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Volume is nothing like intensity

By Mark Di Somma

Speculation in recent days about what a “fan” is worth to a business is a timely reminder to separate volume from intensity.

Many commentators in the social universe it seems to me remain beguiled by quantity. The more liked you are, they seem to think, the more valuable you are potentially. Not so, of course. It costs nothing to say “like”. And in many cases I would venture to add, it means nothing and adds nothing.

Intensity though is quite a different metric – because it speaks to commitment and the bottom-line results of that commitment rather than just impressions. Intense fans buy the brands they feel strongly about. Money changes hands.

Intensity also defies volume. If you have customers who feel intensely committed to your brand, then you can have a much smaller, much less impressive number of them. Apple doesn’t have the biggest market share in a lot of the sectors it participates in, but it has perhaps the world’s most intense fans. And if a good percentage of those committed people only buy your brand or purchase predominately from you, then they are actually worth much more commercially than the hundreds of thousands of people who like you and move on without even a sideways glance at the cart.

Edward Boches says that we should also treat with real caution any suggestion that a “like” is a new customer and therefore a potential convert. In an excellent post on which came first – the loyalist or the like – Boches has this to say about the real market value of fans: “A program that strives to pile up fans will at best simply identify people who are already loyal. At worst, it will convince someone to click a button because it’s effortless, but potentially also meaningless.”

He continues: “The only thing we should be measuring is whether or not [what we do] induces prospects to become customers and customers to become repeat customers …”

Amen.

Like is a button. Commitment is a purchase. And brands the world over should be seeking to be intensely bought rather than just freely shared.

Competition amongst brands in the social universe: is it an open and shut case?

By Mark Di Somma

This thought-provoking Fast Company post calls into question something that I think most of us hadn’t even bothered to question – and that is whether in fact social media sites compete with one another. Google’s Eric Schmidt has argued for some time that this is not a zero-sum competition and that Google does not actively compete with other social networks, saying that everyone benefits when people spend more time online.

As the article observes: “Social networks often confine user data to their websites, forcing users to stay within their ecosystem … Google, on the other hand, seems intent on exploiting its newfound popularity to force rivals into more open data policies.” The article goes on to reference Google’s Chief Economist admitting that their products want to push Google’s open standards on competitors.

My sense is though that you always need to approach the concept of competition with an open mind. And that’s because while brands may not wish to, or expect to, compete in some ways with one another, the element of competition, and therefore the search for advantage, is always there with commercial endeavours.

For example, in this particular set of circumstances, it may not be in Google’s interests to compete for access because, as I’ve said before, closing systems to search actually compromises Google’s scale model. Google’s revenue model is built on traffic – so the more traffic they can encourage directly and through third party interactions the better. And the more that they can make searchable, the more important they are for users. They have a lot to gain from a more open social universe.

But I very much doubt whether Google would be quite so generous about sharing or ceding revenue. In that arena, they will absolutely compete head-on with others (including more traditional channels of course) for market spend priority.

The same applies to many brands. There are times when being seen alongside one another is useful – it works to the benefit of all – but that doesn’t mean brands are necessarily going out of their way to help one another. At some point, the commercial realities must apply. Coke still want other drinks to be available at the outlets they’re sold at, because otherwise consumers would feel they had no choice and the integrity of the outlet as a convenience channel could be compromised. At the same time though, they want to access as much of the beverage buy as they can get at that outlet and to make the maximum amount from the space allocated to them.

Markets are full of dichotomies and this is just another one of them.

Collective mass makes companies, particularly in emergent channels, credible and therefore viable. Google, Facebook et al carry weight because they carry numbers. Schmidt’s right when he says that everyone benefits when people spend more time online, and to do that users need to be able to move freely and easily online. Sharing, liking, linking etc have done a huge amount to foster that. And in that sense the competition is not zero-sum amongst the participants. They need to demonstrate that they are a collective force to be reckoned with. They need to continue to expand and to progress. That’s what makes them a sector.

And yes, I think we will continue to see co-operations, such as the Skype/Facebook alliance, where parties stand to mutually gain from an association, again based around access to services/experiences that the other is renowned for.

But beyond that? No. And the reason is that you always need to distinguish in situations of co-opetition between what’s not at stake and what is. Ultimately open systems and open searching carry few sacrifices, but they have the potential to deliver convenience, speed and goodwill to all who participate. There’s actually very little at stake from the parties working together. But elsewhere, where there is actually earnings to be lost, or even put at risk, the stakes are very real and competition will continue to thrive. In fact, it would be illegal if it didn’t.

