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  • feedwordpress 22:01:00 on 2020/04/19 Permalink
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    New Research Shows Why and How Zoom Could Become an Advertising Driven Business 

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    As the coronavirus crisis built to pandemic levels in early March, a relatively unknown tech company confronted a defining opportunity. Zoom Video Communications, a fast-growing enterprise videoconferencing platform with roots in both Silicon Valley and China, had already seen its market cap grow from under $10 billion to nearly double that. As the coronavirus began dominating news reports in the western press, Zoom announced its first full fiscal year results as a public company. The company logged $622.7 million in revenue, up 88% from the year before. Zoom’s high growth rate and “software as a service” business model guaranteed fantastic future profits, and investors rewarded the company by driving its stock up even further. On March 5th, the day after Zoom announced its earnings, the company’s stock jumped to $125, more than double its price on the day of its public offering eleven months before. Market analysts began issuing bullish guidance, and company executives noted that as the coronavirus spread, more and more customers were sampling Zoom’s easy-to-use video conferencing platform.

    But as anyone paying attention to business news for the past month knows, it’s been a tumultuous ride for Zoom ever since. As the virus forced the world inside, demand for Zoom’s services skyrocketed, and the company became a household name nearly overnight. Zoom’s “freemium” model – which offers a basic version of its platform for free, with more robust features available for a modest monthly subscription fee – allowed tens of millions of new users to sample the company’s wares. Initially, Zoom was a hit with its new user base – stories of Zoom seders, Zoom cocktail parties, and even Zoom weddings gave the company a consumer-friendly vibe. Here, again, was the story of a scrappy Valley startup with just the right product at just the right time. According to the company, Zoom’s monthly users  leapt from a high of 10 million to more than 200 million – an unimaginable increase of 2,000 percent in just one month.

    Just as quickly, however, Zoom became the subject of controversy. Like Google and Facebook before it, Zoom’s success as a product comes from an unwavering focus on convenience. Zoom makes it as easy as possible to use its platform. Employing invisible technical tricks, Zoom engineers made the platform easy to install, easy to share, and … easy to hack. Press reports about “Zoom bombing” began dominating the headlines, and as reporters dug in, so did reports of significant (and long ignored) security failings. Large corporations, state governments, and school districts banned the company’s products. Media outlets began to investigate the company’s Chinese roots – only to discover that the young firm had mistakenly routed user sessions through its servers in mainland China. Zoom responded quickly, freezing product development and focusing entirely on responding to critical security issues. The company then updated its privacy policies, in response to criticism that it might use user data in the same ways that Google and Facebook currently do (more on that below).

    But with China and the United States entering a third year of an increasingly heated trade war, and now blaming each other for the origin of the novel coronavirus, Zoom finds itself in an extraordinary position that no amount of crisis communications can overcome.  Zoom’s founder and CEO, Eric Yuan, is a Chinese ex-pat and naturalized American citizen. More than 700 of his 2,500+ employees live and work in China. Until March of this year, Yuan was held up as an example of the best that global capitalism can offer – an ingenious immigrant who bootstrapped his way to America and leveraged hard work, smarts, and venture financing into a multi-billion dollar fortune.

    Now Zoom’s brand – and its future – live under storm clouds of suspicion. In just four weeks, the company has inherited the full force of the American “techlash.” And the companies previously at the center of that storm – in particular the “Big Four” of Apple, Facebook, Google and Amazon – are  happy to pass along that unpleasant mantle. What might it do next?

    * * *

    As some readers know, I’ve been a student of the “Big Four” for more than two decades. For the past 18 months, that work has focused on the terms of service and privacy policies of the Big Four. Thanks to the work of researchers and faculty at Columbia’s School of International Public Affairs and Graduate School of Journalism, we’ve published a study of the underlying architecture of the Big Four’s core policies, a visualization we call “Mapping Data Flows.” This tool breaks down and compares each company’s core privacy and data use policies, with a goal of giving both ordinary consumers and academic researchers insight into the architecture of control currently dominating our economy’s relationship to data.

    Given its very recent and extraordinary rise as a consumer tool, we decided to apply this approach to Zoom’s terms of service and privacy policy as well. You can find our initial findings here.

    As with every research project, our study of Zoom’s policies began with a working hypothesis. One of the most interesting findings from our initial study of the Big Four was how similar their policies were – they all collect vast sums of data, and their terms of service allow them nearly unlimited usage of that data. And of course, all four granted themselves the right to collect, process, and employ user data for the purpose of pursuing advertising businesses – a multi-hundred billion dollar industry driving what Harvard scholar Shoshana Zuboff calls “surveillance capitalism.” We therefore asked ourselves two questions: First, would Zoom’s current terms of service and privacy policies allow them to join the Big Four in the pursuit of an advertising business? And second, given Zoom is (or was) an enterprise facing (focused on business users), as opposed to a consumer facing platform, would its privacy policies and terms of use be markedly different from the Big Four?

