Saturday, October 25, 2014

Sharing economy series: 5 metrics management teams focus on

GUEST POST

Sharing economy series: 5 metrics management teams focus on
Image Credit: Vadim Ratnikov / Shutterstock

As marketplaces within the sharing economy continue to emerge all over the globe — Bridj and Kinnek are a couple of the most recent — their management teams will find themselves consistently challenged by a handful of key performance indicators. They include:

  1. Balancing supply and demand
  2. Speed of engagement
  3. Gross profits and 80/20
  4. Retention rate
  5. Correlation and dependence

One of the most difficult challenges of a sharing-marketplace business is generating the coveted “hockey stick growth curve” like an Airbnb or Uber, but the way to achieve said growth is oftentimes the result of mastering these five concentrated areas of focus.

1. Balancing supply and demand

All marketplaces have buyers and sellers, and a core challenge is balancing the two sides. If you have too much supply, your suppliers will be less likely to engage consistently. Too much demand though, and your customers won’t be satisfied with their experience.

To channel my inner “Field of Dreams,” what the industry has found is that if you can successfully grow one side of a marketplace, the other side will come (they will come, Ray, they will come). For some businesses, that means growing your supply side, and for other it’s demand. For instance, Handy is in exceptionally high demand; however, an area of opportunity for them continues to be supplying a large enough workforce to meet said demand faster. Conversely, take a newer marketplace that might have plenty of supply but only nascent demand. The challenge there then becomes implementing a user acquisition model to keep up with supply.

2. Speed of engagement

The opportunity for marketplaces is providing on-demand services to potential customers. Selling and delivering on the promise of “on-demand,” however, is quite real, and user behavior reflects the importance of delivery. At HourlyNerd for instance, we see engagement trends change drastically when customer projects are bid on by our consultants within 5 or 10 minutes, same day, same week, etc.

Another example of this is when I recently needed a ride to the airport, and the only thing that mattered to me was the time it would take to get from my home to the airport. I checked both Lyft and Uber. The wait time for Lyft was 15 minutes compared to Uber, which was 5 minutes. I opted for Uber. Now, had Uber taken more than 5 minutes to arrive (without notifying me) and I’d missed my flight, I would have unleashed verbal backlash and, moving forward, would have tested other services like Lyft or EasyTaxi for their ability to deliver on promise.

3. Gross profits and 80/20

Marketplaces often generate revenue by charging a percentage of the transaction fee between the supply and demand sides. Most often, we see this number between 10% and 25%, depending on the value of access being provided and the customer willingness to pay for supply. The best advice is for marketplaces to test price elasticity within these percentages. The goal for price testing is, of course, to find the right balance between the supply-side compensation rate satisfaction and the demand-side satisfaction rate dependent on value.

Pricing implementation needs to be either flexible or customizable and based around choice in order to avoid the dreaded 80/20 rule. Marketplaces by nature try to be everything to as many people or businesses as possible within a target market, so the more evenly dispersed the activity, the better.

For instance, here at HourlyNerd we offer consulting on-demand. If we had 20% of our consultant base executing 80% of the demand, that wouldn’t be scalable and also shifts the pricing leverage too much in the favor of a few suppliers. On the other hand, if 80% of our demand-side revenue is coming from 20% of customers, then we’ll be at too high of a monthly revenue growth risk and may not have found the right mix.

4. Retention rate

Acquiring customers is a challenge every marketplace faces. Whether it’s growing to your first 1,000 customers, 10,000 customers, or your next million customers, it’s a challenge for marketing teams everywhere. Once users have been acquired, managing retention rate becomes crucial to revenue forecasting and company growth. For instance, if you acquire 1,000 new customers per month, understanding what percentage of that 1,000 will be repeat business and at what frequency will substantially help you set realistic growth goals.

