Twitter Advertising Goes HoC

So, House of Cards has clearly struck a nerve in the Twitter advertising world. It’s actually a little clever.

Twitter Advertising Goes HoC

The Three-Shot Espresso

Two weeks ago, Starbucks announced that it would implement a monthly subscription plan for its newly-introduced high-end line of coffees. This comes on the heels of the coffee giant announcing the opening of its coffee mega-mecca, the Roastery, in Seattle, providing a destination for coffee worshippers to come, pray, and purchase at the origin of, well, origin coffee. The implementation of a subscription program, and the generation of a coffee destination, seem part of a larger effort to combat encroachment on Starbuck’s territory by both niche coffeehouses, as well as high-end coffee delivery services. Starbucks is, like its corollaries in beer space, chasing the “craft crowd,” and it’s compelling to see the ways in which it’s innovating.

1. The subscription model: Starbucks obviously faces competition in the subscription space from firms like Craft Coffee and Tonx, among a million others. These subscription coffee firms offer the best of the rarified coffee-drinking experience – single origin, shade-grown beans – delivered to your doorstep at intervals of your choosing. Starbucks may yet have an advantage in drinkers’ homes, since it can dilute its coffee purity a little by offering K-Cups and Via packets in addition to beans – something its high-end rivals would sniff at.

2. The destination model: Starbucks has a lot of stores, and therefore doesn’t have the same destination appeal as small retailers like Blue Bottle or Stumptown. In response to the commoditization of blonde wood, hanging lamps, and Norah Jones CDs, Starbucks has undertaken an effort to redo many of its stores to fit with local tastes and aesthetics.

3. The mecca model: A variation on the destination model, the construction of the Roastery takes a page from the craft beer movement, with Starbucks flinging open the doors of its roasting facility to offer a behind-the-scenes look at the craft behind the coffee.

I don’t think that the Roastery will actually generate enough revenue to cover its costs, but I do think that it will provide a sort of halo effect that, coupled with the introduction of limited-run coffee blends (both in-store and by subscription), will help move the Starbucks brand upmarket while still defending the mid-tier end from encroachment by trendier, healthier options from Dunkin’ Donuts and McDonald’s. It’s certainly an effort worth watching. Pass the half-n-half.

The Three-Shot Espresso

Exploiting the Usability Gap

I’m always fascinated by firms that capitalize upon practical inefficiencies and piggyback on existing products or services. In both public and private realms, middleman firms pop up to smooth out the rough edges of transactions.

Two recent examples: Tax prep software and parcel shipping apps.

The recent kerfuffle over TurboTax’s price increase highlighted its dominant position in the market: according to the WSJ, TurboTax was used to file 29 million returns last year. Theoretically, TurboTax should not need to exist, since, ostensibly, a form required by the Federal government should be easy enough to fill out the filers should not need to use a paid third-party platform to fulfill their obligation. Even Donald Rumsfeld agrees that the tax code’s complexity is absurd.

Shyp was created to exploit the frustration of packing items, printing shipping labels, waiting on line, and mailing boxes. And on the receiving end, package delivery has long-been a frustration, particularly for city-dwellers like myself. I’ve often had packages not delivered, or waited at home for three hours to receive a delivery, since the parcel delivery person could not leave it at my apartment door. Along comes Parcel, which basically narrows the five-hour delivery window provided by UPS My Choice to one hour of my choosing, a significant and critical offering. What makes Parcel interesting is that it relies upon the logistical inefficiency of FedEx and UPS: if either firm were to offer more flexibility in delivery times, Parcel’s business model would face significant challenges.

Exploiting the Usability Gap

Now With More Fiber!

Google recently announced that it was expanding Google Fiber, its gigabit internet service, to four new regions, for a total of 18 cities. Although the Fiber initiative has been around for a year or two, the recent expansion to a number of larger regions – including Atlanta, Charlotte, and Nashville – makes it seem as though Fiber is less of a novelty initiative and more part of a long-term strategy.

And Google isn’t only laying wired infrastructure; it’s also renting wireless spectrum from cell phone carriers like Sprint and T-Mobile, presumably in preparation to offer customers a “pure Google” experience, beyond just the handset itself.

I’m certainly no legal expert, but if Google continues to snap up both wired and wireless infrastructure, I imagine they may face further anti-competitive hurdles. Let’s say, for instance, you’re a video editor living in Austin; you would, presumably, use YouTube (Google content/service) on your Android phone (Google software, at the very least), using either LTE spectrum rented by Google, or WiFi pumped out by Google Fiber. It certainly has a hint of early-20th century Standard Oil, doesn’t it?  MG Siegler rightly points out that Apple is a sort of inheritor to the mid-2000s money-minting tradition of ExxonMobil and Shell. I would argue that Google may, conceivably, come to resemble Exxon and Shell’s last-century forebears, in terms of its market placement. It will, after all, own the content, own the method of consumption, and it will own the delivery network. It’s vertical integration for the 21st century.