    The short answer to that first question is yes. And for the second? That’d be a no. As the first image below demonstrates, Zoom collects a ton of data, and its policies are quite similar to those of its Big Four cousins.

    Figure 1 – Zoom’s Data Collection visualized

    But exploring that first question – whether Zoom might become an advertising-driven business – yielded even more interesting insights:

    Figure 2 – Zoom’s data collection for purposes of Advertising.

    As the illustration from our new visualization above demonstrates, our research shows that nearly all data collected from Zoom user sessions may be used for the purpose of advertising. Despite the clarification of Zoom’s privacy policies posted on March 29th around usage of data from user sessions, nothing material changed in its actual policies. Indeed, the company writes that “We are not changing any of our practices. We are updating our privacy policy to be more clear, explicit, and transparent.”

    To be clear, Zoom does not currently run an advertising business along the lines of Facebook, Google, Apple, or Amazon’s (and yes, both Apple and Amazon have significant data-driven advertising businesses, they just don’t like to talk about them). So why, in their own policies, do they reserve the right to use all collected data for the purpose of “advertising”?

    As any lawyer will tell you, words are slippery things. Certainly in the context of Zoom’s current business, the word “advertising” covers the company’s role as an advertiser – as a brand that uses data to market to current and potential customers using platforms like Google or Facebook. But a careful reading of the company’s policies reveal how easily the same words could allow the company to pivot from advertiser to provider of advertising, should the company wish to. In other words, there’s nothing stopping the company from joining the Big Four as a major player in the provision of advertising services, should it wish.

    How might Zoom do such a thing? And  given its current privacy backlash, why would Zoom ever consider such a move?

    Let’s start with the How, then we’ll cover the Why.

    As I mentioned at the start of this piece, Zoom’s current business is based on what folks in the tech industry call a freemium SaaS (software as a service) model. The company makes a version of its platform available to anyone for free, and then “upsells” those free users to a paid version that has more bells and whistles, like the ability to record, larger numbers of participants on a videoconference, and so on. Pricing starts at $15/month, scaling up to thousands a month for large customers. This model is most often employed for enterprise customers (Slack is a good example), but it’s also found success in consumer-facing applications, where more often than not users pay to get rid of ads (think YouTube or Hulu). Regardless of whether the service is enterprise or consumer focused, free users always outnumber paying ones by an order of magnitude or more.

    One of the most difficult elements of a freemium SaaS model is luring those free users “down the funnel” into paying for a monthly subscription. So how might Zoom convince its bumper crop of roughly 190 million new consumers to start paying up?

    By now you’ve probably figured out where I’m going with all this. Zoom could implement a free service that’s supported by advertising, then encourage users to pay for a version that’s ad free. Doing so would be ridiculously simple: Just as with YouTube, Zoom could force its users to watch a “skippable” pre-roll video ad before the start of each videoconference (and it could use its data trove to make those ads extremely targeted).  Well aware that such an interruption would be an annoyance at best, Zoom could then offer to strip the ads out for customers who paid a small subscription service of, say, $5 a month. If just one quarter of its customer base decided to do so, Zoom’s revenues would jump by $250 million a month – adding a cool $3 billion a year to its top line revenue, nearly all of which would be pure profit. The resulting advertising business could easily add hundreds of millions, if not billions more. That’s five times more revenue than the company reported in its last fiscal year.

    Which brings us to the “Why” of this admittedly speculative (but nevertheless quite reasonable) exercise. And that why comes down to capitalism. Zoom is a public company with a massive valuation – more than $40 billion at the time of this writing. That gives it an unsustainable price to earnings ratio of roughly 1,750 – 76 times larger than the S&P average. The pressure to “grow into” those outsized expectations is enormous. Zoom is staring at a multi-billion dollar business model just begging to be implemented. For its shareholders, board, and senior executives, the question isn’t why it should be adopting the business model that made Facebook, Google, Apple, and Amazon the most valuable companies in the world. Instead, the question is simply this: Why shouldn’t it?

    In another post, we’ll explore answers to that question (and how Zoom, if it’s thoughtful, could help reimagine the core architecture of surveillance capitalism). For now, take a spin around our newest visualization, give us input in the comments below. Thanks for reading, and take care of yourself – and others – out there.


    The Mapping Data Flows project is seated at Columbia SIPA – we are grateful for the support of Dean Merit Janow, as well as the support of the Brown Institute at Columbia’s Graduate School of Journalism, the Omidyar Network, and faculty and staff including Mark Hansen, Juan Francisco Saldarriaga, Zoe Martin, Matthew Albasi, Natasha Bhuta, and Veronica Penney. Hat tip as well to Doc, who’s been focused on these issues for decades as well. 

