Atomic Direct, LTD

Claims of “FREE!” drive purchases of cheesy TV products from Shamwow’s to those (supposedly) Amish heaters. But somehow, it escapes notice of the tech press that equally cheesy claims of “free” run deep amid marketing of the internet.

Free music, free newspaper articles, free magazines, and now supposedly free television. Everybody offers free. And it’s no surprise that consumers go for it.

In fact, this idea of making millions by giving things away was found in many of the irrational “business plans” that dotcom’s claimed would make their investors rich. It didn’t work then, but maybe things have changed.

How is “free” going for Wikipedia”? Wikipedia is the poster child for internet “free”. Except they are deep in the midst of a campaign attempting to raise $16M in donations just to keep their doors open. It’s a campaign that pitches quite hard. Makes me think that even for a donated content online Encyclopedia, “free” isn’t quite as powerful a business plan as we thought.

How is “free” working out for newspaper and magazine content? Bob Garfield wrote an AdAge blog entry recently about the incredible dark side of “free” print on the web.

He notes that print on the web is driven by sites that “aggregate” (bring together) content. Where do aggregators get good content? From newspapers or magazines. Except aggregator sites deliver content to you for free.

In a fit of business insanity, internet copyright anarchists imply that revenue from the hated banner ads on the site of the aggregator somehow trickles back to pay for the hard work it took to create that content. (Hard work is required to make well written, well researched, well fact checked, and well published content.)

Well, the revenue doesn’t trickle back. Garfield notes how “free” access has undercut the economic model that created good content in the US. But he also notes that even those aggregator sites are struggling to keep in business. Guess this model is so flawed that you can’t make money even when giving away content you didn’t make.

How would “free” go for TV content? Don’t expect too much. And note that it’s a double “free” idea that is being used to entice consumers to internet TV – payment free and advertising free. (Secondarily, there’s the idea that they can watch anything they want, anywhere they want, and on any device they want. But while consumers will pay for DVR’s, there’s no evidence of willingness to pay for it online.)

Double “free” is publicized with massive money from manufacturers of internet TV sets, creators of internet TV sites, the venture capitalists behind them, and the tech research agencies paid by the venture capitalists – all drooling at the idea of tapping TV’s big old vein of pure financial gold.

And, frustration with out-of-control cable TV costs means there’s very high consumer interest in cost savings. But do consumers really want what double free TV would mean? I don’t think so.

Double “free” TV over internet will kill content. The existing economic model supports an incredibly well developed, sophisticated, sometimes dysfunctional, but essentially effective eco-system – an eco-system that creates good TV, offers the single advertising medium which delivers the best economic impact and delivers most of what consumers want.

The net results for consumers would be the death of programming. Google claims they’ll stitch together YouTube content to make programming (of course, selling their own advertising time within that content). Don’t expect much. The existing ecosystem turns out everything from niche to mass hits – 30-Rock, The Daily Show, Survivor, Amazing Race, NFL Football, Antiques Roadshow, and CSI Miami on a big screen (I just can’t include “Darth Vader, Night Clerk” in that list). But it costs millions to deliver those shows – often over $1M per episode.

There’s some good news for TV. As Mark Cuban has pointed out, TV is different from print and music. Networks ARE aggregators. That means TV networks have been fighting this type of battle all along. They also seem to have learned from print and are being quite stubborn about protecting their right to get money in return for all the money they invest. Consider

- Hulu (funded by networks) started “free”, but is beginning to use subscriptions.
- The networks fight regularly with cable operators to maintain a viable economic model – even if that means people don’t get to see the World Series. We have to assume they’ll use all means to fight against a double free idea that hurts their business.
- An example of this seems to be that while networks work with Apple, they don’t work with GoogleTV. Maybe they know Apple wants to create viable media business models. But it seems the only reason to create GoogleTV is to try to steal advertising revenue that currently goes to the networks – revenue that pays to for programming.
- Now Hulu (funded by networks) has made it so that you can’t watch their programs on GoogleTV’s.
- Network testing seems to indicate that consumers are willing to watch online TV with traditional advertising breaks. In other words, the double free idea doesn’t even seem necessary for internet TV to work.

Internet TV should have a tremendous future and it will be stronger if the industry stops the promise of double “free”. Internet TV’s future comes with the truly exciting opportunity: integrating programming with interactive features that make the programming more valuable.

But sadly, companies aren’t talking about delivering more value. They’re getting wrapped up in dead ends – like removing advertising when there doesn’t appear to be monetized market power created by doing so.

So next time you hear someone talk about how great it is to get free programming on the internet, know that they’re really talking about a future of really bad programming. You may not like programming today (it’s fun to complain). But just imagine what it would be like in that free future.

Copyright 2010 – Doug Garnett

In my last post, I noted six hard truths or axioms I’ve developed about social media. And while these are sobering thoughts, it’s only by facing a medium’s weaknesses that you can truly leverage its power.

