Freelance Consultant's Diary

While we continue to believe that affiliate marketing is an effective marketing channel for businesses, we see the model coming under increasing threat from the rising popularity of contextual advertising. Here are a few trends to note that we have identified in our recent analysis: Google continues to aggressively recruit publishers in its AdSense program. With the availability of the program in many languages/countries, we expect that Google will soon dominate the contextual advertising space. Google has recently announced that bloggers who use Blogger.com can sign up for its AdSense program. While this may not bring many new bloggers (the bloggers that wanted to turn their blogs into revenue-generating enterprises already did so, but that required a proper website), it will definitely bring some new publishers who do not want to deal with the hassles of maintaining a website (Blogger.com, a Google company will do so now) and will motivate those that only blogged as a hobby to blog m...

When we highlighted the growth opportunity for your business by targeting Hispanic youths , a common feedback we heard was, "We don't have a Spanish language website." It is understandable why many companies do not have Spanish language websites or have not yet developed advertising programs specifically designed for Hispanic customers. Below we are discussing three different models that you can use to develop your own advertising program targeted specifically at Hispanics: Joint programs with existing marketers to Hispanics While Wal-Mart already is a popular offline destination for many Hispanic consumers, it still does not have a website in Spanish. The company has recently partnered with TodeBebe, a popular website among Hispanic women for information on pregnancy and babies. TodoBebe will organize fairs in Wal-Mart stores and use its website and mailing list to target these mothers/pregnant women. Develop your own website and direct mail Office Depot was an early mov...

Without argument, when it comes to industrial design, most of us who have engineering backgrounds have admired the design capabilities of the Japanese and the Germans, and not just for industrial products, but for consumer products as well. Let me share my thoughts on a small aspect of industrial design that I learned while working in Japan and how important it is for us to improve our design capabilities as we increasingly try to sell our manufactured products not only in Japan but in the rest of the world. Alex Taylor III, writing in Fortune in an article on Toyota, says, "At Toyota there's constant tension between American executives, who want larger engines and more horsepower to appeal to US customers, and Japanese engineers, who focus on small engines that consume less gasoline. The engineers pride themselves on their efficient use of space and have an inherent aversion to anything that appears wasteful and inefficient." In two sentences, he has summed up the great...

Most of our clients and visitors to our website support our generally restrictive recommendations on outsourcing. We have consistently been less in favor of outsourcing customer service (that is typically a call center, and more often than not, considered as a cost center by most businesses) because we believe that customers are your #1 asset and you don't want to hand over your current or potential customers to someone else who will never appreciate their value the way you do. We typically support outsourcing of only non-core functions that have no direct interaction with the customer. Unfortunately, the issue of outsourcing is never so black and white, particularly when all of your competitors have already outsourced their call centers and you have lost your ability to compete effectively. Here is what a vice president of a marketer of antique watches writes, "We have embraced the Internet but most of our customers tend to be folks who don't surf to find what they want....

The legal definition of bankruptcy can get very complex but according to Peter G. Peterson in his new book Running On Empty : How The Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It , we are really bankrupt because the NPV of our future liabilities is more than our current net worth. Here is what his analysis shows (based mostly on the data compiled by the Federal Government): In 2000-2001, America had a surplus problem (too high!). Most estimates put our surplus at $5.6 trillion but conservative estimates today project a deficit of $5 trillion over next 10 years. If we continue the current growth in spending on defense and homeland security and implementing other new programs, it could be even higher. We have a serious trade situation. We continue to import more than we export. Here is the balance of payments situation for the US and it is not pretty. Almost all economists are convinced that we will need to borrow heavily to pay for defe...

