It was about half past six, Friday eveningwhen I sat down for drinks with Brett Bullington in a crowded hotel bar close to the San Francisco Embarcadero where we later would be going to the Social Media Network Party organized by Seth Goldstien. Being in the presence of positive and quality spirits I presented my mission for being in the USA was to introduce more SV companies to business development opportunities which existed in Europe. I understand that most American business strategists claim the market is highly fragmented and full of potential business pitfalls, but is this not anything more than notoriety the Europeans have themselves to thank for? The reality is that Europeans entrepreneurs are rigorously protectionist and a cloud of mysterious smoke and warnings of deprivation and gloom are often exuded to foreign market entrants.

However it was this evening that I began to understand that the current general consensus in SV was in fact considerably more favorable to any kind of business expansion strategy which would include China. A consensus which eludes me to some extent and by asking my colleague Nelleke to write a short market comparative analysis hopefully we will offer some grounded perspective on the subject of China. Nelleke has been working for us in China on a social economic development project for Chinese development of tourism.

E.J. Bertrand
——————————————————————————

China’s economy runs on export, well actually import and then export. For those manufacturers that think China’s internal market is massive, think again. Massive yes, buying power no. The average worker in China earns just enough to feed his family. The economic boom in China benefits workers to the extent that their living conditions, housing, health, education, leisure time and public services are getting better. Spending power is as limited as ever, as prices are going up.
A foreigner visiting Chinese cities is easily taken in by the many modern building going up practically overnight and Western companies hanging up their shingles left, right and center. When in Chengdu (capitol of Sichuan, 14 million inhabitants) last year and the year before, the Western storefronts had doubled and it had been impressive the first time. I liked to get my morning coffee at Starbucks across from my hotel, which costs the same or more as in the US, until my official interpreter, a university English major graduate, told me that the price of our coffee was almost equal to a week’s pay for her.

On the main boulevard car dealers showed off their latest models: no Fiat 500, Ford Ka or Suzuki Alto’s here. More like Lamborghini, Ferrari, Porsche. On the corner is a department store, billboards show fashion by Dolce & Gabbana and Armani sunglasses. There is no item in the whole store that costs less than 200 dollars, I explore all 6 floors and find myself in the company of loads of charming sales girls. No wonder, I am the only customer in the place.

My interpreter in Chengdu is excellent, although she has no specific trade vocabulary, she is a fast learner. Different experiences in other parts of the country where the official interpreters assigned to me vary from as little as ‘how are you’ to being able to keep up a simple conversation. Trying to teach these the necessary language skills is an impossible task. A pocket computer is the only way to communicate.

Undeniably there are a few very rich individuals in China. Who has money to spend are multinationals and the government. The government spends its money locally and keeps their employees in company cars, expense account dinners and the newest laptops. The average Chinese Joe earning an average wage cannot afford to buy western made products, he cannot even afford to buy Chinese made products.

Why not export to China:
The dollar has only devaluated 15%. China’s provinces are very autonomous and dealing with government officials is tedious and time consuming. No one speaks English; you always need an intermediary plus a translator. Chinese consumer has no spending power.

SF Chronicle 31/3:
“The Chinese economy today is, in large measure, an assembly platform for American and foreign companies to turn components designed and made elsewhere into final products, and then to export them to the rest of the world. More than 60 percent of “Chinese exports” are, in fact, the sales outside China of multinational firms operating in China.
What Apple says on the back of every iPod is true: “designed by Apple in California, assembled in China” from chips, hard drives and screens made in America, Korea and Japan. Chinese assembly adds only a tiny amount to the value of each iPod.

The iPod is not a new millennium icon because of its components. Nor does it beat the competition on price. iPods are must-have gadgets because of their elegant and simple design, a design created in Silicon Valley, with almost all the profits returning to Apple and its U.S. shareholders.
The final China trade secret is that Americans have benefited from the vast quantities of dollars and Treasury bills (estimated at $750 billion) China has purchased in recent years to manage the dollar-renminbi exchange rate. China-funded credit kept U.S. interest rates low after 9/11 and the dot-com bust, fueling both consumer spending and the rapid run-up in housing prices.

