Growing Business Opportunities in Home Lighting, Heating

November 10, 2012

A ban on incandescent light bulbs took effect in the European Union last month, making more efficient lighting technologies — including compact fluorescent lightbulbs (CFLs) and light emitting diodes (LEDs) — standard across Europe. Such a milestone reminds us that market shifts — whether spurred by regulation or innovation — open up new opportunities for businesses to sell greener products and services to consumers.

Many of these emerging opportunities focus on efficient home energy solutions for consumers. Here are two that businesses should consider:

Next-generation lighting

The European Union isn’t the only region phasing out traditional incandescent lightbulbs. In 2007, the United States passed a similar regulation that effectively eliminates many of those bulbs by January of 2014. Initially, this mandate spurred demand for CFLs, likely from niche consumers willing to pay a higher price for an emerging technology that promised lower electrical usage and longer product life. But, since 2008, CFL purchases have declined each year, despite a precipitous drop in price.

Today, according to the U.S. Department of Energy, two thirds of the energy savings potential from CFLs has yet to be realized. As such, with the U.S. pulling out of the recession and consumers more willing to open their wallets, businesses have an opportunity to spur demand for next-generation lighting products.

Retailers are showing renewed interest in efficient bulbs. Ace Hardware, for example, recently declared Oct. 18 to be Annual Light Bulb Day to raise national awareness for CFLs and other lighting technologies. It also offered discounts on purchases to motivate foot traffic and drive sales.

Alternatively, Ikea has chosen to bypass CFLs: It plans to stock LEDs exclusively by 2016 because it believes the rapidly evolving technology will likely outperform CFLs in the near future. By picking a winner in the lighting category, IKEA generated a lot of buzz for its stores and interest in this emerging technology.

Utilities and utility regulatory boards are also spurring demand as they comply with state energy-efficiency mandates. For example, Efficiency Vermont, an organization authorized and funded by the Vermont Public Service Board to promote energy efficiency, launched a successful campaign to increase the use of CFLs. The campaign tackled the perception that CFLs were more expensive by advertising 99-cent bulbs available at participating retailers. It also created a sense of urgency (“good while supplies last”) to drive demand. The campaign was so successful that it doubled the number of CFLs sold per month.

Natural-gas home heating

Meanwhile, another home-energy opportunity is emerging: converting home heating systems from heating oil to natural gas. Not only would shifting to natural gas greatly reduce carbon emissions and improve local air quality, but — in most cases where gas lines are nearby — would also generate very positive returns for homeowners.

Technology innovation is precipitating this opportunity by unlocking vast amounts of natural gas in shale formations across the country. Many such formations are concentrated in the northeast, a region that historically has relied more on heating oil, partly because of the region’s limited pipeline capacity for bringing gas from the Gulf of Mexico. With natural gas supplies increasing, the residential price has dropped dramatically from its peak in 2005-2006.

Simultaneously, the residential price of heating oil has grown dramatically, providing even more incentive for households to switch to natural gas. In fact, according to the Energy Department, the average heating-oil-heated household now spends more than three times as much on heating ($2,298) as the average natural-gas-heated household ($724).

Of course, many of the developments in natural gas are the result of hydrofracking, a controversial extraction process. Many believe that hydrofracking risks contaminating aquifers used for drinking water, although the degree of risk is up for debate. And while greener fracking technologies are emerging, they haven’t yet reached commercial scale. Still, the benefits of shifting away from heating oil to natural gas may outweigh the costs.

If shale gas extraction continues, there are many ways that businesses can promote natural gas conversion to consumers. Certainly, energy companies can motivate their own customers to make the switch through the use of incentives. Utilities such as Con Edison are already helping to coordinate clusters of property owners to convert together, thereby lowering the upfront costs for individual customers.

Banks also can promote natural gas conversions by extending loans to help consumers make the switch. One such loan program by People’s United Bank covers the upfront conversion costs for Southern Connecticut Gas and Connecticut Natural Gas customers.

Market shifts in regulation and technology are enabling new opportunities to provide efficient home energy solutions for consumers. Many businesses are already starting to take advantage of this. Those that aren’t yet should take note: As the U.S. continues to emerge from the recession, consumer appetite for such solutions is only likely to increase.


Reframing Ancestral Traits To Be Green

June 21, 2012

Certain human behaviors today reflect hardwired traits that helped our ancestors and their kin over time. Such behaviors provide individual benefit, yet the collective impact of such actions can be detrimental to the environment, creating a situation not unlike the Tragedy of the Commons.

Unfortunately, for green marketers, such individual behaviors are not easily influenced, creating an ever-present headwind that they must contend with. Confronting such behavior directly, such as asking individuals to make different choices because current ones are detrimental to the environment, has not proven very successful for marketers.

Instead, Vladas Griskevicius, Stephanie Cantú and Mark Van Vugt, in a recent paper published in the Journal of Public Policy and Marketing, suggest that there are alternative ways to shape such behaviors: Motivate individuals to take more pro-social (and therefore, more eco-friendly) actions by reframing them as having “evolutionary selfish” benefits.

Based on Griskevicius et al., there are at least three social motivations that will drive individuals to alter their behavior in a more pro-environmental way.

