Posts Tagged ‘Power of Choice’

Music Is Free–Let It Loose… and Reap the Benefits. PART 1

December 3, 2010

Intro: Back to the Future

I recently tee’d up final group projects for my Principles of Marketing classes this semester. Since I started doing classes in 2002, I have had students attack the music industry and break up into teams that represent major or independent record labels with the goal to create marketing strategies to grow their business from these two perspectives.

This is no small feat when you consider that the music industry was disrupted by peer-to-peer and other technologies that have empowered listeners with capabilities to distribute and secure music for FREE, and it committed suicide by suing customers and refusing to adapt. Who could have predicted in 2002 that a computer company, Apple, would operate the most successful legal digital distribution system, iTunes? Extraordinary!

How do you compete against FREE?, and make money at the same time?, is the knotty challenge, and there could be no conversation about this in class without taking a look at the visionary band that understood it all so long ago, and built a business and marketing model that made it happen, and happen on a grand scale.

A Bit of Historical Perspective

In 1969 I had the great good fortune to get a job at the best rock club in town called The Boston Tea Party. How I got the engagement is the story for another posting. It was a winter weekend in January that I started and the band, a little combo from Britain, was making their debut in Boston.

For the next year and a half or so, I had what I would describe as a front-row seat to one of the most creative periods in music, at least in my lifetime. Artists I was able to see, hear and hang out with ran the gamut from Ricky Nelson, The Who, Jeff Beck and Pink Floyd to B.B. King, Rahsaan Roland Kirk, Big Mama Thornton, Eric Clapton and yes, the Grateful Dead, the band that redefined marketing for me.

Since one of my duties was to help these bands load in (up two flights of stairs!!!) and set up their gear, I would really get to know the roadies, road managers and other behind the scenes facilitator of the music, as well as the artists themselves.

The Dead were unusual even then. They were as far out as you can go… very smart and very unique, obviously. More than anyone else they embodied the “be ‘hear’ now” hippie spirit… and expressed many dimensions through the music.

Their road manager whom I got to know a bit was a fellow named Owsley, otherwise known as the Bear. Bear was also a world-famous chemist and from what I now know, an all around Renaissance man and resident genius.

Looking back I don’t know how The Dead could play sometimes, especially once Owsley had done his thing. And yes, there were moments when they really couldn’t, like the first they night they followed the The Bonzo Dog Band (another story) in the Fall of ‘69. There was no way to follow this rock and roll musical circus, which was part of the extended Monty Python family, that had the audience freaking out and running for the exits by the time they finished.

Then there were the nights, when it all came together… and the music, created on the fly just for and with the audience, transcended everything. Electrifying. So when it worked, it worked… and when it didn’t, oh well, there was always tomorrow.

Hippie’est to Highest Grossing Concert Band of All Time: An Amazing Transformation

So how did The Dead go from hippie’est of the 1960’s hippie bands, to the highest grossing concert attraction of its era well into the 1990’s?, an era of Rolling Stones, Michael Jackson dare I say Neil Diamond, another huge draw?

Leesons for us all, 40-years later!

Of course it’s the marketing!

David Meerman Scott and Brian Halligan give us great insight into this with their recent book, Marketing Lessons from The Grateful Dead. They identified the genius level marketing developed and adopted by the band… best practice and learn’able lessons that are applicable to all products today.

I will argue that what The Grateful Dead understood, perhaps intuitively at first, was the sense of community they were a part of and had the power through the music to create, nurture and grow.

A 360-degree business perspective

As you can see from this pie chart, from the article in Rolling Stone*, A New Life for the Dead: Jerry Garcia is Checking Cash Flow Charts, from way back when in the November 22, 1973 issue, they were able to see themselves not only as a concert band, but as a business from a 360 degree perspective that included concerts, importantly, but also the totality of their business. They then created a variety of companies including a record label, a sound design and production company, a travel agency and much more to support the enterprise.