So let’s look at another sobering set of thoughts today. If we’re going to look at the people who will be your company’s friend, what motivates them to become your friend?

Reasons People will Friend Your Company

The best starting point is to look at the value they get from connecting with your company. My team finds that there are five primary categories.

- Coupon Clippers. Many consumers “friend” companies to seek discounts and deals. In other words, they are the coupon clippers. Interesting. Coupon clippers are powerful short-term revenue opportunities. But historically they have less brand loyalty and are of lower lifetime value to companies.

- Party Animals. Many consumers friend companies because of clever “entertainment” (typically unrelated to product value). This is especially true for brands who make entertainment the focus of their online experience. Truth is that a significant portion of Party Animals are unlikely to ever use or purchase the product. One great example of Party Animal social work was this year’s Old Spice campaign. Their online campaign generated massive social media interaction and ad business hype. But, it appears to have had no detectable impact on sales.

- Groupies. There are some consumers who become professional “fans” – groupies. And, this happens for every company – not just the “hip” ones. The volume of groupies can be increased with effort. And, they are a lot like rock star groupies — emotionally significant to the company, but they won’t fill an arena and they won’t make your numbers for the year.

- Customer Care. Many consumers connect with companies to seek customer service. One article I read this year pointed out that this is akin to “protecting your investment”. If you own a Toyota and are concerned about this year’s safety problems, you are more likely to “friend” them just to be up-to-date on recall notices.

- Brand Engagers. Some connectors are truly engaged with your brand and will use social media to maintain contact. My axiom is that for broad based social media (e.g. Facebook) this last group is important, but unlikely to be more than 10% or 15% of your total social media connectors.

What does this mean?

I can’t tell you what portion of your social media “friends” will fall into each category. That will depend on many factors including the design of your efforts to attract friends and the fundamentals of your product, brand, and category.

But when you look at that group that gathers around your company, some generalizations are quite reasonable.

1. The hype surrounding social media far outweighs it’s economic value to companies. I think is quite common to find that no more than 5% of your target will even entertain a social media connection. The further fragmentation into five categories makes each segment quite small.

2. As a result, it’s quite easy to spend your money chasing around after your least valuable consumers.

3. If you want your social media relationships to be significant to your company, then you need to avoid the hype and the easy answers in creating social media connections. Instead, take some lessons from the direct marketing world and embrace the social media efforts that build solid & long-term relationships.

In no way do I think you should stay away from social media. But whatever your efforts, enter social media with your eyes open.

Copyright 2010 – Doug Garnett

We’ve been sold the grand myth of social media marketing based on some rather flakey ideas. In particular, the ad biz has somehow convinced itself that the vast majority of consumers have a driving desire to be a company’s friend. Now a study by the Harvard Business Review and the Corporate Executive Board suggests there are significant limits to a company’s potential intimacy with its consumers.

This study started by looking at consumer relationships with qualified counter help – like the people at an airline counter. In studying physical behavior and shopping behavior they concluded that people very often avoid idle counter help and opt for automated systems (like ticket kiosks or supermarket self-checkout). Building from this work, they researched other consumer relationships with companies – including social media. In the end, they conclude that the majority of consumers really don’t want to be close to most companies.

I couldn’t agree more. Consider my own situation. We have a lot of brands in the house. But if I remove commodity brands, there are only 200 to 250 brands where a significant connection is even a consideration.

But you know what? I don’t want to be friends with any of them.

Why would a social media connection with Dial Soap benefit me? Or Cascade Detergent? Or Sony for my TV & my DVD? Or Levi’s for jeans? Or Ethan Allen, Sherwin Williams, Dania, Ikea, Nintendo, Lego, or… It simply isn’t worth the social media and email clutter. (No, I do not want most of your brand emails.)

But there’s an even bigger shocker: I’m pretty passionately connected with my Apple products yet don’t even want to “friend” Apple. Why? When other people write about Apple it’s fascinating. But, their corporate communication is brochure copy (like it needs to be) and so it’s really not very meaningful in a relationship. Besides, I will go get information when I need it (it’s right there on the web).

And this leads to a set of key axioms about people interacting socially with companies. My reading of the current research points clearly to these axioms. But research into social media has been conducted primarily with wide-eyed awe and avoided the tough questions. So I know some of these are based on intuitive jumps more than steely-eyed review of hard numbers.

The six (6) axioms:

1. Most consumers don’t want to be your friend. They may like you. They may even love you. But that doesn’t mean they want to be connected with you online.

2. Consumers who will be your friend on Facebook or any social media outlet are a very small segment of your target market.

3. Consumers who will be your “friend” are usually not those customers who generate the most money for you.

4. The influence of active social media consumers is overstated. There is no reason to believe that consumers who will be your “friend” are important influencers – nor your best influencers. (This conclusion comes from some excellent research on the “Million Follower Myth” that I’ve written about in another blog post.)