Social obligation. One ancestral trait that marketers must confront is that individuals promote self interest – or the interest of their kin – over others. Importantly, Griskevicius et al. note that this wasn’t always the case. For example, it is well documented that clans hunted together, generating mutual benefit. For marketers, this provides a window of understanding into how similar behavioral choices can be reframed today in order for individuals to generate positive benefits from collective actions.

One way marketers have tried to motivate individuals to do so is by creating a social obligation.  Hoteliers have attempted to do so by offering to make a donation on the behalf of guests if those guests reuse their towels once during their stay. Yet, when behavioral economists tested such messaging, it did not motivate significantly different behavior than traditional messaging.

Recently, economists have tried a different approach. This time, the offer of donation was reframed not as a choice but as a fait accompli. The hotel simply informed guests that a donation had been made on their behalf in exchange for reusing towels. In this case, guests felt more obligated to reciprocate, lifting towel reuse by 26 percent (from Goldstein, Noah J.,Vladas Griskevicius, and Robert B. Cialdini (2012), “Reciprocity by Proxy: Harnessing the Power of Obligation to Foster Cooperation,” Administrative Science Quarterly, forthcoming, as cited by Griskevicius et al.). For marketers, such reframing has broader applicability when companies can afford to incentivize consumer actions, but cannot track and reward individuals for their specific behaviors.

Social recognition. Another ancestral trait is that humans strive to achieve relative (though not absolute) status. This means that humans want a certain level of wealth, power or fame in relation to those around them. Such behavior – the proverbial “keeping up with the Joneses” – is well documented. For example, neighbors of Dutch lottery ticket winners have a higher propensity to purchase new cars or renovate the exterior of their existing homes within the following six months after the winner takes home the money. Such behavior, however, can be problematic as it can lead to over consumption.

Interestingly, consumption is not the only way to display relative status. In fact, as Griskevicius et al. mention somewhat counterintuitively, status can also be achieved through competitive altruism whereby wealthy donors compete for status based on the amount donated, with public recognition for their generosity as a primary motivator.

But marketers can drive eco-friendly actions more broadly with consumers, not just with wealthy donors. The Elan Inn in Hangzhou, China, for example, rewards hotel guests for reducing their carbon impact by moderating room temperatures in summer and winter, or even bringing their own towel. Such rewards would be even more powerful if status were associated with visible perks enjoyed during a hotel stay or meaningful badges displayed on Facebook or local social networks.

Social influence. A final ancestral trait is for humans to unconsciously emulate the behavior of others. For marketers, the challenge is to redirect the behavior by holding up pro-environmental behavior to emulate. For example, as Griskevicius et al. point out, it has been demonstrated that the conservation behavior of one’s neighbors is “often the strongest predictor of [one’s] actual energy use.”

Such benchmarking against others works well as long as a majority demonstrates the desired eco-friendly behavior. But, what happens if only a few neighbors do?

Griskevicius et al. suggest that in this situation, green marketers should reframe the message to create the perception that more people do. They provide an illustration: Instead of communicating that only 5 percent of municipal residents carpool, message that 250,000 do. Reframing the message from a relative to absolute basis can create the perception that more people support the eco-friendly behavior, elevating the social influence that a campaign can actually have.

Hardwired human traits present a challenge for green marketers, as individual behaviors that benefit natural selection may collectively be detrimental to the environment. Instead of confronting them head on, marketers should reframe behaviors to be more pro-social, while ensuring that they are perceived to benefit the individual. By doing so, marketers turn headwinds more favorable.


Pay-As-You-Go Pays for the Environment

December 23, 2010

Pay-as-you-go (PAYG) is emerging as a winning consumption model for the environment. It does so in two ways. First, by charging for incremental use, PAYG discourages overconsumption often associated with flat rate pricing. Second, it incentivizes shared use of resources during peak periods in order to avoid excess investments in capacity that would otherwise be underutilized for much of the time.

In recent years, several PAYG models have emerged that are having a positive impact on the environment. For example, smart grid initiatives provide consumers with tiered pricing models that incentivize them to reduce or shift energy use during peak periods. Additionally, PAYG models in cloud computing allow consumers the flexibility to add computing capacity in real-time, while avoiding the need to overinvest in server capacity utilized only during peak periods.

This month, another consumption model got a big boost when the California Insurance Commission approved the launch of PAYG car insurance in the country’s largest car market. Beginning in February, 2011, California residents will be able to purchase insurance from State Farm and the Automobile Club of Southern California and pay based on how much – and how safely – they drive. The less they drive, the less they pay.

Such a model is enabled through the tracking of personal driving data. Consumers self-report miles driven (and validate periodically through inspection) or do so automatically through an active OnStar system or small telematics device that plugs into a diagnostic port under the dashboard. Insurance companies then effectively create personalized rates based on actual car use.

Potential benefits for the environment from PAYG are significant: The State of California estimates that subscribers may reduce miles driven by 10% or more, saving consumers money while reducing accidents, congestion and air pollution.

A wide variety of companies are now in a position to consider testing PAYG models with their customers, especially those that are price sensitive, tend to use a product less than the average or demand additional services during peak periods. While consumers may focus on saving money, the real benefits may be saved for the environment.


Green Brand Leadership: a Fish Story

August 16, 2010

The customer is always right – so goes the mantra of every sales rep from time immemorial. But, as we know, what customers want may not be best for the planet. For some brands, this presents a dilemma: how do you satisfy consumer needs while remaining eco-responsible?

