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A regularly updated resource of information and news items.

Archive for October 2009

Electric cars save cash for city drivers

Posted Friday, October 30th, 2009

 They may miss out on revving their engines at the lights, but urban drivers of electric cars can cut their emissions by two thirds and save up to £3,000 a year. Sound like a fair compromise?

BBC.co.uk, April 2008

Electric cars produce no exhaust fumes, minimal pollution and a third of the CO2 emissions of petrol engines. On top of that they’re tax free, immune to congestion charges, and a full ‘tank’ of fuel costs no more than a pint of milk.

So what’s the snag? Currently, limited range and recharging opportunities, and a lack of driving pizzazz. But could the next generation of electric vehicles change all that?

How does it work? Electric cars use a battery and electric motor to power the vehicle and are charged via a standard mains socket in your home, or at an increasing number of free outdoor charging bays. The average electric car does 60 miles on a single charge with a top speed of 40mph – while higher performance sports cars can do 150 miles and 130mph. There are currently over 100 electricity pumps in the UK – the majority of which are in London. But 250 new points are expected to be added this year across Britain.

How will it make a difference? 1. An electric car run on conventional electricity from a coal-fired generator produces a third of the emissions of a conventional petrol car (64g of CO2 per km compared to 176g CO2 per km) and just over half the emissions of a diesel or hybrid car (104g CO2/km). 2. You can save thousands of pounds a year in running costs
3. If you’re thinking electric car plus green electricity tariff equals carbon neutral transport, you might need to recalculate. green energy

What’s stopping me?
“Max speed, 40mph?” Electric cars are currently best suited to city driving because the average speed of traffic in London, for example, is notoriously just 10mph: 2mph slower than an Edwardian horse-drawn carriage.

“I’ve heard they aren’t safe” Electric cars are classified as ‘quadricycles‘ by the Driver and Vehicle Licensing Agency, so are subject to less stringent safety tests than cars. But one report estimates they are three times less likely than petrol cars to be involved in accidents. Insurers certainly think so – electric cars qualify for the lowest insurance category, group one, because (reckons the AA) their likelihood of getting into dangerous situations is much lower than that of conventional, high-speed cars.

“Won’t the battery go flat as soon as I get out of my road?” Current models manage an average of about 60 miles on a single charge so we can make our average daily commute of 17 miles more than three times between recharges, but out-of-town journeys are of course trickier. Upgrading to more expensive lithium-ion batteries can increase range significantly.

“I’d love to help the planet, but I can’t afford such fancy new technology” Actually, electric cars range in price between £8,900 and £17,000 and, based on the UK average of 10,000 miles a year, you could save £800 a year on fuel, £300 in car tax, up to £2,000 from congestion charges and free parking in London, and get cheap insurance too. On the other hand, the current generation of electric vehicles are unlikely to rack up that sort of mileage due to their limited range.

Fuel and maintenance costs are also about a third of the typical petrol car: about 6.5p per mile as opposed to 20p. Even with the cost of replacement batteries – about £1,500 every three to four years – electric motoring still costs only about 11p per mile.

What’s the debate?
Electric vehicles are exhaust free but critics say that they simply shift the point at which the emissions and pollution is generated to the power station. This is true (in fact, electricity generation accounts for a third of the UK’s climate impact) but power stations are more efficient at generating energy than cars, so emission reductions still hold. You may be tempted to switch your electricity tariff to green energy to reduce your driving emissions to near zero – but think twice before making the jump.

New research published in the journal Environmental Science and Technology in 2008 levels another, less serious, accusation at electric cars: they use more water than fossil fuelled cars. Vehicles running off electricity use about 17 times more water per mile than petrol vehicles because electricity production in power plants requires the withdrawal (and return) of surface water from nearby lakes and rivers. It’s worth bearing in mind, however, that one million electric cars account for just 0.3% of the miles driven by light duty vehicles in the US.


What Should You Spend on Advertising?

Posted Wednesday, October 21st, 2009

It’s a ticklish question for every company. See what your rivals are doing, and then think about what’s going to be effective.

