Archive for the ‘Hyper Social Risk’ Category

Big Data and Privacy

Wednesday, March 28th, 2012

 

This weekend I had some down time and decided to read The Daily You by Josephy Turow, dean of Graduate Studies at the Annenberg Communications School at University of Pennsylyania.

And all I can say is that this book is a must read for anyone working in the digital space, especially advertisers. The book starts out with a nice history of web advertising and then goes on to discuss today’s customized advertising, discounts, news and entertainment , all of which are being tailored by newly powerful media agencies on the basis of data we don’t necessarily know they are collecting and individualized profiles we don’t know we have. Advertisers are placing individuals into what the author calls “reputation silos.” (These are really different psychographic type of segments)

For example, you might be categorized as a Caucasian living in New York City who only eats organic foods and watches Mad Men every week. Is that such a bad thing? It depends on what types of ads and offers are being served up to you based on this information.

The main message of the book is that although we love cool new web based technologies and platforms (Facebook, etc.), the consumer runs the risk of limiting our privacy and anonymity to advertisers.

Reading this book reminded me of my days at AOL, when I worked on their first commercial Internet properties, GNN and WebCrawler, creating advertising inventory. One day back in 1995 stands out for me. It was when Proctor and Gamble, the largest media buyer, wanted to advertise on several of our properties. My co-workers and I spent the rest of the month running around like chickens without our heads making sure everything went perfectly for P&G. It was a simple reminder that the advertiser rules when revenue is involved.

According to the author, we are just at the very beginning of an advertising or consumer behavior tracking revolution as advertisers aim to integrate consumer information across multiple platforms (the web, mobile, and TV). This is Holy Grail for marketers. Companies like Google will also use this information to serve up personalized search results, not just ads. Ironically, when people were asked how they’d feel if a search engine tracked what they searched for, 65% said it was a bad thing. 73% overall said they were “Not OK” with personalized search, since they felt it was an invasion of their privacy.

Although Turow doesn’t touch upon Facebook’s and Google’s recent and ever-changing advertising privacy policies in the book, he does provide some good commentary on this topic in a recent interview he did on NPR’s Fresh Air with Terry Gross.

So far, The Daily You has not gotten the press it deserves. So, take a chance, buy it and read about where media and advertising are going. And for those folks who are media buyers or work with major advertisers, it is important read because of it will provide some valuable insights into customers’ and viewers’ privacy concerns.

Companies can get more informed and responsible by becoming members of the Network Advertising Initiative (“NAI”) and adhering to the Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising. If you’re an online user, you can find out more about online behavioral advertising and learn what choices you have and how to use browser controls and other measures to enhance your privacy.

Since online advertising is becoming more and more complex, what do you think both publishers and advertisers should do in the face of the increasing discussion about consumers’ privacy?

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CloudGate

Sunday, December 11th, 2011

Mashable’s Ben Parr called it Cloudgate to describe what happened when Amazon’s Elastic Could Computer (EC2) went down leaving some major websites in the dust, such as FourSquare, Quora, Wildfire, and more. I think this caught everyone off guard because there had been numerous articles about Amazon’s lead in the Cloud Computing space. The company has been at it for a while and has a head start in learning how to build an efficient cloud infrastructure.Last week, though, we had a friendly reminder that even the good can die young. That we have to always be prepared for the unexpected. (Yes, that’s one of my mottos). Some valuable lessons:

  • Build redundancy – and if your hosting partner can’t provide it, go find another partner to act as your back up.
  • Take service level agreement seriously – some of my friends tell me they were not very stringent
  • Employ some of your own monitoring tools just so you don’t loose any time to be notified about your site being down
  • Cloud Disaster Recover Options — Look into third parties to help you with this
  • Leverage Twitter to send out alerts and let people know what is going on.
  • Follow up with customers and let them know what happened, that you apologize and that you want their suggestions of how to be notified in the future (I only heard from one company who was impacted)
  • Impact of new features and functionality — when you add new i-candy to your site or backend functionality, make sure to conduct complete end-to-end testing

Related articles:Amazon cloud crashes endangers federal websitesIs your favorite website down today? Blame AmazonAmazon takes down the DOE