The dilemma can be quite daunting for a brand, especially if the eco-impact is caused by lifestyle choices consumers are long accustomed to. This challenge is only compounded when consumers are not yet aware that their very actions are having a detrimental effect – as no brand wants to be the bearer of bad news. Or, perhaps more challenging still, brands may find that the very behaviors and rituals that help define a brand itself turn out to perpetuate the very actions that are having a negative impact.

Whose responsibility is it to promote more sustainable consumer behaviors?

Many brands would say, it is the role of governments to regulate – and if they don’t, a corporate entity is not accountable for their failure to act. Others would say that it should be left to the discerning buyer. Should a brand itself take the lead? Some may argue yes. It is a demonstration of brand leadership, they say.

But, being out ahead of one’s customers may serve brands well only when their customers expect them to do so. Staking out a leadership position appeals to customers that want to know that they are doing good through the choices that they make.

Others may argue no. Brands sell products, not morality they might say. Worse, eco-responsible messaging may be antithetical to the experience a brand is trying to create. It is hard to enjoy pleasures guilt-free if one is constantly reminded of the impact that one is having on the planet.

But, regardless of where one nets out on this issue, one thing is clear: today, brands are increasingly left with little choice but to act – or react – whether or not their actions directly influence customer purchase decisions. Advocacy groups as well as individuals are leveraging the power of the media (and social media) to broadcast and amplify their voices to sway popular opinion.

Whether viewed as an opportunity to demonstrate leadership or take a defensive stance, it is likely that more and more brands will have to make such choices.

One example of such tension between brands and eco-decisions recently appeared in the New York Times Magazine article by Paul Greenberg, “Tuna’s End: The Fate of the Bluefin, the Oceans and Us.” (June 27, 2010), As Greenberg writes, Nobu, the internationally acclaimed sushi restaurant chain, faces a decision today over the selection of seafood that it serves.

The Atlantic Bluefin Tuna – a prized fish for sushi and sashimi – is now endangered. Continued commercial fishing may push it to extinction. Further, the timing of the BP oil spill in the Gulf likely exacerbated the situation by polluting one of two known breeding grounds in the Atlantic for these fish right as mating season was to begin.

Today, Greenpeace is pressuring Nobu – in large measure because it is a category leader – to no longer serve Bluefin to its patrons. Nobu has resisted. Nobu co-owner Richie Notar noted, “The Japanese have relied on tuna and other bounties of the sea as part of their culture and history for centuries. We are absolutely appreciative of your goals and efforts within your cause, but it goes far beyond just saying that we can just taken what all of a sudden has been declared an “endangered” species off the menu. It has to do with custom, heritage and behavior.”

Arguably, Nobu’s brand identity emanates from a careful balance of adherence to the tradition and ritual of sushi – its creation, its presentation, its consumption – and hip appeal: swanky ambiance, innovative food creations and celebrity ownership. Out of balance, the brand does not deliver on the experience consumers have come to expect.

With this balance in mind, Nobu has tried to stake out a middle ground by updating its menu with the following message: “Bluefin tuna is an environmentally threatened species. Please ask your server for an alternative”

Such a simple message informs patrons of the issue and then let’s each consumer make their own choice. Additionally, such phrasing invites a dialogue between the patron and server regarding food substitutes, though it is unclear as to how many patrons would be inclined to do so.

What Nobu has missed, however, is an opportunity to leverage this situation to evolve its brand appeal – keeping the balance between tradition and hip appeal while elevating each to the next level.

Nobu could find an alternative to Bluefin tuna and not jeopardize the brand, but arguably reinforce consumer perception of Nobu as hip and trendy. Greenberg asserts that what Nobu needs is a new substitute for tuna. As part of his research, he went searching for a Bluefin substitute and may have found one in a fish known as kahala. Arguably, Nobu is missing an opportunity to be one of the first to introduce kahala across its menus, reinforcing its trendy image.

Ironically, by introducing such a substitute, Nobu would not be breaking with tradition, but rather, returning to it, as Bluefin was not widely popular in sushi until just 30 years ago. It was nowhere to be found in sushi before 170 years ago.

Thus, shifting away from Bluefin and offering consumers a tasty substitute could actually enhance Nobu’s reputation for seeding new trends while maintaining close adherence to the tradition of sushi.

In this case, what is good for the brand may actually be good for the planet.


Driving Adoption of Renewable Energy: Part II – An Energy Marketer’s Perspective

September 1, 2008

Interview with Adam Capage, Director, Utility Partnerships, 3Degrees

 

With the #1 renewable energy program in the US, the City of Palo Alto Utilities (CPAU) must be doing something right.  In fact, despite a formidable price hurdle, CPAU has managed to sign up over 20% of Palo Alto residents for clean energy, and is not finished yet.

 

Notably, when CPAU decided to aggressively market renewable energy to its customers, it decided to reach beyond traditional utility circles to engage the right marketing partner.  For that, CPAU turned to 3Degrees to educate consumers and convert them to clean energy.

 

Recently, I had the opportunity to talk with Adam Capage, Director of Utility Partnerships at 3Degrees.  We spoke of the challenges that marketers face when trying to shift consumers to renewable energy, the approach that 3Degrees takes and reasons why it has been so successful.  Here are his words:

 

MG: How do you partner with utilities?

