotees along the way.

Applying Everett Roger’s “Diffusion of Innovations” model to this particular case, the Guerrilla approach acknowledges the fact that within every organisation the acceptance for change is not homogenous. Some people love change, some are shy or indifferent, some will fight it until they’re dead or fired. Basic human nature, we’ve all seen it. In other terms, only a fraction of people can be considered as “Innovators” and they are the only ones to have the influence to generate buy-in from the “early majority”, quickly followed by a big chunk of the “late majority”. Then come the “laggards”, or “social media haters”, left alone in the smoking ashes of the old “broadcast and sell” paradigm.

Let’s go back now to the Jeremiah Owyang model and try to see what it would look like if we were to turn a “Organic” company into a “Coordinated Model” following the Guerrilla approach.

Step 1 would be to identify and extract one particularly innovative node from the Organic structure.

In Step 2, after some targeted training/workshops, one could decide to launch a pilot program coordinated by the one team extracted in Step 1. At this point, it’s just not realistic to put together a central cross-functional social media savvy team, so let’s make the central team and the node complementary to each other: Central Marketing and one product-focussed initiative, or Central HR and a business-area specific HR team for example. This way we expect to create the first segment of the Coordinated Model and generate interest and buy-in among neighbouring business areas (the orange dots below). This is the “innovators to early majority” stage.

Step 3 to end: One by one, add hubs around the central point replicating on a larger scale the process implemented in Step 2 while complementing the central node with new functions and skills (i.e. Comms + CRM + Legal + HR + Marketing…). Progressively, the central node will develop processes and tools to speed up the integration of peripheral nodes: Social Media Policy, Engagement Guidelines, Training, Tutorials, Toolkits, Resources…

In the end, this incremental (hence long term) approach should enable the organisation to reach the desired structure (or to change its mind along the way) whilst ensuring at each step that the resources are properly trained, that the engagement is consistent, and that – most importantly – social activity is strategically meaningful and ultimately generates value for the business.

Advertisers talk about the need to do cross channel marketing and publishers have caught on late to this. This chart is a message for publishers as to why they need to invest in cross channel delivery of content and advertising. On the plus side, this should make the job of online sales people for publishers easier as advertisers realize a significant uptick in awareness vs. with TV alone.

NOTE: “Online” in this study includes a broad array of mediums including mobile, PC and phone. I would still like to see what the overall yield is for total spend across all the mediums. If money is no object however, full cross channel and cross media advertising is the way to go for awareness.

A marketing guru reveals some of the secrets of his profession

VANCE PACKARD was the Malcolm Gladwell of his day, a journalist with a gift for explaining business to the general public. But in his 1957 classic “The Hidden Persuaders”, he out-Gladwelled Gladwell. The book not only had a perfect title. It also revealed for the first time the psychological tricks that the advertising industry used to make Americans want stuff, instantly transforming the image of America’s advertising executives from glamorous Mad Men into servants of Mephistopheles.

“Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy” is an attempt to write a modern version of “The Hidden Persuaders”. Martin Lindstrom cannot write as elegantly as Packard, as his chapter titles (eg, “Buy it, get laid”) make clear. But as a marketing veteran who lists McDonald’s, Procter & Gamble and Microsoft among his former clients, he knows the industry well. It is far more sophisticated than it was in the 1950s, and just as cynical.

Marketers have vastly more information about potential consumers than ever before. Every time you use a loyalty card you surrender personal information. Every time you do a Google search or hit the “like” button on Facebook, you surrender yet more. Google and Facebook protect personal privacy, but they also make money by selling generic information to advertisers. Professional data-miners use electronic data to create a detailed picture of what you have bought in the past (“history sniffing”) and how you bought it (“behaviour sniffing”). They can then draw your attention to products they think you might want to buy in the future. Smartphones can tell you that there is a shop nearby that stocks just the thing you have been looking for.

Marketers milk science for insights. Studies show that music can affect people’s behaviour: shoppers in American department stores who are exposed to piped tunes with a slow tempo spend 18% longer in the store and make 17% more purchases than those who shop in silence. Marketers routinely track shoppers as they make their way around supermarkets and listen in on their conversations at the counter. They also take willing subjects and observe their reactions as they gawp at products.

Marketers are devoting ever more effort to wooing children. The little monsters have a remarkable ability to nag their parents (whom marketers call “wallet-carriers”) into buying what they want. Better still, habits learned in childhood can last a lifetime. So companies bombard children with advertisements from the day they are born. The average American three-year-old can recognise 100 brands. Many can also recite annoying jingles more readily than their times tables. Given a choice between carrots and “McDonald’s carrots”, children hungrily choose the latter. From a company’s point of view, the earlier you hook your customers, the better. Experiments on rats suggest that a taste for junk food can be acquired in the womb.

