Why "Black Friday" fails to actually benefit retailers

Every year we suffer through the so-called "Black Friday", the day immediately after Thanksgiving that's supposed to kick off the Christmas shopping season and is also traditionally the single biggest shopping day of the year. This means it's a very important day for retailers, of course, but if you dig into the numbers, Black Friday is one of the worst days for retail establishments, not one of the best.

Let me explain...

According to the Chicago Sun-Times, average modern retailers have about a 5% margin on products, be they a pair of sneakers or a flat-screen television. The same story explains that typical Black Friday discounts are now 40-50%.

I understand the logic, that one or two extraordinary deals will bring people into the store and they'll also buy non-discounted or lesser discounted products, thereby making up the difference in profit. But what if that no longer holds true?

Read the papers, you'll see that across the United States people who went shopping at all on Black Friday were very careful about their purchases and were much more likely to go into a store and buy the one or two super-specials than a basketful of goods.

The result? Instead of getting a nice boost on profits and a good jump-start on Christmas / holiday shopping, the entire experience was more likely a complete bust for retailers, losing them, rather than earning them money.

While some analysts will doubtless peg this to the 2008 recession, I suggest instead that it's the inevitable result of the increasing commoditization of our world, the reduction of everything to its cheapest possible manifestation.

This is what Linda Sanford and I wrote about in our book Let Go To Grow [aff], and it's fascinating to see how it's become a more visible retail phenomenon in the years since we wrapped up the manuscript.

Every time we shop at Wal-Mart or Target to get our product a buck or two cheaper, every time we pop online to save on sales tax, every time we research products to identify the lowest-cost outlet, we're all contributing to the problem.

With a retail economy built on the need for a substantial profit to cover overhead and costs, pay city and county taxes, health care for employees, and offset theft and so on, this trend towards an ever-more-commoditized world is a scary one. If followed to its logical extreme, we won't have any retail stores at all or we'll have to impose online store tariffs that offset the dramatically lower overhead of online drop-ship companies. What choice will we have?

Meanwhile, we'll have to see. I predict that retailers will report that gross revenue from Black Friday sales were okay, but that profit from these sales was down significantly from prior years. And next year, even if the economy is in better shape, won't jump back.

Does The Media look for rifts and bad news? You bet it does.

Reading through the always interesting Help A Reporter Out and I bumped into the following query from an online journalist:

Summary: Gen Y's Opinion of Elders after Disaster

"How does Gen Y see the Boomers and X-ers in the wake of unprecedented screw ups (the economic meltdown, climate change etc.)? And how is this emerging generation poised to wrest control of our culture and rewrite badly warped rules?"

Understand that I'm not saying that we aren't in a troubling place in human history, but pick a previous era, dozens or hundreds of years ago, and there were also lots to be concerned about. Most people just didn't have the luxury of a) knowing about it and b) having time to contemplate it.

What bugs me about the query is that there's such a big assumption that things are indeed broken, and terribly so, and that it's going to take an act of physical or psychological violence to "wrest control" of the situation by the next generation. I just don't believe that's true and it will be no surprise at all to me if the resultant interviews and story don't reinforce this clearly biased and skewed perspective.

The old saw about "dog bites man isn't news, but man bites dog certainly is news" is all too true. In the same vein "as with every previous generation, the next generation will have challenges and will be cleaning up some of the mess of previous generations. How do you feel about that?" is much less newsworthy than "next generation screwed by excess and idiocy of current generation. are we all doomed?"

And you wonder why news = bad news.

Join me at the Angel Capital Summit this Friday!

Rather amazingly, I'm actually going to attend an event where I'm not scheduled to speak, but I am still excited about the Second Annual Angel Capital Summit coming up this Friday, Nov 21st, at the Denver Marriott City Center in Denver, Colorado!

There are some very interesting speakers I'll be listening to, including restaurant entrepreneur and Denver Mayor John Hickenlooper, Anita Burke of the Catalyst Institute and 42 presentations by Colorado startups and entrepreneurial companies throughout the state, all vetted by the Rockies Venture Club and other participating organizations. Finally, the Summit will end with a Town Hall Meeting entitled Disrupting the Recession: Colorado's entrepreneurial response to the financial crisis, election, energy and sustainability.

