That’s it. All done. We’ve wrapped the 2006 holiday season. How did US retail sales fare? Well, it depends who you ask. Ecommerce sites such as Amazon.com, CircuitCity.com and BestBuy.com have seen pretty impressive growth this holiday season. According to Hitwise, ecommerce sales are up no less than 5.9%. Several reports have stated that ecommerce sales hit a 23% increase on the weekend before Christmas. Wowza.

So that leaves us with overall retail sales (meaning a combined total of in-store and online purchasing). According to national retail sales estimates, holiday sales saw only a 3% increase over 2005. That’s less than last years increase - not good.

Of course we could blame the overall slow down on interest rate hikes, gasoline prices or even the unseasonably warm weather. Maybe it’s my interactive radar, but, something stands out to me. There was a significant increase in holiday ecommerce this season. People love the convenience of shopping online, and are flocking to the Web to find a vast selection and variety of consumer products. Here’s the question: Could an increase in online shopping hurt overall retail sales? Stay with me…

What if consumers are purchasing less when they buy online? Perhaps we are less motivated to purchase as much, deterred by shipping rates or less exposed to impulse buys? We may even be finding better deals online and spending less. A recent report from Consumer Reports showed a discount of 36% at Amazon.com for the same purchase as at the retail locations for Borders and Barnes and Noble; where the discounts were a meager 4% and 5% respectively. Even the website for Barnes and Noble had a very respectable discount of 19%

This got me thinking about my own purchases this season. Each year I do at least some of my holiday spending online. This year, for the first time, all but two of my gifts were purchased online, including a GRILL from Amazon.com. The result? I actually spent less on my holiday gift-buying than I did last year - by nearly 100 dollars.

Right, so what does this all mean? Online retailers should consider that buyers behave differently online than they do in-store. The sales and marketing psychology used online needs to factor in these behaviors. Online retailers need to analyze their customer’s online behaviors to determine ways of increasing the average spend per user. Many sites have started suggesting items based on what is in a shopping cart or by buying history. I’ve always considered this a great sales technique. But, maybe it’s not enough anymore.

Don’t get me wrong. I firmly believe ecommerce is a fundamental part of today’s economy. But the marketer in me believes that retailers must continually evaluate their customer experience – both on and offline- in order stimulate and grow consumer spending year after year. That’s right … no rest for the weary.

The Coca-Cola Company has released an e-greetings campaign through YouTube this holiday season. The “Holiday WishCast” allows a viewer to select from a variety of Coca-Cola holiday commercials and user-generated videos and send them to a friend with a personalized holiday message.

This adoption of viral video is right on track with Coca-Cola’s great understanding of social media. Their existing website shows user-generated videos of the people that create the Coke brand. With such a passionate brand like Coke, why not let it live within the hands of their enthusiastic, video shooting customers/advocates.

Petro Kacur, a spokesperson for Coca-Cola said, “We partnered with YouTube because they have global reach and a great platform for video. For Coca-Cola it’s an opportunity to leverage that and bring new users to coca-cola.com.”

The program ends the first week of January, so get your videos ready and surprise some friends.

MySpace is finally mobile!

If you are one of the many that might ask, “Why in the world would someone need to have remote access to a social website like MySpace?” you might be dating yourself. MySpace is far more than a place to host your favorite pics, songs and friends; it is now the town hall, the water cooler and even the Email client of choice.

Plans are made, groups are created and friendships are re-kindled. Cingular understood the importance of connecting its’ users with this powerful social media website to create mobile 2.0 (kidding)… actually maybe 3.0 if you consider how text-based communication changed the mobile industry.

So what will be different? Cingular customers can now update their Blogs remotely, upload new photos via their camera-phone, add new friends that they just met and delete those pesky ones that are “off the list.” Consider this addition the Blackberry for the Generation Y and younger crowds.

So what does the future hold for social media? Expect your content to be delivered faster and friendlier over a broad range of devices and mediums. Now, let’s sit back and watch what happens between Orange and Google. (Google phone anyone…)

CNN.com recently posted an article that commented on an AP-AOL survey and the discovery that there is, brace yourself, yet another generation gap between teens and adults and the way these demographics use technology. Specifically, the AP-AOL poll took a closer look at the outrageous amount of instant messages (IM) that are traded back and forth on a daily basis by a younger American audience.

Although instant messaging has been available for almost 10 years, there are some, mainly adults, that either find this electric form of real-time communication unacceptable, or more commonly, incomprehensible.

The AP-AOL poll revealed a number of statistics that once again compliments the idea that America’s youth are more likely to comprehend and utilize the ever growing technological tools that are available in today’s marketplace.