The most effective marketing tools are often subtle. Kopiko, a confectioner from the Philippines, distributes free chocolates to paediatricians. Apple offers baby-friendly apps such as “Toddler Teasers” and “Baby Fun!”. Gatorade, a drinks-maker, tweets good-luck messages to star athletes. A company called Girls Intelligence Agency employs 40,000 American girls to act as “guerrilla marketers”. It gives them free products and everything they need to organise a slumber party with their friends to try them out. Then it sits back and waits for the buzz to build.

Marketers are also devoting much more effort to marketing to men—or, as Mr Lindstrom puts it, getting men to shop like women. In 1995 only 53% of American men admitted to shopping for themselves. That figure has risen to 75%. Many are buying traditionally “female” products; marketers created a $27 billion “male grooming” industry from nothing. They bombard men with images that were once reserved for women: think of Abercrombie & Fitch’s buff, topless hunks. (Not all hunks are appealing, however. The firm offered to pay a star of “Jersey Shore”, a crass reality show, not to wear its clothes.)

Marketers have long known that the most powerful persuader is peer pressure. What is new is that the data revolution and social media have hugely increased their ability to start “social epidemics”. They create outrageous videos that “go viral”: Quiksilver, a company that sells surfing clothes, produced one about surfers hurling dynamite into a river and then surfing the resulting wave. They turn customers into unwitting marketers: Eagle Outfitters’ Times Square store flashes pictures of anyone who buys its products onto a 25-storey screen and then enjoys free publicity as these instant celebrities send the pictures to their friends. And they create armies of “brand ambassadors”: Apple hires students to become “Apple campus reps” and turns entire sections of university book shops into mini Apple stores.

You can shun, but you can’t hide

Many people imagine they can hide from the hidden persuaders. They skip TV ads and put their faith in customer reviews rather than marketing bilge. They read angry books by Naomi Klein and Morgan Spurlock. They join anti-consumerism groups such as Enough. Yet the marketers have a way of triumphing nonetheless. SAS, a software company, analyses social-media chatter to find people whose online comments influence others; companies can then target these “influentials”. Firms such as Whole Foods turn anti-corporate fads such as organic food into marketing tools. Mr Lindstrom proclaims that he has given up his former profession to become a consumer advocate. But he has forgotten none of his old tricks. To promote his argument, he hired a perfect all-American family to promote goods to their neighbours without their knowledge, in a riff on a recent film, “The Joneses”. The video is on YouTube.

Linette Lopez | Aug. 10, 2011, 4:07 PM |

by Jolie O’Dell 29

The press loves the term Super Angels. They use it at almost every opportunity they get and sometimes even when they don’t have the right opportunity for it. In my view the terminology being used for early stage investors by the press and the media is not as clear as it should be. I’ve talked about this on several occasions when I’ve been at conference and on panels, but I figured it would make sense to do a post explaining my taxonomy of the early-stage investing world.

Friends and Family: Or sometimes referred to as the 3Fs for Friends, Family and Fools. This is probably the very first group that an entrepreneur who is starting out may approach for some funding for his or her idea. These are “investors” who are investing in you, i.e. not on the basis of your idea or the merits of your investment, but on the basis of a personal relationship with you. Sometimes this money comes with strings attached – strings in the form of expectations, which if not met can often hurt the relationship. The 3Fs invest their own hard-earned money, usually under $50K. They may or may not be accredited investors, and they don’t invest regularly or often.

Incubators and Accelerators: Incubators and accelerators have to a large extent replaced the funding from friends and family. The incubators and accelerators are investing $15-$50K in a large number of early stage teams (the current YC class has 60+ teams!). They provide additional value add in the form of coaching and mentorship, and most of all access to a network of other entrepreneurs and smart people – that to me is really the real value of being involved with an incubator / accelerator. The incubators also help get their teams get visibility amongst potential investors. The funding for the incubator of accelerator may come from the principals running the incubator (as I believe is the case for AngelPad, i/o ventures etc.) or may come from VC firms (as is now the case with YC being funded by Sequoia).

The incubators invest usually for an equity stake and buy equity at a extremely low valuation (for example, 7% for $15,000, which implies a pre-money valuation of less than $200,000). The companies go through a 3-6 month long startup bootcamp and then typically try to raise angel/seed funding.

