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"The Personalization Summit" (the fourth in an ongoing series) was
held November 12-14, 2000, at The Fairmont Hotel, San Francisco, CA
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Dear Clients, Partners, Friends, and
Fellow Seekers of the Cyber Holy Grail:

If you're not hearing a whole lot these days about personalization, one-to-one marketing, CRM, eCRM, and other variations on the theme, you're likely living on a deserted island somewhere -- *without* a wireless PDA. Although that life may have its rewards, I suspect most of you are at least slightly interested in what the heck this thing called the Internet is doing to marketing, branding, customer communications and retention, customer service, and online commerce.... whether you're a B2C, B2B, B2G, C2C, P2P, or A2Z.

Whatever the acronym-of-choice, your business *will* be changed by personalization, the experts say. So, forget the island--there's no escaping...

A number of these experts gathered recently in the City by the Bay to toss it all around, for a large gathering of folks seeking to better understand this so-called holy grail of marketing. And yours truly was there to capture the high points for you. Here's the first of two reports...

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Thought Leaders Assess State
of Marketing and Personalization

by Graeme Thickins
grt@gtamarketing.com

"What a difference a year makes," said conference producer and host Steve Larsen in his opening, referring to the growth of the Summit, now in its fourth iteration since the event debuted in San Francisco one year ago. "It's mirrored the growth of personalization technology itself." He said attendance at the first event was about 550, with 30-some exhibitors-- while this year's crowd, he said, was about 1000, with some 90 exhibitors. In addition, media and analyst attendance last year was only six, but reached 40 this year.

Personalization, said Larsen, "is the DNA that's changing how business is done." He pointed out how it's gone beyond just the web, "migrating to all other customer touchpoints." He also said it's now much more than retail, moving into such industries as financial services, insurance, and travel.

Larsen pointed out that at least one speaker held the title of Director of Personalization, and asked, "How long till we see a 'CPO'?"

He warned the attendees, however, that the industry needs to be careful it doesn't over-promise. "We must coexist with other technologies and work together," he said.

The advent of personalization, while far-reaching, doesn't mean mass marketing is dead, Larsen said. He envisions the day when the system that targets newspaper ads to hundreds of thousands of people will, at the same time, have the ability to target an individual.

After demonstrating the new SportBrain device he was wearing, Larsen concluded by saying "All these technologies have implications for privacy. And the industry needs to take the initiative to deal with it--not wait for others to."

Soulmates: ABC's Krulwich Falls in
Love With Collaborative Filtering

Unlike most TV tech coverage, which is all "wow stuff," reporter Robert Krulwich of ABC News told attendees how he decided to do a different kind of story--one that would more deeply examine the implications of a new technology: collaborative filtering. Krulwich, the opening keynoter, recounted how he came to do the story, and showed us taped segments of it, as it appeared on ABC's "Nightline."

Actually, his assignment for Nightline began with the question: which invention was more significant, air conditioning or the Internet? Even though AC had significant societal implications, causing major population shifts in the U.S., for example, the Internet was profoundly different, he said -- noting it was almost instantly accepted, with its "astonishly efficient search system" and its capabilities as a communications tool.

In his research, he was struck by a web site called "Movie Lens," which was a project of some researchers at the University of Minnesota that resulted in the startup of software company called Net Perceptions. The site gave people recommendations for movies based on other movies they said they liked. And Krulwich found, from his own use of the site, that it was uncanningly accurate.

So, he asked 10 others at ABC News of different ages and incomes to try it, for a broader assessment. He became even more impressed by what he discovered the site and the technology could do, and began wondering if this technology could be "the beginnings of your own personal butler."

Krulwich also interviewed a large mail-order catalog company in the UK, a company called GUS, based in Manchester. It had been using the same Net Perceptions technology. The company mails millions of catalogs a year, some 25 different titles, and gets millions of call a year. What Krulwich observed "was very spooky," he said, because the "upsale recommendations" the company's call center people were making to customers, based on the collaborative filtering technology, worked so well that many of these recommendations were for things the customers said they had had *just purchased* -- often items totally unrelated to the other product -- thus, again, the uncanny accuracy.

After interviewing others about the technology, Krulwich began to realize that it could also be the little guys (artists and musicians) who could benefit significantly from it, becoming better able to sell their music or creations. And, after doing a survey about the technology on the ABC web site, he discovered people weren't too concerned about its implications, including the privacy of their information.

Thus, he said, he determined that personalization technology offers more benefits than costs, and that it even could help identify new talent. But, since he thought the "big players" could potentially take advantage of it for their own interests, he wondered if it wouldn't be "better to sell the technology to customers, not merchants." [A model not yet being pursued to my knowledge.]

Krulwich feels the all the hubbub now around the privacy issue is a temporary situation. "With the right safeguards," he said, "This technology could rearrange the furniture of the world--if you don't screw it up!"

UC Prof Sealey Disses State of Marketing
He Helped Create, Talks 'Back to the Future'

"We must fundamentally change the way we build and nurture brands, ending brand clutter," said Peter Sealey -- stating in a single sentence the thesis of his new book, "Simplicity Marketing." Dr. Sealey, a former marketing head of Coca-Cola, is an adjunct professor at the Haas School of Business, UC Berkeley.