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Risk Post of the Day

Sunday, December 11th, 2011
Is Online Video a Legal Danger for you Businessby Grant Crowell , Thursday, March 31, 2011Online video continues to boom, with an explosion of content, technologies, communities and campaign spending. But what hasn’t been discussed is the increase in legal problems for businesses with online video — and the fact that most marketers today still have no idea what the legal issues with online video are.Lack of knowledge of these legal issues is presenting more serious consequences for businesses. These can range from the removal of their videos from sharing sites and web hosts and cancellation of their accounts, to the more serious consequences of civil lawsuits with heavy fines, and even potential criminal charges. All of these can cause real damage to ROI, serious businesses losses, and a negative effect on one’s brand and professional reputation.How did we get to this point? First you might be inclined to think back to the last decade of the 20th century, when the Web was considered to be the Wild West of marketing — a label connotating tolerance of some degree of lawlessness, Our legal issues then were largely around intellectual property and stealing other’s content — including copyright and trademark infringement. In the first decade of the 21st century, the birth and growth of social media and online video brought about new legal concerns such as privacy rights.As we have progress into the second decade of the 21st century, improved interactive technologies and increased rewards for producing and marketing video content and campaigns – be it blanketing Google’s search results with video listings, or achieving a viral video success – have driven us further into real-time marketing, with less time for thinking things through properly. It has turned more businesses and entrepreneurs into instinctive marketers than restrained, thoughtful ones. They grow accustomed to taking whatever content they can find without real concern of ownership, publishing it immediately without real concern for accuracy, and pushing social limits to get views on the cheap. Basically, they paying little or no attention to the fact that a virtual creation of a video may cause real problems to real people.What is it about the medium of video that is triggering such a legal reaction – not just in civil courts, but also now with real criminal prosecutions? I’ve seen the causes to be manifold:·
  • Responsiveness - Marketers know that people typically have a more visceral response to video than other single media, online or offline. The problem for businesses is that producing a video to elicit a strong reaction with an intended positive outcome for your business, also can risk producing an equally strong negative reaction. (Sometimes businesses even intend to generate a strong negative reaction, thinking that it will generate more publicity they can harness.) So when audiences and authorities online see a video that ends up generating a negative reaction, they could be more likely to experience feelings of outrage, and act on it through lawsuits and even criminal prosecutions.·
  • Virility - Online video has its own extremely large communities on YouTube, Facebook and most any social network that are built around sharing content with others. Add to the fact that video naturally lends itself to sharing, and you can realize how a negative reaction by a few individuals over a video can compound into a negative reaction by many people very quickly.·
  • Ignorance - Most people are still not aware of YouTube’s, Facebook’s, and other social media sites’ terms of service, community guidelines, and copyright and trademark guidelines.·
  • Disinterest - Many video users aren’t inclined to act responsibly and give proper attention to any guidelines, seeing them as getting in the way of their marketing and fun.·
  • Confusion - With online video and most other social media, much of the law is evolving in the courts, making it extremely difficult sometimes for even attorneys to feel secure about what’s permissible to do and what isn’t.·
  • Ubiquity - Immersed in an online world where being the fastest and most outrageous is both rewarded and commonplace, businesspeople’s perceptions of what’s legally permissible can get skewed.It’s time for marketers and all professionals involved in the online video industry to get a basic legal video education. We need to start paying more attention to legal rights and responsibilities for this most powerful media, getting permission before publishing, and consulting with attorneys specializing in intellectual property, Internet law, and entertainment law who have a good grasp on the online video landscape. To not exercise this basic responsibility for how we choose to use online video in our business would bring us down — from a positive YouTube culture to a negative “You Sued” culture.Originally posted on MediaPost.com

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CSI in the Cloud

Sunday, December 11th, 2011
Symantec and the Ponemon Institute just release a report on the cost of data breach. It showed the cost of a data breach continues to increase each year and is now at an average $7.2 million per incident, up 7 percent from 2009. That’s $214 for every compromised customer record breached. Part of this increase was caused by the number of criminal acts, but there are other factors involved too. These include: detection, forensics (now, I think this would be a great profession — CSI in the Cloud — and upfront work. Most companies don’t put enough energy in the ‘pre-ememptive stage.’ While IT might all over this, it’s important to work with employees so they can understand the risks. It’s important to incorporate protecting companies data into the company’s DNA. And I am not talking about a 1 time training session each year. This is especially true as companies open up their sites to social networks’ authentication systems! While many people believe the costs and data issues will decrease over time, I have a different perspective. Our world is getting cloudier — and the more we do away from our own box (laptops, PCs, etc.) the more protecting customer data and company information will become an issue.