According to the poll that surveyed 1,013 adults and 500 teens:

- Almost three-fourths of adults who do use instant messages still communicate with e-mail more often. Almost three-fourths of teens send instant messages more than e-mail.

- More than half of the teens who use instant messages send more than 25 a day, and one in five send more than 100. Three-fourths of adult users send fewer than 25 instant messages a day.

- Teen users (30 percent) are almost twice as likely as adults (17 percent) to say they can’t imagine life without instant messaging.

- When keeping up with a friend who is far away, teens are most likely to use instant messaging, while adults turn first to e-mail.

- About a fifth of teen IM users have used IM to ask for or accept a date. Almost that many, 16 percent, have used it to break up with someone.

Though the AP-AOL poll uncovers some interesting statistics, let’s discuss these results juxtaposed to another form of a new age communication channel: e-mail. Should companies scrap their e-mail campaigns for something new and shiny? Before we write off this technology, let’s think about what happened when e-mail was introduced. Did everyone stop sending memos and correspondence via snail mail? No.

The adoption of IM in the younger generation doesn’t mean that marketers have lost the tool of e-mail. Conversely, it means that we’ve gained yet another medium to reach a different audience. There is only one thing a marketer can do in this fast-paced environment if they want to survive – keep up.

We live in a society that relies heavily on the progress and evolution of technology. Teenagers are not only immersed in these technological advancements on a daily basis, but are, more importantly, interested in learning and utilizing these new tools that streamline the lengthy and obsolete customs of a distant past.

There are some demographics that will continue to rely heavily on traditional offline marketing campaigns as their major source for consumer research. The older generations of America’s population have not all purchased a ticket on the trendy technology train. Rather, they still rely on advertisements that they have grown accustomed to, trust, and, more importantly, comprehend. Much like Gen X, the e-mail generation will continue to see e-mail as a useful tool to receive targeted information.

That is why it is important not to jump ship when something ‘new’ or ‘better’ comes along. E-mail isn’t Betamax. E-mail isn’t IM. But e-mail is here to stay.

The AP-AOL poll should be a wake-up call for the marketing community. Reminding us that there is still time for traditional and interactive marketing to co-exist and serve as a poster child for corporate America’s beloved ‘synergy.’

Sometimes, we are successful not because of what we do – but in spite of what we do. I think of that often as I watch the user experience industry grow.

While user experience training programs are emerging, sound research methodology is not often emphasized. As an industry, we try to compensate by use of expensive recording equipment, artificial lab environments and complex software. Executive level stake holders are often excited by these technologies. But with few people with the skills to make sense of the data that is generated, we are often left with impressive recordings that mask worthless findings. There’s a saying that sums up this problem quite well.

‘You can put lipstick on a pig, but it’s still a pig.’

Unfortunately, sound science is often hard for executive level stake holders to assess – particularly when they don’t have much of a scientific background. There’s a Catch-22 in this business. You need to have knowledge and skills to be able to assess knowledge and skills in others. Without these, you can never really be confident about the quality of your resources and the findings that they report. Executive level stake holders often see the lipstick, but not the pig. They think…Hey, what a pretty lipstick color, so red, so sparkly. They don’t think…Hey, wait a minute guys, it’s a pig!

Far too often, businesses are much more willing to invest in costly material resources as opposed to high salary human resources. Perhaps material resources feel more permanent – a more sound investment. But there is a vast difference in what each investment can yield. Namely, material resources are useless without human resources who know how to properly utilize them.

What businesses really need is not expensive recording equipment, artificial lab environments and complex software. It’s resources who have sound scientific training – those who have a firm grasp of proper research methodologies and analyses. These people can find far more with a pencil and paper than many can find with the most expensive recording equipment in the world. In fact, these people would likely argue that expensive recording equipment often stands in the way of accurate findings – particularly when operated by amateur researchers.

When I left academia, I ‘took off my scientist hat’ to work here in the real world – but I’ve carried it in my hands. I’ve come to believe that this industry needs to reach a consensus on more than usability principles, goals and heuristics. This industry needs to build a methodological foundation on basic science and hold itself to higher scientific standards. High tech research methodologies are far too often smoke and mirrors, nothing more – they are a crutch.

There’s just no substitute for sound science.

You are famous. I am not sure if you realized that until this week when TIME Magazine put you on the cover (literally on the cover - it only took 6,965,000 pieces of Mylar). You are the Person of the Year. You contribute to YouTube, you blog about your life on MySpace, you post your vacation pictures on Flickr.

