Take the time, if you will, to meet Vincent Ferrari. I’ll let him introduce himself in his own words:

My name is Vincent Ferrari and I’m a proud half-Italian half-German NYC guy. I’m married with two wonderful cats, Pandora and Patches, and I live in a nice part of the Bronx (yep, they do exist!).

Vincent writes a blog called “insignificant thoughts“. It deals with technology stuff, religion and politics. I don’t read it. I tried to read it, but, I didn’t like it. Perhaps it’s because I’m a pompous know-it-all-jerk, perhaps it’s because it doesn’t talk about marketing or music or the sort of pop culture I like, either way, the title rings true for me. I have no reason to read Vincent’s blog and by not reading Vincent’s blog I’m fairly certain my life won’t be any worse off.

AOL, the giant American Internet company, didn’t read Vincent’s blog either. Nor did they pay attention to his YouTube rants. The company did, however, according to Wikipedia, have an elaborate scheme for rewarding employees who purported to retain or “save” subscribers who had called to cancel their Internet service. In many instances, such retention was done against subscribers’ wishes, or without their consent. Under the scheme, consumer service personnel received bonuses worth tens of thousands of dollars if they could successfully dissuade or “save” half of the people who called to cancel service. For several years, AOL had instituted minimum retention or “save” percentages, which consumer representatives were expected to meet. These bonuses, and the minimum “save” rates accompanying them, had the effect of employees not honoring cancellations, or otherwise making cancellation unduly difficult for consumers. Many customers complained that AOL personnel ignored their demands to cancel service and stop billing. Vincent was one of them.

If AOL had read Vincent’s blog or watched hius YouTube channel, they probably could have saved themselves $1.25 million.

There are about 400 million Vincent Ferraris out there in blogland. How many aren’t you listening to?

Better setup a few more Google alerts huh.

This article is a collaboration between myself and Nathan Bush (A.K.A. Another Advertising Wanker, A.K.A. AnotherAdWanker). We’re both strategists at Brisbane advertising agency De Pasquale and had our ire raised a notch when we found out The Starlight Foundation had spent $14 million on its own social network. The fact that we’d been working on a similar project for The Children’s Hospital Foundations had a little to do with it, but mostly, we just couldn’t figure out how they could drop that much dough.

You may have heard about the new social networking site for sick children produced by the Starlight Foundation called Livewire. It is similar to a Facebook or MySpace application but only available for children in hospitals or with serious illness. As Daniel Oyston points out in the Marketing Today podcast, it is an incredibly valuable service for the kids and will no doubt help them feel connected, positive and strong in their recovery process.

However (and I think you knew that was coming), if we put to the back of our minds that this is a children’s charity, there are a few questions that have to be answered in regards to the cost of the project and the allocation of tax payers money. Cameron Reilly addresses this in his podcast with the Livewire creators here.

The crux of the issue is that the cost to develop the social media project over 18 months was $14.7m. The Government supplied $7.2m through Senator Stephen Conroy’s Clever Networks program. The remaining 30% was supplied by Starlight and 20% from other suppliers (keep-in mind that this is not necessarily all cash and includes some in-kind donations).

Nevertheless, $14.4m is a lot of money for a social media project so we will list all of the elements we could find which are included in this budget:

Online platform including social networking tools, chat, mobile platform

Let’s presume you’ve downloaded Ning, analysed it, and then made your own version of it. Let’s say you then get a team of one designer, one project manager and two programmers working exclusively on this for two months. That’s four people times $150 an hour times two months. If you played a lot of ping pong in between meetings, and got your agency’s agency to mark it up a few times you could probably get to $250,000.

Competition Engine

Let’s call it $25,000. That’s one junior programmer working for six months. If you can’t do that for $25,000 you’re doing something very terribly wrong.

Hosting

WebCentral are about the most expensive hosting provider in Australia. Two of their dedicated servers will cost you about $20,000 a month. That’s $160,000 over a year.

Content Management

You could use a free open source CMS like MODx, but your agency won’t make any money out of that, so they’ll convince you to spend $60,000 on some proprietary piece of shit that does the same thing.