The only way for Beijing to allow the renminbi to appreciate was to sell dollars and Treasury bills, which it has been doing in increasing volumes. But this has put upward pressure on interest rates and tightened U.S. credit markets. China did not cause the subprime meltdown, but the sale of its dollar-based assets will hinder an American recovery.”

Why export to Europe.
The dollar is at an all time low, 50% lower than a few years ago, making American goods cheap. American made products are reliable. Europe is one market: having an office in Paris, Amsterdam or Milan covers what used to be over 30 different countries and markets. Most Europeans speak and understand English. Europeans have a large expendable income.
The additional 17 former eastern European countries that became part of the European Union over the past few years represent a large expansion of affluent consumers and companies with an ever growing buying power.

Nelleke Pruijs for TWESTC
Senior Consultant on Tourism
April 5, 2008

Two days ago I launched a new Personal Service called Holiday Home Hunters. Its basically a 72 hour manual search for vacation home rentals executed by a real person.

If you have been out on Google searching for your family holiday home you may have stumbled across over the overwhelming results of over 44 million links to holiday home companies, vacation rentals and individuals offering their homes. It isn’t the only downside because many of the same homes are advertised on many different websites Vacation Rental Management companies can have hundreds of affiliate websites where they advertise their inventory.

A few years ago you could go down the local high street travel agent for a catalogue of rentals but only a very few good companies actually print them these days. The web should have pretty much captured the market for vacation homes but instead it looks saturated and ends up not being time saving in any way, in fact it can easily slurp up hours and even days of your time.

So, more choice isn’t necessarily good for the consumer who is time stricken and quality conscious. There are actually a limited number of holiday home management companies and owners who can offer any kind of guaranty your vacation rental is up to the standards you would expect. Getting reviews on individual holiday homes is very good if you trust their opinion and have the time to go through them. Getting someone else to do the search for you who has been in the vacation home rental business for years is probably going to be able to shed the wheat from the chaf.

I was in the holiday business for years and I’ve never sold anything to anybody without having a pretty thorough idea of what I was selling them, therefore getting very few complaints and many returning customers.

I have always been an advocate that there is a growing market for personal services oddly I’d never have thought a manual personal search on the internet would become one of them until very recently. However considering the raving reviews on the launch that does seem to prove the case.

Check it out at http://www.dolcevia.com/hhh/holidayhomehunter.html

or in Dutch at http://www.dolcevia.com/vakantiehuisjager/vakantiehuisjager.html

Its official, I too am infected by the status disease, affluenza, social status anxiety or whatever you want to call it. The pressure to find a cure has taken me down the path of books on the subject of my ailment and hours spent in session with my therapist in an attempt to control this hostile villainous disease from attacking my intrinsic values. I’ve also spent many hours sifting through the photographic data of my youth to jog my memory into remembering what my intrinsic values and pleasures in life actually are. I’ve been flirting with meditation and yoga which has only caused my wallet to deflate and not much toward inflating my feelings of wellbeing.

Meaner than a midlife crisis which used to easily be cured, there are new methods of treatment necessary to combat this virus.

It has me asking, can I not just put a price on my need for the status of emotional Well Being? Marketers are so incredibly smart that the road to commoditizing this new status symbol is well on its way. Should I be convinced that spending money on peace keeper cosmetics and ELLO mobile (the promise: you pay your bills and we give our money to charities) will do me lots of emotional good. It also has a very nice 70’s ring to it.

If there is one fact I have taken for granted in my life and a logical one at that, it is the statement that all the money in the world cannot buy you happiness. There is certainly something very warm and fuzzy about this assumption which many of us will hold dear. Whoever said it had well in mind to keep us from vile sides of the pursuit of wealth, consumeritus, the purgatory where the wantee’s and havee’s congregate.