Why do you do that? You could answer that question by posting your own dissertation on wikipedia. To save you the time I can answer it for you: You frequent those sites to view content created by other people, and post on those sites to add your voice to the conversation either just for close friends or the world at large. Narcissus may have been enamored with himself, but the rest of us are more enamored with, well, the rest of us. Stated more eloquently, Metcalf’s law claims that the value of the network is equal to the square of the number of users of the network. Clearly the first person to buy a telephone saw his purchase became much more valuable when the second person bought a telephone and so on. Talking to yourself is overrated.

After all, the world of You is really the world of Us online. UsTube, OurSpace, don’t have the same ring to them? That’s what they are though, a worldwide virtual kibbutz that makes the internet more valuable. The internet today reminds me of Steve Wozniak’s US festival from the early 80’s, the marriage of music, computers, television and people has finally been realized. The Woz thought of it first, and named it more appropriately than TIME has today. The power of collective thought is much greater than the actions of any one person online. Web 2.0 has made online collaboration easy for the masses and has had the same profound effects as Woz’s decision to display pictures as well as letters on the Apple II - “I threw in high-res. It was only two chips. I didn’t know if people would use it.” Given the right tools You online became Us online, and we have all benefited because of it.

So grab a copy of TIME this week and take a long look at the mylar staring you in the face. For only with a paper copy of TIME will you be alone. If you read the article online you will just end up collaborating with the rest of us.

I’m often asked what sources I use to keep up with the interactive marketing industry. One of my favorite printed publications is Business 2.0. Josh Quittner (editor) recently wrote an article on Web 2.0 that I thought was interesting. In the article Josh talks about the reasons that this recent internet boom is different, and more likely to last, than the boom we experienced in the late 90’s. A few of his points I really like.

He states that most of us won’t get too hurt this time but then again, most of us won’t get too rich this time either. Start-ups today are not trying to build until they can IPO, but rather are “built to flip”, meaning their goal is to quickly be bought by one of the “sugar daddies” of Web 2.0: Google, Yahoo, AOL or Microsoft.

He also talks about how the smarter Web 2.0 companies understand today’s users and actually get them to produce the content and create the environment by which their business lives. In the old days, the plan was to raise as much VC money as possible and staff up. Today, its grow by adding as little overhead as possible. You might say that in the past the mantra was “build it and they will come”, whereas today its “they will come if you let them build it”.

Which leads me to the last point that Josh makes that I agree is the real difference with today’s boom…today’s start-ups are focused on (GASP) profit! However, he’s quick to point out that in lieu of a profit at the very least these companies focus on the number of users that actively use their service, so then they can leave the profit-making part to one of the sugar daddies.

And I think Google really set the stage for that change (either make a profit or get the traffic to then make a profit - typically through advertising around the eyeballs). Mark Cuban, another person I read frequently to get a different perspective on the industry, wrote on his blog recently about the possibility of Google entering the online music space. Essentially he speculates that Google might decide to compete with Itunes (Apple) and Zune (Microsoft) and completely disrupt the online music world by giving away music and selling ads to make their revenue. It’s the same thing Google did with YouTube - find a way to get your ads in front of the most eyeballs and you win. Imagine if you could buy a similar device to the iPod and your monthly subscription gave you all the music you want - for free. Who wouldn’t put up with a few ads in order to have free music?

But the underlying point is that Google (and their counterparts today) is focused on profits, unlike the world we saw in the late 90’s. Back then, an idea like Webvan where you order groceries online and have them delivered to your door sounded like a great idea. And for the consumer it was fantastic. But there was no way to make that a profitable business, which is what really makes today’s boom different, and more likely to last than the previous one.

After a short and bumpy ride on the technologically savvy bandwagon, the generous, yet equally thoughtless, minds of Sony’s marketing department decided to take one for the team and call themselves out for not completely reading their Web 2.0 manual. At the same time, they taught us all and important lesson by clearly defining the unmitigated importance in the interwoven domains of tech, marketing, and consumer relationships.

Realizing that, in the past weeks, ‘viral’ was one of the many ephemeral buzz words that brought much excitement to our interactive halcyon; Sony took two doses of YouTube with a side of deception, but forgot to ring their doctor in the morning. The company, previously known for its’ edgy and successful marketing campaigns teamed up with Zipatoni, a customer activation firm, to create a fictional taping of a hired foolish rapper (actor) endorsing their PSP. After strategically placing their brilliant short on YouTube, Sony closed shop early, ran to catch the last bandwagon home, and left their campaign’s fate in the hands of a ubiquitous buzz word.

Here’s where Sony falls short: rather than reaping the benefits of a well thought out and relevant marketing campaign, they took the road more traveled, failed trickery 101, and lost the trust and respect of their coveted ‘generation MySpace.’