And all of this, I imagine, comes with considerable data-mining (and therefore, advertising) potential for Google in the long run, and so the capital expenditures – and I’m sure they’re high – may prove to be worth cost. Since internet usage is rapidly shifting from web browsers, like Chrome, which can track all of your web habits (and therefore serve up great advertising data for Google), to segregated apps (which remove Google from the equation), Google obviously needs to develop a strategy that reduces its reliance on its search platform. By stepping outside the search box, it can, conceivably, execute a lot of its data mining by being a web provider, and not just a search engine.

If all of this sounds conspiratorial, know that I welcome Google’s entry into wired and wireless internet. The competitive landscape is meager in nearly all categories: wired phone service, wireless phone service, cable television, and home internet are virtually dominated by a small handful of large firms: Verizon, AT&T, Comcast, and TimeWarner. Since Google’s entry into new markets would not, by any means, give it the same degree of pricing power or monopoly that the aforementioned firms wield, it would, I hope, escape regulatory scrutiny long enough to inject competition into otherwise stagnant markets. And frankly, if Google knows my shopping habits, it’s a price I’m willing to pay.

Now With More Fiber!

Goin’ Mobile

I’ve been traveling quite a bit lately, and, as you might expect, I’ve been using my phone more than usual, too.

In fact, even though I lugged my laptop with me to Florida and New Orleans, I would, ultimately, use my iPhone far more frequently as a means of making reservations, checking reviews, or “printing” boarding passes. Which brings me to a broader point.

I’ve found that, even for businesses that aren’t really predicated on an app – airlines, restaurants, etc – the value a customer places on the larger, non-app experience will be shaped by the firm’s mobile presence and platform – no matter how distant the app is from the actual, physical, good or service. For instance, I’ve flown a few airlines in the last couple of weeks — JetBlue, United, and USAirways. JetBlue and United both have easy-to-use apps that allow you to quickly and easily check in, view a boarding pass, or ascertain a flight status. USAirways, in contrast, has a terrible app that scrounges up only one star in the App Store. My frustrating and time-consuming experience with the USAirways app leads me to a somewhat unfavorable perception of their brand, even though the flight itself – which is, after all, the thing I’m paying for – was largely identical to my experiences on JetBlue and United. Then again, JetBlue does offer free Terra Chips, so it is a tough racket to beat.

Similarly, I’ve long been a customer of a small internet brokerage which I use to manage my investments. Even though the core of the service is the brokering itself – research, low investment fees, etc – my inclination would be to refer friends to more mobile-friendly brokerage services, even if their transaction fees are a dollar or two more.

This dynamic works positively, as well. Part of Uber’s success is that its app is fluid and responsive. Imagine if either Uber’s app, or Uber cars, ran slightly behind those of competitors; which aspect would sooner make a consumer jump ship?

And for me, writing this on my iPhone, using the WordPress app, proves just how critical mobile is – even for non-mobile industries.

Goin’ Mobile

Swappa

I’m due for a new phone, and, like any Apple-head without a contract, I spent a long time traversing the internet in search of an unlocked iPhone 6. I spent a while on Amazon and an inordinate amount of time on eBay. Amazon is a cleaner purchasing process, and eBay, for better or worse, offers a bit more of a tag-sale feel. Some prices are higher than Amazon, some are lower, and searching for a phone is not for the faint of heart. You can, of course, narrow down your search by capacity, color, and price, but you still spend a great deal of time checking the ESN (electronic serial number, your phone’s unique identifier) status of handsets, or double-checking to ensure that the sale includes the charger or headphones. It’s definitely a more flexible – and cheaper! – process than Amazon, but it’s also more labor-intensive.

I perused the interweb a bit longer, and eventually came across Swappa, which combines a lot of the best elements of both services:

a. Every phone on Swappa is guaranteed to have a clear ESN and is ready for activation, reducing the headaches for those of who require carrier activation as well as a SIM card. I can’t stress how handy this is.

b. Sellers are rated, with their ratings ported in from eBay.

c. Prices are transparent. This is huge. Swappa provides a chart that shows you the price changes of your selected item over the last several months, as well as the highest and lowest current prices. It’s like Amazon’s CamelCamelCamel, but baked into the site itself. And it’s great for our consumerist, gotta-have-it-now society, since it really shows how Moore’s Law, and devaluation, put downward pressure on even the most cutting-edge gadget.

iPhone Price Spects

d. Buying is smoother, and more personal. Instead of browsing hundreds of listings with thumbnail images of phones, Swappa shows a thumbnail image of the seller (a gimmick, I know), as well as a little grey, white, or gold bar, corresponding to the color of the phone. It’s a small touch, but it just makes the browsing experience a little smoother.

e. The post-purchase customer service is great. I had a question about my shipping address, and Swappa provided an easy and intuitive means of communication — effectively turning my purchase confirmation page into a message board between me and the seller, along with a voluntary means of cc’ing Swappa staff.

Swappa