Angels: Angels are individual investors, who are investing their own capital and doing so on a part-time basis. Most angels will usually invest under $50K per investment. They are generally high net worth (accredited) individuals who have done well in their career, either as entrepreneurs or as executives and early employees at some of the companies that have done well (in the Valley that usually means Paypal, Google, Facebook etc).  Most angels invest for a couple of reasons – some do it because they genuinely love the startup space and this is their way of continuing to be involved in a startup, sometimes vicariously. Others do it because they are somewhat naïve about the returns from angel investing and think that this is a way to make a lot of money (in most cases the returns from angel investing will not be anything to write home about). Some do it for their own ego, to be able to say “I’m an investor in X, Y or Z” at cocktail parties. However, for whatever reason an angel takes his or her money and invests it in a startup, they’re an invaluable part of the startup ecosystem as it exists today.

There are too many angels and an even higher number of wannabe-angels. In fact, I would go as far as saying that there are too many unsophisticated angels. This is what has led to the current frothiness at the seed stage, because these angels pay up for access to deals. They know that they will only be able to get into the deal by accepting whatever terms are proposed to them – because the supply of money at the seed stage far exceeds the number of good quality companies at the seed stage. They are also insensitive to valuation because they’re investing a small amount of money and they’re hoping for a big hit – they’re buying expensive lottery tickets.

This in theory is very similar to the behavior of institutional investors, however, there is one big difference. Institutional investors make sizable investments in a company, so that when they do get a big hit that can make the whole fund. IMHO, the big hit approach doesn’t really work at the angel investing stage, given the small amount of capital being contributed by any individual angel (in short: less leverage).

Super Angels:  This is where my definition of a Super Angel differs from the press’ definition of a super angel. I define a super angel as an individual investor, who is investing his or her own capital, but doing so on a full-time basis, i.e. this individual has decided to be a professional investor. He or she doesn’t have a “day-job” but spends all of his or her time in evaluating new investment opportunities or working with portfolio companies. They invest prolifically and also write slightly larger checks (~$100K) than the individual angels might and have a somewhat more sophisticated view of investing. They typically have a thesis that they’re trying to test and prove. More often than not, the “Super Angel” is a transient phase – you could very well define a Super Angel as a person who has decided to be a professional investor and is in the process of building his or her track record to be able to raise a fund — to become a micro-VC.

Micro-VCs: This is the category that the press has really been calling “Super Angels”. However, in my view, the big difference here is that the micro-VCs are not investing just their own capital. They are still individual investors, they invest on a full-time basis as professionals, but they have funds with Limited Partners. The limited partners may themselves run the gamut from individuals, family offices, venture capital funds to institutional LPs.

Some of the more well known uVCs (which the press insists on calling Super Angels) are Mike Maples at Floodgate, Aydin Senkut at Felicis Ventures, Jeff Clavier at SoftTech VC, Dave McClure at 500 Startups (although Dave has LPs, he also has a very unique model which spans incubator/accelerator and the uVC category). From what I know the credit for pioneering the uVC space really goes to Josh Kopelman from First Round Capital. First Round was the first uVC fund. (Although some might argue that First Round has now scaled and graduated to the ranks of a true early stage instititutional fund since they have a fund that is over $100M) Note: Since K9 also has LPs (individuals and family offices), I would also classify K9 as a uVC.

The fact that these micro-VCs have LPs is not to be understated, since it changes how they are investing. They now have a fiduciary responsibility to their LPs. This also changes the types of deal terms that micro-VCs will undertake. As fiduciaries, the general partners of the uVC funds have to begin to focus on the dreaded VC I-word : IRR. This now means that they will slowly start behaving less like Angels, and more like institutional venture capital funds.

At first blush, uVCs acting more like institutional venture capital funds may be considered a bad thing. However, there is a difference. The founders of these uVC funds are entrepreneurs in their own right – either as people who have founded successful startups before, or as the founders of their own venture funds – which are also startups.  In my view this means that these uVCs relate better to founders, creating for a more founder-friendly early stage investor.

The uVCs acting more like the institutional funds can have positive effects as well. They will probably become more active in taking board seats, and take a more active role in helping the companies – the way the institutional funds used to do at the early stages about 10-20 years ago.

Institutional Venture Funds: aka your friendly neighborhood traditional VC fund. The institutional funds typically manage a relatively large pot of capital (~$300M or higher per fund, with multiple funds running). They have 4-10 partners who are investing on their behalf. They typical check size for the institutional venture funds has edged upwards to be $3M – $5M for an initial investment. Since the funds are managing a bigger pot of money, they need to be able to deploy $10-$20M per investment in order to the math to work out for them and consequently they look for much bigger $0.5B – $1B type of exits.

Here is a handy cheat sheet for investor nomenclature:

Given the craziness in the market at the seed stage and the lack of good Series A / Series B investment opportunities for a couple of years between 2007-2009, several of the institutional venture funds have tried to move ”downstream” to do more seed and angel stage deals. In my view, this is a temporary and unsustainable phenomenon.