Note: On-line registration closes at midnight tonight, November 19. Walk-ins registrations will be available at the door. While we'll make every attempt to accommodate walk-ins quickly, please bear in mind that last year's Angel Capital Summit sold out, and some walk-ins were unable to register.

Entrepreneurial success is more important to our society now more than ever. Come to the Angel Capital Summit, and be one of those who "disrupt the recession" and build the future!

Cost: Town Hall Meeting only: $25.00. Angel Capital Summit (which includes the Town Hall Meeting); $129 RVC members, $159 non members.

For event info and registration, go to angelcapitalsummit.org.

I'll hope to see you there!

Does Social Media Really Connect You to Humanity?

I originally published this article in the Phi Kappa Phi Forum and am reprinting it here for my online friends and colleagues. I hope you enjoy it and find it thought-provoking. I realize that it's quite possible you won't agree with my viewpoint. That's good. Explain why you view it differently in the comments section please!

Let me start out with a confession. I'm about as plugged in to the computer networks as anyone you're likely to meet. I first connected to the Internet back in 1980, when it was the ARPAnet and commercial use was completely verboten. Yes, it's come a long way, and so has our society.

Nowadays professionals are just as likely to have their Facebook or LinkedIn URL on their business cards as a phone number, and entire conferences seem to be run simultaneously in the physical world and as a running, often snarky, flow of consciousness dialog on the Twitter microblogging service.

But all of this begs the question: are we really more connected? Do computer and social networks really make us more connected as human beings?

That's what I'd like to talk about in this article.

MYSPACE REDEFINED FRIENDSHIP

One of the first phenomena you notice when you start to connect with people through Web sites that are designed to memorialize connections is that the word "friend" takes on a different meaning. In the physical world -- what people in the virtual reality world of Second Life call "RL" or real life -- friends are generally defined as those people you have a personal relationship with, not anyone you happen to encounter, anyone at your college, company, or other organizations. The latter are colleagues or acquaintances or just people with whom you have something in common.

The first popular sites to delve into the world of friendship, of letting you quantify and identify your circle of friends, were Friendster (which is now essentially defunct, having long-since fallen out of the zeitgeist) and MySpace. On these sites every connection you made had a similar strength, so your best friend Mike is considered just as important in your life as Aunt Flo, to whom you've connected to stop her complaining at family gatherings.

In real life, of course, everyone has close, important friends, intimates who are privy to the highs and lows of your life, a larger circle of what we can call pretty good friends who can help out in a crunch but with whom you don't interact with regularly, and finally "almost friends" who are people with whom you feel an affinity, but geography, time or other logistical issues prevent from becoming closer. And then there are the decaying circles of acquaintances, colleagues, and so on.

ENTER THE KEVIN BACON EFFECT

Very little research in sociology has caught the public fancy as much as the early work by Harvard social psychologist Stanley Milgram, in which he hypothesized that we are all far more connected than we realize. His famous experiment of randomly choosing Midwesterners to hand-deliver letters to Bostonians they didn't know through a chain of friends produced the conclusion that people in the United States are separated by about six people on average.

There are a variety of flaws with this research, but whether we're connected through six hops, eight hops or seventeen, the basic idea that social chains are sufficiently all-encompassing that you and I can find a sequence of friends or acquaintances that connect us is fascinating. Make the end point well-known actor Kevin Bacon and you have "six degrees of Kevin Bacon" or "the Kevin Bacon effect".

It was this question of how to gain access to your friends' friends, or, more accurately, the connections of your connections, that has become the basis of LinkedIn, a social network that lets you answer the question "I wonder if any of my friends know someone who..."

The numbers quickly grow at an extraordinary rate. I have 705 connections on LinkedIn. Take one step out onto that social network and that gives me over 330,000 people in my immediate network. One further step out (we'd call this friends of friends of friends, I suppose) and the number is a staggering 8,392,600 connections.

What does that mean? Am I obligated to send holiday cards to them all or keep track of their birthdays? I sure hope not!