5. The vast majority of consumers have at most a handful of companies or brands where they will build social connections.

6. The most powerful social media connections are through narrow social media – like your company’s social media site. It’s always been true in marketing that focus delivers higher returns. Somehow, we need to re-build that understanding in social media.

What does all this mean?

Social media is exciting. And it’s here to stay. As companies evolve their marketing, it’s very smart to plan a social media strategy. But social media agencies are using classic “FUD” salesmanship – casting fear, uncertainty, and doubt on your future “unless” you spend a lot of money with them.

In fact, there is a big danger of social media work taking both energy and budget away from more highly profitable investment opportunities. This danger is made higher by the consuming nature of social media work. I find that staff who work on social media become quickly hypnotized by their new toy and lose their sense of perspective.

So after all this, the first and most critical step I recommend for your company’s social media work is choosing where and how you will limit investment until social media is proven to return commensurate sales.

Copyright 2010 – Doug Garnett

I generally enjoy reading Bob Garfield’s work. So I read his recent AdAge blog post about new media with interest.

In this post he recounts being bombarded in a foreign airport by loudly shouted commercial offers. I know what he’s talking about — offers for time share presentations, people who want to be your “friend” so you’ll use their taxi, people who want to help with your luggage (for a fee), offers to sell you hats, sunglasses, food, … The list goes on.

As I read I thought: Bob, you’ve nailed it. Welcome to the world of new media – that cacophany of demanding voices violating your privacy.

But that wasn’t what he meant. He thinks the old world of media was a lot like this airport because it was based on interruptions. (I can sort-of buy that.) And, he suggests that future advertising won’t be that way. Huh? In fact, he implies a utopian vision that is so commercial-offensiveness free that humanity must be surviving without ever having to admit that society depends on commercial interests.

To be fair, Bob Garfield is reflecting conventional wisdom among the advertising elite. So let’s think about this supposed utopia.

I’ve seen something like it someplace. Hmmm. Where… Let me think. Oh, yes. Star Trek, Star Wars, and Avatar — all movies with utopian visions of the future created as an author’s fantasy – not by reality.

What’s the reality about new media’s intrusiveness? When you stop and really listen to new media, I find it intensely more intrusive and insistent than old. (And I know I’m not alone.)

Consider your mobile life. In the old days, apart from some outdoor advertising and point of purchase, once we left our homes, we were advertising free. Now it is the avowed goal of the tech industry to bombard us with advertising the minute we touch a mobile device.

Consider your ability to ignore advertising. In the old days, you could go get a beer from the fridge. Now, you have to endure that 15 seconds of pre-roll with a meaningless Old Spice ad just to find out if an online video is at all interesting. (Of course, I’m told that most people just skip those ads by opening other windows on their computers.)

Consider how new media advertising invades your personal connections like in social media. If I discuss woodworking projects with friends on Facebook, I’m followed for weeks by advertising for woodworking tools who want me to “like” them. GO AWAY!!! I don’t want them, don’t care, and resent the intrusion on my personal space. STOP IT!!!

Consider the new media “bait & switch”. Rather than honestly tell you “here’s an ad for a product we think you’d find interesting”, many agencies tell their clients to deceive through content. There’s an extensive literature about how to sucker consumers over to your website so you can bombard them with commercial messages.

Consider the lies. Lies travel farther and faster than truth in social media. So, the new advertising elite learn they have to reject meaningful & useful messages because they’re too complex – and because only a few types of messages will ever get seen in new media.

Consider how many messages bombard us. A couple of years ago AdAge noted that in the old days, we were presented 500 commercial messages in a day and research showed we remembered 1 or 2. Now, we are presented with 2,500 commercial messages in a day and research shows we still only remember 1 or 2. In other words new media, with its pervasive stridency, is training consumers to ignore advertising at a higher rate. And that means we’ll have to yell louder and more insistently just to be heard.

There is a fundamental societal flaw at work here. We used to have an unspoken agreement about advertising as a society. The agreement included ideas like “our society needs advertising to create and sustain jobs”, “consumers want to learn about products that are meaningful to them”, and “the ads pay for making good content”.

What made this work were specific media structures and limits on how advertising was used in those structures. Now the structures are changing. And those limits are gone so the best advertising agencies compete to see who can intrude on our personal lives at the fastest rate.

In a third world airport, the situation is different. The airport noise that strikes Bob (and myself) as so loud is part of their social contract. But it’s not part of ours and neither is the intrusiveness of new media.

The real issue is what we want for the future in our society. An airport cacophony that follows us everywhere? Or advertising that delivers both economic strength and quality of life? Only time will tell whether we get what we want. But without dramatic intervention, the captains of the advertising industry seem hell bent on rushing to the airport.

Copyright 2010 – Doug Garnett