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New Media World Order Marketing has been turned on its ear. The Seven Keys to Marketing Genius challenge many of the practices of the traditional marketplace, and Marketing 2.0 takes it to the next level. While the principles of the Seven Keys still hold true, the methods and models of marketing have changed tremendously over the last few years. Why? The Internet is the driving force behind the change. The dot com bust of 2000 had some people writing off the web as a fad. This was just a taste of things to come. The web is exploding again with new ideas and products that are revolutionizing the way business, and marketing, is done. This second coming of the web has been dubbed web 2.0. It is bigger, better and smarter than the first iteration. Not only have we learned from the mistakes of the past, the new generation is capitalizing on what makes the Internet so great- it’s ability to empower the masses. The new marketing is the result of a democratized marketplace. Disintermediation is taking place left and right resulting in various lean distribution channels. The power to determine message, product, price, place and promotion is in the hands of the many, not the few. It is a time of great opportunity for those who are smart enough to listen (Key 6) and adapt (Key 7), or disaster for those stuck in the past who try to hang on to their power and control. What will you do? Will you learn and adapt, or become extinct? The choice is yours.
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If you get a grasp on marketing 2.0, and how some companies and products are capitalizing, you will be ahead of the pack. As you read these next pages ask yourself how these examples highlight certain principles of marketing 2.0, and how they apply to your situation. If you try to copy what they are doing, you are missing the point and you will miss the boat. Throughout this section I use the term 2.0 as it applies to various industries or communications. The term comes from the world of software design where new or updated versions of the same software would hit the market. They are the same thing, but they have had some bugs corrected and feedback applied to make them better. The changes that are occurring in marketing and elsewhere are so significant they require a new designation hence the 2.0 moniker. 2.0 Terms There are a few terms to describe the types of Internet sites that are emerging and what they do. This list is taken from the August 2006 issue of Business 2.0 (www.business20.com): Social Networks- sites that allow people to connect like MySpace (www.myspace.com) Social Media- user generated content like Flickr (www.flickr.com) Webware- applications that work within your browser like Zoho Writer (www.zohowriter.com)
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Aggregators- collections of content from all over like My Yahoo! (www.my.yahoo.com) Mashups- sites that add features to other applications like Plazes that adds information to Google Maps (www.plazes.com) Internet TV- video sites like Google Video (www.video.google.com) and YouTube (www.youtube.com) Nobody Cares! You will notice that this section on marketing 2.0 has a more conversational tone to it than the original Seven Keys text. I have had several comments from readers on how they like the conversational style of the original book. At the time I felt I was taking a chance by writing that way, so I was still a bit reserved. I have been trained to be a corporate. That means I can create very professional brochures and websites with an about page, company history and biographies just like the pros. Here is what I have learned- nobody cares! As you read this section you will notice a common theme of what people are looking for- an authentic voice. Nobody wants to talk to a machine or people that talk (or write) like machines. You have a very short window of opportunity to get your message across, so make the most of it. It makes sense since a powerful principle of marketing is to build relationships (key 5). Relationships are person-to-person, so the more personality you have in your writing and marketing communications the better.
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No, it really isn’t
You and I Do you like to sit and listen to people talk about themselves? “I did this and then I did that, and oh yeah, I’m really good at this too.” Now look at most advertising and web copy. It is inwardly focused on how neat the company or person writing is. Is this fun to read? Before I was married, 8 years ago, the pre-marital counselor had my wife and I practice “I” messages. Stuff like, “I feel hurt when you say that,” instead of, “you always say hurtful things.” Good advice, and it takes away
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some of the negative feelings when communicating with your spouse. This does not work when speaking to your customers. You must do the exact opposite and use “you” messages if you want to communicate effectively. What if the previous sentence said, “when I communicate, I always use ‘you’ messages?” Is it as powerful? Does it get in your head the same way? You want to get into your customers heads and out of yours. You know what you are about, they don’t. The challenge in marketing is to communicate yourself better than your competition. When you go online and do a search, you are looking for answers. You type in problems and are looking for someone to solve it, whether it’s how to spell something, find a restaurant, or get your plumbing fixed. So when you are creating your copy or website set it up in a way that it is providing answers and solutions to people’s problems. Disintermediation Being a middle man is big business. Ingram Micro is the world’s largest computer distributor with warehouses and offices around the world. Their specialty is logistics, getting the product from the manufacturer to the retailer. In the past there was a need for specialists in the distribution process. It was easier and usually cheaper to pay an intermediary who specialized in the moving of goods than for the manufacturer to do it themselves. Alas, the Internet changes the picture again. To buy a computer in the 80’s the manufacturer would work a deal with a wholesaler, like Ingram Micro, who would work a deal with retailers, like Best Buy or Circuit City, and the
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retailers would sell them to the customers walking in the stores. Now, consumers can order directly from the manufacturer who ships the product to their door. This is good news for companies, like Dell, who can keep some of the profit they would pay the middle man, good news for the customer who gets a lower priced item and bad news for guys like Ingram Micro. The same thing that has happened with computers is happening in every other industry. Manufacturers are selling directly from their websites and shaving costs. It has also opened the door to the little guys that are making products in their basements. They can now go directly to potential customers on the web, rather then pitching their wares to a distributor or a retail store. The Long Tail The Long Tail is an economic term that refers to the declining demand curve for a product.