Retention rates are evaluated by management teams but are impacted by various teams, including marketing, sales, and product, and stem from keeping both sides of a marketplace interested, engaged, and satisfied. One nice example of delighting customers on the supply-side comes from Uber: The company rewarded its top 7 drivers by sending them to the World Cup in Brazil earlier this year. On the demand-side, it’s important to consider customer councils, trust and quality assurance, badges/gamification, product automation, and a rock star hire to run your product marketing (one of the harder hires to make). 

5. Correlation and dependence

In the most simplistic form of a question, what impacts what? That’s the question to ask consistently and about every aspect of a marketplace.

There’s a reason Airbnb offers professional photography to its supply-side. The reason is that when users are searching for places to stay, they’re more likely to engage with high quality imagery than they are with amateur photos (usually taken by the owner with a smartphone and zero knowledge of photography) of someone’s apartment. While this is a seemingly obvious insight, it wasn’t so obvious when Airbnb was trying to grow. Paying attention to the smallest details and making calculated shifts can often lead to the most sizable results.

The only way to identify trends around correlation and dependence is to consistently present data and have open cross-departmental discussions. Presenting insights and thoughts, no matter how small or seemingly trivial, is a culture trend that is a staple for growth. The literal ideas won’t always be beneficial and at times will seem amateurish, however, it’s the mindset of questioning, exploring, and identifying that you want to instill in your company culture.

The Bottom Line

Are these the ONLY five metrics that management teams focus on? Of course not. They are, however, trends that we are continuing to see arise time and time again in meetings, at industry events, and across the media. They represent core areas of growth as well as challenges that can determine the success or failure of a sharing-marketplace business.

Always keep in mind and evaluate what’s going on behind the curtain to make the trains run on time and how you can improve process. This is the behavior that separates the elite teams from the mediocre. As always, it’s an exciting time in the sharing economy!

Dan Slagen is currently the CMO of HourlyNerd, a marketplace that connects MBA alumni and students directly to businesses all across the globe. 










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Why Pandora’s new analytics tool is a winner for both the music company and musicians

Why Pandora’s new analytics tool is a winner for both the music company and musicians
Image Credit: Screenshot via Pandora/YouTube

Try as they might, music services have yet to come up with a universally preferred method for artists to track listener data about their work.

Spotify started offering its version of music analytics for artists last year. Apple inherited musician analytics through the Beats Music acquisition of Topspin. And, finally, “YouTube of audio” service SoundCloud rolled out its own analytics tools along with a new ad platform back in August. All of these analytics tools were marketed as providing musicians with better information they can use to earn more money. Now it’s Pandora’s turn.

The company may have arguably been first in the rise of digital radio services, but it was among the last of the big players to start tracking artist data with the launch of Pandora AMP earlier this week. But just because it is late to the analytics party doesn’t mean it wasn’t planning for it.

Pandora cofounder Tim Westergren told VentureBeat in a phone interview that the company has been working on AMP for “literally years.”

“There is nothing more central to why Pandora exists than what AMP is really tackling,” Westergren said, adding that there’s good reason the company didn’t launch something like AMP sooner. “I’ve been grinding my teeth for a long, long time now, anxiously awaiting launching it. But we wanted to make sure that it didn’t disappoint.

“I think there have been a lot of promises made to musicians over the years, and this is one that has to be fulfilled,” he explained in regards to services touted as a solution for “working” (aka relatively unknown) artists looking to make enough money to justify music as a real source of income.

“Ultimately, we would very much like it if the first thing musicians did when they woke up in the morning was to log into Pandora and have a look at AMP.”

Screenshot of Pandora's new AMP dashboard.

Above: Screenshot of Pandora’s new AMP dashboard.

Image Credit: Pandora

See, Westergren gets it. At least I think he does. Music services are all starting to provide audience analytics because creating relationships with musicians is valuable. It’s akin to Facebook’s hold on the average U.S. citizen. When your music platform becomes the tool that guides tour decisions, creates perfect set lists for concerts, shows which fans are enjoying what songs, and makes musicians more money, then your platform wins.