In fact, they're not friends. While they offer up a tremendous professional resource, they don't in any fundamental way expand your social or personal network. They don't connect you with the greater humanity.

Since I know you might be wondering, Facebook isn't any better in this regard. You can certainly join many, many different circles of common interests through mailing lists, applications, etc., but it's still a very abstract, intellectual world. I have 358 Facebook friends and at least 25% of those I wouldn't recognize if we bumped into each other at the local Starbucks.

DO ANY SOCIAL NETWORKING SITES SOLVE THE PROBLEM?

If we're trying to ascertain what helps you become less isolated rather than gaining the appearance of more friends while still leaving you just as disconnected, perhaps the answer lies in dating sites? After all, those are sites where you connect with others because of either an existing or desired personal connection. No, still, that's not right because, with the exception of novel sites like Ignighter.com, they are focused on who you want to know, not who you know.

Another possibility are lightweight social networks like Twitter, to which I admit a personal addiction (you can follow me at @DaveTaylor). The idea behind sites like Twitter are that it'd be useful and interesting to be able to keep tabs on your friends as you all go through your day. Spontaneous meetups, collaboration, and mutual support all easily flow from this sort of connectivity.

Twitter indeed fulfills some of these daily needs for people to be connected, especially with its great strength as a mobile application. It's interesting to see how this evolves too, however, particularly in light of our quest for online tools that help you truly connect with humanity: I keep track of just over 100 friends, all of whom I would recognize at a party, but over 3000 people keep track of what I am saying and doing. It's kind of weird, actually!

IS IT ABOUT MEASURING FRIENDSHIPS?

As we've traveled through the landscape of social media and social networks, whether it's the immediacy of Twitter or the business-like utility of LinkedIn, what has become clear is that these tools need to let us differentiate between close friends and acquaintances, to rate the strength of our connection. Without that capability, everyone's in the same proverbial pool and my connection with my close friend Richard is identical to my new connection with PKP magazine editor Margaret Lisi.

That being the case, you need to make a decision, preferably before you proceed to enmesh yourself in a social network, regarding whether it will capture everyone you know and have more than a passing acquaintance with or whether you will reserve it to your closest friends.

In the social network world we refer to this as quality versus quantity, and there are strong arguments for each approach. But what I want, predictably, is both. The quality gets me the connection with humanity, the ability to stay in closer touch with my intimate friends, and the quantity offers me all the benefits of our modern, highly-connected world. How to attain both? Well, we're still at the veritable infancy of social networks so I'm pushing their edges and watching it all evolve on a weekly basis.

How about you? How will you choose to utilize these many online tools to expand your own social and professional circles?

PR Tip: Exciting products should have exciting press releases too

Last week I survived my visit to the lion's den with my talk on "PR is Dead" to the Public Relations Society of America's Colorado chapter retreat. No brickbats (what the heck is a brickbat anyway?), no scars, and rather a surprising number of PR professionals from major agencies coming up to me afterward saying "you were spot on, Dave!"

My main point in the talk was that modern public relations is about getting journalists and the media (which of course includes us bloggers too) excited about products, services and companies, but while also recognizing that we need our autonomy. It's not about control, it's not about being the gatekeeper for corporate info and communications. I can't really summarize a 50 minute presentation in two sentences, but that's the gist of my main idea, at least.

In this modern world where there are thousands more "journalists" than ever before, there are nonetheless similar challenges that have faced PR since the profession was created: standing out from the crowd.

That's why I'm so amazed by the release I got this afternoon entitled "***Worlds Collide as Midway Unleashes Eagerly-Awaited Mortal Kombat vs. DC Universe***".

So, with that title, you expect something at least mildly visually interesting, don't you? And yet, here's what I got:

This is so boring it's painful to even get in my inbox. We're coming into the second decade of the 21st century, guys, isn't it time to start creating communiques that are visually engaging already??

Mostly I'm just so struck that this major media news for the gaming world that's built upon dozens of very well known comic book figures has been boiled down to the most boring, uninteresting, unengaging press release possible.

Do they really expect any pickup at all??

Is PR dead? You tell me....

