Early in my career, I had the distinct pleasure to work side by side with John Little, Institute Professor and the Chair of Management Science at the MIT Sloan School of Management. John is the quintessential quantitative marketer, and is widely considered to be one of the founders of marketing science with his work in the area of promotional spending and marketing mix models for consumer packaged goods.

One of John’s favorite sayings was “If you can’t measure it, you can’t manage it.” He consistently imprinted this mantra on his students and those of us that worked side-by-side with him. We, in turn, took this message to the market and to our customers and used numbers, facts, and data to substantiate advertising and promotion spending, lend credence to hunches, and generally separate the truth from fiction when it came to marketing strategy.

In a recent open government conference, I sat upright when one of the keynote speakers uttered those same words, impressing upon the audience that it was not enough to embrace web 2.0 strategies. One had to measure and quantify the impact of those initiatives. To ignore measurement was to ignore the truth about one’s initiatives.

Federal and state agencies and departments are investing more heavily in their web presence, making their sites more citizen-centric and easier to interact with. Are these efforts working? Are they meeting the needs of the constituents? Is the public receiving value? The current administration's focus on transparency and automation has elevated many of these concerns and they are now receiving significant attention.

comScore is a vital part of that value chain and brings accountability and precise measurement to these digital initiatives. Over the past five years, we have worked closely with MedlinePlus, a service of the National Library of Medicine/NIH. MedlinePlus has a long-standing goal to strengthen its role as a leading source of unbiased online medical information for general consumption. Other leaders in this space include WebMD, EverdayHealth, and the Centers for Disease Control (CDC). While not competing directly for advertising revenue, government, not-for-profit, and commercial web sites do compete for visitors, session engagement and share of mind – these metrics are among those used as benchmarks for gauging MedlinePlus’s success.

comScore provides both syndicated data and consulting services to MedlinePlus for actionable, multi-dimensional insight into the success of their website and traffic to their commercial counterparts. MedlinePlus and other NIH.gov website teams develop their web content and create strategies to drive traffic based in part on these results.

In the most recent ACSI E-Government Satisfaction Index, MedlinePlus’ website was in the top five of all measured government sites, with an overall satisfaction score of 85. This rivals the satisfaction score of many of the best commercial sites.

Other government agencies working with comScore are embracing measurement as part of their Internet initiatives, including the Department of Defense, the National Institute of Health, the Internal Revenue Service, the Postal Service and the Federal Trade Commission. As more agencies adopt the culture of accountability, we can all hope to see a more responsive, citizen-centric government.

John Little would be pleased.

Recent media coverage of the supposed decline of the video game industry has me a bit troubled. The coverage almost singularly focuses on the fact that retail sales of video game are falling off a cliff as a sign of the video game apocalypse – the beginning of the end for the once vibrant industry. “Sorry gamers, it’s been a fun ride, but it’s time to pack up your toys and go home!”

But, wait a minute. Is this assessment of the video game industry fair? While it’s true that at GDC 2009 I made the prediction that the retail model of selling video games was going the way of the dinosaur, the fact is that people overall are playing more games. The market is as vibrant as ever. What’s happening is greater video game media fragmentation along with the trend towards digital distribution.

I will be the first to acknowledge that retail gaming is down. People have less discretionary income right now, and as a result are making fewer purchases, including video games and other complementary products. But should retail spending really be the only yardstick used to measure the current health of the video game industry? Perhaps what is happening is the same thing we see for newspapers, magazines, music and shopping in general: digital cannibalization.

Perhaps it’s the method that is dying, and not the medium?

To understand what’s really occurring in the video game industry, we must recognize that there are several trends affecting retail video game sales, including:

• Micro-transaction games
• Subscription-based games
• Ad-sponsored games
• iPhone games
• Digitally downloaded games

Let’s begin by focusing on digital downloads. Recall a year ago when the discussions on the street centered around the question: Would consumers adopt a model of digital delivery for ‘games of size’ (i.e. DVD sized installs, etc)?

To answer this question, consider Steam, by Valve. This free-to-install application allows consumers to shop for retail available games through an easy-to-use interface.

Valve’s ‘Steam’ Digital Delivery Interface

Consumers can purchase complete versions of PC games, new and old and the majority of popular games are available. Recently, I added Bioshock (amazing), Assassins Creed and an older game Silent Hunter III (I like submarine simulations) to my library. I paid the retail price for these games, something I feel is very likely invisible to the research folks examining traditional checkout register receipts.