If Pandora’s AMP becomes essential enough to the very creators whose work sustains all streaming services, it can change how music is measured, how artists are paid, and maybe even how musicians promote new music — in the same way news publications can pay to promote a link on Facebook, for example.

I’ve seen how addictive audience-tracking tools can be from a content creator’s perspective. At any given moment, you can track how far your content — your art — reaches its audience outside your news organization. You can see how long people spend consuming it and view various other behavioral and social metrics. I once gave a battle-hardened veteran of the newspaper business a glimpse of real-time audience tracking tool Chartbeat, and he was blown away. The truth is, it’s exciting to see who is checking out something you created and watching hard data showing incremental progress on the path to becoming a well-respected creator among strangers.

Right now, musicians don’t really have something like that. Sure, there are plenty of services offering tools like it, but musicians haven’t yet collectively become aware. I say this having grown up in “Music City” — Nashville, Tennessee — where a lot of my friends and acquaintances were either aspiring musicians or liked to think of themselves as such. Those people — musicians — are inspired by the music, not data, so they measure incremental success in different, more traditional ways, like the crowd reaction at a live show.

“This [AMP], I believe, will help artists understand the scope of our platform and what’s possible given its size. I don’t think people realize how large or connected Pandora is. This will connect some of the dots,” Westergren told me. The music service has over 75 million active users per month that listened to nearly 5 billion hours of music in its third quarter alone. Westergren said that the listener data provided through AMP will make the service as indispensable to artists as it is already for users now personalizing their experience and connecting with music in a way that wasn’t possible on terrestrial radio.

“It’ll be equally important to artists because [Pandora will] now become a new form of communication with listeners that’s never existed before,” Westergren said. This is an aspect of Pandora that no one has fully understood up until now, which he hopes AMP will eventually change.

The AMP platform provides analytics to over 125,000 artists with music in Pandora’s vast library of songs. About 12,000 of those artists have more than 100,000 unique listeners and, with AMP, can now get a clearer understanding of their relative successes. One thing Westergren was quick to point out is that the “unique listener” stat the company uses to show traction is the number of Pandora users who either actively added or created stations for a particular artist or thumbed-up a song from that artist, not the number of people who passively listened to a song from a particular artist.

So the larger question is, how is Pandora’s AMP going to stand out among other listener analytics tools?

Screenshot of artist analytics from Pandora AMP.

Above: Screenshot of artist analytics from Pandora AMP

Image Credit: Pandora

Well, at first glance it doesn’t seem like AMP is much different, and it might not be in terms of appearance. What is different — and a main point that Pandora is trying to drive home — is that the company’s music platform has almost 10 years’ worth of listener data powering song recommendations and how people uniquely want to experience music. And that listener data has been carefully applied to Pandora’s audience measurement data, which the company smartly tied to the same standard measurements the billion-dollar terrestrial radio ad industry uses.

That said, the music business community trusts Pandora’s listener measurements, so in theory they should be superior in showing what music fans like/dislike — at least when compared to listener measurements offered by rival music services. It remains to be seen if this will actually prove true for Pandora’s AMP platform.

Also, Pandora’s AMP might not translate directly to artists making more money from Pandora (in fact, Pandora’s having a hard time making money itself, as Thursday’s Q3 2014 earnings report shows), but that’s really not something new or specific to Pandora. (See also, Spotify.) Even moderately successful album sales a decade ago didn’t bring in huge paydays for artists. But if artists can use this tool to enhance other areas of their career that do generate significant amounts of money — such as live shows and merchandise sales — then AMP is still very valuable.

“For working artists, the ability to tour and market themselves effectively is sort of the whole ballgame. I mean, you really need to figure that out,” Westergren said. “So if you’re going to do 12 stops on a two-week tour, AMP can help you do them in just the right spots. And, of course, it’s also going to help artists recognize which of their songs people are connecting to.”

Still, AMP’s launch, Westergren told me, is only laying the initial groundwork for much larger plans Pandora has for the future, which he declined to elaborate on.