 

AC: Essentially, we partner with utilities by leveraging their brand and their customer connections [and combine it] with our knowledge of how to talk to people about why they’d want to support renewable energy. 

 

The Palo Alto partnership was [our] first utility partnership [formed] in 2003.  When we partnered with Palo Alto, they had already had a green program operating for three years and it had not yet reached 1% participation. 

 

In many ways Palo Alto had the ideal demographics for marketing this product.  And so it’s very tempting to just think “Well hey, its Palo Alto, of course they’re at 20%”.  But, the product did exist for three years [before involvement by 3Degrees] without hitting 1%.  So, it’s a combination.  Yes, demographics are key.  But, you do have to talk to [consumers] repeatedly and get the messages out there and that’s what we’ve been focusing on. 

 

Since 2003, the participation rate has basically sloped upward the whole time.  Today, we’re actually over 20% now and we haven’t seen any slowing.  We keep kind of wondering if and when it will slow, but it hasn’t. 

 

Traditional thought was that there was low hanging fruit [to acquire] and then it would get harder to acquire people over time.  Instead, it seems that you can create new low hanging fruit.  As you talk to people, you make [renewable] an accessible, appealing product to new groups.  Another possibility is just that Palo Alto has such a huge percentage of their population with [the] perfect demographics [for purchasing renewable energy] that you can get an incredibly high penetration rate.

 

MG: Do you tailor your message to particular subgroups within the city?

 

AC:  No.  The real challenge is that renewable energy requires people to pay a premium and they have absolutely nothing [tangible] to show for it.  People for a long time tried to compare this to organic food or bottled water or other premium product.  And, you just can’t do that because with bottled water people think they’re getting [a personal benefit like] cleaner water.  With organic food they might be stopping themselves from having pesticides.  [Unlike with renewable energy], it’s not just about the public good.

 

[Marketing clean energy] is like a request for people to make a private contribution to a public good.  And that’s just damn hard. 

 

I think that the best parallel is public radio and TV knowing that people understand that the programs are very likely to continue whether or not they pay up, but they do it anyway.  With renewable energy we need to put a line item on the bill that says you pay more.  It’s very hard to make people get connected to what they’ve done.  So we try but you know we can’t be in the home everyday like public radio or TV. 

 

We focus on a message that you can make a difference and there are specific environmental benefits to purchasing renewable energy.  We link [environmental benefits] to specific energy usage and [provide] examples of benefits that are local.  And then we repeatedly try to get that message out there.

 

MG: Do you focus your message on awareness or consideration for purchase?

 

AC: When we start each [partnership], it is like going back to 2003 in Palo Alto; you start from ground zero.  It’s a cluttered market and it’s hard to break through so awareness is definitely our first battle.  

 

With Palo Alto I think that awareness has come a very long way.  I don’t think they’ve done research recently, but I bet it’s pretty high  so now we’ve got messages that simply say “just do it”.

 

MG:  What is average price premium for renewable energy?

 

AC:  It varies quite a bit around the country based on the premium for clean energy, current electricity rates and the amount of energy that is consumed.

 

In California the average household uses something like 500 or 600 kilowatt hours a month, where as we have a partner, Amerin, that is based in St. Louis.  Its Missouri customers use on average 1,000 kilowatt hours a month.

 

The premium for Palo Alto [residents] that convert [to renewable energy] is going to be between $5 and $7 per month I think.  For our partnership in Amerin, it’s closer to $15 per month on average. 

 

MG:  Aren’t renewable energy prices independent of oil price shifts?

 

AC:  The programs aren’t designed that way.  A few [utility tariffs] in the country are actually designed where the renewable energy price is essentially substituted on people’s bills for their traditional fuel.  Those programs have seen great success.   Everyone understands why they’ve seen [success] as they have a whole new message to talk about: price stability because [the price of] renewables never change.

 

Most programs are designed where the renewable energy premium is on top of what they already pay.  So the thinking [by consumers] is renewable energy is more expensive.  You aren’t actually getting the electricity from [specific] wind turbines anyway.  What your dollars are doing is allowing the utility make more investments in putting renewable energy into the overall mix.

 

Hence the public good part: your electricity comes on just like everybody else’s except you pay more.

 

MG: Are you actually paying for 100% equivalent renewable energy?

 

AC:  Yes.  Not every program in the country is designed the same. But, our five partnerships are all 100% usage.

 

MG: What are the key customer insights for purchase of renewable energy?

 

AC:  A few people talk about new technology and want to support it.  A few people talk about fuel prices going through the roof and we are beholden to the Middle East, so they want to support another source. But the majority just says “I want to make a difference”.  It seems like one small step, one small opportunity for [consumers] to do that.

 

MG:  Can the success of Palo Alto be replicated across the country or is this an anomaly?

 

AC:  20% might be an anomaly but I know that, in general, these [renewable energy] programs are underperforming.  We have five like I said.  One of them just started and so it only has a couple tenths of a percent participation.  But all together our five average 7.8% participation.  The industry average is 1.8%.  You can do this better.

 

MG:  What’s the secret?

 

AC:  I think that the partnership model is a really good one.  The utility has the customer’s eyes and contacts and, in most cases, the customer’s trust.  That is certainly true in Palo Alto.