Content

Hire a pretty blonde with a PR degree and she can punch out content for 12 months for $60,000.

Customised manual sign-up to increase data security

Call it $5000.

90 computers and tables in hospitals for children to access from bedside

Dell will sell you 90 computers for $108,000. Presuming the kids are happy with IKEA and don’t need rich mahogany, you should be able to get 90 tables for $9,000

Wireless networks and wiring in some hospitals

Five business plans and a few modems - call it $10,000

Parents and siblings site to come by the end of the year

Surely you’d build this in the initial stages as part of the whole thing?

Two therapeutic studies on the benefit of social networks to recovery

Two w@nkers telling you shit you already know like “kids who can interact with other kids have faster recoveries than those stuck in solitary confinement in a Romanian orphanage”. $100,000.

15 full time employees in total - chat room hosts, editorial, security and an outreach person in each state to work with partering organisations to demonstrate how to use the site

$60K a year each, so that’s $1 million, tops.

Training program for chat hosts with the Australian Federal Police

Let’s say they had two police officers training staff for two days. That couldn’t possibly come to more than $10K. Cops don’t earn that much.

TOTAL

$1.79 million

As you can see there is a lot more to this project than just being a social media site - especially in regards to security and support. However, we still can’t see how all of $14.4m will be completely spent by the end of this year. We can get to around the $1.4m mark with some generous estimates. This leaves $13m unaccounted for. This leaves us with some questions:

1. As Cameron Reilly points put, is there any reason to reinvent the wheel? Surely a free network creator such as Ning and embedded content would have significantly brought the cost down with no major impact on functionality?

2. Will the publicity around social media projects such as this and the budget being used scare other charities off playing in the social space? We know that charities can do sites such as this for next to nothing - but will they ever bother to explore now?

3. Livewire is aiming for 20,000 members by the end of the year. Given the funding of the program (which ends this year) - this equates to $735 per member. Is this a responsible allocation of funds when our hospitals have a long wish list of other resources required?

Don’t get us wrong, it is a great project and will do wonders for the kids. But surely we need more accountability here?

Matt: Where’s a good place to go for lunch around here?

Nathan Bush: There’s a great place off Brunswick St Mall, near Subway, they do $5 wraps - they’re great.

Matt: Really?

Nathan: Yeah, just down the alley, past Subway. They’re great.

Matt: Cool.

Matt walks to mall, finds shop easily, it’s the one selling wraps just past Subway with the long queue outside. Pays five dollars for BBQ meatball wrap with lettuce, BBQ sauce and Mayo. Finds it to be Tasty.

Two Weeks later…

Matt: Hey Christie, do you want anything for lunch? I’m just going to get a wrap from this cool little shop in the mall.

Christie: No, I’m OK thanks, I’m going out today.

Matt: OK

Matt walks to mall, finds shop easily, it’s the one selling wraps just past Subway with the long queue outside. Pays five dollars for BBQ meatball wrap with lettuce, BBQ sauce and Mayo. Finds it to be Tasty. Comes back to office bearing wrap.

Gino: What have you got there?

Matt: It’s a wrap from this little shop in the mall. They’re five dollars. They’re great.

Gino: Nice

Kasey: What are you eating?

Matt: It’s a wrap from this little shop in the mall. They’re five dollars. They’re great.

Kasey: Nice. Is that a beer you’re drinking?

Matt: No, it’s an organic ginger ale from the wrap shop. It’s great.

Kasey: Nice

Matt: Wait.

Kasey: What?

Matt: I think there’s a hair in here.

Kasey: Oh.

Matt: Oh.

Gino: Oh.

Two Weeks later…

Derek: Hey Matt, what’s good for lunch around here?

Matt: Do you like Subway?

I was in a strategy meeting today with the head of online marketing at an accommodation reservations company. They’re kind of a big deal, but for the last two years they’ve been getting at least three complaints a day from members of the public who have tried to use their system and been pissed-off because some of the prices they were initially being quoted weren’t, in fact, the prices they would be paying. (I won’t bore you with details, but basically, they were showing a list of hotel rates from a particular source, but they were often three days out of date).