IT outsourcing (near-shore or offshore) is now a fact of life in America (and many other developed economies like France, Germany, UK, and Japan). In the current business environment, when even one player in a specific space resorts to outsourcing, other players have to follow suit to maintain their competitiveness. And our economy has already reached that point. In fact, during a recent discussions with a group of venture capitalists, we learned that if a startup does not have a robust platform for outsourcing (or offshoring) its IT (and incresingly R&D, new product development, etc.), either these startups are not funded or the venture capitalists send them back and advise them to return with a revised plan that includes outsourcing. Impact of IT outsourcing The human cost of IT outsourcing comes from two areas: job losses and increased angst among the survivors. The survivors often do not trust their employer after a massive layoff and are more likely to use their remaining peri...

As we have been arguing all along that productivity improvement is key to survival for American businesses , today's data clearly shows that businesses are doing the right things. In all segments of the economy, productivity showed impressive gains. In fact, compared to previous quarter, productivity in manufacturing improved by as much as 7.5%. We believe that productivity improvement will be the single-most important determinant of American competitiveness in the global market. Areas of concern Rising labor costs: Interestingly enough, unit labor costs are going up in business and non-farm business sectors but declining in manufacturing. Considering that we are largely a service economy, this is a serious concern for us. It seems as if after cutting workforce to the bare minimum needed, companies are having to pay a lot more to the employees that they have on the payroll. The result could be lower corporate profits and incentive to seek offshore locations with lower labor costs....

We have been suggesting all along that businesses that have not yet explored affiliate marketing to grow their business, should think about using affiliate marketing as a new channel . But based on a bunch of emails that we have received, here are some interesting points that you need to be aware of before you put all your eggs in the affiliate marketing basket How affiliate marketing provides fewer incentives to publishers than contextual marketing? Affiliate marketing is based on pay-for-performance. Or in other words, as a business, you pay nothing when the desired action does not occur (typically a sale or a lead). For many companies like Amazon.com, this is a great model. It has tens of thousands of affiliates (or associates as Amazon likes to call them) who work for them as salespeople, who only get paid a commission when a sale happens. But do not forget that these associates are pretty savvy business people too. Many of them find that the return is not always as good as the eff...

In this article we will discuss why offshore outsourcing of R&D by American pharmaceutical and biotech firms makes a lot of sense. While we think that that it can be accomplished without any loss of American jobs, even if there were job losses, the benefits far outweigh the suffering due to these displacements. We have been carefully watching the debate on the issue of importing drugs from Canada. We can definitely appreciate the serious threat it poses to the profitability of American pharmaceutical companies, but interestingly enough, no one has yet come up with an argument that makes sense even to the grandma who is ordering her drugs from Canada, what to say of convincing an analyst. What that means is that it is only a matter of time that something drastic will happen to drug prices. There are several possible scenarios (e.g. drug prices go up the world over, or they drop in the US, or drug imports are allowed from other countries into the US) but ultimately we believe that ma...

If you have not been following the advertising related discussion on iProceed blog , then it might be helpful to come back to this post after reading the following posts. Otherwise read on. I will discuss the growth opportunities available in marketing and advertising to Hispanic youth, particularly in the United States. iProceed's 3Es of advertising: Traditional advertising is in danger Disturbing trends emerge for advertising targeting 18-34 males The niche approach in television advertising We have traditionally thought of television as less targeted than websites. The two platforms are just quite different. However, the demographic trends (particularly with the speed at which consumers are moving away from television to Internet and video games) are forcing television and media companies to launch more niche-focused stations and programming. Hispanic youth: An attractive marketing and advertising niche If you think all Hispanics shop only in Wal-Mart and watch Spanish novellas ...

Since I wrote about how to develop a powerful email marketing strategy , I have heard from dozens of people who have indicated that they see serious threats to existence of email marketing as an effective tool for a long time. They are all convinced that RSS/XML feeds will definitely become the preferred tools within months (for savvy web users) and within 12-18 months among all users, particularly with the push by Yahoo to incorporate RSS feeds in the My Yahoo page. My attention was also drawn to a study by Arial Software and here are some of the best practices in email marketing identified by them (I have only included those that are not mentioned in the iProceed list): Double-confirm subscription request (simply because crooks were using other people's address and getting them subscribed, though we wonder, why). Unsubscribe mechanism should actually work (we had emphasized this but what Arial found in its study was that not all companies have a fully functional system in place)....