Businessweek, February 2009

One of the questions I’m frequently asked is: “How much should my company spend on marketing and advertising?” It’s a conundrum that vexes many corporate leaders, from emerging entrepreneurs to seasoned CEOs. Unfortunately, instead of seeking a rational answer to the question, many of them just ignore it and hope it will go away.

As a rule, emerging companies focus most of their time and talents on meeting the needs of customers, as well they should. If they don’t take care of the customers they already have, everything else will be academic. Strangely, however, many neglect the function of winning customers in the first place. Others naively assume that if they simply provide excellent products or services, their reputation will precede them. Call it the “build a better mousetrap” syndrome. But the world has too many other things to do with its time than beat a path to your door. That means you need to structure your profit-and-loss statement in such a way that you can profitably allocate a reasonable percentage of your revenue to marketing.

The Big Question: How Much?
While there is no definitive answer as to how much any business should spend on marketing, there are general guidelines any company can use to develop a formula that works for them.

Your first step should be to try to find out what the advertising-to-sales ratio typically is in your field. Public companies in your industry may give a figure for their marketing spending in their financial statements (found in their annual reports). With a simple calculation, you can figure out what percentage of their overall revenue that represents. If you can’t find any public companies that seem similar enough to yours, you might want to start at 5% and then adjust your projected spending up or down based on the size of your market, the cost of media, what you can learn about how much your competitors are spending, and the speed at which you’d like to grow.

You’ll also need to ask yourself if your business is built to leverage volume or to leverage margin. Even within industries, there are substantial differences in the marketing spend of volume-driven companies compared with margin-driven ones.

Volume-driven companies tend to spend a tiny percentage of sales on marketing, in part because their large revenues enable small contributions to add up fast, and in part because of the margin pressures they face in having to compete with other high volume companies. By contrast, margin-driven companies tend to spend a larger percentage of sales on marketing: They have room in their margins to afford it, and they’re often working from a smaller revenue base.

The retail industry provides some good examples. While Wal-Mart (WMT) might spend a meager 0.4% of sales on advertising, the sheer size of the company turns that tiny percentage into a significant budget. Wal-Mart’s nominally higher-margin competitor, Target (TGT), spends closer to 2% of its sales on advertising, while Best Buy (BBY), as a specialty retailer, spends upwards of 3%. Finally, more upscale stores like Macy’s typically spend on the order of 5%.

The same kind of ratios can be seen in the car industry (automakers’ generally spend 2.5% to 3.5% of revenue on marketing), liquor (5.5% to 7.5%), packaged goods (4% to 10%), and every other industry.

If you’re in a services business, you might want to bump your starting point higher than 5%. For example, like most professional services firms, my company is more margin-oriented than volume-oriented, so fueling its growth requires that we spend a higher percentage of our revenues. Last year, our number was just over 8%, and I’ve seen companies spend upwards of 15% when warranted—especially young companies that need to invest to build their brand.

Marketing, Not Just Advertising
It’s important to make a qualification here. Giant consumer corporations such as automakers, packaged food manufacturers, and retail chains spend a huge percentage of their marketing dollars on paid media advertising, the most visible (and expensive) tool in the marketing toolbox. Depending on the size of your company and the business you’re in, advertising might not be the right (and certainly not the only) tool for you.

A professional services company like my own is a good case in point. While we serve a national clientele, we are much too small to effectively advertise on a national scale. As a result, we don’t purchase paid media advertising. But we do have an aggressive marketing program built around tactics like direct mail, online marketing and public relations. For a variety of reasons, paid advertising might not be right for your company either, but events, vehicle wraps, point-of-sale displays, or other tactics certainly could be.

The important thing is intentionally and deliberately to set aside some rational percentage of your sales to get out there. That way, the question you have to answer isn’t “How much should we spend?” but rather, “How do we spend most effectively?”


Adults flock to social networking sites

Posted Friday, October 16th, 2009

The Independent, 15 October 2009

The number of adults using social networking sites has nearly doubled in two years, research suggested today.

Women are more likely than men to use the sites – and nine out of ten users say they have a profile on Facebook.