The head of online marketing is a pretty switched-on guy, and he knew that pissing people off was the best way to ensure they never visited his website ever again (you don’t want to annoy any customer, but you especially don’t want to annoy tech-savvy early-adopters of your product who have the potential to tell hundreds of others). He’d been having trouble convincing the CEO that the system had to change because there was a lot of development cost involved, but finally, after a year of trying, he’d got the change approved and a new system was in place that showed accurate prices. He had been conviced that the change would result in more sales, but he was at a loss because after a few weeks, the conversion rate had barely shifted at all. The GM told him that he’d have to break the news to the tech team that the costly change he’d implemented hadn’t been effective and it had been a bit of a waste; he was disappointed.

“But…” I said.

“I’ll bet your returning visitor numbers are up.”

His eyes lit up: “Hmm?”

“That’s your metric.” I told him. “I’ll bet you any money your returning visitor numbers increase dramatically over the next few months because people are going to be much happier with your product and they’ll want to come back. They’ll probably even tell their friends. And once you get more and more returning visitors, your conversion rates are going to keep going up because they’ll stop shopping around as much.”

This was good news.

Very good news. I think he wanted to hug me…

If there’s one web metric you want to see curve upward, it’s your returning visitor numbers. More new visitors are great, but what you really want to see are more people coming back. 1,000 visitors who come back ten times are worth far more than 10,000 visitors you never see again.

The best way of getting them to come back is figuring out why they’d want to leave in the first place; think about what they’re NOT getting and give it to them. If the solution sounds expensive, think about what a lifelong customer is worth to you, over time, and I’ll bet you’ll change your mind.

My first proper job was as a reporter for a start-up indie newspaper in the north western suburbs of Sydney. The editor was an awesome guy called Peter Gladwell; he hired me because he had a fire in his eyes and I think he saw a bit of that in me too. He wanted to bring credible, interesting, ballsy journalism back to suburban newspapers and I wanted to write credibe, interesting, ballsy suburban journalism. The paper was called the Northwest Edge and it was brilliant. I think it lasted five issues.

When Fairfax and News Corp got wind of what this little start-up was doing they slashed their advertising rates and undercut the market. A little indie newspaper stood no chance against two giant media corporations and that was that. I looked Peter up on LinkedIn and he now appears to be Chief of Staff at Fairfax, which is kind of ironic. I’m sure he’s getting his own back, one stolen paperclip at a time.

The Northwest Edge is a David and Goliath story. There are lots of them in the media, and sadly, Goliath usually wins. What happens though, when Goliath fights Goliath? Google is the biggest giant standing in the current media landscape and they’ve put numerous companies out of business by not just undercutting the market, but literally giving away products and services other companies were charging a mint for. Imagine if you’d invested millions of dollars into any of the following services in the last decade with the hope of making money from them:

• Maps
• Email
• A Blog Service
• A Website Where People Can Share Videos
• Website Traffic Analytics
• Satellite Imagery

You’ve now either been bought by Google, or you’ve been put out of business (or you will be soon).

Google has avoided producing ‘content’ of it’s own so far, with the exception of mapping data, but before long their share price will level off and investors will start demanding further diversification. The Google search brand is so well established that it won’t be tarnished or have its power diluted by adding more complimentary services. There is absolutely no reason why Google cannot feasibly, tomorrow, muscle in on the real estate, jobs and classifieds markets. There is no reason why they can’t produce their own accommodation search engine. What exactly will RealEstate.com, Seek, CarSales.com.au and Stayz do if when a major player like Google comes along and makes their product free. When was the last time anyone used WhereIs? (A site that just launched a popup ad in my browser, little fuckers). Does anyone really think that MySpace and Facebook are going to remain dominant for more than a few more years?

(Almost) everything online will soon be free. If I was shareholder in of any of those fore-mentioned companies, I’d be cashing out now.