Building Demand

Around & Around It Goes: More demand = Larger Halls, More Equipment, More Gigs, Larger Overhead, Bigger Organization -- Repeat

At its center or core, was the live music itself, the concerts. As it turned out, this was where when the 60’s ended and the 70’s and beyond began, the overall Dead experience could be monetized as they played bigger and bigger concert halls.

They consciously realized that since each performance was basically improvised and different, it was possible that demand for tickets could be increased, where fans would come night after night, market after market, and invite their friends to share a unique musical experience each and every time.

The other, was the understanding that the music once played was no longer theirs alone. In other words, the notes once in the air, were no longer owned by the band or anyone for that matter. This was and still is counter-intuitive, in stark contrast to how the rest of the concert/music business views it – where the music in all forms is still considered the property of the artists themselves and fans are prohibited from “capturing” it in any and all forms, except for artist-authorized versions, and of course in our memories.

Live Music Creates a Connection between Artists and Audience

In creative terms, the one thing I learned by having had the opportunity to watch bands play multiple night engagements at the Tea Party over a two-year period was see how instrumental the audience is to the creative process.

There would invariably be a night, THE night when the connection between the artist and the audience would be at a more intense level. Bands were “on”, and we the audience didn’t just passively hear the music, we actively listened and a two-way connection was made that fed off and built on each other.

These were the nights we lived for and there was no doubt that the audience was integral to the creation of that night’s music. The Dead always understood and respected this connection and surrendered control.

Who Owns It?: Let “Remarkable Content” Loose…

Knowing this also allowed them to open up the concerts themselves freely to “tapers,” die-hard fans who wanted to record a living document of the show. These tapers, were then free to share the recording with friends and other fans as well, and in doing so foster and feed a community of friends and fans, who in turn would fuel more demand for the live, real thing and so on, round and round it goes, growing all the time.

Yikes!

You would think that considering their extraordinary success, other bands, and even products and services would surrender control and follow down this road. But sadly, this has not turned out to be the case, at least not yet.

…And a Community Flourishes

Today we need to understand that music is in a way like “information is free” (to quote Stewart Brand) and by that I mean not necessarily free relative to cost, but free in terms of being un-tethered by artificial restrictions. The marketer’s way is to let it loose, let the audience control it and in doing so give them a reason to share, to connect and then experience the real thing for themselves.

As the Dead proved with music, letting it loose unleashes the marketing power of the music (information), the more compelling and in today’s terms “remarkable”, the more the demand, the audience will grow and the more opportunities to monetize the total experience will emerge.

In today’s world with tools like social media where such a strategy based on collaboration with the audience aligns perfectly with transparency and customer control, who knows how much “further” the Dead could have and would have taken it!

Part II to come: How it all worked… From What I Could See, Owsley was The Guy who made it happen.

* I wanted to acknowledge the Rolling Stone: Cover to Cover, the DVD set that includes every issue, every page of Rolling Stone from 1967 to May 2007. You can read it all, as it happened, and see music and music journalism evolve from those heady days of the late 1960’s to today. If you love the music, you will love this!

I also wanted to call out the Grateful Dead Archive now housed at the University of California in Santa Cruz. They are in the process of digitizing massive amounts of the Dead’s memorabilia and making it available to all, in the same spirit that made this all happen to begin with.

Advertisements

Don’t Go Away Mad… Just Go Away: A Marketer’s Perspective to the Thorny Issue of Technology & Privacy and What to Do About It Now.

November 6, 2010

Last week there was an interesting article in the October 25, 2010 Wall Street Journal, A Web Pioneer Profiles Users By Name, about a web company called RapLeaf that takes data collection and web profiling to a new level.

Privacy in the 21st Century: A Brave New World

This is one of a whole onslaught of articles in the Journal and media overall regarding the apparent erosion of privacy, information and how it is and will be used in our 21st Century world. The information that is collected about us and our behaviors and now embedded on our computers and mobile devices for “harvesting” by companies intent on delivering ever more relevant marketing to us based on our actual search, purchasing and other trackable behaviors on and offline is astounding.

