Amazon Lessons for a Digital World - most trusted brand in USA !

We love Amazon, not the least because Alan and I are both authors and Amazon helps sell our books in many markets and regions where the local bookseller might not know of us and our books.. But there is more to the book on Amazon than just its covers. And the latest finding by Millward Brown study of trust in brands in the USA, puts Amazon on top of all brands, ahead of Fedex, Downy, Huggies and Tide, etc. In case readers might not know what these other brands do, Fedex is the parcel delivery company, Downy is a fabric softener ie it is related to washing clothes, Huggies is a baby diaper, and Tide is a laundry detergent. Yet internet brand Amazon tops these long-term staples of the US market.

AMAZON EXCELLENCE

So what is it about Amazon? I don't claim to be an expert on e-commerce haha, but I think there are several things that set it apart, both against its bricks-and-mortar booksellers and against online retailers. First is range. Amazon seems to carry every book and if its a current book (still in print) odds are you'll find it at Amazon ahead of almost any other bookseller. Classic "Long Tail" offering so to speak. So if you like books (or DVDs, CDs, etc other stuff that Amazon now also sells) its probably one of your favorite booksellers to begin with.

But it gets better. We have the recommendations. Not just how many stars a book has, but actual reviews by real people who had bought the book. Very useful and its user-generated, so Amazon didn't have to do that, they just enabled a platform for user comments and reviews and ratings, and now we have a massive data resource on commentary of books. Regular buyers put very high degree of trust on these consumer-created reviews and ratings. (ya-ya-ya, "communities dominate" and all that, eh?)

Amazon has good prices. It started as a discount book retailer but soon moved to offering books at pretty much normal prices. They offer so much a better deal otherwise, they don't need to give big discounts to get business (another lesson there for companies headed to the digital space). They deliver to your home, and they even have added the 'search inside' feature which allows you to browse books for parts of the pages inside - and better yet, the search inside will also be indexed to Amazon's search overall. So for example if you search for "Tomi Ahonen" at Amazon you find not only my six hardcover books sold by Amazon, but you find many other books that mention Tomi Ahonen.

That all is wonderful and fine. I am sure all of that has contributed to Amazon's loyalty and trust. And that they tend to do very well with order-delivery, even to difficult destinations as here into Asia haha.

AMAZON MAGIC

What I think sets Amazon totally apart, and is something far more compelling, is their recommendation engine. You know, it will know what kind of books you've bought and what you've looked at recently, and based on that pattern, it will recommend books for you. And if you are at a title, it will suggest books that are similar to the book you were looking at. This is not user-generated content, this is an intelligent data-mining algorithm that digs through millions of purchases by millions of people and discovers patterns. So people who buy books about "3G" will also be drawn to books about "UMTS" or about "Wireless broadband". Amazon's search engine is not 'intelligent' enough to know that 3G is more-or-less the same as UMTS which is a close synonym to wireless broadband. But it finds the purchasing pattern. And it can make recommendations to buyers based on those patterns.

To me this feature, the recommendation engine and the discovery of similar book titles (or movie titles, music etc) is the most powerful part of Amazon, something that no bookstore owner can master across all book titles. And there is a real insight here, for our Communities Dominate blog.

AMAZON DOES ADVERTISING THAT WE LOVE

Note that Amazon's recommendation engine delivers advertising to us. It is advertising not driven by a book publisher brand, or by a given author, or by what a given 'real' bricks-and-mortar bookstore happens to have ordered too many of, and has overstock and piles into a big table to sell at half-price-off. No, Amazon uses its engine to just make recommendations to us. It advertises to us. Amazon really does not care whether you buy Harry Potter or an obscure 7th mass media book by some crazy Finnish ex Nokia dude. They want customers to discover good books and buy those - and come back and buy even more books.

But it is advertising. Did you ever stop to think about that? That Amazon's recommendation to you when you sign up today, is advertising aimed at you? That while we 'hate' advertising on TV and radio and newspapers, billboards, the cinema (and online and on mobile phones) - we LOVE the advertising on Amazon? We love it. We crave it. We want more of it (we actually click on those images of books on the bottom of the page, which suggest more ADS of books that are more like the one you were looking at). Advertising that we love? Advertising that we want more of? Imagine that?

This is a perfect example of what the future of advertising will be like. We hate ads that are not relevant (why does TV show me an ad about baby diapers, I don't have children). We love ads that are personalized. I love it that Amazon knows my interests are in mobile telecoms, in digital media, in James Bond, Ice Hockey and Formula One.

JUMP AHEAD ONE DECADE

Today this is the beginning. We understand Amazon, we (as in this case the advertising and media industries) don't yet fully understand how that might relate to other media and other marketing, advertising and sales. So it is not obvious how Nike or Levis or BMW might use this concept in their advertising on the web or on mobile (or digital TV or DVD etc). But advertising will evolve and improve. The key lesson is - that it is absolutely definitely possible to create radical new advertising concepts - that are loved by their recepients. Like Amazon's recommendations.

