Decoding the new economy

Twitter is like CB radio and this isn’t a bad thing

Of all the predictions we can make for 2010 one good bet is social networking is approaching, if not past, the fashionable peak of the hype cycle. Particularly Twitter which we’ve seen pronounced dead by various writers over the break.

Last week’s Las Vegas Consumer Electronics Show illustrates the Hype Cycle we discussed just before the Christmas break. If there’s one thing for sure, we can say tablet computers, 3D televisions and Google phone are racing to see which will be the first to the “peak of inflated expectations”.

Funnily, we’ve been here before with mobile phones, tablet PCs and 3D entertainment so it will be interesting to see where these are in 18 months or so.

While it’s entertaining looking at the new gadgets, the interesting action is happening on the other side of the peak where real uses for technology and gizmos are found after the hype moves on to something newer and prettier. When the bored fashionistas move on from a product that’s no longer the newest and shiniest we see if something is genuinely useful or just a pointless fad.

My favourite comment was from an weekend newspaper entertainment columnist stating the Twitter hype was driven by “Boring Old Farts Suddenly Discovering Technology” and the whole thing is now dead because an MTV host declared she was over Twitter. The Luddites are crowing that Twitter, Facebook, LinkedIn and the entire Internet thingummybob can join CB radios in history’s discount bin of overhyped technology.

Citizens Band radio is a good lesson of what happens as a product moves through the hype cycle. In the mid 1970s peak, songs were being written about it and the media was awash with spookily similar stories of how CB radio was ushering in a new era of participatory democracy. Within a couple of years, the hype had passed and those who had a use for it, such as truckies, farmers and service people, got on with their work without the kids and newbies hogging their radio channels.

Exactly that process is happening now with the various online networking tools. The naysayers will crow they were right all along about a fad for boring old farts while unknown to them entrepreneurs will be figuring out ways to make money from these tools and smart businesses will be using them to stay ahead of their slower competitors.

As well as the trendies moving on, the social media snake oil sellers who’ve traded on the social media hype over the last two years will also move on to the Next Big Thing or go back to selling multi level marketing schemes. The honest consultants and genuine experts who survive the shakeout will be able to genuinely add value and help their clients achieve more with the tools.

So a product or technology passing the peak of the hype cycle is an excellent opportunity to use it do great things for your business without the fashionistas and snake oil merchants distracting you. Don’t be afraid to experiment just because the PR machines and fashion victims have moved on.

How marketing and business are interwined

Entrepreneur magazine discusses changing your definition of marketing. While Dan Kennedy has some good examples of businesses that have used tools such as membership and market positioning to grow, I’m not sure they can be treated as marketing.

Entrepreneur magazine discusses changing your definition of marketing. Dan Kennedy has some good examples of businesses that have used tools such as membership and market positioning to grow, but I’m not sure they can be treated as marketing.

All of the examples; Starbucks, Disney, Florida timeshares, barbers and gourmet pizza shops illustrate some great business models which is exactly what they are; ways of doing business that engage the customer and sell a better product.

The marketing aspect is simply telling the story of why the business is better, unique or why it does something so well.

One of the problems with marketing is it’s often about telling porkies, not about describing the product or why the business is unique. This type of marketing fails when the customer finds they’ve been sucked in.

In the past, big brands have been able to get around this by using mass media to shout it louder and stronger on the idea that if you repeat the lie often enough, people will believe it.

Marketing is part of your business DNA, you have to tell your story to get business. The key is to be telling a true story based on your product’s strengths.

How the net is changing business

We often talk about how the internet is changing marketing and distribution, but we often overlook just how fundamental the basic ways we do business are changing.

Internet tools like social networks and the web itself are forcing us to be more honest, open and ethical.

This occurred to me during the annual Cannes Lions International Advertising Festival a few weeks ago, where I was fortunate to go along and see how the advertising sector is dealing with challenges to their clients’ traditional marketing channels while a global financial downturn hits business.