As a marketer, this is a nirvana like condition… a “brave new world “ of actionable, personally relevant information. Information that can be applied to customers one-to-one, with the idea of improving response rates for our online marketing programs. Better clickthroughs on PPC (pay per click) ads and banners, more targeted and specific messages to our prospects and customers. Eureka! The proverbial pot of gold at the end of the rainbow is at hand.

…Or 1984

And the “best” part that this is done automatically. We don’t have to do anything differently, it is done for us. I don’t know about you but this almost sounds more like Big Brother and “1984” when you put it like that.

So let’s circle back to what started this off… RapLeaf. Up until now, we have been told by Google, by Facebook, by ISPs, by Telecoms and all the rest that they collect anonymous data about us.

Fair enough, perhaps. At least we are used to it and may have a cookie (sounds so innocent doesn’t it) or a beacon implanted on our computers that may identify our habits, but not our names and e-mail addresses, we are number. That is until RapLeaf. They have collected it ALL… names and e-mail addresses and other contact info along with the rest.

Although RapLeaf claims otherwise, companies or other entities such as political parties and candidates use this information for highly targeted, pinpoint marketing programs, as the example in the Journal so clearly noted. This opens up an array of questions and issues that I am sure will be a part of our national (and international) conversation for quite some time, as these capabilities grow in every increasing frequency and at a faster rate beyond the traditional checks and balances, regulations, etc., that are now woefully out of date.

However our real fear, and possible solution, a marketing one at that, is a bit different.

A Marketing Point of View

Offering users the choice of how they wish to interact with technology increases ad relevance and value. Loyalty and other incentives for user determined levels of engagement further improves performance and reduces privacy concerns.

For an example of what I mean… if today you are a member of CVS’s ExtraCare® or similar loyalty program, and you swipe your tag at point of purchase, you may receive a seasonal discount offer for say, suntan lotion in the summer after every two or three purchases you make. Basic and static, these swipes are more about information gathering and over time CVS has acquired massive amounts of information this way.

Moving forward from now, it can and will be quite different. There is the new reality, currently in the process of being built.

Every time you interact with a CVS or any other retail environment, it will be tracked. And not only can the swipes be accessed in real time, so can your overall purchase behavior and credit card info as well. Tie this in to your personal info like mobile phone number, e-mail, web and actual addresses, now a whole new level of direct interaction is possible.

Let’s say you have allergies and every Spring you buy Claritin®, for example. That e-mail offer you may get, or ppc link on your Google or Bing search, or text message in March at the beginning of allergy season may feature, you guessed it Claritin… buy two, get one free. Or if the GPS on your cell is activated, you are in a CVS store around that time and isn’t that ironic, there is that bar code on our smartphone for you guessed it, that very same offer delivered to you in real time, right at the point of sale. At some point you may be walking by a Walgreen’s and…

Fantastic! So what is the difference between the realities of Brave New World or 1984?

The Customer-Oriented Solution: Transparency, Control and Choice…

In the CVS example, you freely give your information in exchange for discounts, relevancy and other benefits in exchange. There is a clear incentive. In the other, it is done to or for you without your consent or control, as we saw in the Journal article.

What about relevance?

Clearly having relevancy defined for you, sometimes doesn’t always work as intended:

  • Remember that baby present you purchased for your niece or nephew a while back? Isn’t it weird to have sponsored links for baby carriages and disposable diapers follow you around, even if your kids are off to college, or you never had any?
  • Or if you do have kids. One way or another they have figured out how to work around the parental controls and now you are getting all kinds of e-mails, and links to crazy sites you would never visit in a million years. Ooops.

We know that one of the hallmarks of Web X.0 and the Inbound Marketing trend is control, customer control. Transparency in being up front and offering choice supports this reality. Permission as we now know it, giving your permission to engage or accept a newsletter or such, is only step one.