  • feedwordpress 15:32:15 on 2020/04/06 Permalink
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    An Open Letter To American Corporations: It’s Good Business (and Smart Marketing) To Support Quality Journalism 

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    Brands and journalism need each other.

    “Outbreaks have sparked riots and propelled public-health innovations, prefigured revolutions and redrawn maps.” The New Yorker, April 2020

    “Nothing will be the same.” 

    That’s the overwhelming takeaway I’ve heard from dozens of conversations I’ve had with C-suite leaders, physicians, policy experts and media professionals these past few weeks. 

    When it comes to the business practices of large corporations, there’s no time to debate whether or when things might return to normal. If corporations truly stand for something – and nearly all of them claim to nowadays –  the time to prove it is right now, as the crisis deepens and consumers look to corporations to step up and lead. Companies that wait this crisis out will learn – quickly – that once loyal customers will readily turn to competitors who made it a priority to be in service during this extraordinary moment.

    Communicating that message of service means marketing. With that in mind, here’s a list of fundamental truths given today’s media landscape:

    • Context matters more than ever. Every customer is consumed with understanding the threat and implications of the pandemic. High quality, trusted information is critical.
    • Given this new context, marketing messaging can and must shift toward communicating how a company is adding value to society and its customers. Companies must recognize the severity of our times – brand messaging becomes serious and information dense. 
    • The majority of global marketers have frozen or cancelled their marketing plans, and all are struggling to identify and roll out relevant new messaging.  
    • When those messages are ready, marketers will find that traditional vehicles for messaging have shrunk or disappeared, or seem frivolous and out of context. No NBA or MLB, no Olympics, no live entertainment, and most advertising-driven television production has been suspended. 
    • Stuck inside and online, consumers are glued to news outlets, and have retreated to streaming video for escape – and the lion’s share of those services are ad free. Those with advertising models (Pluto, Roku, etc) have previously been viewed as nascent and unproven. This will change, but at present the connected TV sector lacks the inventory to satisfy the marketing needs of the world’s biggest brands.
    • Pushing context-driven marketing messaging on audience-driven services like Instagram or Facebook Newsfeed will come across as tone deaf. Again, context is now king. Where can serious, service-driven marketing messaging find the right context?   

    Turns out, there is a massive media channel that lives in a serious and information-dense context every minute of every day. This channel has nearly unlimited inventory, deep and consistent consumer engagement, and is eager for partnership with brand marketers.

    This channel is called news. And if marketers are smart, they’ll realize that running their messaging in high quality news channels isn’t just good business, it’s good for society as well.

    For decades, marketers have been eschewing journalism as a serious marketing channel, claiming that brands can’t be built adjacent to coverage of plane crashes, natural disasters, politics, or other staples of the news business. This misguided philosophy has led marketing agencies to create massive blacklists of terms like “Trump,” “guns,” and now, “COVID.” These lists direct tens of billions in programmatic advertising away from local and national news outlets, and toward “safer” channels like live sports on television and Facebook or YouTube online.  

    But it’s time for that to change. Perhaps the most important element of society’s response to the global pandemic lies in the curation and communication of high quality information, and calling that truth to those in power. Who but journalists will hold the governor of Georgia to account for mistruths, or the President of the United States? This has always been the role of journalism – and despite decades of declining revenues, most news outlets are rising to the challenge. Traffic and engagement to news channels has skyrocketed since the COVID outbreak – at The Recount*, we’ve seen spikes of up to 10-20 times our normal viewership. 

    It’s time for brands to rethink news as a marketing channel. This doesn’t mean brands should abandon their metrics of success – but forward thinking leaders in the industry have already proven that news channels can offer more engaged and receptive audiences. A friend and industry leading marketer (who prefers to not be named) has led the way in this regard, investing at least one in three of his media dollars in news channels last year. He tells me that not only are news audiences influential and affluent, they are five times more likely to recall advertising than general audiences, and six times more likely to engage with ads when they recall them.

    Right now, we need more leaders like him to step up and support the news business. And it’s not just good business: journalists are keeping people informed at one of the most important and perilous times of our history. As our finest corporations bend to the work of finding ways to be in service to their customers, they can and should partner with the one media channel that has been committed to serve the public since its inception: Journalism. 


    *Yes, this post can be seen as self serving, and I’m fine with that. I’m convinced that the thesis is sound regardless of my position at Recount Media.



  • feedwordpress 16:24:01 on 2020/03/25 Permalink
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    Will The Coronavirus Save Big Tech? 

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    Who’s Really Behind That “Death of the Techlash” Narrative?


