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Obama and McCain: How political marketing has evolved from offline to online

What?? A political post?
I’ve never blogged about politics before, and I’m not going to start :) This post is 100% about the evolution of marketing in the world of politics, not about any political positions. Anyway, I’m compelled by the fact that I’ve been encountering article after article about Obama’s mastery of the internet, and before that Howard Dean’s.

In particular, there was a great article in The Atlantic Monthly called The Amazing Money Machine with the subtitle “How Silicon Valley made Barack Obama this year’s hottest start-up.” In it, there are some great passages on how the Obama campaign has used technology to their advantage:

To understand how Obama’s war chest has grown so rapidly, it helps
to think of his Web site as an extension of the social-networking boom
that has consumed Silicon Valley over the past few years. The purpose
of social networking is to connect friends and share information, its
animating idea being that people will do this more readily and
comfortably when the information comes to them from a friend rather
than from a newspaper or expert or similarly distant authority they
don’t know and trust. The success of social-networking sites like
Facebook and MySpace and, later, professional networking sites like
LinkedIn all but ensured that someday the concept would find its way
into campaigning. A precursor, Meetup.com, helped supporters of Howard
Dean organize gatherings during the last Democratic primary season, but
compared with today’s sites, it was a blunt instrument.

And of course, you can’t forget Obama Girl, who now has 8.8 million views, or the Obama Facebook group which has over a million supporters now. Overall, pretty amazing stuff.

But as I mentioned above, this isn’t the first time that the Internet played a role in politics, since the Howard Dean supporters aggressively used services like Meetup and the MoveOn website to organize their efforts. Here’s an article from Wired magazine in 2004 describing the Howard Dean run.

Republicans and their direct mail expertise
Of course, back in 2004, another big story that played was the mastery the Republicans showed of direct marketing, particularly by Karl Rove who previously spent many years in that industry. In another article from The Atlantic, called Karl Rove in a Corner, there are some choice passages on how he thinks about targeting and direct marketing:

When Rove arrived in Alabama, in 1994, his clients were initially
puzzled as to why he was having them campaign in rural and less
populated parts of the state rather than the urban areas they were
accustomed to. It turned out that he had run an electoral regression
analysis on each of the state’s sixty-seven counties, and for
efficiency’s sake he put his four judicial candidates together on a bus
trip to the counties with the highest percentage of ticket-splitters.
“Karl got us focused on the fact that it was a matter of convincing
Democratic voters who were already conservative to vote for Republican
candidates,” Mark Montiel, a candidate on the trip, explains, “because
that was who best expressed their views.”

… snip …

As with direct mail, Rove was skilled at reaching specific voter segments with television commercials, buying air time only during programs that he believed would attract the audience he was trying to reach. In his Alabama races he was known particularly to withhold advertising from The Oprah Winfrey Show and similar afternoon programming—”trimming a media buy,” as it is known in the trade. Bill Smith, who worked on a series of close races with Rove in Alabama, says, “There’s a real overlap in what he specialized in professionally and what you need to do in a tight race.” Whether he is seeking donors in a direct-mail fundraising campaign or manipulating a particular demographic sliver to win a close race, Rove’s professional goal has been strikingly consistent: to reach the right people.

There’s also another great article on the attempts for Mitt Romney, a Harvard Business School grad, to do this for his (ultimately failed) presidential campaign in the Post covered here. The point is, they were very smart about the process of collecting a vast database of data, using advanced marketing techniques like cluster analysis, machine-learning segmentation, regression analysis, etc. This is good stuff!

That said, in almost every article I’ve read about the subject, the focus of the Republicans seems emphasize direct mail – perhaps that’s a better vehicle for their demographic, or perhaps because that’s just the skillset they have developed over the last 10 years. However, there’s many studies about the efficiency of internet advertising versus offline, and politics is no exception – let’s take a deeper look at this:

Comparing direct mail to internet
There’s some interesting numbers comparing direct mail and internet-based donations in an article from the American Enterprise Institute, which states:

It is not just that he has built this
veritable army of contributors, most of whom will follow with him
through the fall campaign and beyond, if he is able to win the White
House. Having this base of small donors through a process that is
incredibly inexpensive to run, with fundraising costs that are 5 to 10
cents on the dollar (compared with 95 cents for direct mail)
, frees
Obama from the punishing, time-consuming burden of attending scores of
fundraisers and making thousands of phone calls to potential donors.
(Of course, Obama is not at the same time ignoring the $2,300 donors
and bundlers, which may create more flak for him through the rest of
the campaign. But he will certainly spend much less of his own time
courting donors than will McCain.)

(I bolded the sentence above). Wow! 5-10 cents on the dollar versus 95 cents for direct mail – what an amazing statistic. If you believe that, then it means you are almost 20X more efficient with internet marketing than direct mail, which is a huge number.

I’m not following the political campaigns that closely, but I’d be interested in a couple broad questions about how the approaches of the two parties are shaking out, from a macro-perspective:

  • First off, are the Republicans majorly lagging in their ability to use the internet as a political vehicle?
  • Similarly, do marketing channels like broadcast media and direct mail – which are “push” – fundamentally different than interactive media, like Facebook apps, YouTube UGC, etc.
  • Can the same techniques that Rove used back in 2004 be re-applied to the internet? Is the DNA there, and it’s just a matter of time before the GOP cracks the nut for online marketing as well?
  • For online marketing in politics, how quantitative are the approaches right now? Or is the offline-to-online opportunity so ripe that the qualitative stuff works without much thought?