Imagine you work in the marketing department of a noodle company. Your corporation provides “quick, easy and healthy meal solutions with broad consumer appeal” (even Don Watson would be proud of that corporate philosophy). Your job is to sell more noodles. You’ve made a name for yourself flogging rice crackers to the female snacking demographic and word from management is the ‘poor male uni student demographic’ is untapped. Your research tells you that they like MTV and they respond to online, so there’s no possible chance you’re going to be able to launch a campaign unless there’s some sort of social media marketing component. You and management don’t really understand how the whole social networking thing works, but you know it’s cool and everyone else is doing it (not to mention the competition), so you do some research and decide to give it a shot.

After months and months of collaboration with the big-name advertising agency, some sizeable cheques, a few prayers, plenty of late-night meal solutions, and some rapturous applause, you come up with Pimp My Kettle. Everyone tells you it’s a great idea, people can watch episodes of a pretend TV show based on the MTV hit and then they can join the site and create a profile to get information about how they can participate in a charity auction to buy kettles pimped by celebrities, all the while being exposed to your brand. You can even get the dude from Mythbusters to do the voiceover; how could the demographic possibly NOT identify and respond! You love it, the agency is proud of it, the boss is happy. It looks great and people are saying the art direction is brilliant. The launch party is a hit and gee-whiz, those pimped out kettles look great in the foyer of company HQ, almost like, gasp, trophies, in a cabinet. The agency is even talking about entering it at Cannes for a Cyber Lion!

The launch date comes, the tech guys do their thing and Pimp My Kettle goes live. You sit back and wait for the sales figures to start going through the roof and update your LinkedIn profile (you learnt about that one in the social networking crash-course the agency gave you) to make sure it’s easy for the headhunters from Nestle to come knocking, but not so easy that management from your company knows what you’re up to.

Two weeks go by, nothing… A few friends of the creative team at the agency and a couple of your cousins have joined up to the site, but it’s been a bit quieter than you thought it would be. No matter, Google alerts (another thing you picked up from an online marketing blog) are telling you that people are starting to talk about your campaign, it’ll all be good, surely. Just a bit of lag time until it all kicks in.

A couple more weeks go by and critics start pointing out that the whole idea was ripped-off a YouTube rip-off of a rip-off. Out there in the blogosphere the demographic is yawning; people are saying that the whole ‘pimp-my’ thing has like, so been done before. Orders from Woolies and Coles are up, but word from sales is that product isn’t exactly flying off the shelves and word at the pub is that the guys over at Maggi are about to launch a TV campaign with a bunch of Olympic stars who claim that their noodles are the key to their success in Beijing; you hate those fuckers ’cause they have enough cash to pull stunts like that all year, but you only had enough budget to run Pimp My Kettle in prime-time for two months.

But that’s the brilliant thing see, even though your brand can’t afford the TV spend throughout the whole year, the website is going to keep working for you for at least the next 12 months, that’s the POWER of social media. In fact, you don’t even NEED TV because the Gen Y doesn’t even watch TV anymore anyway (that Forrester Research survey confirmed it).

Jeez, imagine if it really took off and became a fad, like the ‘Will it Blend‘ stuff. It could SO happen! The focus groups loved the content, it even made your mum laugh and she doesn’t laugh at anything, imagine if you started a whole new trend in kettle-pimping, it could take off around the world and imagine what that would do for the brand! The reach would be phenomenal and everyone would know it was your baby.

OK, LOL, so that probably won’t happen, but man, you’re using social media in a real proper tie-in campaign, you should be super-proud. In fact, you probably should put that on your resume; ‘implemented social media marketing campaign to boost product sales by X%’. No wait, better make it ‘XX%’! Screw that, make it ‘XXX%’ you can fill in the exact figures later, when you find out what they are. They’ll be three figures for sure - that’s the power of social media! There’s just no way this could possibly go wrong.