“What we’re putting out today with AMP is sort of the basic building block for everything that comes next,” he said. “We’ve got a laundry list of ideas.”



Pandora gives people music they love anytime, anywhere, through connected devices. Personalized stations launch instantly with the input of a single "seed" – a favorite artist, song or genre. The Music Genome Project®, a deeply deta... read more »










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Friday, October 24, 2014

4 big threats native advertising faces in 2015

GUEST POST

4 big threats native advertising faces in 2015
Image Credit: HBO

Recently I’ve been hosting roundtable discussions over dinner in New York and London with publishing executives who are betting big that native advertising will drive major revenue growth in 2015 for their businesses. We often end up debating what the biggest threats to the industry are, and there are four notable threats I wanted to share.

Readers reject native advertising

Those of us who are in the industry buy-in to why native advertising makes sense; However, when I explain what I do to friends outside the publishing industry, the first response is always “so you are basically tricking users into clicking on ads?”

Point being, perception matters. For example, John Oliver’s take on native advertising last month generated a lot of attention for our industry. It also served as a not-so-gentle, sobering reminder of the importance of disclosure and trust.

Earlier this summer, IAB and Edelman released new research on what consumers actually think of native ads. Results of that research showed that well-executed native advertising can boost the credibility of a publication’s site, and that site’s credibly can, in turn, boost the perceived credibility of sponsored content it features. More specifically, sites saw a 33 percent lift in perceived credibility of native ads when those ads appeared on news sites considered to have a high level of credibility. Also, 54 percent of respondents from the research stated that they look favorably on news sites if its sponsored content was relevant to the content they were already reading.

FTC may regulate native advertising

Likely the biggest threat native advertising faces for content marketers could be federal interference — such as the Federal Trade Commission (FTC) introducing a set of regulations for the industry. In December of 2013, the FTC hosted a workshop to discuss the impact of native ads, which produced some mixed results. They said some native ads are unlawful, which gives me reason to pause. This is a big reason for why self-regulation within the industry is so critical, and the IAB’s native ad playbook is a good place to start.

Let’s take a page out of the search marketing industry’s playbook. When Google released its first search ads over a decade ago, they were 100 percent native — meaning a user would not have been able to tell those ads apart from organic search results. What later happened in search advertising is that the big players (Google, Yahoo, Microsoft) have all self-regulated, and done so successfully. This strategy has avoided regulators from stepping in and bringing their industry to a grinding halt.

The lowest common denominator wins (again)

I have written at length about why I’m not building a native ad network as I think it’s the wrong move for the industry. “Advertisers we work with at Quartz are interested in having genuine impact with highly sophisticated audiences – there’s not necessarily a commodity solution to that equation,” says Jay Lauf, SVP Atlantic Media at Quartz. The threat remains, though, that as publishers become more desperate for revenue, they offer their highly-premium native inventory to networks that will generate a few bucks short-term but also commoditize that inventory forever.

What makes content marketing successful today is when clients and their agencies have a direct, one-to-one, relationship with the publisher. The best content programs are built based on the client’s objectives as well as what the publisher’s audience is receptive to. Every publisher’s site is different, or at least that’s the promise given to readers who spend hours consuming content. I think the moment the same sponsored content appears across multiple publishing sites, that site now risks to lose the trust and uniqueness they first touted when building their audience.

Publishers forget to invest in a distribution model

Every business needs a distribution model. Whether you are Samsung, Amazon, Wal-Mart, Coke, Apple or Polar (my business), everyone has a distribution model. VP of Gawker Media Erin Pettigrew puts it well when she says:

In a world where users are bombarded with information and can discover news through many channels, publishers can’t forget to invest in their own distribution model. At Gawker, we have successfully built a large audience that marketers are keen to engage with, frequently. This is thanks to a focus on distribution and developing unique approaches, ones that I expect will continue to evolve.