Ofcom‘s UK Adults’ Media Literacy interim report also found the number of internet users aged 65 and over had increased sharply since 2007, from 26 per cent to 41 per cent.

The study found internet users with a profile on a social networking site had jumped from 22 per cent to 38 per cent since 2007. Some 41 per cent visit the sites daily, compared to 30 per cent two years ago. But while the popularity has increased, more people are selective about who can view their profile.

The study showed 76 per cent restrict access to family and friends – up from 48 per cent in 2007. The research showed 42 per cent of women were likely to have a social networking site profile, compared to 34 per cent of men. And 39 per cent of women used the internet at least weekly for social networking, compared to 28 per cent of men.
Facebook was the most popular site among social networkers, with 89 per cent adding their profile to it, up from 62 per cent in 2007.
Just under half (49 per cent) of men surveyed said they used the internet for news, while 35 per cent used it for sports updates and 39 per cent to pass time. In comparison, 30 per cent of women used it for news, 6 per cent for sports news and 30 per cent to pass time.

One in three adults (29 per cent) who use the internet watched online or downloaded television programmes or films, with 25 to 34-year-olds most likely to do this.

As well as increasing usage in older age groups, 51 per cent of people from low income households now use the web, up from 35 per cent in 2007.

But the level remains lower than the overall figure for adults using the internet, which stands at 73 per cent.

The growing influence of the internet was also reflected in an increase in the number of people who selected it as the media form they would miss the most. While most people (51 per cent) nominated television, more adults listed the internet, up from 12 per cent in 2007 to 15 per cent.

Other themes revealed in the report showed take-up of digital televisions now stood at 89 per cent, up from 82 per cent in 2007, and personal mobile phone usage had risen from 85 per cent to 91 per cent.

* The survey involved 812 in-home interviews with adults aged 16 and over from April to May.


Squeaky clean

Posted Wednesday, October 7th, 2009

BBC World Service, 22nd September 2009

Lots of people get very excited about this thing called “branding”. Flatfooted thinkers use the concept as though they thereby are granted great insights into the mysteries of business.

It’s easy to see why. After the serious business of thinking deep financial thoughts, you can do sexy things with branding : psychoanalyse brands, for example, or run focus groups about them.

You can even do that weird sort of reverse branding exercise that recruitment people used to specialise in. “If you were a car” they would ask, intently, “what sort of car would you be?” Abject nonsense.

Now I am not trying to undermine the value of brands themselves. Big brands are both powerful and very valuable to the companies that own them.

Branding (or sign-making) is an ancient game : witness the bushes signifying a mediaeval pub, or the barber’s pole (that means more than just a close shave in some parts of the world).

Inseparable: What makes me annoyed is when everybody gets the idea that brands can be dreamed up, advertised and made to happen, just like that. “What values do we want to attach to our new brand?” people ask at brainstorming sessions, before they pass some sort of brief to an advertising agency who’ll whip up some clever ideas.

Brands shouldn’t be bolt on attributes, like that. Brands should be virtues accruing to products and services over long experience of them by customers and consumers.

Real brands have lives of their own, and flourish because of it, not because somebody is spending millions face lifting them. The best brands are an implicit part of the experience of product, and are probably inseparable from it.

So the question for businesses to ask is not “How to we build a brand” but how do we make things that people really want to buy and value and pay more for?

How do we make our products real experiences for our users, so the brand and the things are intertwined ?

These thoughts are driven by this week’s programme from San Diego, California. I dropped in to a workaday industrial estate to listen to Gary Ridge, chief executive officer of a company called WD-40. You probably know the product in its distinctive blue and yellow cans, and you probably know how it starts off as a lubricant and then generates all kinds of other uses, most of which give the users the wonderful feeling that it’s their cleverness to spray on the WD-40, rather than the product’s versatility.

Acquisitions: That’s what I mean by branding: the product is so satisfying that people are constantly trying to think up new uses for it.

One women told the company she stops squirrels from climbing up the pole on which her bird feeder is placed by squirting it with WD-40.