He described his book as essentially being the confessions of a marketer who made marketing too complex. The result of all this brand complexity, said Sealy, is "stress and confusion in the customer." The focus now should be relieving that stress, Sealey declared.

For some 50 years, marketers have focused on increasing choices, creating a "choice glut" with consumer confusion and stress. "Our lives today are far more complex," said Sealey.

"Do we need 13,000 mutual funds?" Sealey asked, ticking off several similarly outrageous examples of choice glut: 47 flavors and sizes of Crest toothpaste, 25 packages of Coke, 6000 Visa cards, 300 digital cable channels, 3 billion offers a year for credit cards, 47 commercials per hour on TV, and 270 billion coupons per year--1000 for every man, woman, and child--only 3% of which are ever redeemed.

"GM has 67 brands," said Sealey, "and they only have 28% share! How can they carve it up that small?" He also reminded us all how many phone numbers and email addresses we all seem to have today.

"My point is this," said Sealey. "Human capacity for choice is not an infinitely expandable thing -- and we've reached the threshold."

He went on to provide some examples of brands that practice simplicity marketing: iMac, BMW, AT&T One rate, In 'n' Out Burger (known to many die-hard fans in California), Southwest Airlines...versus their complex brethren: Dell or Gateway's "build your own PC," GM, the cell phone "tiered rate plan," McDonald's, and American Airlines.

Sealey talked about "the Internet 2.0" as being far more important than what we've seen to date. "The kids of Palo Alto ran 1.0 -- the Fortune 500 will now dominate." We'll be moving to an era of the "always connected consumer," he said, referring to a world of wireless, always-on Internet, with dial-up access becoming a thing of the past.

He cited some examples of how consumer use of the Internet is rapidly expanding: Southwest Airlines will sell $1 billion in tickets online this year, even beleagured JC Penney predicts 'Net sales this year of $300 million, Ford now lets dealers sell directly on the web, and new consumer travel sites like Orbitz and HotWire are emerging as airlines get together to exploit the opportunity. In the coming months, Sealey said, we'll see more and more consortia being formed to go after consumers -- not just the supply chain ventures, like the automakers' Covisint, we've been hearing so much about.

And he added an exclamation point with numbers like these: the 'Net has allowed the airlines to save $6 billion in travel commissions over the last four years, and online advertising (despite all the negatives we're now hearing) totaled some $4.1 billion in the first half of 2000, alomost double the total for all of '99.

Sealey then alluded to what's coming next: the Internet 3.0. "The Internet destroys the boundaries of the firm. It changes its very nature," he said. The day is coming when only the core of a company will be overseen by the CEO, and all else will be outsourced. "For example, all Coke should worry about is marketing and distribution," he said of his previous employer.

"The 'Net slashes multi-party transaction costs, and demolishes the limits of time and distance," Sealey shouted. "Like savings of $9,000 on a $30,000 car."

Closing his talk on what seems the hottest-of-hot conference topic these days, Sealey spoke of how the constraints of the Information Age are going away: processing power is now essentially free (for example, about 25 cents per MIP for the Mac G4), with the movement of data trending to zero as well -- as bandwidth grows some 3X per year, and a single fibre cable is now capable of carrying up to 160 completely autonomous streams of data. Combine that with data storage becoming essentially free (down from about $11 per megabyte in 1988 to now only 2 cents!), and what results? Why, the phenomenon now being called "P2P," or peer-to-peer computing, of course.

"Processing moves out to the edge," said Sealey. "As the constraits evaporate, power shifts to the consumer." Browsers will change since "people don't want to be connected to computers, but to information." That will result, he said in a "new computing paradigm (that) will not be desktop or browser-centric." [Read: wireless Internet devices.]

This P2P phenomenon will cause huge productivity advancements, Sealey said, "like going back to the early 1900s." He spoke of how mass marketing reached its peak about 1978. "Now we're going back to one-to-one," like it was early in the last century. "It will now all be run by the consumer."

(More to come in a second report: Hagel & Singer talk branding...and selected speaker quotes.)

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Some Event Stats

"The Personalization Summit," the fourth in what has grown to an ongoing series, featured 6 name keynoters, 2 interviews of industry notables, 28 sessions (4 tracks: Techniques, Strategies, Case Studies, Trends--spread over seven 50-minute time slots), about 90 exhibitors, 5 Platinum Sponsors, 11 Gold Sponsors, and approximately 1000 total attendees. The dates for the next Summits, as announced at the closing, are April 1-3 in New York City, and December 2-4 in San Diego. More info at www.Personalization.com.

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That's it for now, but that second Personalization Summit report will be posted soon here, with more in the way of specific insights from this event.

Again, if you'd like to be among the first to receive my reports by email in the future, just email me, say "yes," and include your contact info.

your faithful, unstoppable, cable-car ridin' Nob Hill
hob-nobber, and insanely personal conference reporter,
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Graeme Thickins, Founder & Principal Consultant
GT&A Strategic Marketing Inc.
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Voice: 952/944-1672
Fax: 952/944-1673
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