Hi y'all. I'm giving a talk to the Public Relations Society of America later this week, with a working title of "PR: 0, Bloggers: 1", and rather than retread the same tired examples, I'd like to ask if any of you have interesting examples of either expensive PR campaigns that were a fail or very inexpensive grassroots blog/social media-based campaigns that were a huge success.

I'll share my notes post-event.

Oh, and if you think PR is just completely dead because "we are the conversation" or whatever, or think that PR's just as essential as it has been for the last 100 years, I'd like to hear from you too!

Thanks.

What was SanDisk thinking when it introduced the SlotMusic format?

This might seem confusing, but in a world where more and more people are obtaining music through digital means, notably the iTunes Music store, a consortium of music companies have introduced a new physical music distribution format called SlotMusic. The idea is simple: a read-only MicroSD card that has an album's worth of music on it, along with - hopefully - additional digital information.

But is it the right product at the right time? I don't think so. Let me explain why...

As we have seen again and again with the introduction of new media formats in the consumer electronics industry, there's a classic chicken and egg problem when it's released. That is, the industry won't release lots of music on this new format until there are lots of players, but people won't buy players until there's lots of music available. The slow adoption of Blu-Ray and demise of HD-DVD are both examples of how this expensive problem plays out in the marketplace.

Clearly there needs to be a compelling reason for anyone to adopt a new music format like SlotMusic and while the vendors talk about simplicity and ease of use, the true key feature is that the music is available in the common MP3 format without digital rights management (DRM) restrictions.

Market penetration of MP3 players demonstrates that people really like digital music, but having a collection of tiny, fragile chips as your music library? Doesn't seem like it's going to work.

Further, there's a classic pricing error in the positioning of SlotMusic too: at $14.99 suggested retail, it's compared to the suggested retail of CD music, but a quick glance at someone like Amazon.com (Nasdaq: AMZN) shows that in fact almost all of the most popular CDs are $9.99. Why that price point? Because that's exactly how much an album's worth of music costs on the Apple (Nasdaq: AAPL) iTunes Store too.

SanDisk's SlotMusic player. Notice the tiny card: that's the MicroSD device.

The only place I can find online that's selling SlotMusic music is consumer electronics powerhouse Best Buy.com (NYSE: BBY), for, yes, $14.99/gizmo. (Wal-Mart (NYSE: WMT) is supposed to come online with SlotMusic material within a week or two).

To be fair, while it appears that you need to buy a new SlotMusic player to enjoy this new medium, each actually includes a USB adapter, making it easy to read them on your computer or laptop device (and then, presumably, copy it to your Mp3 player). There are cheesy low-end SanDisk (Nasdaq: SNDK) players that are cheap at $19.99, but do you really want to buy another player?

Nonetheless, even with the included USB adapter, it's hard to imagine why anyone who is sufficiently plugged in to care about copying the material to their computer wouldn't just use one of the many online music stores, skipping the MicroSD device entirely. (and note that while many users are unhappy about the DRM limitations of music downloaded from the iTunes Store, there are plenty of alternatives)

I'm not alone in being down on the future chances of SlotMusic either. A quick spin through the blogosphere will reveal that GigaOM, The NY Times, NewsOK and Technologizer and Engadget all agree that SlotMusic is destined to fail, not succeed.

I can only wonder why savvy tech company SanDisk even bothered with this half-baked technological effort that doesn't address the cost of music, the percentage of the sale that goes to the artist, or the extraordinarily inefficient distribution channels and costs imposed therein. A way to distribute and sell CDs for $4.99, where $1 would go to the artist would be revolutionary.

A SlotMusic MicroSD physical distribution device for music in the age of digital downloads that retains the $14.99 collection of songs from popular artists is dead on arrival.

How do you use social media to promote your business online?

A friend of mine sent me the following question:

"What sites do you use / recommend using to promote content (i.e. blogs, articles, etc.)? I'm re-tooling our business website and blog, and want to make sure I get the most effective (popular?) ones, along the lines of Technorati, Digg, etc. Your answers will help me pick the buttons I'll use..."