Anyway, if anyone has any opinions or insight onto this, I’d be very interested to know. Comments and suggestions always welcome!

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25 reasons users STOP using your product: An analysis of customer lifecycle

Churn from a customer lifecycle perspective
As much as I blog about viral marketing, it can’t be avoided that having healthy product retention is an equally (and incredibly) important part about having a successful product. Thus, in addition to talking about the issues around user acquisition, a similar discussion must be had around user churn.

In the customer lifecycle perspective, you look at the product from the perspective of a user that has a series of experiences starting from newbie and going into an advanced role. In addition to looking at the success cases, looking at the failure cases is informative too – you want to analyze your product for potential exit points and relate them to both quantitative and qualitative measures. More on the customer lifecycle concept here, by Josh Kopelman at First Round Capital.

Anyway, here’s a good example of this from the games industry: At the Austin Game Developers conference last year, there was a great presentation on why players leave their MMOGs from Damion Schubert (who also writes a mean blog here). There’s a very convenient writeup of his talk at Massively, which includes a great list. I’d encourage reading it in full. Obviously, the challenges that face more web-like products are very different, yet the same approach can be used.

Customer lifecycle within a social product
I imagine that many in the readership are working on social products – for any product in this space, you often have a number of fuzzy stages that a user can move through during their lifecycle. This may include stages like:

  • First experience
  • Soloing and single user value
  • Encountering some friends(?)
  • Hitting critical mass for social
  • Becoming a site elder

Obviously every product is different, but the rough idea should hold for every social product out there. Early on, the initial experience is all about whether or not the user sees value in the product, and whether or not it “looks okay.” Then, oftentimes the users won’t have enough friends to make the site useful, in which case they fall back on a solo experience. Once they start hitting some other folks on the site, and making friends, then if done correctly, the site will hit critical mass and things will be sticky. And finally, in some products, some % of these users will turn into mods or admins or otherwise be elders within the product.

25 exit points
Now let’s look at all the different reasons why people might leave at any point – and obviously, the retention gets stickier and stickier in each stage, so perhaps reasons like “the site is too addictive!” become less effective :)

Anyway, there they are:

    • First experience
  • “I don’t get what this site is about”
  • “This site is not for people like me”
  • “The colors/design/icons look weird”
  • “I already use X for that”
  • “I don’t want to register”
    • Soloing and single user value
  • “I don’t have time to get involved in a site like this”
  • “I’m lonely, not enough happens”
  • “I forgot my password”
  • “I don’t know how to talk or meet people”
  • “I’ll just check on this account every couple months in case something happens”
    • Encountering some friends(?)
  • “People on this site are mean”
  • “People I don’t know keep messaging me, WTF?”
  • “I want my friends to use this, but none of them are sticking”
  • “I’m getting too much mail from this site”
  • “I only have 3 friends, this site is still boring”
    • Hitting critical mass for social
  • “This site takes up too much of my time”
  • “Too many people are friending me that I only sorta know”
  • “People are stalking me based on my pics and events!”
  • “This Top Friends thing causes too much drama”
  • “I’m getting flooded by e-mails for everything that anybody does”
    • Becoming a site elder
  • “The guys who run this site aren’t building feature X that we really need!”
  • “The guys who run this site build feature Y that’s going to destroy this site!”
  • “I’m doing a lot of work but I’m not getting anything for it”
  • “I’m bored because there’s nothing left to do”
  • “Newbies are fun to pick on :)” (wait, maybe that’s a benefit!)

Obviously, this is just a quick brainstorm of a list, but the point is, the reasons why people churn is often very different depending on their lifecycle. And some of the best things you can do for your product, in terms of retention, are things that are very positive for newbies, but might have side-effects elsewhere. You always want to balance each of these things off, depending on your product and business goals.

Am I missing anything else obvious? Comments and suggestions are always welcome!

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Companies reading Futuristic Play – advertising, games, media, and more

One of the more unfortunate things about writing a blog focused on long-form essays that are not easily discussable is that you don’t get a ton of information about your audience just from comments and e-mail dialog. Through limited methods, I have some very rough visibility from what I can put together based on referrer logs, subscribed email addresses, and other sources.

Anyway, here’s a meta-blog post, in tradition with previous ones on top referrers, subscriber boosts from Scoble, and others, I wanted to share a short collection of the wonderful audience I’m very grateful to have reading this blog.

It’s pretty amazing to see how wide and interdisciplinary the audience is – there’s a ton of folks from super-consumery publishers/games, but also advertising and finance folks.

Here’s a selection of the companies that caught my eye:

Advertising and B2B:

  • Aster Data Systems
  • Medio Systems
  • Revenue Science
  • Tacoda
  • Right Media
  • Publicis Groupe
  • … and a bunch of ad networks

Games and entertainment

  • Electronic Arts
  • Linden Lab
  • NCSoft
  • Sulake
  • … and numerous startups like IMVU, Gaia, AreaE, and Weeworld

Media

  • Joost
  • Yahoo
  • Virgin
  • Google
  • Slide
  • Facebook
  • MTV
  • Hi5
  • Tagged
  • … and tons of Facebook developers and apps

Finance

  • Lazard Freres
  • Elevation Partners
  • Mohr Davidow Ventures
  • Blue Run Ventures
  • Sierra Ventures
  • Bessemer Venture Partners

Sorry if I’m missing anyone – I have a lot of empty referrer URLs, personal gmail/hotmail/yahoo addresses, and many other untraceable sources :)

Anyway, thanks to everyone for reading!

PS. Get new updates/analysis on tech and startups

I write a high-quality, weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.

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