 

3Degrees brings the messaging and dedication to execution.  The single best thing we’ve found is that you collect information about what channels and messages are working well and you just execute again and again and again and again. 

 

That’s not what utilities do; they are not marketing organizations.  We do the marketing behind their brand and no one ever knows our name.  We want it that way.

 

MG:  Do you think that the social narrative has changed given Al Gore’s movie a few years ago and just the growing reality and awareness of global warming?  Has that context enabled you to move the needle further?

 

AC:  It definitely helps.  We were out in front of movie theaters when Al Gore’s movie was released.  We set up tables outside to intercept people came out of the movie.

 

MG:  When you target utility customers, what kind of marketing campaign do you implement?

 

AC:  The campaign is continuous.  Email, bill insert, direct mail, events.  We’re spending money and testing different channels all the time except TV.

 

Yard signs are also used to bring to peoples’ attention that their neighbors have done this.  We get requests [for signs] saying I want to show people that I did this.

 

MG: Were there other ways that you tapped viral marketing or activated influencers?

 

AC:  We did holiday card campaign where we sent all Palo Alto participants a card that they could send to their friends saying “I participated in Palo Alto Green and you can too”.

 

We offer wind tours where we let participants come and then, hopefully, tell other people about going to a wind farm and seeing what their money is supporting. 


Driving Engagement and Viral Impact in the Green Space: Part II – Original Content

July 11, 2008

While creating and sharing user-generated content is an effective way to facilitate consumer engagement and viral marketing, it is not the only approach that marketers can take.  Professionally produced original content is another proven way.  Increasingly, agencies or production studios create and seed content on behalf of their clients for consumers to view and share online.

 

One such shop is Free Range Studios which has produced several original videos that have generated significant buzz and viral impact in the green space.  Calling its approach “socially conscious viral entertainment”, Free Range tries to “distill a complicated message into a fun or moving short story” while engaging its viewers by allowing them “to write the end of that story by taking action or donating.”  Stories are distributed not only through paid advertisement but via video sharing sites such as You Tube and, more specifically, RiverWired, emPivot and LivePaths in the green space.  They are also distributed offline at concerts and events.

 

Recent Free Range videos with eco-themes including Grocery Store Wars, a Star Wars spoof about a “small band of organic vegetable puppets” including Cuke Skywalker, Ham Solo, Chewbroccoli and Obi Wan Cannoli that do battle against Darth Tader and the Dark Side of the Farm.  

 

Most recently, Free Range released The Story of Stuff, a 20-minute video that explains the environmental impact regarding the “stuff” we consume.  The video has been a huge hit, recording more than 3 million viewers on The Story of Stuff microsite alone. Moreover, the video has received acclaim by winning the SXSW Interactive Award for its contribution as an educational resource.

 

Marketers should recognize that there are certain trade-offs made in producing their own original content themselves versus encouraging users to generate it for them.  For example, with original content, upfront costs are likely to be significant higher.  Yet, for getting a complex message across to consumers, original content may be a marketer’s best option to hit a home run.


Managing Environmental Risk by Looking through the Rear-view Mirror

June 1, 2008

A recent survey by The Economist Intelligence Unit identified both the top influencers of – and benefits derived from – corporate environmental risk management (CERM) programs.  Two things are curious about these survey results.  First, customers and investors rank relatively low in influence (fourth and seventh, respectively) despite the fact that “better corporate reputation” among these groups ranks as the primary benefit for launching CERM in the first place. 

 

Second, “regulators” and “government” exert significant influence – second only to “executive management” – on companies to initiate CERM programs; in terms of benefits, however, “improved relations with regulators” ranks only eighth.

 

Risk Manager Responses from Recent Survey by                    The Economist Intelligence Unit

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The high level influence of regulators and government suggests that corporations consider regulatory compliance as the primary measure of CERM success.  This focus is understandable given the stiff fines imposed for non-compliance.

 

Moreover, it also suggests that corporations believe that regulatory compliance is the way to improve its reputation with customers and investors.  Yet, while compliance is arguably important with customers and investors, it is simply the place to start.

 

When it comes to customer and investor groups, focusing solely on regulatory compliance is like driving a car by looking through the rear-view mirror.  Quite simply, regulations do not necessarily reflect current consumer and investor expectations regarding corporate actions toward the environment; instead, they reflect those held in the past when the regulations were passed.

 

This is an important distinction because consumer and investor expectations regarding corporate environmental responsibility continuously evolve.  As such, it is likely that current expectations have far surpassed current regulations in place today.  Take climate change, for example.  There is a growing consensus that carbon must be regulated, yet no binding limits yet exist in the US.  

 

There are other cases where customers or investors actively challenge management’s environmental policies.  For example, led by members of the Rockefeller family, ExxonMobil shareholders have made it clear that they believe that when it comes to climate change, compliance with existing regulations is not enough for this oil giant.

 

As such, corporations that primarily focus on regulatory compliance are likely falling short when it comes to improving their reputation with consumers and investors.  Instead, management should try to better understand current customer and investor expectations toward the environment, and how these sentiments evolve with time.  This will require corporations to take action that go beyond current regulatory mandates.  It will also require recognition that customers and investors hold greater “influence” on CERM decisions than what is commonly realized today.


Predicting a Green Future

February 14, 2008

This past week, the Industry Standard (IS), an icon of the late nineties Internet boom, relaunched its online property.  It did so, however, not as a publisher of industry content but rather as a consumer-driven platform to predict the future.