There are definitely some people who say "you should just do it all" and some of them even have a presence on dozens of social media sites. To me, that's not a viable answer because most people -- myself included -- want to focus on their core business, not the promotional tools. It's like someone who forgets that in addition to nice print ads, their restaurant still needs to serve a good meal. Not a good long term strategy, needless to say!

My view of things is that you need to have both a "destination" and pointers to that destination in the online world. Further, I believe that each of the major social networks (e.g., Facebook, LinkedIn, MySpace, etc.) is its own little universe and that you need to have some sort of presence on each of these where your potential customers participate. (let me explain that a bit further: if you have a restaurant, yes, you should have a presence on MySpace. If you're a lawyer, however, LinkedIn is more likely to be your core constituency).

Your destination is where you tell the story, where you sell your product or service (gently, please), where you actually try to close the sale. My recommendation for this is a weblog (not surprisingly) where you can create search-engine friendly content and retain control of its design and presentation. I also recommend that you have a standalone blog, rather than using, say, the "notes" section on Facebook or the crude blogging tools available in MySpace.

Once you've created the destination content, it's time to think about what additional sites can help you promote and gain traffic. There are two categories of these: bookmarking sites like Digg and Delicious and separate universes like Facebook and MySpace.

For the former, there's a never-ending wrestling match between having them be valuable and having them be polluted by people trying to game the system. In particular, Digg has had a lot of growing pains in this regard and I've spoken with "top diggers" who candidly say that they sell their popularity: you want visibility on Digg? Pay them.

Nonetheless, if your audience is sufficiently tech savvy to know what these sites actually are, then there's no reason not to include a few of those bookmarking buttons. I suggest you include Digg, Delicious and StumbleUpon, or use a consolidation bookmark tool or widget like Socialtwist, which I'm using on my busy Ask Dave Taylor site.

Don't go crazy and list ten or more of these. There are sooooo many me-too bookmark sites but listing too many causes confusion for readers, the old "embarrassment of riches" problem. It's not going to gain you additional visibility.

In terms of separate universes, of the social networking sites (as opposed, as I said earlier, to bookmarking sites), I think almost everyone should have a meaningful presence on Facebook and if it's a professional product or service, LinkedIn. If your target demographic includes the under-18 crowd then you also need to be on MySpace.

On many of these sites you can automate things so that when you post a new blog entry it shows up on these sites too (for example, see my article about How to hook your blog RSS feed to your Facebook profile) which certainly makes life easy. Automation is good.

The problem is that I don't think that every single blog entry I write is appropriate for every social community within which I'm a participant, so my suggestion is that if you write something really good, manually promote it on the other sites too.

That's a perfect use of Twitter, for example: not to think of Twitter as a purely promotional channel (which will fail) but rather to intersperse an occasional pointer back to your core content with your other Twitter comments. This is exactly applicable to, for example, your Facebook status updates (ditto MySpace, LinkedIn, etc).

If your material includes video, YouTube can drive traffic, and if you've photographs or still images, putting them up on Flickr can produce yet another traffic stream.

Finally, after this crazy long entry, I will say that my plan for promoting this particular blog entry is to mention it on Twitter with a clickable URL link included, to post the same status message on Facebook and to write a brief summary - with "read more" link - and post it to my MySpace blog area. And, hopefully, a few of you will bookmark it too, but I don't pre-bookmark my own entries.

...and the fact that you're reading this shows that the strategy works, at least at some level. :-)

My busy, busy next seven days

It's good that I like being busy, because I sure am right now! Tomorrow morning I'm opening up the Thin Air Summit with the keynote address on "Finding a Voice: The evolution of personal media through history", then Monday afternoon I'm a judge for the Colorado Inventor's Showcase in Denver. A few days to recharge my batteries and Friday I'm back on the podium, offering up the keynote address for the Public Relations Society of America's Colorado Chapter meeting in Denver. My topic is "Social Media 1: Public Relations 0 - Understanding, tracking and managing the message in a highly connected world".