We argue that we need to go further. As you can see in one of our earlier blog postings Hulu Pulls a Lulu, there is a strong bottom line marketing rationale to offer customers more control, more often.

And if choice and choice were adopted side by side with the latest information processing capabilities of say a RapLeaf, we can see that even more value could be created, not less as it may appear, and in a manner that does not conflict with the issue of privacy, in fact a manner that respects it.

How is that?

Choice = Value

Remember the old axiom from Direct Marketing 101? The one that says the greatest cost and lowest return is in the initial “getting the hands raised” action. Say you spend $1 million to reach an audience of 1 million people. The cost is $1 per person, and you get a 1% response or 10,000 people act. The cost per response is $100. It’s expensive.

Now you a pool of 10,000 folks that have already acted and declared an interest in you and your product. Working that audience not only costs less, but since they are aware of you and have already expressed an interest the product or service, response rates can go up, often significantly, as the relationship develops, if you engage this very valuable audience of folks that have “raised their hands”.

One argument I have heard is that if you offer choices, you in fact limit the impact of your message to only those that act, and slash your response rates. This is valid I suppose, especially if say you trying to go viral with a compelling white paper and force readers to register first. Response rates can drop to almost zero.

The question is does it have to be either/or?

First. Using the direct response model and our technological quest for more marketing relevance, it may be true that overall response rates go down if active choice is offered, but at the same time shouldn’t the value of the response go up? If I choose to view automobile ads, or better yet, brand-specific auto ads, aren’t I self-selecting and indicating my possible interest?, and doesn’t that have higher value than just a general click through on a banner, a sponsored link on Google, or other such online device?

The next step of course is to learn if I am a potential buyer, and if so, when? But isn’t that easier to assess once our interest is established?

And if a short-term buyer I am not, could there still be longer-term value as a quote unquote lead. I may know someone, or have a child looking for a vehicle, or I may be in the market later. In other words, underneath the choice to receive information, is my customer initiated response, opening the door to develop a long-term relationship.

To continue with the car example, information and technology could add value, as an added layer on top of my choice levels. It could offer me a variety of car options using what it “knows” about me… to validate brand, type, features, and my needs, and then facilitate the most appropriate, highest value interaction with the product. This way the technology is my information partner so that I get the most relevant information, because I choose it to do so.

Re-Positioning Latest Technologies as Enablers to More Relevant Information

In this case the technology is an enabler helping me get information I want and need.

What if we don’t want and choose not to actively interact, and therefore want the technology to do it for us, to serve us messages and links that the system identifies as relevant, much in the way Google does based on our search query today?

Create a mechanism to let us choose this option.

If we want to be creative, we can even use a CVS ExtraPoints/loyalty program as a model. Imagine if incentives are in play in return for the freely given exchange of information? This recognizes and provides value in exchange for levels of privacy that in essence are “surrendered” and offers the opportunity to deepen the relationship over time, at the same time.

And of course, there will be those that won’t, don’t or can’t respond. That may be the subject of another posting.

Let’s take this approach to another hot spot that has received a lot of attention relative to its privacy policies lately, Facebook, the 800-lb super gorilla of social networks.

Under Mark Zuckerberg’s leadership, Facebook has consistently attempted to stretch the privacy envelope in order, it appears, to monetize as marketing intelligence, the deep, deep profiles, Likes, Friends and other information it has on it’s users. Again and again we have seen sudden changes to privacy controls and policies, and more feature introductions like the ill-fated “Beacon” program that would have been used to create high value information that could be sold at a premium to third parties.

What has astounded me over time is:

  • how people haven’t fled the network as these initiatives were imposed, often without warning
  • how Facebook’s users have pushed back when they felt privacy envelope had stretched too far, and
  • how Facebook has responded, pulling back as it attempts to monetize the information on hand.