The brand has a story attached. The death was announced earlier this year of John Barry, the man who took over the Rocket Chemical Company in 1969, when the main market for what became WD-40 was stopping space rockets corroding. He saw the potential of this water dispersant as an all-purpose lubricant, changed the name of the company to reflect the 39 unsuccessful attempts they had to find the magic formula that finally worked with mixture number 40, and built the brand.

What’s nice about WD-40 today is that the company under Gary Ridge still understands and respects that splendid tradition. Yes WD-40 is a wonder international brand, and understands itself. When Gary Ridge looks for acquisitions, they have to meet a difficult criterion … they have to over impress the user.

And that’s what I call branding.


Curtain twitchers, the CIA and the rise of Facebook

Posted Thursday, October 1st, 2009

New technology and old-fashioned curiosity have made social networking so hot that everyone is cashing in. Nico Macdonald helps you sort the tweets from the bots

 Design Council

If everyone felt like Jerry Seinfeld, Facebook wouldn’t exist. The comedian observed: “As an adult, it’s very hard to make a new friend. Whatever group you’ve got now, that’s who you’re going with. You’re not interviewing, you’re not looking at any people, you’re not interested in seeing any applications.”

Yet, for most of us, the social instinct is deeply ingrained. So deeply that, by the age of seven, research suggests, two thirds of American children have an imaginary friend. Technology has made it possible for us to connect with real friends in undreamt of ways. When Tom Coates, a staffer in a London office of Yahoo!, needed a break, he decided the best way to round up some company was to post this message on Twitter, a hip social networking service: “I need to go for a walk to clear my head. Yauatcha for macaroons anyone?”

Social networking is such a phenomenon that many employers – even the CIA – now have Facebook pages and use the site as a recruitment tool. The agency plans to launch its own staff social networking site called A-Space.

The wisdom of friends: the psychological argument for using social networking sites full of ‘people like us’ is compelling. But how long with the fashion last? And what do sites need to do to increase their reach?
Asking all your friends if they’d like to join you for lunch would once have been impractical. But sites like Facebook allow us to gossip and curtain-twitch online, be bored by someone else’s holiday snaps without visiting their house, plan a business meeting and accelerate the getting-to-know-you process. Instead of taking months to realise that a new acquaintance, like you, can quote Seinfeld scripts verbatim, you can join a group of like-minded souls in minutes.

New technology, old-fashioned curiosity and a dollop of ‘wisdom of friends’ psychology have made sites like Facebook, MySpace and Bebo immensely popular. A 2007 survey found that 48% of American teenagers online visit social networking sites at least once a day and 72% use them to make plans with friends. In the network age, computing power is in the hands of more people and is tackling new challenges. We’ve moved from using computers as work objects to the widespread use of computing-enabled things – laptops, mobile phones, games consoles – to manipulate emails, diary entries, instant messages, contact information, URLs and blogs wherever we are.

Social networking is driven by significant technical developments and rapid social change. The current fears for – and of – teenagers – may explain why they have become core users of social networking sites, spending more time at home on the internet. As a rule of thumb, for every hour we spend on the web, we typically spend 23.5 minutes less with friends and family.

The culture of fear and decreasing trust have made some wary of encounters with strangers and reluctant to embark on deep personal relationships. Surveys show that a record one in four Americans say they have no close friends at all. Many prefer ‘safer’ relationships mediated, to an extent, via a screen, where they can connect with a wider circle of friends in a non-committal fashion. Consumer trends analyst Linda Stone calls this “continuous partial attention”, adding: “To be busy, to be connected, is to be alive, to be recognised and to matter.”

Cheaper travel and a more integrated global economy, where staff change jobs more often and are more likely to work abroad, have played their part too.