I'm also going to be moderating a (recorded) panel discussion for Blogger & Podcaster early next week, with author Michael Webb, ClickBank Director of Marketing Bob Dunlap, and blogging affiliate marketer Miles Baker, which I'm looking forward to quite a bit: they're just the right people to discuss the challenges of commodity marketing. (the discussion will be made available through Blogger & Podcaster magazine a few weeks later)

In the midst of all of this I'll have a complete change of pace by accompanying my delightful 4yo daughter on her class Martinmas lantern walk. If you don't know what that is, the holiday is based on the legend of St. Martin of Tours, who was born in 316. He's honored for having apocryphally sharing his cloak with a beggar and represents brotherliness. According to custom, as the days become shorter and the stars appear earlier, children would walk with lanterns through the streets singing. As the world grows darker, the inner light of man wants to shine forth. That's what I'll be doing mid-week.

Then it'll be right back to business and social media and the online world, 2008AD. Kinda Jekyll/Hyde, actually. Everyone who is a parent and businessperson, however, knows what that's like!

Sheesh. I think today I should just stay in bed and sleep, so I can be caught up for what's going to be a fun and exciting, but tiring, next seven days! I hope to see you at one or more of these events.

Malaria kills a child every thirty seconds...

A bit off my usual beaten track, but I'm a big proponent of much of the work that the United Nations does, especially through UNESCO and UNICEF. If you've read my writings for a while, you've probably seen me talk about this before, and if you've ever gotten an Intuitive Systems holiday card, you won't be surprised that they're all from UNICEF too.

Generally I feel that the United Nations is misunderstood and greatly maligned in the United States and that most people have no clue about the tremendous work that the organization does above and beyond the often empty pontification of the General Assembly. Fact is, though, the UN is trying to make the world a better place through so many different avenues it can make your head swim. From sexual abuse to childhood illnesses, poverty to giving downtrodden a political voice and control over their future, there's quite a bit going on every week at UN offices throughout the world.

This week marks a very interesting conference that's the subject of this blog post: The Safer Alternatives to DDT meeting in Geneva.

The UN release describes it thusly: "Some 80 delegates from governments, industry, research institutions and non-governmental organizations (NGOs) today kicked off a three-day United Nations-backed meeting in Geneva focusing on cost effective and environmentally-friendly alternatives to DDT, a controversial chemical used to control malaria."

What you might not realize about malaria is just what a major problem it is around the world. According to the US Center for Disease Control and World Health Organization, 300-500 million cases of malaria are reported annually and over one million people each year die of malaria.

Far more shocking is that in Africa, where it's rife and mostly affects younger children (as it does throughout the globe) a child dies from malaria every thirty seconds.

It's safe to say that, yes, malaria is a major health problem, and it's really amazing that in the 21st century when we have cellphones with more technological capabilities than the original Apollo lander and a global Internet that makes sharing information unbelievably simple and efficient that a disease transmitted by mosquitoes remains such a plague around the planet.

If you're a cool-hearted businessperson and can read these statistics without any sort of emotional reaction, think about this: "Because malaria causes so much illness and death, the disease is a great drain on many national economies. Since many countries with malaria are already among the poorer nations, the disease maintains a vicious cycle of disease and poverty."

Break these cycles of poverty and the world will unquestionably be a safer and better place.

This is the perfect example of a diseases where a vaccine would be a good solution (certainly better than DDT) but, as the CDC explains: "There is currently no malaria vaccine approved for human use. The malaria parasite is a complex organism with a complicated life cycle. Its antigens are constantly changing and developing a vaccine against these varying antigens is very difficult. In addition, scientists do not yet totally understand the complex immune responses that protect humans against malaria. However, many scientists all over the world are working on developing an effective vaccine. Because other methods of fighting malaria, including drugs, insecticides, and bed nets, have not succeeded in eliminating the disease, the search for a vaccine is considered to be one of the most important research projects in public health."

I urge you to take a few minutes off today to think about the plague of malaria and what you can do to help out. Perhaps it's a donation (there are a number of charities focused on breaking the malaria cycle), perhaps its just praying for a cure and for the souls of the twenty or thirty African children that died while you were reading this blog.

In this day and age when we seem to focus most of our attention on a small number of big issues, I find it helpful to expand my mind and my attention by remembering the less glamorous problems we all face too.