The last point she makes is key: the approaches and tactics will continue to change. How does this relate back to native advertising? Well, content marketers choose to work with premium publishers not only to create great content, but also to drive great distribution to it. Anthony DeMaio, associated publisher at Slate, often reminds clients that “content may be king, but distribution is queen”. Slate has served 100M native ads in the past month alone and is marrying strong content with strong distribution.

***

In closing, 2014 has been an exciting year for those of us in the publishing industry. My company in particular, Polar, has delivered 2 billion native ads alone for premium publishers. Those are impressive numbers that I hope will continue to accelerate, provided that together we can mitigate some of the threats facing our industry in the coming year.

Kunal Gupta is CEO of Polar, which provides a native advertising platform to premium publishers. You can follow him on Twitter (@kunalfrompolar).


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WP Engine adds disaster recovery to keep your blog alive during natural disasters & zombie uprisings

WP Engine adds disaster recovery to keep your blog alive during natural disasters & zombie uprisings

Above: The WP Engine team

Image Credit: Jordan Novet/VentureBeat

WP Engine, a Texas startup that hosts websites based on the open-source WordPress content-management system, is closing out quarter after quarter with new business. Now it’s introducing a feature that big businesses should dig.

Today WP Engine is telling customers about a new disaster-recovery option for automatically sending web traffic to an alternative data center in the event of a catastrophe at the data center they primarily use.

It’s not the sexiest feature. But it could help WP Engine assure companies, colleges, and other organization that it’s up to the task of delivering sites all day, every day. And that’s important, with well-funded Automattic, IPO-bound GoDaddy, and Pantheon, among others, also hosting WordPress sites.

WP Engine claims more than 23,000 customers running more than 200,000 domains. That means its customer account has shot up 130 percent in the past year. New customers include Etsy, Arnette, the Humane Society of the United States, and VentureBeat. (Yes, you read that right.)

“WordPress has really reached this kind of tipping point where much larger businesses are adopting WordPress as a core technology for their content,” Heather Brunner, the startup’s chief executive, told VentureBeat in an interview. “Just seeing that adoption, we’ve been able to really benefit in terms of providing a platform and service and really creating kind of an enterprise-scale solution for businesses who want to adopt WordPress.”

That doesn’t always mean winning business from WordPress hosters like Automattic’s WordPress VIP (which doesn’t disclose its customer count but says it served 2.7 billion page views in the past 30 days). Rather, WP Engine has been picking up revenue by taking websites from what Brunner called “generic hosts,” including BlueHost and GoDaddy, as well as cloud infrastructure providers like Amazon Web Services and Rackspace. That’s where having a “WordPress specialist” is desirable, Brunner said.

And this summer, WP Engine startup established WP Engine Labs, where it’s researching the Facebook-developed Hip Hop Virtual Machine, mirroring in Amazon’s S3 public-cloud-storage tier, and methods of improving resiliency, speed, and caching.

“We’re innovating both on the core and innovating on what’s new,” Brunner said.



WP Engine is one of the most mature premium managed hosting platform for websites and apps built with WordPress. WP Engine powers tens of thousands of websites, delivering the fastest, most reliable, and most secure web experience. Bus... read more »










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Even with $5.5M in funding, Ello’s future looks unclear

Even with $5.5M in funding, Ello’s future looks unclear
Image Credit: Jordan Novet/VentureBeat

So the Ello saga continues, and this time with $5.5 million more in the bank, and a new kumbaya-esque charter and legal status that’s leaving us with more questions than answers.

Yesterday, the hip alternative — and ad-free! — social network announced that it has raised a lot of new funding, and that in the name of staying true to its promise of keeping ads and data-brokering off its minimalist, black-and-white piece of the Web, it’s filing to become a public benefit corporation (PBC) in the state of Delaware.

And yet, there are still so many unclear parts of this story — despite the fresh documentation and investor blog posts to explain it all.