I rather do despair at the idea that alongside my personal quest to find the deeper meaning in life I will inevitably be a marketing target and be vulnerable to the lure of a prêt a porter range of values and charities invented by ‘free range social marketers. Imagine that ‘using product xyz will help you feel you are playing your part, help us to create a new society where we will all be happy, fulfilled and conscious members of our friendly planet earth’.

But beyond this I am actually helping the world to be a better place and there are bound to be charities which particularly appeal to what I think are my personal intrinsic values.

In fact, it is a brilliant (mis)interpretation of what psychologists believe, actually will help you find your way to a happy, self-fulfilling life, free from status anxiety and depression. Not particularly easy to achieve as it is basically an exercise of self-motivation which essentially must come from within you.

However social marketing is still brilliant because I don’t think many of my intrinsic values differ quite that much from millions of other consumers so I and many others are basically easy targets.

Unfortunately in my opinion it doesn’t mean we are truly on the road to becoming the increasingly conscious society, it just means that marketers have found a way to influence me into thinking there are indeed less strenuous ways to obtain emotional happiness.

For social entrepreneurs (I love this label for its unprofessed ambiguity, for yet have I to encounter the anti-social entrepreneur, a concept which I would find very frightening indeed however exceedingly more realistic and funny as it reminds me of those hilarious Eristoff Vodka commercials. As Oliver James put it in his last book ‘Affluenza’, social entrepreneurs play a key role in unleashing the unselfish capitalist manifesto.

10 years down the line and consumers, having seemingly happily spent millions and billions of currency on charity endorsed products, they will still wake up feeling as depressed as they were ten years earlier.

I have spent some time researching the attitudes of SME on applying internet in a business growth strategy. SME’s actually do not use much of the Internet for advertising or to establish new distribution channels.

However, SME’s do recognize the importance of the internet in their business strategy to benefit from growth opportunities it presents. In fact SME’s consider the Internet as a vital contributor for business performance but do not apply resources to this area if; from one side, they don’t have or need a growth strategy or from the other, the value of the internet is not vividly apparent to them.

If a SME business owner has a value perception of the internet, adoption of an internet strategy is never far off even though there is no actual planned business growth strategy.

It could be that these firms see outside pressure from competition using the internet, another could be that the company owner just has a very good knowledge of the IT opportunities.

However with most SME who don’t have a planned growth strategy, the value perception of the internet is generally very low, there is usually no internal IT knowledge and perhaps they can’t see any competitive pressure.

If you will allow yourself to take a step back and look at technology adoption rates from the perspective of a SME business owner we may conclude that a change in attitude to business growth is needed and not necessarily a change in the perception of the internet as a business driver.

Show me the money

Why we ask ourselves are advertisers sceptical about online advertising and yet they will place an expensive ad in the paper without giving it a moments thought?

In my view its because the value is not transparent to all of us. I do not question the fact that my ad in the Sunday Times will be viewed by millions of readers. I read the Sunday Times, I can see my ad, my neighbour will too because I know he reads the Times front to back on Sunday afternoon. Somehow advertisers perceive the value of online advertising differently than offline advertising.

Let me be the devil’s advocate a moment by stating:. If you can’t visually illustrate ad performance, don’t bother selling it!

This may sound preposterous to an experienced online marketer. Think of all the wealth of tracking tools, analysis and performance stats I can provide to my advertiser, the possibilities to track ROI have never been finer!

All true, good arguments, but I’ll buy your ad because I know it pays off. You are telling me it will pay off and your statistics tell me this but I still have a problem visualizing the ad you are trying to sell me, I don’t even know these websites you want to place my ad on. On top of that he is thinking your pitch sounds pretty complicated. “I’m sorry we just aren’t quite ready for this right now and besides we don’t really have the budget.”