Digital downloads of games achieve a couple things that retail sales can’t. First, they provide an online social relevance to the game where existing players can communicate the quality and playability to those who haven’t made the purchase yet, thereby driving the second and most powerful aspect: the impulse buy. This doesn’t happen at Gamestop, and you won’t see it happen at Target. But I can guarantee you it happens on Steam. In fact, each game deployed under the Steam framework has the ability to easily communicate with other logged-in Steam users.

Steam, in particular, offers few free games. There are a handful of ad-sponsored, limited feature version games (such as the completely amazing TrackMania), but by and large the games are sold to the consumers. You’ve no doubt heard of Half-Life, Portal and Counterstrike, top selling games that gave Valve the popularity it now enjoys.

A year ago, the concern was that bandwidth and digital purchase hesitation on the part of consumers might curb the adoption of digital downloads. At the time, the Steam application had 11 million users globally (June 2008). Then the recession hits, and presumably digital delivery services will show a pullback just like the retail video game sector – right? Wrong. In June 2009, the number of Steam users had grown 62 percent to more than 18 million. I personally haven’t purchased a game in a store in well over a year, and the last console games I bought for my Wii were Star Wars: The Force Unleashed and Rock Band.

In coming posts, I’ll discuss other emerging areas of video gaming online that are slowly eating away at the classic retail video game model. I’ll also discuss dollar-to-eyeball conversion, where consumer spending on games can effectively be replaced by display advertising.

Game on!

I appeared on CNBC Squawk Box this morning discussing trends in consumer spending. In the comScore e-commerce data we are essentially measuring disposable income spending and the trends provide a lot of insight into the strength of the consumer economy. As you can tell from my comments, I believe consumer spending has bottomed out and is now “going sideways” The million dollar question is: when will consumer spending start to grow again?

If you would like to learn more, please consider attending comScore’s upcoming “State of the U.S. Online Retail Economy” webinar.

As Vice President of Panel Development at comScore, I frequently get asked about how we are able to build such a large diverse global panel of more than 2 million Internet users, which serves as the foundation of all of our products and services, including the recently announced Media Metrix 360 panel-centric hybrid measurement platform. The answer is simple enough: through a large network of partner sites and our own sites, we offer a widely appealing suite of value propositions to panelists in exchange for allowing us to passively observe and anonymously gather their Internet behavior. More succinctly put – we give them free stuff. We believe we’ve developed a diverse portfolio of free stuff and, while each individual offer may not appeal to everyone, there is truly ‘something for everyone.’ This allows us to recruit robust samples from every demographic segment and ensures that our panel is representative of the Internet population at large.

Our portfolio of offerings includes a variety of PC utilities, productivity tools, desktop personalization downloads, digital media applications and entertainment applications, but we also provide incentives that are a bit more altruistic in nature. A recent post in the Gaia Public Relations blog highlighted the many valuable member benefits we offer, with a particular focus on our ‘green’ efforts with PermissionResearch, one of our many recruiting platforms. The author noted:

It was wonderful to see a front page link [on the comScore website] for the corporate social responsibility (CSR) program, as CSR often gets buried in secondary pages. It appears as though comScore, “…has partnered with Trees for the Future to plant a tree for each new person who joins PermissionResearch (a division of comScore) through the comScore Trees for Knowledge campaign.”

The cornerstone of our green recruiting efforts is the Trees For Knowledge program. Through our partnership with the Trees for the Future organization, we have committed to plant trees on behalf of Internet users who join the comScore panel through the Trees For Knowledge campaign. So far, we have made contributions to support the planting of more than 1.8 million trees worldwide. And while the number of trees is quite impressive, it’s not all about getting more trees to take CO2 out of the air and dump more O2 into the air. It’s also about reversing the effects that deforestation has had on climate change, soil erosion, habitat destruction for plants and animals, and the disruption of water systems that have devastated areas around the world. The goal, as outlined in the Trees for the Future mission statement, is to “help people in developing countries improve their rural livelihoods through the introduction of environmentally sustainable land management projects focused on beneficial tree planting.” It is not too late to make a difference and reverse these effects. As the Chinese proverb says, “The best time to plant a tree was 20 years ago. The next best time is now.”

