Twitterville: How Businesses Can Thrive in the New Global Neighborhoods
Free: The Future of a Radical Price
John Gerzema and Ed Lebar
The Brand Bubble: The Looming Crisis in Brand Value and How to Avoid It
Perhaps nothing this year captured the fancy of the marketing and media intelligentsia, and the interest of pop culture as a whole, more than Twitter. This micro-blogging service promised to infuse excitement into moribund customer service, revitalize marketing, reengineer the connections between celebrities and fans, and perhaps even overthrow governments, all in 140 characters or less — the maximum allowed length of a message.
It’s been true for a few years that consumers have a more commanding voice in the marketing arena; the difference now, as Twitter’s popularity reveals, is that more and more individual consumers are using their voices — what was once a trickle produced by the most tech-savvy consumers is now a rushing stream. The injection of the consumer’s voice into brand messaging may be the most explosive change for digital-age marketers, but it’s the ongoing contribution of all those voices that is actually making the impact.
Now that major marketers and individual consumers use the same tools to produce and distribute messages, it’s as though the open source movement has spread into the business of brand communications. Take Dunkin’ Donuts: It spends millions of dollars on marketing, but there are also dozens of fan-produced Dunkin’ Donuts pages on Facebook, and the vast majority of the 5,000 YouTube videos tagged “Dunkin’ Donuts” were uploaded by consumers. The cross-pollination of corporate marketing and consumer messaging has reached a point of irreversibility. The three best marketing books of the year address this reordered world of messaging and marketing.
All Aflutter about Twitter
It is virtually, pardon the pun, impossible to ignore the mental space that Twitter has taken up in the last year within the marketing and communications industries. The service is still relatively small — InformationWeek reported that Twitter attracted about 23 million hits versus Facebook’s 122 million hits in June 2009 — but its hold on the marketing imagination is profound. Twitter is word-of-mouth moving at hyper-speed. Each person (or corporation) using the free service can post text-sized messages (tweets) and “follow” the messages of other users. Users resend the most interesting of the messages to their followers, creating a constant spreading of tweets in a very public forum in real time. This makes Twitter an incredibly dynamic platform for communicating with and distributing messages to people with high levels of interest in a brand, as well as a potent platform for gathering consumer intelligence.
Not surprisingly, about two dozen books solely devoted to the two-year-old service are already for sale on Amazon. Thus, in picking books to review, the task became not whether a Twitter book should make the list, but which book to include. Some of the authors are marketing wonders, but many are charlatans who simply consider their role as Twitter pundits to be a get-rich-quick opportunity.
Shel Israel (Twitter user name: @shelisrael) doesn’t fit into that latter category. Israel is the coauthor, with tech evangelist Robert Scoble (@scobleizer), of Naked Conversations: How Blogs Are Changing the Way Businesses Talk with Consumers (Wiley, 2006), and he admits his own early skepticism about the service. In Twitterville: How Businesses Can Thrive in the New Global Neighborhoods, he writes: “When a friend talked me into trying Twitter in August 2007, I found myself reluctant.… I already had all the contacts I thought I needed and was having plenty of interaction with people through traditional and social media tools.” Israel’s experience, replete with early fits and starts, makes his insights into Twitter all the more credible, as does his research method — about three-quarters of the book comes from people who are active users. He also knows how to tell a good story, in this case of how a teenager named Jack Dorsey created an online municipal dispatch service in 2000, which provided the seed that became Twitter.
For the marketer, Twitterville really shines in its case studies, which show how the service can provide a distinct, and easily achievable, competitive advantage. One case study concerns the JetBlue Airways Corporation (@jetblue), which in 2008 discovered the service’s utility as both a mechanism to determine consumer needs and a promotional tool. When airline employees who used Twitter noticed messages complaining about the difficulty in booking flights between San Francisco and Austin, Tex., for the SXSW Interactive conference, a key gathering of technology executives, the airline quickly added flights, and then, completing the virtuous circle, posted messages on Twitter to market the added seats. Meanwhile, the other airline with many flights to Austin — American Airlines (@aairwaves) — missed the moneymaking opportunity, simply because Twitter wasn’t yet on its corporate radar.
Israel’s understanding of Twitter culture is best displayed in an anecdote about how Procter & Gamble Company, usually among the most savvy advertisers, got Twitter wrong. P&G partnered with Feeding America to sell Tide T-shirts to fight hunger, but it failed to understand how the Twitter community worked when it attempted to piggyback on the reputation of 150 of the most followed users of the service. P&G asked these influencers to send tweets to their followers, who would presumably re-tweet the message to their followers, and so on. However, the goodwill of the Twitterati didn’t extend to hawking T-shirts promoting Tide, especially since Procter & Gamble didn’t disclose how much of the purchase price was actually going toward feeding people. In the end, P&G sold only 2,000 T-shirts and the initiative was considered, by the Twitter community at least, to have bombed.
No one knows if Twitter will become a permanent fixture in the social networking scene or turn out to be a fad, but in terms of this book’s relevance, it’s a moot point. Reading Twitterville should be a priority for anyone who is serious about marketing today, because the online conversation is just beginning to evolve, and dismissing the phenomenon exemplified by Twitter would be a major mistake.