Nudging: making the most of the power of suggestion

By Mark Di Somma

We’re much more susceptible to the power of suggestion than many of us might like to think – at least that was my take-out from more reading from Time: this time on how brands use buying suggestions to entice us to buy more than we might otherwise.

The article quotes John T. Gourville, a Harvard Business School professor of marketing who specialises in studying pricing strategies. Consumers, he says, tend to follow the suggestions listed in brochures or store aisles, so people tend to buy the amount, or buy in increments, that are advertised. If they see five for $5 or 10 for $5, they buy five or ten, regardless of the fact that they normally buy three.

And that, as the article points out, is the key strategy here: to get consumers buying more than they would if there was no sale. It seems we respond positively too to the suggestion of limitation – imposing a limit of two per customer or six per customer incentivises people to buy right up to that limit. The article concludes, “this is the power of suggestion at work, and it has little to do with whether the item’s sale price is good, or whether you, the consumer, actually wanted any of that soda at all.”

So, if you want to increase how people respond to your brand, make suggestions. Try with this, add that, good with three of those, best value when you buy six of them … and then look to put a limit on how many.

Intriguing isn’t it? That retailers can nudge people to buy more and yet restrict how much more they buy almost in the same breath. But it goes back to two things about brands that we need to remain mindful of. As consumers, we’re looking for guidance and value in a world of choice. Brands need to make use of that, but not abuse it. And secondly, exclusivity never fails to intrigue us. The moment we’re told we can’t have as much as we want as consumers, we immediately want all that we can get.

In a world where everyone just expects access, and to have things rammed down their throat, almost so that they can ignore them, making something unreadily available can be a sure way to get attention. It works for selling wheelbarrows. It’s working for Google+.

At times, a nudge really is so much more compelling than a push.

A brand that discounts or a discount brand?

By Mark Di Somma

This article in Time on how to get the most out of Apple is a reminder that there is a noticeable difference psychologically between a brand that discounts (even if it’s only occasionally) and a discount brand. Apple does discount – but for selected parts of its range or for specific reasons: change-over on a model, for example. The most important thing is that they don’t give that impression.

Apple’s approach is to treat price as a reliable indicator of value. By not overtly or uniformly discounting, they maintain the value of the brand by making products that excite customers and they continue to charge for them at that level of value until there is a good reason not to do so. In other words, Apple’s ethos is never discount an Apple product while people are most excited about it – no matter whether that is days or years after it was first released.

But while Apple have worked hard to position themselves as a full-price, full value brand, that’s not always the case. As the article points out, “With the exception of the iPhone and the iPad, Apple products are typically discounted within eight days of first hitting the market …” Surprised? I was. But “As for the most in-demand Apple products—iPad and iPhone—there doesn’t seem to be much financial incentive to delay your gratification. The price for either is unlikely to change by waiting a few days, or even a few months … discounts have basically been non-existent until it’s time for Apple to introduce the latest new-new model.”

Even when Apple do discount, the wider motivation seems to be to give customers entry points to the Apple universe. By lowering the price of a laptop, they invite customers into their world, knowing that they will then be pre-disposed to go Apple all the way. At least that’s my theory, and it’s one I think extends to the pricing of their new operating system. Lower the barriers to entry to get people involved, but retain the pricing and the aspiration on the iconic products that people continue to be excited by and around which the world of Apple pivots.

Such an approach seems worlds away from the volume-driven approach taken by discount brands that advertise serial sales to drive up their top line. But as I’ve said many times before, there’s nothing wrong with that model if you’ve built your business and your brand around it. Smart discount brands rely on a very different perception of price though than a brand like Apple. Whereas Apple sees price as proof of value, astute discount brands treat price as a pain point. And they rely on easing perceived pain in order to generate interest. They rely on you paying less in one area but more in others to help balance the load. Just like with Apple, it’s a feel-good balancing act. The difference is that one brand makes itself known for discounting and the other doesn’t.

One truth straddles both approaches. No matter how you choose to use discounting, to use it effectively you need to hard-wire it into your ethos not just your pricing. You need to be very clear too about how it works to protect your margins store-wide.

You might like to ponder that the next time you see a sign advertising “30% off selected lines”. Which lines have been selected … and more mportantly, why?

Positioning your brand through memories

By Mark Di Somma

I think it’s healthy for there to be a direct relationship between memory and frequency for a brand. The more often a customer comes into contact with your brand, the more consistent the memory needs to be. That’s because brands that frequently interact with their customers have the power of habit on their side. In fact, when someone is buying from you frequently, the memory itself needs to focus on regularity: greeting customers by name; being easy to find; recognising what they like and maybe working with that; introducing suggestions that fit with what they’re looking for. The memories are smaller in their impact and their “experience” factor, but their frequency makes the effect powerfully cumulative.

