WSJ

Coke And Pepsi’s Business Model Is ‘Insane’ (SODA)

Source: http://www.businessinsider.com/coke-and-pepsis-insane-business-model-2012-11

crushed coke

SodaStream CEO Daniel Birnbaum has an incentive to disparage his rivals — but nontheless he made a strong argument as to why Coke and Pepsi are “antiquated” and “insane.”

Some unusual candor in an interview with WSJ’s Simon Zekaria:

“Coca-Cola Co. and PepsiCo will have to face the reality that their business model cannot be preserved forever. The world is changing and we’re going to call it out,” says the CEO of SodaStream. 

“If the beverage industry had to create itself now from scratch, it wouldn’t do it the way it is. You don’t need factories, trucks, bottles and cans,” he says. “Transportation for carbonated drinks in the world utilizes 100 million barrels of oil every year. That is 20 times the BP disaster that hit the Gulf of Mexico.”

“I think it is criminal that the industry, led by two big companies, will do anything to protect their antiquated business model. They are generating 35 million bottles and cans every single day in the U.K. alone. World-wide it is one billion bottles and cans, most of which just go to trash, landfill, the oceans or parks. It’s insane,” Mr. Birnbaum added.

Now that he mentions it, that does seem wildly inefficient.

Of course, inefficient companies can last a long time thanks to all of that infrastructure in place. And if the industry is disrupted by a new company, there’s no guarantee that company will be SodaStream (which is one of the most shorted stocks on the market).

Don’t miss: The Complete HIstory Of Sodastream >

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Wednesday, November 14th, 2012 news No Comments

Source: http://gizmodo.com/5932069/staff-of-chinas-biggest-search-engine-delete-user-content-for-cash

Staff of China's Biggest Search Engine Delete User Content For CashThe Wall Street Journal is reporting that Baidu, China’s biggest search company, is sacking staff because they’ve been deleting users’ posts for cash.

The “professional post-deleting”, as it’s come to be called, is a way of removing negative press and reviews from websites. The deletion is a major problem in China, but cross referencing a record of original posts with the deletions its employees make has allowed Baidu to identify the culprits. The company told The Global Times:

“Baidu has fired the four. If we discover such cases, we will severely punish staff. Baidu will close the loopholes by strengthening management to maintain order in our communication platform.”

The Global Times points out that payments for post deletion can range from around $150 to delete a single forum post, $450 to delete a news story—a news story!—and up to $30,000 a year for what’s referred to as a long-term “maintenance service”, which sees any negative mentions of a company deleted immediately.

So, next time you rip into the irony of Google “don’t be evil” policy, spare a thought for the Chinese. [WSJ and Global Times via Verge]

Image by Getty

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Monday, August 6th, 2012 Uncategorized No Comments

$500,000 [Digg]

Source: http://gizmodo.com/5925586/digg-sells-itself-for-pathetic-pocketchange-500000

Digg Sells Itself for Pathetic Pocket Change: $500,000O, how the mighty fall have an asthma attack and roll off the side of a cliff. Digg, erstwhile king of the internet, just sold itself for a mere $500,000. In 2008, it turned down Google’s offer of two hundred million.

Of course, in 2008, Digg was one of the top sites on the entire internet. Now, not so much. As Gizmodo alumnus Mat Honan points out, this is exactly .0005 Instagrams. That’s pretty much a “we’re not giving you zero dollars, now shut up and die” offer in tech land, and certainly not enough to keep Digg going as anything that resembles the Digg of today: WSJ says “None of Digg’s remaining employees will join Betaworks as part of the acquisition.” Frankly, Digg should be glad it wasn’t offered a free bowl of warm soup and some Hollywood Video gift cards.

The site, which once carried the massive internet clout of Reddit in 2012—able to make or break (literally) entire websites with its gigantic traffic tsunamis—was just acquired for less than it costs to buy a tiny apartment in New York. The Wall Street Journal reports that the “New York technology development firm Betaworks,” which ” intends to fold Digg into News.me Inc. a digital media startup that Betaworks launched in April 2011.” Considering nobody knows what the hell News.me is, this is goodbye for Digg, which drifts off to join Blockbuster, CompUSA, Sam Goody, and MySpace’s lower torso under some shadowy rock in hell. Bye, Digg! You’ll long remind us of the late 2000s, when Rihanna was busy capturing our hearts, and you were worth actual attention, and maybe even money. [WSJ]

Photo by Kdt

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Thursday, July 12th, 2012 news No Comments

This GM Ad Cancellation Is Big, Bad News (FB)

Source: http://www.businessinsider.com/attention-facebook-investors-this-gm-ad-cancellation-is-big-bad-news-2012-5

chart of the day, facebook revenue growth ahead of ipo, april 2012

In what should come as a shock to potential investors, one of the world’s biggest advertisers, GM, has announced that it is pulling a $10 million campaign from Facebook…because the ads don’t work.

The effectiveness of Facebook ads has always been a big question-mark, with some data suggesting that the ads just don’t perform well.