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Simple Framework for a Crisis

Sunday, December 11th, 2011
While working with the Adobe Enterprise Team, I was introduced to Jacob Morgan, who consults to a number of companies (and has a good blog) about CRM.He recently wrote about a book called “The New Supply Chain Agenda,” by Reuben E. Slone, J. Paul Dittmann, and John T. Mentzer, and how it provides a ‘risk’ model that could also be used for evaluating ‘risk’ for a social business, produce or venture.The framework, which is highlighted in the book, is outlined below.Again, the key is that it is all about doing the work upfront, planning for a potential crisis, and evaluating your strengths and weaknesses. It’s a simply model, but it does add some structure to an often unstructured or forgotten practice. Financial and Insurance Risk Managers run models and build frameworks all the time. It’s just the other folks in the organization, who forget to plan.The first steps are to look at:

  • Severity
  • Probability of Occurrence
  • Probability of early detection

And then you score your ‘RISK’ with a simple probability index. One key point is that this is not done by a single group. It requires a cross-functional teamwork. At one of my clients, we built a ‘Center of Excellence’ to quarterback this process. Some companies have the Social Media Team do this. My only caution here is that this could put more of a marketing lens on things vs. looking at each area of the company: Finance, Legal, Privacy, Product Development, etc.The last two steps involve creating Recommended Actions and Responsibility.Recommended Actions are good, but I would probably make it stronger by saying “Action Plan.” I hate leaving things open for interpretation. Obviously during the crisis itself, the ‘owner’ has the flexibility to change the action plan a bit. Having an owner, someone who is ultimately responsible is important. And having a back up owner is important too.In the chart above, it lists different departments responsible for implementing an action plan. I prefer to assign the name of someone and their back up. Ownership is the key in preparing for and implementing ‘Risk Management.’One model for the ownership part is the DACI framework, where there is:

  • 1 Driver (D)
  • 1 Approver (A)
  • Multiple consultants, who help provide in put into the planning (C)
  • Multiple Informed people, who just need to know what is going on in case they are called upon and need to get up to speed quickly (I)

I will discuss the DACI model in more detail in a future post…

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Root Cause for employee no-nos

Sunday, December 11th, 2011
Companies worry about what their employees will say about them on Social Networks. And when there’s an issue, such as employee sharing some company secret on Twitter, management usually asks legal ‘to go after that person.’ Instead, it’s important to figure out the root cause of that person sharing their feelings on Facebook or another site. And a simple way of doing this is to do a simple ‘Five Why’ exercises, which basically entails asking ‘why’ over and over until you get to the real reason something happened. The Five Whys tool helps us uncover the root causes of problems or it can aid our understanding of our own motivation. We answer a central question, such as ‘Why do we come to school?’ or ‘Why does the tap leak?’ and then ask why five times.In the scenario about an employee sharing company secret, the questions would be:Why did the employee share a company secret? BecauseA) they wanted to hurt their employer orB) they didn’t know any betterIn Scenario A:- Why did they want to hurt their employer? Because they were unsatisfied?- Why were they unsatisfied? Because the company would not at listen to their concerns- Why did the company not listen to their concerns? Because there was no mechanism in place to give feedback to managementSo this should be an indication for the company to create a way for employees to express their viewsIn Scenario B:- Why didn’t they know any better? Because there was not training or guidelines for employees- Why was there no training? Because it wasn’t a high priority for the company- Why wasn’t it a high priority for the company? Because the company just assumed the employee should know better- Why did the company assume this? Because it didn’t know any better and didn’t share best practices or learn from others.So for scenario B, it’s important for companies to share their ‘war stories’ with other companies so they can learn from each other. It is important to note that it doesn’t have to be from companies in the same industry. I think there’s value in just learning from other. Another recommendation involves training. In the past, I have created ‘Guidelines and Guardrails’ for employees to help them navigate social networks. These are usually provided via an opt-in program, so the employee can feel as if they are controlling their destiny vs. having something mandated. (In a future post, I will define further what these would consist of.)It is my experience that 95% of the time, employees want to do the right thing and don’t want to hurt their employer by saying something in cyberspace.Key Take-Aways:1. Learn from other companies — share your war stories2. Create guidelines and guardrails to help employees understand how they can leverage social media without ‘risking’ their job3. Make all program opt-in, so the employee feels as if they have some control4. Give the employee the benefit of the doubt5. Leverage the 5 WHYS to get to the root cause of an issue or problem before ‘coming down hard’ on an employee