Soon we will have our 'digital footprint' driving the intelligence of not just our book purchases (and DVDs and music) but increasingly other areas in life as well. This is so powerful - imagine how much this is exciting to the ad industry, where the customers 'hated' their 'product' ie the ads. Customers hated TV ads so much, that they bought expensive TiVo devices just so they can 'skip' past the ads. So, advertisers know fully well that regular consumers hate, despise, their offering. But now magical new ad methods are being invented, Amazon recommendation engine being one of them. 

But Amazon does not track what I do outside their store. Imagine the power, if we had in one place the digital footprint of everything we do. In some way, Google is attempting to collect that for itself, through Google search and Gmail and maps and YouTube etc. But its still a clumsy work-around, and while the internet is indeed very wide-spread, its not ubiquitous. 

THE POWER OF DATA COLLECTED VIA MOBILE

The one gadget that is with us at every point of our lives is of course our phone. It is truly personal and it is with us when we consume other media (1 in every 7 minutes of media consumption with any mass media, features the mobile phone as part of the media experience according to Universal McCann in 2009). So its the American Idol voting type of behavior, and the fact that as the end-credits start to roll in the cinema, we already send SMS text messages to friends telling them if the movie was worth seeing. That kind of thing. The phone travels with us from our home to our work and our leisure time and back to our home again. It reveals very quickly who are our best friends and what kind of telecoms traffic patterns we generate with whom.

It goes actually far further. The phone is our personal diary collecting our messages and pictures we take along the day. It is our watch, our alarm; our calendar and reminder. Many use the maps and navigation of smartphones. The phone is soon emerging as a cash-replacement vehicle for small payments like public transportation and parking and lotteries and vending machines. The phone screen is replacing various ticketing and coupons from airline tickets and rock concert passes to loyalty card schemes and discount coupons. And now the phone is starting to become a remote control device, to control the locks to our homes and cars, to control the air conditioning and lights in our homes. A couple of years into the future and our home robots, our plants, our pets will send messages to our phones to tell what is going on at home (robtots) or when they need water (plants) or when they need to go out for a walk (dogs) etc. By the way, I am not kidding, all of these already exist as consumer-sold products and services in leading digital countries like Japan and South Korea. Soon shopping malls in your country will also feature shops that sell home robots like they have had in Seoul South Korea since 2007.

So yes, fast forward to the middle and end of this decade. Almost all of the relevant activity we do, will transit the phone in some way or another. Then lets go back to Amazon. Now think about the digital footprint. If all of our activity involves the phone - its with us in our car, its with us in our important job interview, its with us when we have our romantic dinner with our loved one, its with us when we go partying and yes, even when we sleep the phone is there in bed or on the bedside table with us. Its the last thing we see before we fall asleep and its the first thing we see when we wake up (as its our alarm clock too). The phone can actually wake us up from sleep with an incoming text message or phone call - its that powerful. Our iPod or PSP or netbook or Kindle won't be anywhere near that important to us.

So data.. Increasingly almost every activity we do, we will be using the phone for it - today's stats from the FCC report that even Americans are well catching up to global mobile stats. 28% of American mobile phone owners use the mobile internet (same level as the world average, 28%). Google has been telling us for five years now that the future of the internet is mobile, and Nokia just told us in January that the global majority of internet access is now from phones, not personal computers. As my consulting company has reported, 1.3B total mobile phone based 'browsing' users vs 1.2 billion PC based browsing users. The shift is already happening and we've passed the mid-point.

The FCC numbers tell us also that while only 66% of Americans use SMS text messaging (78% is global average) that number keeps growing. And then on the bright side, already 52% of Americans use picture messaging ie MMS (well ahead of the world average which is 37%). So already today globally 3 times more people send messages on a phone than use any kind of messaging, email, IM or otherwise on a personal computer; more people browse web and WAP pages on a phone than use the 'legacy PC based internet' on a phone - and MMS with 1.7 Billion users worldwide reaches already more mobile phones than the total installed base of television sets on the planet. That is where we are at, in February 2010.

WHEN iPHONE IS FORGOTTEN TOY TO PRE-TEENS

Then consider the modern smartphone. What is your favorite smartphone? An iPhone 3GS or Blackberry Bold or Nokia N900 or Google Nexus One or whatever is your superphone of choice. Then remember, the world average replacement rate for phones is 17 months (its more than twice as fast for phones as the 42 months for personal computers). So by mid 2011 your hot superphone of today, will have become a used hand-me-down phone given to your eldest teenager kid. And by 2014 it will be yet another old phone, forgotten and forlornwhere far more powerful superphones are in our pockets.