According to Sharon Terlep, Shayndi Rice, and Suzanne Vranica of the Wall Street Journal, GM decided to pull the ads after meeting with Facebook executives and coming away unconvinced that they were effective.

GM currently spends $40 million a year on its Facebook presence.

Importantly, however, only $10 million of that spending goes went to Facebook.

The other $30 million goes to pay ad agencies and others to create content for Facebook and maintain GM’s pages and presence on Facebook.

In other words, GM has just killed the only part of its Facebook advertising presence that it was paying Facebook for.

Here’s the key section of the WSJ article:

Asked about the move, GM marketing chief Joel Ewanick said the auto maker, “is definitely reassessing our advertising on Facebook, although the content is effective and important.” Content refers to the unpaid Facebook pages many companies use to promote their products.

GM, started to re-evaluate its Facebook strategy earlier this year after its marketing team began to question the effectiveness of the ads. GM marketing executives, including Mr. Ewanick, met with Facebook managers to address concerns about the site’s effectiveness and left unconvinced advertising on the website made sense, according to people familiar with GM’s thinking.

Importantly, GM’s skepticism about Facebook is not due to a skepticism about digital advertising overall. GM spends about $300 million a year on digital brand advertising–just not on Facebook.

The growth of Facebook’s advertising business has slowed sharply in recent quarters, and the business achieved growth of only 37% year over year in Q1.

Advertiser skepticism may be one reason for this.

facebook google yahoo revenueAlthough some people are convinced that Facebook will eventually be a bigger company than Google, there is very little evidence to support this contention. At the same time, there is much to suggest that this conclusion is simply unwarranted:

  • Facebook is growing significantly more slowly than Google was at this stage of its development
  • Advertising on Facebook, however well-targeted, is like advertising on walls at a party (people are there to socialize, not buy stuff). Advertising on Google, meanwhile, is advertising to people who have explicitly expressed interest in your product (See: “Like Hell Facebook Is Killing Google“)

Facebook just rolled out a suite of new impressive-looking ad products, which will include large ads in users’ news feeds. These new units seemed to be well-received by advertisers, at least to the extent that they were excited about hearing more about them.

But GM appears to have gone to the trouble to hear a lot about them–and still came away unimpressed.

The loss of a $10 million deal obviously won’t dent the ~$5 billion of revenue Facebook is expected to generate this year. But the loss of lots of clients like GM will begin to dent it. And for a company whose growth rate is already decelerating, there’s no way this can be construed as good news.

SEE ALSO: Sorry, Facebook Fans, These Numbers Just Aren’t That Impressive

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Tuesday, May 15th, 2012 news No Comments

Groupon Needs To Be VERY Careful, Because The Sharks Are Circling (GRPN)

Source: http://www.businessinsider.com/groupon-needs-to-be-very-careful-because-the-sharks-are-circling-2012-4


Diver Shark Attack

Groupon is bleeding in the water, and the sharks are circling.

On Friday, we learned that Groupon under reported the number of returns it had in Q4, and that the company had to revise its earnings.

Then Groupon’s auditor filed a “statement of material weakness,” basically telling the SEC it would not vouch for the company’s numbers.

Yesterday, the WSJ reported that the SEC is investigating the company.

That’s not all the company has to worry about. 

Institutional investors put big money into Groupon’s IPO.  

Since that day’s highs, the stock is down more that 50%. It tanked 16% yesterday alone.

If those institutions can blame somebody else for those losses and recoup any of their own investor’s money, they will.

That means if those investors catch even slight whiffs of fraud out of Groupon – and trust me, they are sniffing – the lawsuits and subpoenas will come in rapid succession.

Ever seen a shark frenzy?

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Tuesday, April 3rd, 2012 news No Comments

Americans Haven’t Been This Angry About The Economy Since March 2009

Source: http://www.businessinsider.com/americans-havent-been-this-angry-about-the-economy-since-march-2009-2012-1


According to the Chicago Booth/Kellogg School Financial Trust Index (h/t WSJ’s Sudeep Reddy), only 23% of Americans trust the financial system.  And 62% are either “angry” or very “angry” about the state of the economy.

Trust in the financial system hasn’t been this low and anger in the economic situation hasn’t been this high since March 2009.  And March 2009 was when the S&P 500 hit that horrific low of 666.

“In an election year, this certainly indicates the importance of the economy to the political agenda,” wrote Paolo Sapienza.  Sapienza co-authored the index with Professor Luigi Zingales.

chart

chart

Then again, March 2009 turned out to be an amazing time to buy stocks.

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Friday, January 27th, 2012 news No Comments

Target Realizes There Are Only Two Ways To Compete With The Internet (TGT)

Source: http://www.businessinsider.com/target-realizes-there-are-only-two-ways-to-compete-with-the-internet-2012-1


Target

Target is sick and tired of customers who browse its stores and then go and buy products for cheaper prices from online retailers.

To reduce so-called “showrooming,” Target has asked its vendors to adopt one of two practices, according to the WSJ:

Last week, in an urgent letter to vendors, the Minneapolis-based chain suggested that suppliers create special products that would set it apart from competitors and shield it from the price comparisons that have become so easy for shoppers to perform on their computers and smartphones.