Turn around Adrank

So if we need to put the money where our mouth is, we should perhaps come up with a significantly simplified way to help advertisers visualize the ROI of online advertising.

What if we illustrate the return of ads by offering advertising conversion scores directly on the ads themselves and outside of any kind of Google AdRank. Current advertisers benefit by knowing if adjusting their creative format, copy or adblock will increase conversions for them but I’ve already made the decision to use Adwords by then. Potential advertisers should also be able to see how online ads generate leads before their very eyes and it makes the whole AdRank system much more transparent at the same time. No need to get out the case studies and analytic demo kit, get out of the hard sell business and back stuck into the relationship business.

In the advent of the new Google Personalized Search, the subject of privacy and portability of personal data increasingly becomes a matter of debate. Are consumers aware or should they be made aware of the extent of data logging and do websites and online marketers need to take responsibility to create more awareness for consumers?

When we use a service such as Facebook or Amazon, we are not tuned into whats happening to our data once we’re out to lunch. Do we care if they use this data somewhere else in the meantime?

MySpace’s Mike Barret, chief revenue officer, explains how they use user data to make sure that ads are targeted in a more efficient manner.

‘We test the click-through and refine the algorithm to make certain that the target audience, in this case fashion aficionados, are truly going to perform better than if you just ran a fashion ad on run-of-site’.
What this means is, that they are closely monitoring, logging and analyzing all user behaviour. Does this user show behavioural patterns? Which interests are shared by connected friends? Imagine yourself standing naked in front of a panel of researchers who monitor your every move and reaction and take notes on your behaviour.

I don’t think users understand how much information is left behind and logged and indeed if someone else profits from that information. Nowadays metrics are no longer limited to traditional statistics such as page views, visit duration or tracing browser history of an IP address. They are technically complex analysis tools and not your average net stats applications.

Greg Linden, founder of personalized news service Findory and author of Geeking with Greg, commenting on Google’s new personalized search explains: “Searchers do not have to do anything explicitly to use it; it is all implicit. The current Google Personalized Search is likely to be using the same Kaltix technology (acquired by Google in 2003), building a high-level profile of you, then biasing all of your search results based on your long-term behaviour.”

So if you are a frequent user of Google’s services, rest assured that they are happily mining you probably 90% of the time you spend online. There is an off-switch, but first you have to find it and that can be a challenge.

I would like to share a short analogy on Facebook written by Chris Saad, an esteemed evangelist of APML and Open ID: ‘These shopping centres (referring to Facebook) are not like real shopping centres. They let or invite you in, you will form friendships while you are there, but they won’t let you leave together. They remember every purchase you make, but they won’t give you a receipt. They sell you plenty of stuff, but what you buy looses its value as soon as you leave. These shopping centers want to lock the doors and trap you inside – they don’t want you to go home’.

What Chris is trying to tell us is that these ‘shopping centres’ create profit from your ‘AttentionData’. This is a specific term used by APML (Attention Profile Mark Up Language) evangelists to describe data that represents what you have paid attention to in the past. It is also known as your ‘AttentionStream’.

A recent report by market analysts Bear Sterns Inc., claims that sites such as Facebook, who grow extremely fat by your enthused production of user generated content (UGC), is not a fad. In fact YouTube, Wikipedia, Blogger, Digg, MySpace and Facebook currently make up about 12% of total internet traffic in the USA, this does not include x-rated user generated content sites obviously, as Bear Sterns likes to be conservative not only with their figures.

Privacy concerns regarding storing and using past behaviour are very real, and sophisticated personalization of content is an inevitable evolution. Personalized search doesn’t just retrieve basic url’s from your behaviour on line. The new systems are actually on a quest to find the real you and before long it will know you better than you know yourself. The basic internet metric and analysis system of page views, hits and visits is very nearly quite dead. Marketers especially know that as soon as they can build a record of everything you have paid attention to in the past they can start to build what Chris Saad calls your ‘AudientStream’ which is basically a channel of records of everything you might need or want to pay attention to in the future.