I would have thought users would leave… but we didn’t and apparently don’t. And the question remains, knowing that this robust info about us exists, how can Facebook marry in a cool, mutually beneficial way the information it has with marketers that still gives us as consumers control and allows us to determine the levels of relevance we want?

One simple way could be to add a profile section specifically for marketing purposes. Invite us to participate. The promise: relevant communications between companies looking to match their products to people with expressed interests with products or services of that type. The value of the interaction to all parties jumps here.

Facebook could get slicker and stickier create a platform where we get points when we click, when we share, and when we buy or act. This way the user could be recognized as an influencer driving word of mouth and/or a customer.

More Choice = More Relevance = More Value

In return there could be an interaction where we are actually offered a dynamic menu of advertising choices based on our profiles and technology where we then get to choose (raise hands) for relevant products with a higher likelihood of interest.

By the way, couldn’t this type of thing work with Google too?

With such a mechanism, Google could engage with us when certain potential buying patterns emerge with our queries. Kind of a super Pay Per Click.  “Are you looking to buy… a car “ type of dialog could help Google serve up even more relevant links based on an actual declared interest. This could even have an impact on organic search as well, where a simple added interaction would help Google fine tune their search results to truly match our needs immediately and over time.

Couple this with the semantic web capabilities coming up and this enhanced search capability could add even more value to search, which could help offset inevitable maturity of the product.

And yes, choice does apply to YouTube, Hulu and so many others. Give us choice and the value of our information and interactions increase and privacy recedes to the background, as long as it is treated with respect, which includes transparency and security. Under these circumstances, a RapLeaf offering may not be so intrusive after all.

One last thing… please talk to us in plain language. Have you seen the electronic terms and conditions for say Apple’s App Store? The basic agreement is 55 screens long. Who reads this? Not us mere lay folk.

Maybe we need to agree in the form in legalese, but give us a one-pager in every day language please. And if you make an update to the terms, give us the bullet’ized version summarizing changes in plain language again. Then when we agree, especially if it is in relation to control, transparency and such, we know what we are doing, and as such have added the value of conscious choice to the action, which adds true marketing value to the relationship overall.

3-D Movies: How to Kill the Golden Goose Before It’s Time… Coming Soon to a Theater Near You!

April 2, 2010

I want to preface this posting to say I don’t like to look at movies as a horse race or the “who wins the weekend box office $’s derby.” I realize this is one way to measure popularity and success… and if movies are a popularity contest, don’t we like to invest, ooops, I mean spend our hard earned cash on the winners, the ones we know we will enjoy? But is volume the real measurement of goodness? In the herd mentality, of the if everyone else likes it, it must be good, kind of thinking, yes. But of actual goodness, perhaps not.

Earlier in the week, I was reading Lauren Shuker’s article in the Wall Street Journal entitled ‘Dragon’ Movie Fails to Tip Scales as Price Increases go Into Effect (March 29, 2010), which has gotten some great reviews, and am once again struck by the apparent marketing incompetence that seems all too inherent in the entertainment industry.

Here’s why.

It appears that there is no doubt that audiences very much enjoy today’s 3-D film experience. Huge 3-D successes such as Avatar and Alice in Wonderland, and the IMAX sales of each testify to this.

Now of course, in the sequel style, copy-cat mania that seems to be Hollywood these days, everyone and his brother wants in the bonanza. I gather that How to Train Your Dragon was filmed in 3-D, but for example, but Clash of the Titans, which will be released next week, was enhanced after filming was concluded and is not a native 3-D film, as Avatar and Alice were.

I have no problem with the studios tripping over themselves to milk the 3-D train for all its worth. But the operative word here is CARE. In the drive for revenue (greed?), it is becoming clear that if studios and exhibitors over reach, sales will be diminished and the technology reduced once again to fad status.