    One of my least favorite kinds of journalism is the easy win. It’s the kind of story that just lands in your lap. It feels immediately counter intuitive and of the moment, and  it simply writes itself. It’s the kind of editorial sin most often committed by columnists facing immutable deadlines, and a perfect example can be found in the Wall St. Journal last week. “OK, Fine, Let’s All Get Back on Facebook,” the headline read. The subhead explains further: “All it took was a pandemic to make Facebook’s privacy-challenged products seem highly appealing.”

    Couched as a review of Facebook products helpful in our current era of social distancing and mandated work from home, the column may well stand as a turning point in what was once knows as the “techlash.” Has the coronavirus pandemic earned the world’s most powerful purveyors of surveillance capitalism a collective pass from the press?

    It certainly seems that way. A rash of articles over the past few days have picked up this narrative – and the comms teams at Apple, Facebook, Google and Amazon would be fired for malpractice for not stoking it. A good crisis must not be wasted, after all.

    But as the Journal columnist noted later in her piece, the reasons underlying society’s broad misgivings around Big Tech remain. With that prophylactic caveat duly administered, the columnist then profiled her own usage of Facebook’s services- and declared them a trend. Before COVID, the company’s many privacy missteps had led her to back away. But now that everyone she knew was stuck inside, she found herself once again checking her feeds, monitoring her neighborhood Facebook groups, and even pointing a Portal camera at her son.

    This narrative isn’t making it into the press without a bit of help. Facebook’s been quite public about the fact that people just like our columnist are in fact flocking to its products. “Facebook Is ‘Just Trying to Keep the Lights On’ as Traffic Soars in Pandemic” crows a recent Times piece. That headline quote comes from Facebook’s famously media-trained CEO, Mark Zuckerberg, who hasn’t exactly made a practice of calling the press and offering offhand observations these past few years.

    It’s always instructive to note when the company actively participates in stories, and when it declines comment. Lately, there’s been plenty of open lines of communication. The Times further wonders if “Big Tech Could Emerge From Coronavirus Crisis Stronger Than Ever.” And somehow (I can’t imagine how), an “internal report” from Facebook made its way into yet another Times reporter’s hands, leading to this chef kiss of a headline: ‘The Coronavirus Revives Facebook as a News Powerhouse.” Over at Wired, Facebook author Steven Levy asks “Has the Coronavirus Killed the Techlash?” He explains: “Facebook has gotten rare kudos for its responses to the pandemic, and perhaps even more significantly, more people are using it for the kinds of meaningful interactions that Zuckerberg has been promoting for a long time. Could this be a turning point?”

    Well, yes, but I certainly hope it’s not the kind implied by present day reporting. Again, the issues our industry struggled with Before Covid won’t disappear After Covid simply because the public is thankful for services (and business models) to which we’ve already become addicted. Perhaps instead, this pandemic could offer more of a step-change opportunity, one that might just offer us new approaches to connecting to others, buying shit we need (and don’t), and staying informed. I can see those new habits already starting to form, and I certainly hope they won’t be limited to Instagram dance parties. More on those in future posts, I hope. For now, back to work.

  • feedwordpress 14:49:03 on 2020/03/13 Permalink

    This Too Shall Pass 

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    In my younger years, I found myself working at a digital agency during the height of the dotcom bubble burst. This was the early 2000s.

    We closed offices, let people go and grappled with the fact that the economy we helped build in code seemed to crumble before our very eyes. It was humbling, to say the least. During these same years, we also endured 9/11 and on a personal front, we had just brought two new lives into this world—a world in transition and turmoil. The uncertainty was palpable.

    I can remember thinking to myself that I might have to move back home with my parents if things got really bad and if I lost my ability to provide. We were a single income family facing uncertain times in an even more uncertain world.

    Today, things are feeling uncertain once again. Markets are in flux, oil prices are plummeting, and of course, a virus triggering fear and impacting economies...

    But wait. We’ve been here before.

    Maybe not exactly. Every time it’s a little different. But this isn’t the first time. We’ve been through much together. And we’re more resilient than we give ourselves credit for.

    This too shall pass...

  • feedwordpress 16:30:03 on 2020/03/09 Permalink
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    Investing In The Future Is Investing In Yourself 

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    Recently, I spent an hour with a colleague who is just starting out in his career and wanted to learn more about what I do, how I do it and how he can apply that knowledge to his exploration of a career path.

    If you have the opportunity to have conversations like these—you should take them. First, because if your professional life has been good to you (and mine has) you have an obligation to pay it forward, especially to those who will build the future.

    Secondly, it's not just an investment in someone else's future but it's also an investment in yourself. When you are faced with the energy, passion, and curiosity of someone just starting out, it's a great inspiration and a reminder of why you do what you do.

    In a world where win-wins are becoming less frequent, this is one. So make time for that person just starting out and don't be surprised if you both leave the meeting better than when you started it.

    The investment is mutual.

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