How does a platform such as this enable seemingly ordinary consumers to predict the future?  Quite simply, IS taps the “wisdom of crowds” or consensus view to determine the probability that an event will happen in the future.  Such an approach assumes that that “aggregation of information in groups…result[s] in decisions that…are often better than could have been made by any single member of the group.”  Perhaps somewhat surprisingly, this approach has been demonstrated to be quite effective at making accurate predictions.

How does it work?  In the case of IS, a “market” is simulated whereby members place a bet on the probability that a future event will or will not occur.  They do so using “virtual currency” called “Standard Dollars”.  The probability of that event coming true is estimated based on “community consensus” calculated as the weighted average value of the bets placed for or against the prediction coming true.

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Interestingly, IS is only the latest online publisher to tap into this type of platform as a way to engage consumers.  Moreover, many of the existing platforms have a focus on predicting environmental trends including FT Predict, intrade, IdeaWorth, newsfutures, Popular Science Prediction Exchange, and ZiiTrend.   

                  Intrade’s Market Predicting EU Carbon Targets

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            Popular Science’s Market Predicting Green Events

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While many other sites exist to predict the future, it seems that only IS has tapped industry heavyweights as regular participants.  Their presence not only lends credibility to the site (and the predictions generated there), but arguably, also increases the accuracy of those predictions as well.  Quite simply, influentials possess domain knowledge that can shape the opinions of other site participants and the wagers that they make regarding the future.

As marketers experiment with new ways to attract and engage consumers, simulated markets should be in the mix.  Moreover, participation by domain experts may only enhance this consumer experience by providing credibility and enhancing the accuracy of the predictions.  But, you don’t have to take my word on this, however.  Just ask a crowd.


Green Content Syndication: Part III – Activating Diggers

February 4, 2008

Today, dozens of social news sites exist where users bookmark content for the site’s community to view and rate.  Specific content related to the environment is available on both general news sites such as Digg, Newsvine, Propeller (AOL) or Reddit and green vertical sites such as C2NN, Hugg, Five Limes and plant change (Aus).  Squareoak Media provides a fairly comprehensive list of social news sites categorized by vertical.

When syndicating green content, marketers should seek to activate influentials on each social news site by encouraging them to submit relevant articles that support and reinforce the marketers’ efforts.  Articles submitted by such influentials are more likely to become popular (see Marketing Green’s “Green Content Syndication: Part II – Top Environmental Diggers”) than if submitted ordinarily, resulting in improved reach and traffic to the host site.  

But, how do you activate influentials on sites such as Digg?  While all social news sites operate somewhat differently, learnings from Digg are relevant to most every other site.  Marketing Green believes that there are three key ways to influence article submission by Diggers.   

Make it relevant.  Each Digger has his/her own style and topic preferences.  Get to know each of them by reviewing their profile, past articles that they submitted (and especially those that subsequently became popular) and in what categories. Focus on activating those Diggers that most closely align with your content topics. 

Make it easy.  Diggers sift through dozens of blogs, sites and newsfeeds daily.  As such, make sure your articles  stand out: position them with a new spin, provide a catchy title or attach relevant visuals (ie, images, video) to accompany the content.  Moreover, when possible, refer articles written by a third-party source as it provides added credibility. 

Develop trust. Marketers should focus on developing a rapport with a select few Diggers and carefully seed articles to each – or give them a heads up in advance of their publication. 

Recently, I had the opportunity to connect with two diggers on Marketing Green’s List of Top Environmental Diggers: 32-year old Jonathon Colman (#7 burkinaboy) of Washington DC and 18-year old Erik Bashatly (#10 sepultura) of Montreal, Canada.  It is important to note that Diggers are not paid (while “Scouts” and “Anchors” on Propeller are).  For them, the environment is an interest or a passion; submitting content is their way to help build awareness for issues of interest or concern.  Notably, Jonathon’s activities as a Digger aligns with his day job as the Associate Director of Digital Marketing at The Nature Conservancy.  

Separately, I asked them questions about their style as Diggers, their influence and how green marketers should best approach them with new articles for submission.  Here is what they had to say:

MG: When it comes to the environment, are there specific topics that you like to digg?

burkinaboy: I tend to submit stories about conservation, people and their interactions with nature, endangered species, and environmental science/data, but I tend to digg (vote for) quite a lot of “green living” and general sustainability-focused stories.  I always find reading these articles to be very intriguing and helpful in terms of reducing my own, personal impact on the environment and climate.

sepultura: I’m a strong believer in green technology, so I try to find as many stories as possible, which take on the positive effects that technology has on the environment.  For example, advances in automotive technologies are a strong plus for me when I’m looking for stories to submit.  The majority of the green tech articles I submit are from a blog called EcoGeek.org, which is focused on spreading the word on all the beneficial improvements of technology.

MG: What makes an article become popular on Digg?

sepultura: If a story gets enough diggs, it’ll become popular in time.  But, don’t we all wish it were really that simple?  Digg’s front page stories get there based on an a complex algorithm, which was very well explained by my friend and fellow digger Muhammad Saleem. While there is no fixed rule on how and when articles can or will become popular, the more experience you gain on the site, the more you’ll understand it.  I’d say that about 85 % of Digg’s top users have noticed the many patterns in the algorithm and have adjusted their submissions accordingly.

burkinaboy: I think that it’s a fun (yet sometimes awkward) balance of trust in the user submitting the article, “juiciness” of the title and description text, freshness level of interest in the news itself, reputation of the hosting site for the content, and (of course) luck.  That said, it’s well known that a good photo or multimedia feature can sometimes sell a story, as can other singular aspects, such as using the phrase “Top 10…” in the title.