When looked at through our marketing lens, there are a couple of things to remember to prevent the latter while maximizing the revenue generating opportunity 3-D presents:

1. It is and I think always will be the story. James Cameron and Tim Burton are at their core master story-tellers which, love them or not, informs all of their work. 3-D is an enabler to the story, not the driver of it.  In other words, if you are going to charge a premium, it probably won’t work for lesser fare, at least until the film has built a core audience.

2. The last few years haven’t been all that kind to the movie industry. And we are still living through a recession. The market is price sensitive. The new price for 3-D movies under the new structure is approaching $20 a ticket! This can easily add up to  $100 per outing for a family of four, which makes a night at the movies a very pricey, special purchase, not a casual and affordable date night type of event.

3. Seeing a movie in a theater has some communal benefits and people love to go out.  However, part of the audience dip these last few years has been a convergence of sorts… where home movie systems with surround sound offer a near multiplex movie experience at a lower cost. And if that isn’t enough, 3-D capabilities are coming to a flat screen TV in your home, very soon!

So considering these elements, what should the exhibitors do to maximize this technology in a manner that makes marketing sense?

Make Sure That 3-D Adds Value to the Communal Theater Experience!

Central to the exhibitor point of view has to be exploiting the positive elements of the communal viewing experience and doing everything possible to add value to it.

I live in the Boston area, and one of the pioneers of the multiplex phenomenon is a locally based company called National Amusements.

Multiplexes were great for revenue generation, but with ever smaller screens and smaller auditoriums that result, the exhibitors themselves over time have diluted the big screen viewing experience thus opening the door for home theater to be a competitive threat today.

So much so, perhaps, that National Amusements itself is now leading the charge of such innovations as stadium style seating to enhance the comfort and viewing pleasure of their guests in such a way that is very hared to duplicate at home. They also created Cinema De-Lux, a first-class section in selected theaters offering food & beverage service and plush seating that audiences happily pay a handsome premium for.

The dilemma for 3-D is to add value without adding price resistance. The way to do that is to understand and then compress the product adoption lifecycle.

How can we do this successfully — Grow the audience for films and exploit the revenue generation potential?

There are a couple of ways this can happen.

The Simple Method

  • Keep prices low and raise them gradually for general screens.
  • Raise prices and focus marketing activities on IMAX and De-Lux venues, where movie goers expect to pay more.

The trick to remember is that 3-D is a positioning “ace up the sleeve”, something that can be compelling and different that makes the communal movie-going experience special versus the home theater and other options available today.

This in essence creates a tiered pricing structure. And of course prices can also be adjusted should say another Avatar-style blockbuster come along. The key then is not raise prices prematurely until the audience demand is established.

The Complex Method
Don’t raise prices for 3-D films shown on “standard” screens for an initial period, say the first week or so.

This offers a couple of extra powerful benefits:

  • The Power of Choice & A Sense of Urgency
    By setting up “Popular Pricing” now with a higher price later, an incentive, is applied to drive business for that first critical weekend that offers the audience a choice—go now pay less, or wait and pay more.
  • Audience Empowerment
    In this way the public can literally join the critics and other influencers to help decide the fate of the film, especially by getting the word out through social networks to their “friends” and support films they love.

Option #1 focusing price increases on the self-selecting premium segment piece is easier to adjust with the already high priced options such as IMAX and De-Lux in place. In other words raise the first class price and gradually raise coach fares over time.

Option #2, however, offers a variety of counter-intuitive tools that can help launch new films, stimulate choice and create a great reason for the public to join with others to get the word out that can also serve as the basis for a whole variety of promotional activities.

In either case, once the public is used to a staggered pricing schedule it will be easier for prices across the board to rise over time.

Care however, must be taken to matter what directions are taken (or not) to exploit 3-D as a value added tool to support the movie theater experience first. This is the golden goose that must be nurtured and protected at all cost.

Otherwise audiences will turn in other directions, which will negatively impact each new film’s success as we have just seen with Dragon, a worthy effort where it seems great notices are not enough to overcome resistance to new, steep and sudden price increases.