Yesterday there was a massive outage with Optus that affected pretty much all of Queensland. Phone lines were down, flights were delayed, shops couldn’t use their EFTPOS machines, businesses had no Internet, loved ones couldn’t get in touch, hospitals had no phones, people couldn’t dial ‘000′. In short, it was a bigger PR disaster than having a senior executive tell people he wouldn’t recommend your company’s shares to his mother. Optus’s strap line is ‘Yes’; yesterday it was ‘no’.

I wrote a blog post about it yesterday. I wasn’t doing it to have a whinge, in fact I really didn’t care that much, I’m Australian, I know shit happens, but I did want to see how long it took for coverage of the incident to reach search engine results and I was keen to see what Optus’s reaction was.

The ABC published an article on their website and within 15 minutes of the article going live it was appearing on the first page of Google’s results when I searched for ‘Optus down’. My own blog post was there within half an hour. The ABC and I beat all the other news outlets to the story and both our pages are still there in Google (and I’m willing to bet that this post will hang around for a while to). Optus is yet to mention anything about the outage on their website, in fact they haven’t even issued a media release about it.

The public’s reaction has been furious. Onine news articles were flooded with angry comments, forums were ablaze; hell, people even started venting their fury in my blog. It didn’t look good for Optus, but if they’d had their wits about them, there was plenty they could have done to off-set the negative effects.

What should they have done?

Traditionally speaking, they should have at least issued some media statements about the situation quick f’ing smart — the golden rule of crisis management is to control the situation; if the public are getting their information from you you can control the message. I learnt from the ABC that journalists were trying to get in touch with the company for official comment from 8.30am, but it was 8.30pm last night before they published a story with comment from Optus spokeswoman Maha Krifhnapillai. As a customer I wasn’t happy about their silence - they’re a communications company for goodness sake. That’s by-the-by though, this blog isn’t about tradition.

What Optus will be living with now, and for years to come, will be the search engine results legacy of their PR disaster. Posts like this one will survive for years when people search for ‘Optus sucks’ (so far there are 64,900 others, and counting), and posts like the one I wrote yesterday will hang around when people search for ‘Optus down’, not to mention the 78,000 results that appear when you search for ‘Optus outage’.

If I were Optus I’d be taking control of the search engine results. I’d be publishing pages on the official Optus website that are tailored to appear at the top of Google when people search for ‘Optus outage’, ‘Optus sucks’ and ‘Optus down’; I’d be explaining that their up-time is actually bloody good, I’m sure they have some excellent figures to back it up.

Unfortunately, if you look to Google for information on their company, you’re going to get a very different story. In fact, when it comes to digital strategy and online marketing, Optus sucks.

I recently wrote a post on the definition of spam in a 21st Century marketing context which touched on the topic of what happens if you get caught spamming in Australia. The process is similar in most western countries. In case you don’t want to read the whole thing, here’s a quick summary:

1. You generally get an official warning from the Australian Communications and Media Authority first, but;
2. There are fines of up to $220,000 per day for a first offence for a business entity
3. Do it again and you risk a range of harsh penalties, you’ll get an infringement notice and we’re talking anything from a few thousand to a few million dollars: read some case studies here

If you live in Nigeria your government probably won’t take a whole lot of action if you decide to send unsolicited email with little regard for the recipients’ rights (or intelligence). However, if you live in Australia, or any of the other more progressive countries with stern privacy laws, the consequeneces of sending out bulk email can be severe, even if you think you’re doing the right thing (in one case a managing director of an infringing company was ordered to pay $1 million out of his own pocket).

People generally only want to receive email they’re expecting to get, so no matter how great you think your offer is, if you send an unnounced message to a bunch of people who aren’t waiting to receive it, it’s not going to go over very well. At best they’ll ignore you, at worst, they’ll report you to the authorities. The Australian government provides a handy online form for reporting spam and to their credit, they even provide a plugin for Outlook and Outlook Express, which means that if you send email people aren’t expecting to get, you are literally only one mouse-click away from being reported to the Australian Communications and Media Authority (other countries have similar systems in place).