Microsoft CEO Steve Ballmer put the worst case scenario of the world economy resetting to lower debt levels with marketing spend declining faster than GDP, as newspapers and magazines vanish at the same time consumers tighten belts.

Perhaps it was to be expected that Google CEO Eric Schmidt had the opposite view that Americans were too wedded to their credit cards to do anything else but spend.

The marketing bosses of Proctor & Gamble, Kraft and McDonalds had a very different outlook to either of the CEOs. They saw online advertising growing, while print and broadcast spending stays static – the most quoted statistic was the net occupies 20% of consumer’s time while only 7% of budgets are allocated to internet marketing.

A splash of cold water was from Kofi Annan and Bob Geldof who launched the “tck tck tck”, Time for Climate Justice campaign to get real results from the UN Copenhagen Convention in December. Their speeches were compelling and a reminder that some things are bigger than how much you spend online.

Back in the online world, Twitter co-founder Biz Stone gave an entertaining talk on how Twitter came about and some of the possibilities for making money from the service (charging for richer data) but the best social media talk was from Kevin Eyres, LinkedIn’s Managing Director for Europe.

Kevin’s key point is a business’s social media profile is just as much from what employees say on Twitter, Facebook and MySpace, as it is of customer’s comments and the efforts of the marketing team.

This is spot on and shows just how broad the risks and opportunities are for managers and entrepreneurs.

Modern management has to be honest and consistent – the days of hollow mission statements and empty commitments to customer service and equal opportunity are over.

If you don’t hold by your principles then your customers, staff and suppliers will rat you out to the wider world. If you do hold by them you’ll gain respect and true followers.

The final thing from the Cannes Festival was just how innovative and creative the world advertising industry is. While the prize winners were impressive there were many clever entries that changed the way you’ll look at marketing.

Luckily, most of them are online at the Cannes Lions website, so have a look at the speakers and get some inspiration from the entrants. Don’t copy them though as you’ll probably be dobbed in on Twitter.

Cannes Lions: Day Two

Day two of Cannes Lions continued the theme of dealing with new channels with a big focus on digital and Internet possiblilites.

One old channel using new technologies is the movies.

The future of Cinema with SAWA was an entertaining session that showed how movie theatres are going to bring together various technologies to enhance the audience’s experience.

These new experiences offer great opportunities for producers, studios and marketers and while naturally the audience were more interested in the marketing angles, it’s clear that everyone involved in movies will be focussed on how they can make these features work for them.

Jimmy Mayman from Go Viral showed some of the successes in viral marketing, including T-Mobile’s Dance and Sing clips.

I have to admit I was left cold by these examples. I’m not contrived flash mobbing events are even truly viral marketing as such.

Monday’s highlight was one of Twitter’s founders, Biz Stone, discussing the future of Twitter to a full auditorium.

The big news from the session was how Biz hopes to have a revenue based on advanced API functions for commercial users.

This is an innovative twist on the “freemium” business model. Where individual users are subsidised by the sale of aggregated data to businesses.

It will be interesting to see how Biz and his team deal with the inevitable privacy concerns that will be raised.

While the session was promoted as a tweet-up, it was limited by the lousy Wi-Fi access in the venue. In fact it’s surprising how little a role Twitter’s playing in the event given how it’s being used at Australian events like the Future Summit and CeBIT.

Wi-Fi problems illustrate just how event organisers are struggling with the demands of a modern market. It’s a theme we’re going to see continue.

Lipstick myths

Is the lipstick theory of recession spending really true?

Is the lipstick theory really true? I’ve been hearing a lot about it lately and I’m not so sure.

The “lipstick theory” is people will spend money on small, modest priced luxuries in a downturn to make up for not being able to afford big luxuries.

It’s been used to justify everything from increased fast food sales to Belgain chocolates to expensive beer to, well, lipstick.

I recently heard it used by a software developer as the rationale for investing in a software as a service product.

But is it true?

The Economist isn’t so sure and shows there’s little correlation between past recessions and lipstick sales.