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Revenue Recognition

Sunday, December 11th, 2011

Revenue Recognition

January 9th, 2011 — 6:36am
While surfing the web tonight, I found Oracle’s social media policy for employees. It was dated January 2010.When I was at Intuit, I worked closely with the legal, privacy and financial teams to create something we called ‘Guidelines and Guardrails’ ™, because we wanted to provide Guidance vs. threatening employees. We also developed an opt-in training program for employees who wanted to help in figuring out what to do or not do – what they Rules of the Internet Road were.Oracle takes a similar common sense approach policy. Here’s their reference to revenue recognition. Its policy states:As a general rule, don’t discuss product upgrades or future product releases. Because of potential revenue recognition issues, it is especially important that we do not give the impression to customers or potential customers that a given product upgrade will include specific features that will be incorporated into the product within a specific time frame. See Revenue Recognition Guidelines. Any exceptions must be approved by senior management, Legal, and Revenue Recognition.Unfortunately, I cannot access or find Oracles Revenue Recognition Guidelines (highlighted above in red). After doing random sample of talking to ten people in ten different Silicon Valley companies, almost none of them could tell me where their own company’s Revenue Recognition Guidelines were located. And only half could define or provide an example of Revenue Recognition. And I have yet to see a company explain it with numbers. Some example. (Of course, I would love to see some examples of organizations that do this – there must be some)In most companies, they only provide links to revenue recognition guidelines and do not really spend time to explain the financial impact on a company.  Wikipedia defines it as:The Revenue recognition principle is a cornerstone of accrual accounting together with matching principle. They both determine the accounting period, in which revenues and expenses are recognized. According to the principle, revenues are recognized when they are (1) realised or realisable, and are (2) earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting – in contrast – revenues are recognized when cash is received no matter when goods or services are sold.It’s a good thing I took accounting in business school; otherwise, I would have no idea what they are talking about. Wikipedia and other sites provide examples of how to handle revenue recognition, but it’s difficult to find examples of what a violation would be and it’s financial impact.’ This becomes a bigger issue as employees play outside the company on social networks. Since it is so easy to accidentally talk about a new product features on Facebook, Twitter or LinkedIn. And it is even easier for someone to cut and paste an excerpt of something and spread it around the Internet. So while one person is sitting back and feeling special cause they shared some cool information about a new and upcoming product feature, the company mentioned will have to allocate some revenue for the quarter the features was mentioned in.Providing a roadmap of the new feature will cause all new sales of Quickbooks to be delayed until the payroll feature is released. Employees need to be careful in what they say or offer to their customers because any commitment or promise could cause delay in recognizing revenue the current quarter or fiscal year. BUT, it is up to the finance group to properly coach employees on the impact of ‘spilling the beans’ on the web.So what does a finance person do to make sure everyone in the company understands this? Here are some key recommendations:

  • Include an explanation of revenue recognition during new employee orientation
  • Make it easy for employees to find information and examples (I have yet to find a company that actually puts some numbers with their words, and explains the financial impact)
  • Provide some examples of what to say and not say
  • Give the employee the benefit of the doubt and trust they will not do anything intentional to violate Rev Rec rules
  • Think twice before editing or deleting a post or comment that has revenue recognition issues because there might be some backlash about editing a post

This last point is interesting because a company has to decide if they want to include the revenue in the quarter where the product feature was discussed. Finance people should also get the social media experts involved with new product launches so they can leverage monitoring tools to determine if an employee has accidentally shared a product road map or feature before a launch date.I also recommend visiting this site that is dedicated to Revenue Recognition issues.What’s the risk here? Your forecast and projected revenue could be impacted by just one simple blog post or statement on Twitter.

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Real Politik in the Digital World