Giving the Store Away, but Making a Profit
It might be tempting to dismiss Free: The Future of a Radical Price, except that its author is Chris Anderson, editor-in-chief of Wired and author of The Long Tail: Why the Future of Business Is Selling Less of More (Hyperion, 2006), whose title became one of the big catchphrases of Web 2.0. Anderson’s controversial new theory is that sooner or later, every business will have to deal with Free (a term that he uses as a capitalized noun, somewhat preciously, throughout the book) and start giving away goods and services that in a pre-digital era would have been sold. Up to a point, anyway.
Not that “free” is easy. After quoting Sheryl Crow about how “sad” she feels that some people think music should be free, Anderson says the most heretical thing that it’s possible to say to a capitalist. “Spot the fallacy?” he asks. “It’s that the only way to measure value is with money.” Anderson argues that Crow doesn’t recognize that when her songs are stolen, she is really participating in two of the Internet’s “nonmonetary economies” — economies measured in attention and reputation, which can be used to make money. Thus, he espouses the idea that “free” is the essential first step toward revenue, particularly in digital businesses, where the marginal costs of reproducing and distributing products are essentially zero.
If that doesn’t sound heretical exactly, it does sound wrong-headed — maybe even crazy. And yet, there is no denying that “free” can work marvelously. Look at Google, which gives away e-mail, blogging software, maps, and even a software suite that rivals Microsoft Office, and thrives from this exposure. (As for Crow, Anderson points out that the exposure stemming from free music leads to revenue from merchandising, concerts, and licensing; just ask the surviving members of the Grateful Dead.)
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 BrandRepublic.com, 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.
Here’s what they found: Wall Street has been bidding up the value of brands to such an extent that “brands account for approximately 30% of the market capitalization of the S&P 500” and “have doubled in their contribution to shareholder value over the last 30 years.” The problem, as the authors explain, is that while Wall Street has been bidding brands up, consumers have been bidding them down. The public’s faith in most brands has been eroded by decades of over-the-top ad claims and the fact that the shelves are overcrowded with undifferentiated products. Kudos to Gerzema and Lebar for also making the link between the accelerating decline in brand credibility and the mass adoption of the Internet, which, in effect, open sourced people’s ability to research brands and communicate about them.
Among the loads of evidence The Brand Bubble presents to substantiate consumers’ lack of interest is data from Forrester Research Inc. revealing that the percentage of people who say they “buy products because of their ads” fell from 29 percent to 13 percent in the four-year period between 2002 and 2006, and the percentage of those who agreed with the phrase “companies generally tell the truth in ads” declined from 13 percent to 6 percent at the same time — and those figures came after decades of slower erosion in the power of brands.
It wasn’t only the authors’ command of the facts that struck me when reading The Brand Bubble. It was a gut reaction that Gerzema and Lebar, having examined all the many facts at their disposal, have articulated something profound about the sorry state of brand equity. Decades ago, as they put it, “simple awareness was enough to create product differentiation, especially when brands were small and regional.” Now, “barring meaningful distinction, brands enter into a transactional relationship with consumers, letting price dictate the purchase decision.” As brand equity erodes, the specter of commoditization rises.
Just as insightful is their discussion of why certain brands continue to resonate with consumers. What is it about Apple, Nike, Virgin, Whole Foods, and Google? They’ve all achieved “energized differentiation,” according to the authors. These brands don’t rest on their laurels, they are continually looking forward and staying in motion:
We used to think of positioning as a hole in the ground in which to plant a brand. Water it with repetitive messages and GRPs [gross rating points] until it bears the fruit of brand equity. But the marketplace is in constant motion. Competitors, consumers and culture are constantly reordering brand meaning…. It’s no longer effective to stake a claim to a perpetual territory and defend it through repetition. Instead, the best way for a brand to own a position is to be constantly dynamic with it.
Eureka! The power of Apple’s iPod isn’t in the core invention, but in how the brand is constantly evolving. And the decades-old skin-care brand Dove is still relevant because it “elevated itself from a memorable product attribute focus (‘one-quarter cleansing cream’) to engaging in a cultural conversation with consumers (reframing social perceptions of beauty).”
Fortunately, the book spends much more time on how to capture energized differentiation — starting with an energy audit to assess a brand’s current position — than it does on explaining why the brand bubble exists in the first place. Although much of it is too detailed to describe here, the book’s advice for reenergizing moribund brands is as well reasoned as its big ideas. (Also see Gerzema and Lebar’s “The Trouble with Brands,” s+b, Summer 2009.)
Finally, in a move that Chris Anderson would applaud, the authors invite marketers to go to www.thebrandbubble.com as a starting point for conducting their own energy audits. Even though the process does require registrants to give up “basic information” to receive a password, the authors promise they won’t follow up. (But if you want to get in touch “for a personal discussion of your brand,” they won’t object.)
In some sense, what makes these the three best marketing books of the year is that they couldn’t have been written at any other time, maybe not even as recently as a year ago. The cross-pollination of brand messaging has been slowly emerging, but as it comes into full flower, the only books worth reading are those that help us come to terms with the dangers and opportunities in a completely reordered communications and competitive landscape. Many older books that once contained great marketing insights have become obsolete, because in the marketing and communications industries these days, it’s less and less true that past is prologue.
- Catharine P. Taylor has covered advertising and marketing for almost 20 years, focusing on the impact of digital media since 1994 and writing for publications including Adweek, Advertising Age, and Wired. Founder of Adweek’s AdFreak blog, she currently posts about advertising at her own blog, Adverganza.com, posts daily to the BNET Media blog, and writes a weekly column, the Social Media Insider, for Mediapost. Her Twitter user name is @cpealet.