By contrast, when your customers only interact with you occasionally, then the memory needs to be stronger and much more enduring. It literally needs to “last” until the next time a customer needs to buy because there isn’t the same front-of-mind of course – which means less consistent awareness and less reminders. It’s easy for customers to decide to explore a new technology or take advantage of what they see as a better price.

Natural or special? Which sentiment do you generate? The feeling that comes with a trip to your favourite deli or the excitement that wells up at the thought of a trip to another part of the world? That’s the choice for many brand experiences. Something so easy that life wouldn’t be the same without it. Or something so wonderful that you really look forward to buying it again.

Which one do you want to be? For some professions that’s easy. If you’re a grocery brand, for example, or a snack food. Or if you’re a luxury perfume or an upmarket clothes store. But sometimes that choice is less obvious? If you’re a firm of lawyers for example – how do you want your customers to feel about you? Natural or special? If you’re a consultant? Or a speaker? Do you want to be familiar, trusted, part of them, or a treat, something indulgent, an occasion?

Perhaps those are the real ways to think about positioning your brand. What expectation do you want to set, what timeframe do you want to interact in and what memory do you want to generate?

We need to talk

By Mark Di Somma

What have you got to say for yourself? We were talking about this today as we discussed how and when a brand should best take a stand. Go hard or go soft?

Soft. Taking a stand this way is about clearly and simply stating the things that you cherish and value as a brand, in such a way that consumers have clear line of sight between what you say, what you offer, how you act and what you value. It’s positive. It’s connective. It’s constructive. It’s honest. It shows the strengths of your beliefs. Specifically, it explains your worldview. We do this because … Or we don’t do this because … It’s not emphatically saying we’re right or wrong. It puts opinions on the record and asks the consumer to sign up if they want to. It proves consistency.

Hard. What polarising brands do. They set out to set up sides and they do that by deliberately upsetting people, by getting under people’s skin, by provoking the response they want. Often they court publicity by working people’s biases – sometimes in a fun way, sometimes in a not so healthy way. They poke the finger. They call others out and say they’re wrong. They accuse. They piss people off. It proves passion.

Both approaches work, but interestingly they work for consumers in different ways at different times. Because there are times and things we want our brands to be hard about, and times when we’d just like to softly know what they’re thinking. If we have passionate views of our own for example, we often side with brands that loudly articulate a similar viewpoint. That’s because we identify with the view they are expressing. It concurs with our own. We enjoy hearing them shout the odds. We egg them on.

On the other hand, there are times we just don’t want to hear too much about what a brand thinks. Providing they have a view that seems consistent with who they are, that’s enough. Often we feel like this about things that don’t really matter to us, or at least most of the time pass beneath or around our radar.

Brands need viewpoints. But they also need judgment. They need to know when it’s important to their consumers that they get on the soapbox, and when it is best to just have an opinion for those who are motivated enough to look.

The same concern can call for very different stances from different industries. If you make toys, I’m very interested in your views on child labour, particularly if your products are made in some parts of the world. If you’re an accounting practice, I might still like to know what you think but, because it’s less directly relevant to what I buy from you, it might be less important to me to know what you’re doing about it.

Relevance fuels reaction. And expectation.

So if you do have a viewpoint that you hold to, and articulate loudly, you need to show your consumers why you’ve made it your business to get so hot under the collar about it. You need to join the dots for them.

Markets are noisy. Everyone says you need to get consumers’ attention. They’re wrong. You need to get and hold consumers’ commitment. And sometimes the best way to do that is to shout what you think from the rooftops. And sometimes you just need to show you’re true to your word, and stop there.

Just like in any relationship. Both sides need to talk. Sometimes loudly. Sometimes quietly. They just don’t need to talk in the same way all the time. Or else they switch off.

Renormalising

By Mark Di Somma

Brands are all about habits. But as this article in Time reminds us, sometimes the best thing a brand can look to do is to change a habit – even if they helped create the habit in the first place. Of course, brands tell themselves they do this all the time – but for many brands, the focus of their problem solving is on increasing consumption.

Their answer to a pattern they feel they know and understand is more of that pattern.

But the insight here is that changing a habit for the better doesn’t necessarily mean just offering the consumer more of what they have, or more of what the brand perceives consumers want.

In the context of the fast food industry for example, generosity is not a competitive advantage. When everyone’s offering bigger portions, the portions aren’t more generous. They quickly become the new normal. The pattern itself hasn’t changed, it’s just got bigger.