A spate of data during last few weeks has convinced us that for American businesses the key to survival lies in productivity improvement. We expect pricing pressures to continue as consumers cut back on their spending and shift their consumption patterns to select lower-priced goods and services. Productivity improvement will need to come from several parallel strategies: cost-cutting, business process redesign , outsourcing, offshoring , and even exiting certain businesses that do not fit into the evolving economic system. That is why a disappointing job report this morning did not surprise us. After all, there are so many other economic indicators that have shown that US economy is still very choppy. Indeed we have made progress, but not much to talk about. Let us review some of the recent developments: Average income of Americans continues to fall . GDP growth is not enough to give a strong boost to the economy yet. Taxes are likely to rise in 2005 due to a huge deficit. As a result...

While we at iProceed.com have been concerned about advertising for a while, our hypothesis was validated when James D. Speros, the Chairman of the Association of National Advertisers (and the Chief Marketing Officer at Ernst & Young) admits to it. He writes in Fortune, "...advertising is no longer the be all and end all of moving product...Where we're all missing the boat is the lack of focus on creating big ideas that resonate with consumers. Instead of paying agencies by labor-based fees and commission, we should pay by the value of the marketing ideas they create." Ouch! It's probably not music to the ears of many advertisers and the agencies that they work with. There are two good things about Speros' admission: The folks in the advertising world are finally admitting that there is a fundamental problem. Things have to change everywhere: advertisers, advertising agencies, and the media. Let us review some of the ither things that are happening right now...

New business opportunities identification is one of the major responsibilities of any business leader. But how can one do it in a mature economy like the United States where almost everything seems to grow at or below GDP rate? As soon as anything becomes 1.5X or higher, companies move in so fast that if you don't identify it before anyone else does, it's over. Let me discuss how a business leader can identify new business opportunities by 'connecting the dots'. I personally like the approach that Japanese business leaders adopt. Japan is unique in the sense that the Japanese schoolgirls are early adapters of new technologies/trends (in contrast to the US where it is typically the young business professional). That is why Japanese companies are known to hire schoolgirls to provide enormous insights into concept refinement and new product development. Not only are they part of their brainstorming teams, focus groups, and prototype testing, they are also the ones that do ...

Businesses have to get really careful about what discounts and promotions that they offer as consumers cut back on their spending due to falling incomes and rising prices (particularly for energy). Department of Commerce has some bad news for businesses, particularly those that sell consumer products, as shown in the chart below: Other important statistics from the data are: Personal consumption expenditures (PCE) decreased $53.3 billion, or 0.7 %, the largest drop in three years. The decline was led by a cutback in spending on automobiles and other big-ticket durable goods. This has been a result of falling income of Americans . Spending on durable goods declined by 5.9%. For non-durables such as food and clothes, spending dipped by 0.3%. Private wage and salary disbursements decreased $2.7 billion. Goods-producing industries' payrolls increased a meagre $0.5 billion; manufacturing payrolls were unchanged. Services-producing industries' payrolls decreased $3.2 billion. Governm...

If you are developing a strategy for consumer products for 2005-2006 period, iProceed's analysis shows that American consumers will continue to be under pressure and will not be increasing their spending as evident from the following indicators: Gross tax receipts continue to decline to due to drop in average income of Americans GDP growth is still not robust enough to give a strong rebound to the economy and result in an explosion of jobs (critical to consumer spending) Federal deficit continues to be at worrisome levels as shown below. This means that taxes will definitely rise in 2005, further restricting consumers' disposable incomes. (In an excellent analysis by Bruce Bartlett in Fortune, a senior fellow at the National Center for Policy Analysis, he shows that taxes will go up because of higher federal spending , particularly on homeland security , most tax cuts enacted earlier are unlikely to be made permanent due to high deficits, and as I said above, federal revenue i...