It is temporary, because when I look at the seed deals that were done in 2010 – 2011, there are several high quality companies that are in the pipeline for a Series A and Series B. So the institutional investors will have enough deal flow in the near future to keep them busy (in fact, we’ve already been seeing some of this in Q2 of 2011). The institutional VCs playing the in the seed stage is also unsustainable since the economics of doing so simply don’t work for them. If the seed stage deal doesn’t mature into a Series A or Series B that they can pre-empt, then it’s not really worth their time for the amount of money they are able to deploy, since even a great return will not move the needle on their fund.

The Series A is now the third round of financing for a company, but the nomenclature hasn’t been changed. The first round is the 3Fs or incubator round, then the Seed/Angel round, where the Angels, Super Angels and the uVCs play, and then the Series A, which is where the institutional venture funds step in.

In the venture industry, the only way for a venture fund to grow, is to move upstream and start managing a bigger pot of money. It is the natural evolution of the venture business and funds. This is what has happened with a lot of the institutional funds over the past decade. This gradual upstream movement in the venture industry, is what I refer to as the Venture Spiral.

The angels of today, will become the super angels of tomorrow. The super angels of today will be the uVCs of tomorrow, and the uVCs of today, will become the early stage venture capitalists. The institutional venture funds will morph into what we used to call growth funds (Anyone else notice how Kleiner Perkins has been moving upstream into later stage deals: GroupOn, Twitter, LegalZoom). The cycle will continue, as it inevitably does.

The one change that seems here to stay is the initial financing of companies will come from the angels, super angels and uVCs, who have become an intricate part of the venture capital eco-system.

Updated (05/16/2011 at 11:05 AM) : Added a row to the table/cheat sheet to indicated whether  or not the investor is typically an Accredited Investor (better explanation on Yokum’s blog), or not.

You can follow me on Twitter at @ManuKumar, or, follow @K9Ventures for just the K9 Ventures related tweets.

Today I am simply going to regurgitate an excellent blog post that I read yesterday by my favourite social media strategist, Amy Sample Ward.

Crowd or community sourcing are definitely worthy tactics in a social media strategy, but they are not for the faint hearted. Engaging with the crowd takes skill and finesse otherwise you will be discarded as a spammer. Amy manages to very succinctly explain the difference between engaging with and using an online community or an online crowd to develop your digital strategy or campaign. I’ve heard of only 2 of my friends or colleagues that have used crowd sourcing – both for creating a logo or design for their business or website and their motivation was usually the low cost and high volume of choice that it offers. From their anecdotal experience my impression was that the quality of the product they received back was also fairly average – however, this could also be representative of the quality of the brief they provided.

The way I interpret Amy’s definition of crowd sourcing versus community sourcing is as follows:

Crowd sourcing is engaging with an online audience that you do not have an existing relationship with to try to mobilise them for your cause, whether it be an advocacy campaign or your business brand strategy. Usually you would engage with “the crowd” via forums or through specific crowd sourcing websites (10 crowd sourcing sites for design, advertising, software, data etc are listed here).

Community sourcing is using your existing network of subscribers, customers, fans and supporters to take action on behalf of your cause of campaign and then share it will their own network of friends, colleagues, fans etc.

Amy provides a helpful infographic that explains the difference and acknowledges that there is definitely some cross over between the two audiences.

The benefits of engaging with a crowd or community are many; it invites diversity, you can get a very large response in a very short space of time, it stimulates dialogue and word of mouth for your cause, it ensures that your supporters voices are not the only ones heard.

However with every positive there is a negative. When using the community or the crowd, you have to allow time and resource – if the response is good it can be very time consuming to manage the volume of responses. With the diversity you may also find it difficult to find a consistent theme amongst the fragmented opinions that come back – if you already know what you want to do or build, sourcing the crowd may just add an unnecessary element to your strategic process.

And last but not least, Amy gives 3 key tips to consider whenever thinking about engaging with a crowd or online community:

1. Consider your timeframe. Do you just want a quick response or does your campaign require ongoing maintenance with your crowd or community?

2. Give the crowd or community something to do, an action. The crowd will respond best to passive actions (such as signing an online petition) whereas your community has already engaged in this and want something more substantial to do – like calling talkback radio or writing a letter to the editor or speaking with the manager of your local department store.

3. Who is your audience? How many people do you need to reach. Consider if the crowd or community is the right place.

Amy goes on to describe how to design a campaign for a community and how to design a campaign for a crowd but if you want more, please, read Amy’s blog. She’s the expert.