The Long Tail (Image from www.wikipedia.org)
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According to the Wikipedia (www.wikipedia.org) a Long Tail is: “Distributions of a high-frequency or highamplitude population that is followed by a low-frequency or low-amplitude population which gradually ‘tails off’". “In many cases, the infrequent or low-amplitude events—the long tail, represented by the lighter portion on the right side of the graph—can cumulatively outnumber or outweigh the initial portion of the graph, such that in aggregate they comprise the majority.” This means that although most people are looking for a big hit product that will spike in sales, you actually sell more at a lower level over a longer period of time. Chris Anderson, Author of the book The Long Tail, applied this concept by developing a comprehensive theory and book about how the Long Tail is playing out in today’s market. According to Anderson: “The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-target goods and services can be as economically attractive as mainstream fare. One example of this is the theory's prediction that demand for products not available in traditional bricks and mortar stores is potentially as big as for those that are. But the same is true for video not available on broadcast TV on any given day, and songs not played on radio. In other words, the potential aggregate size of the many small markets in
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goods that don't individually sell well enough for traditional retail and broadcast distribution may someday rival that of the existing large market in goods that do cross that economic bar. The term refers specifically to the darker left part of the sales chart above, which shows a standard demand curve that could apply to any industry, from entertainment to hard goods. The vertical axis is sales; the horizontal is products. The darker left part of the curve is the hits, which have dominated our markets and culture for most of the last century. The lighter right hand part is the non-hits, or niches, which is where the new growth is coming from now and in the future. Traditional retail economics dictate that stores only stock the likely hits, because shelf space is expensive. But online retailers (from Amazon to iTunes) can stock virtually everything, and the number of available niche products outnumber the hits by several orders of magnitude. Those millions of niches are the Long Tail, which had been largely neglected until recently in favor of the Short Head of hits. When consumers are offered infinite choice, the true shape of demand is revealed. And it turns out to be less hitcentric than we thought. People gravitate towards niches because they satisfy narrow interests better, and in one aspect of our life or another we all have some narrow interest (whether we think of it that way or not).” (Read more or buy the book at www.longtail.com.) Online retailers are also finding long tail, or niche products, to be more lucrative than hit products. Their
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costs are higher to obtain big budget or name brand products so the margins are smaller than on the lesser known items that cost less to acquire. For example, big retailers will usually lose money when selling big name book titles in the store. They hope to get people in the door, where they will purchase higher margin titles or other products. They have a limited amount of self space in each store, so they can not carry every small market niche title like an online retailer can. The online retailer has the ability to offer more niche products, and since these titles have a higher profit margin, they actually make more money by selling them. What this means is that within a long tail economy, obscure titles are more valuable to retailers (at least online) than the big hit ones. This opens the market up to many more products, such as this book, that would not have been available in the past.
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The Long Tail and the Internet give this book a chance
Two Products Diverged in the Woods The long tail is an example of divergence in action. Most marketers think people are looking for one product that does everything, but actually people like multiple versions of the same product, that do what they want it to do. Successful products split and multiply. My daughter has a toddler Karaoke machine with a built in radio tuner. Why? Because it is cheap, so why not
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add it. You can buy the same type of radio with headphones at the dollar store. Radios are so cheap you can find them in key chains, pillows, pens, and anywhere else they fit. You would think there’s not much more you can do with radio right? It has converged with just about everything it can. Did I mention that most of those mini radios are FM only? That does not work if you are listening to the resurgence of talk radio on AM. AM talk radio has blossomed as an alternative voice to the mainstream media. That’s because in the 2.0 world people will find or create their own means of sharing their messages. Now XM and Sirius Satellite radio have hit the scene. These are paid radio stations with a service in the mold of the cable or satellite TV model. Howard Stern was paid $500 million dollars to move to Sirius from commercial radio. What looked like a convergent product that was being sold at the dollar store has moved to a huge multibillion dollar industry with a new divergent product. The money and the markets were not in convergence, but in the divergence, because it meets the needs of a new market in a new way through specialization. Pez, Legos and Mixed Tapes Another web orchestrated phenomenon is the creation of Unbundled Microchunks. This is the process of taking apart full media projects and splicing them into smaller units for consumption. If you ever created a “mix tape” you were unbundling. Back in college I went with my friend Chuck to a place in the city where his brother was house-sitting. Both of the brothers were audiophiles and the word was that
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they had hit a goldmine. Chuck’s brother was house sitting for a radio station DJ who had amassed a huge collection of albums. The living room was filled with the greatest records of all time. Ah, but that was just the tip of the iceberg. The real treasure was the wall to wall records in the basement. These were deep tracks, live albums and obscure titles with great music. The best part was that the owner had put a small ink dot next to the coolest songs on each record. Chuck and I brought over a stack of cassettes and began creating mixed tapes of everything we could get our hands on in a weekend. We did not realize it at the time, but Chuck and I were unbundling the records into microchunks-taking the best and leaving the rest. Think of the one hit wonders of the past. If a group came out with a really groovin’ song, you had to buy the whole album to get the song you liked. Now you can go to iTunes or Napster and get only the tracks you like and instead of spending a weekend at someone’s house changing records and pausing the cassette deck, you can download all you want in minutes. Have you had this conversation yet? “Remember that really funny skit on Saturday Night Live? Yeah, that one. The rest of the show was OK, but that one skit was really funny, right? Oh, you didn’t see it? Let me send it to you, it’s on YouTube, the website that’s let users upload and download videos for free.” If not, you will soon. TV shows and movies are being dissected, and the best scenes are being shared with friends.