Aleks Krotoski, from Guardian Unlimited explains why businesses should approach the interactive marketing realm of integrated tech resources with caution. He defends, “Transparency is key in the modern advertising-savvy marketplace. Bad fakes can be spotted a mile away, and good fakes often get found out with a fanfare of negativity…The most important currency online is trust.” Unfortunately, Sony learned this lesson the hard way when realizing the only thing that spreads faster than a successful viral marketing campaign is a disturbing ‘dog and pony show’ disguised as the campaign valedictorian, class of Web 2.0.

Sony further realized this truth with a slap on the wrist from their consumers and the gaming community. Intent on fully utilizing life’s proverbial mulligan, Sony released a statement tacking the viral campaign’s downfall to speech that was “too funky fresh,” and the fact that they were just “a little too clever.” Nothing says “I’m sorry” like “I’m smarter than you.”

In other news, the Guinness Book of World Records announced today that the heaviest package ever sent by post was received by Sony. The contents: a seemingly countless number of dictionaries all with the definition of clever flagged.

I just unsubscribed from the Buy.com emails (finally). Those guys really bludgeon you with emails and probably for the better part of six months I just deleted them without even looking at them, like it was part of my daily chores for the day. So I finally decided to unsubscribe. I was surprised that they actually had a preference page to allow me to select one of the following:

- Basic Emails

- 2 Emails per week

- 1 Email per week

- 1 Email per 2 weeks

- 1 Email per month

- Deal Alerts Emails only

- Entertainment

- Technology

- Unsubscribe

A decent choice list by them but the options were radio buttons and not check boxes (meaning I could not choose multiple items)! So I could choose to only receive technology emails but I’d still get them daily. Or I could select to get emails from them once a week but they’d still send me entertainment content which I don’t want. They were so close!

I can’t stress the importance of properly created preference centers for email marketing. And in today’s world if you don’t give your customers as much flexibility and control over how you communicate with them you’re missing the boat. Silverpop, one of our partners and truly one of the best Email Service Providers on the planet, has a great white paper section on their site and in particular they have one entitled, “Give Customers What They Want with Preferences.” It’s a great read. Maybe they should send a copy of it over to Buy.com

I’ve got a Chihuahua who weighs 14 pounds. Kept feeding him. That and he’s probably not 100% Chihuahua. At first, he was known as Snuggle-Bunny because he loved us so much – always wanted to be close by. After a while, he was known as Sweet-Pickle because he was such a sweetheart – never barked or cried. One day by accident, I called him Snuggle-Pickle. The nickname stuck.

I like to assign human characteristics to my 14 pound boy. I’m a dog mom. I can’t help myself. Fortunately, I’m not alone. Most people assign human characteristics to their pets – as well as other more inanimate things. We’re hardwired to do this. It’s a built in heuristic (mental shortcut) that makes human to human social interactions easier. Without heuristics like these, we would have to exert a lot more brain power to deal with simple situations. But these social predispositions are so ingrained in us that it’s hard not to apply them when we interact with other, nonhuman things. Technology is no exception.

Take a look at MIT’s Kismet. She’s an anthropomorphic talking head. But to most people who meet her, she’s a 2 year old child. People adore Kismet. When they interact with her, they speak motherease. When they hurt her feelings, they feel bad and try to make it up to her (see several videos of Kismet). Some groups are against the production of ‘intelligent’ robots like Kismet. They think that creation of such technologies goes against nature and raises questions that are too difficult to answer. But they’ll never lay a hand on Kismet. Oh no. After all, she’s only 2.

Have a chat with A.L.I.C.E. She’s a massive database of questions and answers. But to most people who meet her, she’s one of the best web-based conversational agents in the world. During the last major election, I asked A.L.I.C.E. whether she was a Democrat or Republican. She told me she was a Libertarian. When you get to talking with A.L.I.C.E, it’s easy to forget that she’s not a real person. It’s easy to forget that she’s talking to several hundred other people while she’s talking to you.

A group of researchers recently discovered that users are most likely to disclose personal information to computers ‘who’ disclose ‘personal information’ to them. For example, computers ‘who’ say things like…

I only have 28k modem speed but I wish I had more, what are your shortcomings?

…are more likely to elicit personal information from users than computers ‘who’ say…

What are your shortcomings?

I often question whether findings like these could be used to influence conversion behavior. If we disclose more information about ourselves before users convert, for example, will users be more willing to give us personal information during conversion? I imagine they might. And the truth is, there are so many findings like these – just waiting for people like us to apply them to what we do. The possibilities seem endless in the veritable gold mine of human-computer social interaction research (see The Media Equation or anything by Byron Reeves and Clifford Nass for findings). Those who leverage this research will likely spawn some of the most powerful conversion strategies that this industry has ever known.