MG: How much influence do individual diggers have in making an article popular?

burkinaboy: Quite a bit, assuming that the individual user is well-known, has a good reputation, and operates at an elite level.  For example, articles that are posted by or commented on by users like msaleem, zaibatsu, and mrbabyman tend to attract a lot of attention from the community.  That said, a relatively unknown user can use shouts, a catchy title, or even — gasp! — find outrageous, incredible news that hasn’t been posted elsewhere.  Beyond following best practices with story submissions, I personally use a combination of shouts, Twitter, Pownce, IM and my Facebook profile to attract diggs for the stories that I post.

sepultura: On the whole, it is relatively difficult to get a submission on Digg’s front page without having a strong presence on the site.  (This has become less difficult today due to Digg’s recent addition of the “shouting” system). Over the past few months, I’ve noticed that casual users can (for the most part) only get a story on the front page if the submission meets one or more of the following criteria: it links to a very popular site (Ars Technica, Cracked, Torrent Freak), it is breaking news, or  it’s something so amazing that no one has ever seen before (which is the hardest to come across). 

Digg’s so-called top users have an easier time getting their stories popular simply because they have built a following and have gained experience and have learned what other diggers want.  If you contribute enough, you start to know exactly what to do to be successful.  So I’d say that when it comes to top diggers, an individual digger has a lot of influence.  However, any other user does not have that much individual power on Digg.

MG: Do marketers send you or tip you off to articles for consideration? If so, how often do you dig them when they do?

sepultura: I get about 2 to 3 articles sent to me for consideration each day from people who get my email address off my Digg profile. If I like an article I’ll usually digg it (I’d say that I’ll accept about 60% of the articles sent me to me. However, it should be noted that I’ll usually getting these request from the same people most of the time, which I continuously like to support.

burkinaboy: I love receiving articles from other users and evaluate them for diggs as I would any other story… I look for fairness in coverage, journalistic integrity, newsworthiness, whether the source is primary or first hand in nature, etc.  I tend to only get a handful of requests each week from folks whom I don’t know.  That said, the bulk of my personal submissions to Digg are from a huge page of aggregated RSS feeds that I review frequently.

MG: Do you like when marketers send you articles?   If so, how would you prefer that they approach you?

burkinaboy: Being spammed by fellow diggers will not gain my votes unless the stories are of truly exceptional quality, which they most often are not.  I prefer shouts as my main method of inbound requests and review my incoming shouts regularly, parsing out the stories for votes.

sepultura: I generally don’t mind people sending me links to their own blogs, but I do mind the occasional “demand” (as opposed to the welcomed “request”).  Some people believe that saying “check out my story and Digg it on Monday morning so that it can get the most traffic possible” is a legitimate way of asking me to help them out. 

I also never accept money for submitting articles to Digg.  It wouldn’t be worth risking my reputation. 

I love helping people out, especially bloggers who are just getting started.  I will, however, deny a submission if I don’t approve of it.  It’s also quite obvious when someone is in it for the money instead of for their content.  As for tips from random people, they’re always welcome of course!

MG: Why do you spend so much time on Digg? 

burkinaboy: I do this because it’s a great way to market and promote stories about the environment, conservation, science, green living and sustainability to a large number of people who have an interest in and are affected by these issues, but who might not otherwise see the particular stories that I post. 

We all know that making a story popular on Digg tends to cause a large wave of traffic to the hosting site, but what gets talked about a bit less is the spike of blog and media sites picking up popular posts on Digg that drives a smaller (but longer) secondary wave of traffic, interest, and search engine visibility to those same stories.  Therefore, making a story popular on Digg doesn’t just mean that a marketer is promoting content to a closed audience, but to nearly everyone consuming media online.

sepultura: Many people believe that we either do it to gain some kind of profit or because we have nothing better to do with our lives.  Either way it’s a negative misconception.  We do it simply because we enjoy contributing to something that we love to use.  It’s that simple.


Green Content Syndication: Part II – Top Environmental Diggers

January 22, 2008

One of the most effective ways to syndicate content is by activating power users on sites such as Digg.  Quite simply, “Diggers” uncover and bookmark interesting content – news articles, images and videos – for others to view.  

Top Diggers are known for frequently submitting content that is deemed compelling by the Digg community.  If others users like the content, they may “digg” it as a way to recommend it to others.

Why should marketers care about whether an article submitted on Digg becomes popular or not?  Well, “popular” articles create their own viral effect.  Not only are more people likely to be interested in articles that come highly recommended, but more people are exposed to them as well.  On Digg, popular articles tend to get preferred placement on the front pages of the site and each topic section.  (Note: while popularity is the primary factor that affects placement on Digg, Neil Patel of the Pronet Advertising blog suggests that other factors impact placement including “number of submissions in a category, diggs, and time” between submissions). 

