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 / Winter 2009 / Issue 57(originally published by Booz & Company)


Best Business Books 2009: Marketing

Of course, the trouble with “free,” especially in these data-driven times, when return on investment should be an exact science, is that the profit it generates is indirect. The ties between Google’s sponsored links program and revenue could not be more direct, but how does a traditional businessperson rationalize the company’s decision to simply give away software? Anderson’s caustic answer to those still attached to 20th-century ideas of pricing: “You have to think creatively about how to convert the reputation and attention you can get from Free into cash…. This is just like everything else in life — the only mystery is why people blame Free for their own poverty of imagination and intolerance for possible failure.”

Yes, there is certainly stridency here, so much so that you have to wonder if there’s a subconscious connection between Anderson’s passion for his theory and his lifting of some of the book’s passages from Wikipedia, the free online encyclopedia; the plagiarism was uncovered by the Virginia Quarterly Review in the weeks leading up to the book’s publication. (Anderson called his lapse “sloppy” and “inexcusable.”)

For marketers, the most salient points of Free aren’t really pricing related, even if that’s what the book’s title implies. The concept of “free” is important for two reasons. First, it has already been embraced by younger demographics. We’re now dealing with an entire generation that, through file sharing, free Facebook accounts, and free Google Docs software, views “free” not just as the way things are, but as the way they should be. Given marketers’ endless pursuit of youth culture, they’d better get their arms around this. Second, although Anderson doesn’t quite come out and say it this way, “free” can be seen as the new mass media. As it becomes harder and harder to engage consumers, perhaps the easiest way to create interest is to give away a stripped-down version of a product. The trick then becomes how to get those people who upload pictures to the basic Flickr service or play a free version of an online game to buy the premium version of the same product. It’s a strategy that Anderson references throughout the book as a “freemium.”

Anderson also tracks the “free” phenomenon into the analog world, where it has existed at least as long as there have been “buy one, get one free” deals. His most detailed example is Ryanair, which sells airline tickets for unbelievably low prices (a recent visit to its website showed flights from Liverpool to Stockholm for only £4). But the Irish airline charges for nearly everything else, from flying with an infant to renting a car through its website. It is even considering charging passengers to use the restroom and pondering whether letting people gamble on board would allow it to give away tickets on some flights. One thing Anderson doesn’t point out is that “free,” like any other marketing program, can have a substantial cost in a company’s reputation with customers if it’s done poorly. In a series of interviews on the U.K.-based website, for instance, Ryanair customers called its plan to charge for toilets “absolutely horrific.” Still, as the tens of millions of people who have flown Ryanair can attest, “free” has an obvious allure — and so does Anderson’s book.

When the Brand Bubble Pops

If this year’s best marketing book, The Brand Bubble: The Looming Crisis in Brand Value and How to Avoid It, weren’t so well-documented, it would be easy to accuse the book’s authors of trading in scary headlines — burst bubbles are all the rage these days. But John Gerzema and Ed Lebar, executives at the global ad agency Young & Rubicam, have plenty of data; they oversee the agency’s BrandAsset Valuator, an analytic database that currently encompasses 600,000 customers, 30,000 brands, 48 countries, and 240 studies.

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