Making money

From the get-go, Ello said it would stay away from ads and selling users’ data to third-parties — basically, being the anti-Facebook. It’s also said the entire time that it would monetize through paid premium features, “for power users” or users that wants particular capabilities.

When Ello got all its initial buzz, it had only taken about $435,000 in funding. With that sum, we could all squint our eyes a bit and believe they could eventually generate a return for their investors without doing anything too flagrantly commercial.

Aral Balkan wrote a fiery post at the time, warning us and Ello that taking investors meant an exit was coming, some day. But let’s choose to believe Ello could get enough power users to make that initial investment turn into a valuation worth the risk.

But now it has an extra $5.5 million in funding — and that brings with it much, much larger expectations of a big payday somewhere down the line.

Are there really going to be enough of these “power users?” When we spoke to cofounder and chief executive Paul Budnitz early on, he said that the team built Ello for themselves and some friends. Getting the entire world connected — Facebook’s mission — is not their goal.

The math is a bit scary now.

With that said, Foundry Group partner Seth Levine told VentureBeat, “We’ve talked about paid features as one thing we will do.”

That implies that while it’s established what Ello won’t do, there’s still room for more revenue sources along with paid features. He also said that while connecting everyone is not the goal, “growing a large network” is.

And to be fair, there have been many successful “freemium” companies in the past. And the new money is to help give Ello time and space to finish building out its product, Levine said.

A public benefit… what?

As part of its new financial rejuvenation, Ello also filed for registration as a public benefit corporation in Delaware.

Delaware PBCs, which came into existence last year, are essentially for-profit companies that have a legal obligation to do social good. Their main characteristics include having a corporate purpose to create a positive impact. Directors’ duties include taking into consideration non-financial stakeholders. And PBCs need to report their performance using an independent, credible, and transparent third-party standard.

Ello has apparently written its charter, but as GigaOm has pointed out, this means a few additional things, such as the ability of shareholders to sue “if the directors of a corporation fail to uphold the public benefit that is described in its charter — just as shareholders of a regular corporation can sue if directors breach their financial duties.” And in order for someone to trigger one of these lawsuits, they must control two percent of total shares or $2 million if the company is public.

But if all the shares are held by investors and not Ello users or an independent party, who can use that legal check here?

VCs and LPs

Ello’s main institutional investors in this round, Foundry Group and Techstars’ Bullet Time Ventures, have both issued long blog posts explaining their investment in the startup.

They both clearly stated that they’re fully on board with Ello’s status as a PBC and support the pledges it has taken (no ads, no data selling). They both also write that they are backing the company as investors, not seeing this as “charity.”

To be honest, I believe them.

“Our belief is that we will make money on Ello,” Levine said. He also said that he believes that generating revenues and being true to a company’s ethics can “exist in harmony,” and that detractors of this possibility are shortsighted.

But what about their limited partners (LPs)?

When LPs put their piles of money into a VC fund, they trust that the managing partners will put it in places where eventually it will turn into much larger piles of money.

Did these limited partners sign up for this investment in a PBC with unproven ability to yield a whole lot of cash?

Levine says yes, sort of.

“We didn’t talk about B-corps or PBCs specifically when we were raising our fund,” he said. But he and his partners did invest in a B-corp with their previous fund, and Foundry Group’s LPs know Levine et al. and the things they believe in and are interested in. This shouldn’t be a surprise to them.

“At the end of the day, our investors have hired us to be good stewards of their money and we have some latitude to do that,” he added.

And then again, the old rule of thumb around Sand Hill Road is that nine out of ten VC investments will be duds, and that the tenth one will make it up for the rest. So even if doing well by doing good is a long shot, this might just be part of the overall portfolio.

Levine himself said, “The reality of my business is that a lot of businesses don’t work out.”

And, he said, he’d rather “fail than comprise [their] values.”


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Ello was originally built as a private social network. Over time, so many people wanted to join Ello that we built a public version of Ello for everyone to use. Ad Free Ello doesn't sell ads. Nor doest the company sell data about it... read more »










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