Subsequently Chris Saad opts another term, the ‘Attentstream’. This would be a stream of events (attributed to you for example) that signifies attention given to you by another. “Attentstream data could come from the tools which people use to pay attention to other matters, i.e. browsers, RSS readers, embedded players, flash player, adobe reader, the Second Life client. Because the tool itself does the reporting, it can report more subtle information which cannot be gathered on the servers of significant websites.”

Back to cross referencing, the Bear Sterns report states: “apparent to us, that as the supply of video content rises, value will shift from content producers to aggregators and packagers of content that can best aid users in finding content that fits their specific interests.”

For marketers this step up in the use of technology to build online behavioural patterns and create in depth individual profiles of consumers, is very useful in targeting consumers one-on-one, but technology such as this certainly is not infallible. As any marketer has perhaps learnt in past experiences with one-on-one marketing, targeting individual consumers can be very embarrassing if you get it wrong.

Basically people enthused about APML agree that Attention Data should be portable and users of websites should be able to choose if Attention Data is stored or used to profit others. Using an APML file, a sort of meta/meta file where all your data is stored, users should be able to allow or not allow access to this information over various sites and services on the web.

Currently there are few communities and services on the web which understand why open portability of attention data is important. Check out Me.dium.com in beta if you want a visual of having control over your own Attention Data and how you can control who has open access to it. Me.dium is developing a next-generation collaborative browsing technology that dynamically combines visualization and chat, it’s not there yet and its pretty basic but certainly an interesting case study on open portability of personal data.

In June 2007 Me.dium secured $15 million in investment for this APML project from Commonwealth Venture Partners.

Quoting an article on Read/WriteWeb Written by Alex Iskold / June 11, 2007:

‘So why do these VCs think that Me.dium has such big potential? It so happens that Me.dium has a chance to literally break outside the box that we described in our recent Evolution of Communication post.

So the $15M dollar question is what is Me.dium.com planning to do next? In a nutshell, the company is planning to spend the money on refining and scaling its sophisticated matching technology. The secret sauce here is in connecting people based on their browsing patterns. Doing so dynamically for hundreds of thousands of users is hard algorithmically and very intense computationally…..

….. Me.dium takes a strong stand on information - they say that the user owns all of it. To succeed, the company needs to continue to drum this beat and to act accordingly, which they have been doing so far.’

Particls.com is a unique news feed; it combines APML data with your choice of channels together with some manual input to build a personalized news tickers-service which runs on your desktop. Other examples of projects which support open portability and use APML applications are Engagd, Dandelife, Cluztr and iStalkr (using the Engagd API).

My estimation is that concepts for open portability of data, Open ID and APML, are distinctly subjects which will gain effect and relevancy as users become more aware to which degree their data is purged. Sites (let’s call them both beta projects for now) such as Me.dium and Particls, show and enable consumers to visualize data and give them tools to self-manage their own data across the web.

Obviously I would be interested in understanding how these sites will go on to educate their advertisers and when they are letting them in. It seems to me that marketers may not directly benefit from giving more control to users over their attention data. Personalized advertising is a no-brainer for any marketer in the current online ecosystem, and obviously advertisers benefit if users do allow access.

Even though it is early days, I assume evolution of open portability of Attention Data means we are moving towards a challenge for online advertisers. Not only will marketers need to be able to handle large amounts of complex data and embrace one-on-one marketing online with all its pitfalls, they will also need to find means to encourage users to allow access to the data if open portability becomes a fact of life.

In my opinion, any information or data that a user leaves behind in the virtual world, solely belongs to that person and we should be given the choice whether or not we allow others to mine or trade this data for their own gain.

Further reading

Study: Search engine privacy policies improving, published August 7th 2007 Computer World:
A Slap In The Facebook Follow-up