We’re both excited and proud to sponsor such a program. We’ve created an appealing offer for the comScore global panel community that at the same time has benefitted the larger global community, of which we are all members.

Last week, I had the pleasure of speaking at the “Breakfast of Leaders”, a monthly CEO business forum, in Ashburn, Virginia. Terry Moraska, the forum’s founder, had invited me to speak to the forum and also graciously arranged for me to spend the night before my talk at the Glennfiditch House (cool name), a completely renovated sixteen-room antebellum home in beautiful Leesburg which historically hosted Generals "Stonewall" Jackson and Robert E. Lee. In addition, James Dickey lived there while writing his manuscript Deliverance. Originally called "Harrison Hall" after its builder and first owner, Henry T. Harrison, the house served as a headquarters for the Confederate Army and as a temporary hospital during the Civil War.

It was ironic that I would spend a little time in such a magnificent building that has withstood the test of time - and which looks as it did back in 1840 when it was first constructed - because the subject of my talk at the Breakfast of Leaders forum was “change.” Specifically, the need for all businesses to change if they are to survive.

The thrust of my talk was that the rate of change in technology poses serious threats to many established businesses, while simultaneously presenting attractive opportunities to entrepreneurs. How each handles the challenge often determines the success or failure of the enterprise. Drawing on my personal experience, I presented some guidelines for how the challenge of change can best be handled.

I’ve spent much of my career building businesses that leveraged changes in technology -- first at IRI and now at comScore - and I consider myself something of a student of the art and science of business change. Fortunately for me, most of my experience with change has been positive. I have been the innovator and the “other guy” to the incumbent. But, this has also allowed me to see the damage that change in market conditions can do to an existing business if not handled correctly - or ignored even.

In 1982, I remember reading “In Search of Excellence: Lessons from America’s Best-Run Companies”. Written by two McKinsey consultants, Tom Peters and Robert Waterman, it is one of the top selling and most widely read business books ever, selling 3 million copies in its first four years, and reigned as the most widely held library book in the United States from 1989 to 2006. The book explores the art and science of management used by leading 1980s companies with records of long-term profitability and continuing innovation. But, what I found particularly fascinating about “In Search of Excellence” came from examining the performance in subsequent years of companies that Peters and Waterman identified as excellent in 1982. For some, it’s not a pretty picture. Digital Equipment, Atari and Wang are just three of the companies that were rated as excellent in 1982 but which subsequently (and quickly) fell on hard times.

How could this have happened? Well, in an interview in 2001, author Tom Peters provided the answer. He confessed that: “In hindsight, there were whole categories of business changes that were headed directly at us that we completely whiffed on.” Tom identified these changes to include:

• Customers have more choices. They’re interested in the newest, best, fastest, and cheapest. And there are more competitors.
• The rate of change in information technology
• The advent of globalization
• The importance of speed

I believe these factors still represent the most pressing challenges for incumbent companies and some of the most attractive ways in which entrepreneurs can successfully enter a market. Change is a constant today. And to paraphrase Will Rogers: “Even if you’re on a fast track, you’ll get run over if you just sit there.”

The challenge is how to best handle change. While I’m always wary of giving generalizable prescriptions for success (I’ve found out the hard way that the best course of action is often situation-specific), there is one rule of thumb that seems to apply well to how best to handle change: speed is of the essence. Nimble entrepreneurs who are fleet of foot can often be successful against larger, well-established competitors. In turn, to successfully defend their businesses, incumbents need to react fast to entrepreneurial threats. I can remember Howard Tullman, one of Chicago’s most successful entrepreneurs, outlining the importance of speed in change management:

• Get more done with fewer resources in less time
  Almost by definition, new entrepreneurial entrants have fewer resources than incumbents, and that often translates into more flexibility and less bureaucracy. And that, in turn, translates into speed. The challenge for a large incumbent company is often how to duplicate this behavior.
• Time lost in not making a decision can never be recovered
  Thousands of years ago, the poet Virgil said: “Tempus fugit”, meaning “irreplaceable time flees”. For the incumbent, never being able to recover lost time means the new entrant may well have had sufficient time to achieve its most critical -- and deadly – advantage: market acceptance.
• Sooner is better. Right now is best
  A sense of urgency pervades successful new market entrants, for they well understand the inherent advantages of speed.

There you have it. Sage advice from Howard Tullman on how to manage change.