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A mixed tape masterpiece
Blogs are doing the same thing. If you see a good line or two on a website, highlight it, blog it and share it with friends. You become an aggregator of the best ideas (or part of ideas) on the net. In the future, the better you can take apart and put back together these chunks of information or products, the more successful you will be in the marketplace. To wrap our minds around the concept a few people have created the analogy of the Pez dispenser (www.knowmoremedia.com). You can flip open the head at your leisure and consume a little chunk. I prefer the Lego analogy. People are not just consuming this media, they are breaking it into chunks and recreating it other forms. It’s like a mix tape on steroids. So, what should marketers be doing? Let’s start with what not to do. Don’t try to control every aspect of
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your message or how it is used. Make your product easy to break apart and be shared. Lazy Marketing NBC got greedy when the video of a Saturday Night Live sketch called “Lazy Sunday” went viral on the web and was being downloaded and sent to millions of people. The video was unbundled from the rest of the show by viewers and uploaded to YouTube and Google Video. NBC forced the sites to remove the video due to copyright laws and put it exclusively on their site. Then NBC would get the traffic and eyeballs on their site where they belong. Sounds reasonable right? Maybe in the past, but we are living in the 2.0 world. I saw the video on Saturday Night Live and knew it was being emailed around. I went and watched it again on YouTube. I decided I had to show it to my brother-in-law Carlo. No problem, I found it easy last time. I went back to YouTube and read the notice that the video had been removed. Then I tried Google Video- gone. I started searching for the video to be posted somewhere else, and finally I located it on the NBC site. Alas, I could not get it to load. My assumption is that because there were so many people trying to access the video, it crashed the NBC system. In this scenario I went from an advocate of Saturday Night Live, trying to promote the show as having some funny stuff and telling others, to a bitter person who wasted 30 minutes trying to download the video to no avail. I went away from the PC frustrated and cursing NBC as greedy corporate suits with no perception of marketing 2.0.
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Richard Bach said, “If you love someone, set them free. If they come back they're yours; if they don't they never were.” Attention marketers: You do not control the message any longer. The more you try to control how, when and where your message gets shared the more likely you are to sabotage the process. The best you can do is make it easy for others to understand and communicate your message for you. You will need to be more creative in how you monetize your efforts. In this situation, NBC should have let the video be posted and reaped the benefits of additional viewers, which in turn would allow for increased broadcast advertising rates. Social Inter-networking At the time of this writing, MySpace (www.myspace.com) a social networking site, has over 70 million user accounts. The site is wildly popular due to its ability to allow members to share pictures, messages, chat, blogs, email, pictures and videos all in one location and for free. The genius of MySpace is that the creators provide little content themselves. They provide the means by which their users can interact and provide their own content. While MySpace has some neat interactive tools, the site is not the easiest to navigate and the layout is a bit clunky. I’m not saying that to pick on the web designers; on the contrary, they prove the point that what makes web 2.0 sites great is that they put the tools in the hands of their users instead of trying to build everything themselves. Extra Curricular I could see the value of social networks online when I created Certified Marketing Professional University
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(www.cmpuniversity.com). CMP University is an online course that allows you to get a practical education in marketing with immediate application. The approach is based on the Seven Keys book and uses it as the text. Of course I think this is valuable material (since I wrote it), but I also took a page from the MySpace playbook when creating the course. As a participant, you are required to post responses to study questions and assignments to the class discussion board. You are then required to comment on the post of at least one other person. By discussing the content with other participants, you are getting different perspectives and learning new material based on the experiences of your peers. A major requirement of the course is to write a marketing plan for your current situation. As you work through the class you submit parts of your plan to get feedback and peer reviews along the way. As a marketing consultant I have charged $10,..."
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