Sunday, December 11th, 2011
January 7th, 2011 — 5:30am
Funny how life works. Just when I was looking for an issue to write about, I received the email below. A note from American Airlines, trying to make me feel better about their recent decision to pull their listings from Orbitz.comDear Scott Wilder,As a valued AAdvantage member, we want to clarify what you may be reading in the press. As a result of a commercial dispute, over the past several weeks there have been changes to how we sell our tickets. American Airlines last month removed its fares and schedules from Orbitz.com, and effective January 1 Expedia.com stopped offering American Airlines fares on its website. Additionally Sabre, a company that distributes airline fares and schedules, made it more difficult for travel agents to find and select American’s flights by moving our fares lower in the display order than they normally would be listed.While there is much misinformation circulating on these matters, rest assured that tickets for travel on American Airlines and American Eagle — including all international and domestic classes of service — are widely available through a number of outlets, including American’s own website, AA.com, which features our Lowest Fare Guarantee. Tickets, fares and schedules are also available through American’s reservations agents, thousands of travel agencies in locations worldwide, other online travel agencies such as Priceline.com, and travel search engines such as Kayak.com. For more information, please visit AA.com.We are committed to working with all distribution channels, including traditional travel agencies, online travel agencies and global distribution systems. We will keep you informed of important updates on these developments.Thank you for giving us the opportunity to address this matter. We appreciate your business very much and look forward to welcoming you aboard soon.Sincerely,Maya LeibmanPresidentAAdvantage® Loyalty ProgramThe note above explains the company’s position for their little tit-for-tat spat with Orbitz.com. Is AA playing Realpolitk here — flexing it’s muscle.If you look at the sentence highlighted in red, you can see that American Airlines broke one of the golden rules in marketing ‘communications’ and legal practices – traditional and digital. Don’t publically bad mouth a competitor or even worse, don’t bad mouth a business partner. An old business partner or a potential new business partner. Or someone who still has some clout in the industry.I am a little confused as to why AA criticized Orbitz in the email above to customers, when one it’s spokespeople, Cory Garner, American’s director of distribution strategy, quoted in Tuesday’s New York Times as “discussions are ongoing” and that he hoped the differences would be resolved since “it is in the best interest of all of us to continue to do business together. To be honest, I also don’t like how AA starts promoting their prices in an apology letter. See the green highlighted copy. So on the one hand they say Orbitz is making it difficult for consumers, and on the other hand, they are saying that it is best for everyone for this issue to be resolved.All this bad press has pundits accusing AA of trying to cut out the middleman. It wouldn’t be the first time this would happen. Personally, I have always been a big believer in ‘going direct.’ But, I have also been believer of participating on those websites and platforms that your customers visit. Maybe that’s just cause I am a digital guy. There’s a lot of AA customer very comfortable with Orbitz! Instead of making what appears to be a knee-jerk reaction (yes, I know they have been talking to Orbitz for a while), why not negotiate a compromise. AA also explains their decision as a way to save customers’ money. It’s cheaper to go direct and purchase a ticket from AA.comAmerican Airlines explains their decision to end their relationship with Orbitz as a way to help their customer’s money. I am sure there are other ways to do this, such as not charging for luggage and other services. They already have a lawsuit over the baggage issue.The real loser here is the consumer. American Airlines just made it a bit more difficult for consumers to get flight information. Yes, there are still some viable options for finding flights (which are highlighted in Green) below, but I have always believed that you participate where your customers are, and reduce the amount of work they need to do to find you. Even if it means reducing the amount of clicks. I also question if this will really save consumers money. As Mike McCormick, executive director of the National Business Travel Association, a trade group for corporate travel managers, pointed out this could result in significant capital increases required to expand their own infrastructure for each airline that by passes a third party distribution system. And these costs would be passed on to the consumer.Plus AA is making approximately 17% of their revenue from the Expedia’s and Orbitz. That’s nothing to sneeze at. It has been suggested that AA was trying to send a message to it’s investors about the high distribution costs associated with a third party. Perhaps there are better ways to do this. Or maybe AA wants to prevent folks from price shopping. But who is to stopped another approach or site or algorithum to show up.AA has a digital issue on their hands. They are washing their laundry in public. (I never really understood that phrase). I am not saying Orbitz is innocent in all this. I just think there are some golden rules being broken.So from a digital crisis perspective, AA should:1. Make sure they are not talking to other airlines about this because that might trigger anti-trust (price fixing,  – especially Delta that has already cut off some third party price listing sites and this could enter ‘interesting waters’ if senior employees from two airline companies discuss the Orbitz issue2. Train their staff  to respond to consumer posts and concerns, without bashing a former business partner (I am going to test them out and see how they respond to my Tweet about this post : )3. Conduct a town hall with key travel related bloggers and customer advocates to create a two way dialogue with their customers vs an email bkast4. Provide info to their customers on the appropriate social networks — being active where their users are instead of just asking them to go to their site.5. Be prepared really meet their low-price guarantee, and think about potential legal action if they don’t meet those obligations (Just to keep them honest, I am sure their will be some bots surfing the web and showing their prices vis a vis sites.6. Even though your legal department probably was informed about AA’s decision, it’s important to think through the consequences. Orbitz is now threatening to take legal action.7. Be prepared to respond to what some experts are calling a massive fragmentation of the airline industry depriving consumers the ability to price shop across multiple airlines an anti-consumer tactic, thus influencing the value of the companies stock.8. Make sure every employee – spokesperson or president or other has the same story. You can’t have one person say bad things about Orbitz and then another person saying we want to work with them.In showing this post to a friend before sending it live, he said ‘I like companies that act like nations. They have interests, not friend or business partners. They believe in Henry Kissinger’s RealPolitik. That doesn’t work in this digital world. Where word of mouth travels fast. Groups can quickly gather steam and boycott or protest.Maybe I am exaggerating a bit – but who knew that one lost guitar could cause so many headaches for United. And that it would cause their stock price to drop 10%, costing shareholders $180MM

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