That smartphone, which was the absolute ultimate best phone of today, that you cherish using now, will be so obsolete, that you will hand it over to a 7 year old nephew or niece - essentially as a toy. By 2014 we will be giving used, old, forgotten smartphones with 3G speeds, WiFi, a 3 megapixel camera, DVD quality videorecording, a large color screen etc - as toys to our pre-teen aged kids. And these devices are as powerful as a new top-end laptop from a few years ago, or a supercomputer twenty years ago. Toys for our kids.

So, what happens - the power of the phone keeps getting far better and the price of the phone cheaper - due to Moore's Law. And now that Google tells us that everything is going mobile - that Google in fact do 'mobile first' - it does mean all digital 'stuff' is headed to the phone. It is no longer in doubt.

IF THE AMAZON ENGINE WAS ACTUALLY COLLECTING PHONE DATA

So, Amazon. Imagine if the Amazon recommendation engine was actually 'embedded' onto our phones. So it would know not just what we 'buy' using the phone - Tomi prefers Pepsi rather than Coca Cola for example - but the digital footprint really of what we do - Tomi watches James Bond clips on his phone and downloaded a Ferrari engine ringing tone and plays a Formula One videogame and catches up on the NHL and Olympic Ice hockey scores on his phone - plus he Twitters and blogs on his phone etc. The pattern of data is far more complete and compelling - Tomi's phone disappears from Hong Kong and appears in Slovenia or Brazil or Canada or Norway - we see his travel patterns etc...

The phone is the natural collector for the future data related to our digital footprint. All of it, not just our purchases. If my location was the local cinema and after the scheduled end of the new James Bond movie I sent several SMS text messages to friends who also have an interest in both movies, and James Bond - we get very compelling data about me - Tomi the movie-going James Bond fan - but even more so - the 'social context' of my consumption - who else do I consider to be a friend AND also a James Bond fan.

FUTURE OF BEST ADVERTISING IS MOBILE

Remember Amazon recommendation engine is advertising. Now think, if we collect accurately usage patterns based on the phone - we get a far wider reach of data points than Amazon can hope for. Or even what Google could hope for from our internet Google-branded activities like Gmail, search, maps etc. And then what if the advertiser first gets my permission (we have to have opt-in in engagement marketing obviously) and then - my digital footprint is intelligently analyzed to offer me recommendations. So now, what if British Airways sees that their frequent flier Tomi Ahonen is also a James Bond fan and lives in Hong Kong but regularly flies between Hong Kong and London. Well, when the next 007 feature is released, BA could offer me a slightly discounted seat on the flight to London for the first week of James Bond's next premier. Even offer the movie tickets for free (consider the cost of movie tickets vs cost of intercontinental air travel) and tell me they show a James Bond movie marathon on the flight. Normally the BA website would never find out that their frequent flier Ahonen is also a Bond fan.

If we get targeted, relevant, valuable, useful, personalized offers (advertising) that are well done, we will love them. Not just 'tolerate' them, we will love them. Just like we love Amazon's recommendations. Our friend, author and blogger Jonathan Macdonald tells time and again, that when he was with Blyk, that was the finding - that teenagers and young adults who received the radically new 'engagement marketing' based MMS and SMS advertising though Blyk's system, they loved it and the single biggest complaint that Blyk got - was that the audience wanted MORE of the ads. It is not illogical, think of Amazon. If we get permission, then do truly relevant, targeted and useful ads, our audience will not even think of it as advertising, they will think of it as valuable information and will love it.

Amazon is proving it to us today. You can become a most-trusted brand even as you serve ads to your clients. And advertising can be so good, that consumers will love it and look forward to it and seek more of it. Now, when that data is no longer held by only one merchant, but collected from our phone - we do get to what Alan Moore's been writing about in his latest book with Ajit Jaokar and others Social Media Marketing, that social marketing intelligence is the new black gold of the 21st century. And where can we best collect that black gold? Via the phone of course. Which may explain a bit more why Google is going 'mobile first' and they bought the mobile ad giant Admob; why Apple bought Quattro and earlier Nokia had already bought Enpocket.

This is an exciting year for mobile advertising but we are only starting to grasp the true potential. Remember Amazon's recommendation engine. If we use that kind of insights for mobile (and web) and especially in engagment marketing, we will get satisfied consumers who will love our ads. Great lesson taught to us by Amazon.

Now please allow me a quick plug - if you want to see 50 examples of world-class mobile advertising cases from 19 countries - all real, all excellent, pioneering, innovative and including many of the best award-winning campaigns using 'engagement marketing' - check out my eBook Tomi Ahonen Pearls Vol 1: Mobile Advertising. It only costs 9.99 Euros and there are free sample pages and cases at the eBook ordering site. see Tomi's Pearls Vol 1

TWO FOLLOW UP POSTINGS

I have added two blog postings expanding the thinking. I first show how we are moving beyond demographics and what becomes possible when we voluntarily accept the 'digital leash' via the mobile phone. Then I went further into that topic, showing there are 3 levels of consumer behavior insights we get from mobile.

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