My suspicion is if it was true in the twenties and thirties, it was more because better manufacturing and distribution techniques meant a better, cheaper product could get to the market.

Even if the lipstick theory is true, it’s dangerous to assume your product is the same.

For a start, some lipsticks will do better than others, partly because of marketing and partly because their price points are smarter.

Should your “lipstick” product be successful, it might not make much money for you anyway. In the last recession we saw McDonalds and other fast food chains introduce $1 and $2 meals, we’re seeing a similar trend at the moment with sub $500 computers.

These “recesssion busters” may keep your market share up, but they aren’t going to be particularly profitable. Indeed, for the computer manufacturers, the sub $500 laptops may well be cannibalising what’s left of their profitable product lines.

The reality is a lot of the products that are claiming the “lipstick theory” will save them are really doomed. The vast majority of shops selling expensive chocolate, lingerie, beer and other pricey but non essential products are simply marking time until the effects of the popped bubble reach them.

It’s best to base your business plans on sound evidence rather than blind hope in an idea that may or may not be true and may or may not apply to your products.

Ignoring your customers

The new Facebook design has picked up lots of critics with nearly 800,000 users giving it the thumbs down.

However Dare Obasanjo claims Facebook founder Mark Zuckerburg doesn’t care. Apparently Mark’s view is “the most disruptive companies don’t listen to their customers“.

That’s true – Steve jobs ignored the howls of protest when Apple dropped support for floppy disks and the Apple Desktop Bus which left millions of Mac users stranded with obsolete equipment.

Even more famously, Henry Ford told customers they could have any colour Model T they liked as long as it was black.

Both were right and the customers followed them, although not without some grumbling.

So you can succeed by knowing your customers needs better than they know them, but it’s a risky ask as Microsoft found with Windows Vista, Ford with the Edsel and Coca-Cola with New Coke.

Time will tell if Mark Zuckerburg’s right. It’s a high risk strategy though.

Managing your reputation

Keeping track of what your customers and others are saying is important for your business. Luckily there’s a free tool to let you keep track of your reputation on the Internet.

This article first appeared in Smartcompany on 17 February, 2009

Last week at a major telco’s product launch a respected tech journalist piped up that while their new gadget was nice, their network was rubbish and so the gadget wouldn’t work very well.

The telco’s reaction to this deserved comment was instructive on how large corporations deal with criticism.

Rather than take the comments on the chin, the telco’s spokespeople canned the journalist and waved around a report stating their network was the greatest thing since sliced bread, or at least since somebody thought of connecting two cans with a piece of string.

Personally I’d be tempted to point out to the esteemed and highly paid writers of the report that two cans of string are probably a touch more reliable than their client’s network in notoriously remote locations like North Sydney and Martin Place.

While telco managers usually get away with head in the sand behaviour, business owners in the real world can’t. Their reputation with customers matters.

In the current business climate, you can’t afford to be dismissing your customer’s concerns. When a customers complains, action needs to be taken and lessons learned from that complaint.

How business leaders deal with complaints is a real test of how good they are. Handled well, a complaining customer can be turned into a raving fan of your business and a complaint should be an opportunity to review how well you do your job.

You don’t need to be hosting press conferences with stroppy journalists to find out what people think of you. One Internet tool for managing your reputation is Google Alerts.

With this, you can set up an email summary of each time your target word or phrase has popped up on Google and have it delivered to your inbox.

I have all my business names listed with Google’s alert service so I can see when others have mentioned them on Internet forums, blogs or websites. It’s also very handy on keeping an eye out for anyone breaching your trademarks.

Incidentally, the journo was right, and that particular telco’s network problems have been widely discussed on the net and in the media. It beggars belief the managers and PR couldn’t have expected this sort of criticism if they’d been running these tools.

The web’s a pretty effective way of getting good and bad news out about a business. If you watch it closely, you can anticipate problems before they bite your bottom line.

Category: marketing

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