If someone does lodge a complaint against you (everyone’s definition of spam is different, even people who opted in can change their mind, it happens) and it’s your first offence, expect to receive the following email from Alana Keynes, or one of her colleagues in the Australian Government (or a government near you).

The following message was passed onto me by the client who received it (we had nothing to do with it, I swear!) And remember, this is just for a first, seemingly innocent offence. Do it again and you could end up in court:

—

To Whom It May Concern:

The Australian Communications and Media Authority (ACMA) is responsible for the investigation of complaints of alleged breaches of the Spam Act 2003.

This email is to inform you that ACMA has received a complaint from [the complaintants email address was here] alleging that a commercial electronic message (email), that did not meet the requirements of the Act, was sent on 1 July 2008 from [senders name went here] with the subject heading “Association Member Survey”.

Specifically, the complainant alleges that no consent to receive such messages was given.

The Act makes it an offence to send unsolicited commercial electronic messages with an Australian link. ‘Unsolicited’ refers to messages that are sent without the consent of the recipient.

The Act requires that senders of commercial electronic messages must include accurate identifying information about the organisation or person that authorised the sending of the message, and must include a functional unsubscribe facility.  All requests to unsubscribe must be actioned within five working days.

At this time ACMA would simply like to ensure that you and your staff are fully aware of the Act’s requirements. To assist in this, ACMA maintains extensive information regarding compliance at www.spam.acma.gov.au (click on ‘Understanding spam’ and ‘Ensuring that you don’t spam’).

However, please be aware that if ACMA receives further complaints about your activities, or other information that indicates non-compliance with the Act, we may initiate further investigative action.  This could include further inquiries into this complaint or a formal ACMA investigation as to whether a breach of the Act has occurred.

It is important that all senders of commercial electronic messages are fully aware of the requirements of the Act, as the penalties that can be imposed under the Act are substantial, with fines of up to $220,000 per day for a first offence for a business entity.

Please ensure that the complainant’s email address is removed from all electronic mailing lists immediately, and that all future electronic correspondence complies with the Act.

Please respond to this message to ensure it has been received by the correct recipient.

Regards

Alana Keynes
Compliance Officer
Anti-Spam Team
Australian Communications and Media Authority
1300 855 180

—

Bottom line: Just because people are a member of an organisation, or accidentally left a box ticked on an online survey they filled out, doesn’t mean they want to hear from YOU. Don’t send anyone anything unless you know they specifically requested it or you’re wasting time, pissing people off and jousting with the law, none of which is good for your brand. My golden rule for sending commercial email messages is:

“Only send an email if you know the person would complain if they didn’t get it.”

Footnote: US marketing guru Seth Godin has an excellent email checklist you might like to consider before you send any email message, bulk, commercial, personal or otherwise. It’s well worth a read.

Six points to NAB (Australia’s biggest bank) for trying, but their recent attempt at infiltrating a football blog with advertising messages about their new SMS banking service (they were giving away free tickets to a game as part of their launch promotion) raised the ire of many, including the respected online magazine Crikey and blogger Duncan Riley, who started a reasonably successful call to boycott the bank.

I happen to be an NAB customer and I can’t say I like their tactics either.

The idea to spam the comments sections of private blogs was a recommendation of PR agency Cox+Inall,  and had been undertaken by Cox+Inall with the bank’s full knowledge and approval. A NAB spokeswoman said that no-one at her company or at Cox+Inall had considered approaching blog owners first for permission before posting their promotional messages.

“Cox+Inall had searched for blogs that included AFL coverage and were well-enough read to attract readers who might be interested in our offer. We identified five or six blogs where we felt we’d give it a try.” the spokeswoman (Felicity Glennie-Holmes) said.

“Blogs are a public forum”, said Ms Glennie-Holmes. NAB and Cox+Inall felt this meant commercial interests could feel free to contribute unsolicited and irrelevant commercial material as comments.”

I have to pop into my local branch this afternoon to give them some documents relating to a credit card account I’m trying to close. I might hang around for a little while in the foyer and hand out flyers to customers who look like they might be interested. You know, just to give it a try. NAB won’t mind surely?