Where special products aren’t possible, Target asked the suppliers to help it match rivals’ prices. It also said it might create a subscription service that would give shoppers a discount on regularly purchased merchandise.

Target’s troubles with showrooming are shared by brick and mortar stores everywhere. Unfortunately small retailers may not have the clout to demand special products (see: Missoni) or help in price matching — and price matching without support from the supplier can be a losing proposition.

Don’t miss: See how big retails stores are spread across America >

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Monday, January 23rd, 2012 news No Comments

This Map Reveals The Trick Behind IKEA’s Store Layout

Source: http://www.businessinsider.com/the-brilliant-trick-behind-ikeas-store-design-2012-1


Grocery stores all use some simple tricks to disorient and delay customers, but IKEA takes the so-called Gruen Transfer to another level.

A lecture on the subject by Alan Penn, professor of architectural computing at University College London, has gotten a lot of buzz this year (via Good and WSJ).

Penn found that IKEA customers, following the signature yellow path, walk through the entire warehouse store. They get lost, encounter products they weren’t looking for and spend enough time shopping that they feel justified making impulse purchases.

Here’s a customer heatmap from Penn’s presentation, followed by the video.

ikea

Now check out 15 ways supermarkets trick you into spending more money >

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Wednesday, January 4th, 2012 news No Comments

Will Groupon Thrive Or Tank In Q4? This Chart Holds The Key (GRPN)

Source: http://www.businessinsider.com/this-chart-tells-you-whether-groupon-will-thrive-or-tank-in-q4-2011-12


groupon girl

Groupon’s Q4 2011 couldn’t be more crucial: Will it see the revenue bump it needs from holiday shoppers to justify its business model? Or will sales collapse following CEO Andrew Mason’s promised pullback on marketing and customer acquisition spending?

The Wall Street Journal reports that gross billings at the company rose just 1.5 percent from September to October, and not 22 percent as previously estimated.

Has the company reached a plateau before falling of a cliff? Or is it merely taking a pre-Thanksgiving breather before continuing its climb up the Christmas sales ladder?

The company could go either way. Until recently, the company has been dependent on a cash float (and the money it raised in its IPO, of course) to stay in business. Groupon generally makes a loss each quarter. It funds its operations by taking revenues from customers’ credit cards immediately and then delaying for 30 days or so the share of those sales it owes to the merchants who made the offers. As long as there is a greater amount of new money coming in than old money owed, Groupon continues to function.

But what happens if Groupon enters a period in which its revenues decline? At most companies that isn’t too problematic — management can cut expenses to remain profitable. But at Groupon the company’s marketing and customer acquisition expenses are closely related to its revenues. It is not at all clear whether Groupon’s revenues will continue to rise if Mason cuts costs. ! Here’s a chart showing Groupon’s net revenues plotted against its total operating expenses:

groupon

As you can see, in Q3 Mason pulled back on expenses (the green line) in hopes of seeing a profit, but revenue growth (the red line) began to lose steam. The WSJ report suggests it hasn’t regained momentum since, but the October sales period doesn’t include the Christmas run-up.

In Q4, this chart is all you will need to understand whether Groupon can mature into a business that isn’t funded by stock sales. If Mason can get the red line above the green line, or if he can keep the red line moving upward, then he should be congratulated.

If he cannot, then the company — and its investors — will need to do some serious thinking about whether their daily deal business model is viable or not.

SEE ALSO: Groupon Allegedly Hacked Merchant’s Email To Alter Contract

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Monday, December 12th, 2011 news No Comments

YouTube Gets It, Will Allow Ad Skipping

Source: http://gizmodo.com/5576453/youtube-gets-it-will-allow-ad-skipping

There’s nothing worse than watching a 30-second ad to watch some 30-second clip of something the world inevitably finds funnier than you do. Google/YouTube are acknowledging this phenomenon of the consumer psyche and will introduce an ad-skip button this year.

The idea is as simple as this: If an advertiser’s commercial isn’t captivating enough to watch in its own right, it’ll be skipped by viewers. If viewers don’t watch the ad, Google doesn’t charge the advertiser.

Now I know what you’re thinking: Why would anyone watch an ad voluntarily? See exhibit A, the lead video in which the god of the infomercial, Ron Popeil, does his thing. The only way that 9-minute clip could be more captivating is to put ANOTHER 9-minute Ron Popeil clip in front of it.

This skippable ad model will inevitably lead to better ads—at least in terms of catering the online attention span—and, for those of us* with the libidinal fortitude to turn a blind eye on GoDaddy-esque BOOBIES BOOBIES BOOBIES teasers, a lot more free time. [WSJ via Fast Company]

* OK, maybe I don’t skip every such commercial. But I only** watch them to be educated enough to write about them on Giz.

** This is a flat-out fabrication***.

*** What sort of monster have I become?

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Wednesday, June 30th, 2010 digital No Comments

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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