Keeping in contact, avoiding cowboy plumbers
The functions social networking best supports are, in a nutshell or seven:

Familiarisation and maintaining contacts. From status updates and edited profiles you build a rounded picture of an individual. People you know may share this with you – to varying degrees – if asked. Essentially, human knowledge is being connected by the network (rather than embedded in it – the goal of so many past computing visions).
Swapping, sharing and storing of ‘objects’ – photos, movies or songs – online. We can be told when something of interest has been uploaded.
Group discussion, which is moving to social networking sites. Contributors’ real names and pictures can be displayed and you can check their profile.
Finding and hiring skills. The self-employed already use sites like LinkedIn to get in touch with businesses and customers regardless of location.
Online or internet-enabled applications which allow us to manage tasks, meetings and diaries. You can, for instance, open up your diary to contacts.
Campaigning. You can network with people with the same ideology. But the likes of Facebook can’t, by themselves, reinvigorate the democratic process.
Searching the web. Social networking can reveal, filter, enhance or shape the data we find when searching. We can link, recommend or rate almost anything and form an opinion influenced by our knowledge of the contributor or the number of recommendations. In a world full of cowboy plumbers – or so reality TV shows would have us believe – we might be relieved to find one implicitly recommended because they’re linked to someone we know. Friends or contacts are acting as ‘trust engines’, and by answering, friends build their relationship with you and increase their kudos with others.
While Google focuses on computer science, engineering and performance, Yahoo! has focused on what Bradley Horowitz, vice president of product strategy, calls “better search through people”, buying bookmark-sharing tool del.icio.us and photo-sharing site Flickr and developing such services as Yahoo! Answers.

Junk mail, smart address books and over-engineering
Social networking sites need to improve. As Facebook’s personal profile – which includes favourite music, TV shows, films and books – is completed manually, it is of limited use and soon out of date. Profiles would be richer if they drew on actual activity, such as the music we buy or play. Artificial intelligence-based tools could help others access a user’s locally stored information. There is a risk of over-engineering, though. An element of a profile or relationship can be extracted or inferred but do we want to share it with everyone? Giving users visibility on – and control of – what they share is a design challenge. Already LinkedIn lets you ‘View my profile as others see it’.

Sites need to be accessible and to hand, as easy to use as a stapler. Modern mobiles and smart phones like the iPhone have feature-filled browsers. A site such as Jaiku offers a dedicated application for modern Nokia devices that identifies your geographic location to your circle of friends. You could have a smart address book that tells you if a contact you plan to call is busy or abroad. Giving physical form to such ideas is the Availabot, a pop-up figure that stands up on your desk when the contact it represents comes online and falls into a flaccid heap of despair when s/he goes away.

Exhaustion, Rupert Murdoch and evolutionary psychology
The subtlety of human relationships can’t be over-estimated. We finesse what we tell different people, even lie. There is a danger that concerns about privacy, and scares based on extraordinarily rare – but shocking – abuses of social networking tools, may deter people from using these sites. Worries over security, time wasting and other abuses has led employers to block access to Facebook.

On a practical level, there is a danger of exhaustion. Coates says: “The amount of sites using social networks is so substantial that [registration] is no longer something people will go through again for no obvious reason.” Sites could be integrated as an external service to other sites. If LibraryThing could access your Facebook profile, it could show you books your friends liked. Profiles could be abstracted so they can be ‘applied’ to any site or service. So far, this has had little success, but as social networking profiles are made easier to edit and when this approach presents a competitive advantage, the ‘abstract’ approach may flourish.

Rupert Murdoch’s strategy for MySpace raises another issue. MySpace plans to run a TV series about showbiz wannabes as it strives to persuade users to linger longer, so they can be targeted by ads. If these sites are not full of user- generated content but have content developed by professionals, does that extend their appeal or fatally undermine it? Facebook has announced it will start targeting ads based on user profiles. Will users be deterred by advertising or welcome it? Concerns about privacy have been heightened by Facebook’s plan to allow (user-controlled) elements of profiles to be indexed by Google.

Historically, human relationships have built over time from face-to-face encounters, in which we use body language and other cues to assess honesty. By contrast, the ease with which we can indicate friendship with social networking allows us to appear to have a cohort of friends. There is some science behind Seinfeld’s gag. Evolutionary psychology suggests we are hardwired to remember no more than 150 people. These smaller, more intensely focused groups have often been responsible for scientific, technical and intellectual breakthroughs. The trajectory of social networking is in our hands. Will we, as a society, take these services seriously – or be satisfied to play online with our new ‘friends’?


 
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