For a marketer, this can translate into increased reach and traffic to a site where the content is hosted at little to no incremental cost.  Though it is difficult to quantify the incremental impact of traffic referred from Digg, antidotal evidence suggests that Digg popularity leads to increased traffic.

For example, The Daily Green recently published its “10 Most Popular Stories of 2007”.  Notably, five in ten articles had been bookmarked on Digg.  Moreover, three in five articles submitted were wildly popular on Digg – with more than 1,100 users digging each of two articles (“Major Breakthrough for Super Efficient LED Lighting” and “Arctic Sea Ice Re-Freezing at Rapid Rate“) and nearly 700 users digging a third (“Glass Wall of Death Surround California Suburb”).  Inevitably, these bookmarks referred significant traffic to The Daily Green and contributed to the popularity of the articles on the site.

top-diggers_dailygreen_for-blog.gif

Today, “Top Diggers” are ranked based on the total number of popular stories that they have submitted.  Marketing Green believes that for green marketers, however, the current method for ranking diggers is incomplete. 

First, the current ranking gives undue weight to tenure.  Quite simply, the longer one has been digging, the higher the likelihood that they will have submitted a greater number of articles that became popular.  While successful tenure is an essential criteria, it may portray an incomplete picture, however, as it does not necessarily mean that the digger is very active today.  As such, any ranking of green diggers should also take into consideration recent activity.   

Second, the current ranking is based on articles submitted across all categories rather than those specifically focused on the environment.  Diggers are typically specialists that focus their efforts on a specific area of interest, however.  As such, not every Top Digger is interested in promoting articles related to the environment. 

Others have tried to create a more specific ranking focused on green diggers.  The Daily Green, for example, recently published a list of top environmental diggers.  While the list is solid, it is based on a “subjective process” that relies heavily on personal opinions rather than measurable facts.   

In contrast, Marketing Green believes that a ranking should be based on more quantitative criteria that enable it to be repeatable over time while minimizing bias. 

Moreover, any ranking should balance a digger’s success over time (successful tenure) with his/her recent activity specific to the environmental category (recency in category).  Marketing Green’s List of Top Environmental Diggers attempts to do just that (within the limits of publicly available data).   

Marketing Green gives equal weighting to two criteria: successful tenure and recency in category.  Successful tenure is determined based on the cumulative number of popular articles submitted by a digger over his/her tenure on Digg.  This is similar to how Top Diggers are currently ranked today. 

Recency in category is a proxy for how successful a digger has been recently in submitting popular articles specifically on the environment.  It is estimated based on two factors: the number of articles submitted in the “environment” category within the past 30 days and the historic percentage of submitted articles that have became popular. 

Marketing Green’s List of Top Environmental Diggers

mgs-top-environmental-diggers.gif

Based on analysis of diggers in early January, 2007; 1Overall popular articles; same as current Top Digger ranking; 2Popular articles on the environment within the past 30 days

Marketing Green’s Top Environmental DiggersMrBabyMan, supernova17, msaleem, suxmonkeyzaibatsu, tomboy501, burkinaboy, Aidenag, skored, sepultra; Notable mentions: 1KrazyKorean, capn_caveman, charbarred, cosmikdebris, DigiDave, FameMoney, johndi, maheshee11, petsheep, pizzler, vroom101

Notably, Marketing Green’s ranking reveals somewhat of a different mix of diggers than are included in the previous rank of “Top Diggers.”  It should not come as a surprise, however, to see that the four Top Diggers are also ranked on Marketing Green’s list of Top Environmental Diggers.  Interestingly, these Top Diggers rank highly on Marketing Green’s list based not only on their successful tenure (the current criteria for ranking) but also on their recent activity within the environmental category.

The remaining six diggers on Marketing Green’s list are ranked in large part due to their recent activity in category.  Up and coming diggers such as suxmonkey and burkinaboy are great examples as they rank #57 and 110, respectively, based on successful tenure while ranking #1 and 3, respectively, based on recent activity. 

Why should green marketers target top environmental diggers rather than digg the articles themselves?  For starters, content submitted by top diggers has a higher probability of becoming popular than others.  This is likely due to a variety of factors including: faster submission time (top diggers spend time trawling for new articles), superior ability to uncover interesting content, a broad network of friends that may digg articles submitted, and established influence within the Digg community that may peak the interest of others.   

Moreover, InvespBlog suggests that diggers also know how to ‘sell’ their Digg submissions through compelling titles (eg, more than 75% of the top 100 most popular articles on Digg had titles different than the original), by attaching relatively lengthy descriptions (eg, the median description for a top 100 article was 48 words) and by choosing articles of limited length (eg, the median number of words in the top 100 article was 444). 

How much better are top diggers than the average?  As it turns out, they are significantly better.  In fact, the 10 “Top Diggers” have an average % popularity of nearly 37%.  This is in contrast to the average of the 100 Top Diggers (26%), let alone the 1,000 Top Diggers (18%).  Impressively, Marketing Green’s List of Top Environmental Diggers have the highest average % popularity at 38%, narrowly surpassing the overall 10 Top Diggers.

 top-diggerv4.gif    

As such, marketers seeking to syndicate content should consider activating power users on sites like Digg to help them do so.  All diggers are not alike, however.  Green marketers should take into consideration not only the overall success of a digger but their recent activity within the environmental category.   

Stay tuned for the third and final part in this series for tips on how to active them. 


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