One of the reasons why brands are so reluctant to change patterns is that they take so many of their cues from what they perceive to be consumer behaviours. What they don’t always stop to do is check whether those “normal” behaviours are how people want to behave, or whether in fact they are simply how people do behave because a sector is driving the behaviour that way.

Here’s a pattern, by way of example. Consumers are eating the double-stack burger and barrel of chips because that’s what everyone is offering them when they order a family-size meal. And if it’s there, they’ll eat it. Habit. It’s not their fault – “The brand made me do it.”

That doesn’t necessarily mean though that they want to eat that much food. Or that they wouldn’t eat less. Or that they wouldn’t like to be offered less.

But that’s how marketers have taught themselves to analyse what’s going on. If that many people are eating that many big meals, and competitors are offering big meals, that’s the pattern. Which means they need to offer bigger meals. Which they then do. So the consumer eats more. And on it goes …

Until some smart soul breaks the cycle – and renormalises the category.

In fast food for example, consumers fed up (sorry!) with feeling they might have to discipline themselves about portion control, are now asking brands to do it for them – and recalibrating offerings in the process. Super-sizing is out. Miniaturising is in. Small meals, small drinks, small treats … great for the brands, because proportionately consumers are paying more per mouthful for the privilege of having less mouthfuls. And great for the consumers because they feel they’re doing something that’s good for them.

The very clear message: if your brand is competing in a “more is more” scenario, sometimes the wisest thing you can do is make the case for less, not by pointing out why people should abstain, but rather by developing an offering that still feels desirable and yet also seems more responsible.

In broader terms, wherever a market follows a pattern as a pack, the disruptive opportunity is to redraw what you do by packaging an answer that makes sense and takes control. Don’t just ask your consumers to break the habit or, worse still, go without. Instead, check whether what they’re doing, and what the market is used to, is the behaviour consumers would like to be making or the one they have been given.

If the habit they’ve got is not the habit they want, your opportunity is to offer them a way to re-normalise that habit, via your brand.

Are your analytics cheating on you?

By Mark Di Somma

Numbers matter, but different numbers matter differently. To me, one of the great confusions is extent and value:

  • Extent – how far your brand reaches.
  • Value – how much your brand is worth (both literally in the minds of the market and in terms of margin in the minds of consumers).

The temptation is to assume that the brands with the greatest reach must (ultimately) be worth the greatest amount of money and therefore have the greatest value. But to my mind that’s an assumption too far, because of course extent does not monetise or convert to sales consistently, and the value that can therefore be placed on that extent varies greatly.

Does a brand with more likes make more profit than a competitor that doesn’t have as many? Sometimes. Perhaps. I guess. And what’s the critical gap? At what point does extent start to bite? Don’t know.

I’ve seen lots of assertions about the value of reach, but few about the cumulative bottom line effects for most brands with a social media presence.

I’m not saying for one moment there isn’t a relationship, or that a business case cannot be made. I am saying that the two terms are often confused and I haven’t seen the case made well, except for brands that do use their reach directly to monetise their model like Google obviously.

If you’re a retail brand, the fact that your brand has X,000 followers or X,000 likes or even X,0000,000 visitors indicates reach, and therefore influence and possibly authority – but there is no way a lot of brands can quantify that on a balance sheet. There is no automatic translation. Therefore it does not have tangible economic value. It has potential. It shows inclination, even preference. And those are important emotional metrics for brands because they can show whether you are maintaining interest and relevance, but I have yet to see an evidence-based correlation between those numbers and what customers are therefore prepared to pay in terms of increased margin.

A lot of people clapping doesn’t always ring the till.

In fact, in the case of Apple, the model works in reverse – they have less reach than other brands in terms of market penetration, but the monetisation of their brand, via the prices they ask and the margin they generate, is huge.

Part of the problem of course is that reach can quickly extend to millions and millions of people, but it can also quickly retract, so it’s a model with significant in-built volatility. To paraphrase Heidi Klum, “one day you’re in and the next day you’re out”. That reference is not as far-fetched as it may first appear. The social crowd is also a very fashion-conscious crowd.

Enjoy your reach by all means. Follow your analytics. Attract followers and likes. Lift your Klout score. But please don’t assume that means that one day you’ll be able to bank on them.

Not worth the paper it’s written on?

By Mark Di Somma

What do you do with a toxic brand? If you’re News Corp it appears, you opt for euthanasia, perhaps in the hope that the sheer ‘shock’ of stopping a 168 year old institution dead in its tracks will be enough to divert the rest of the media from your crown jewel assets and side-track regulators and other scrutinisers into believing you’re done enough to warrant completing other lucrative deals.

Consumers can be remarkably forgiving, especially with brands that forge a ‘bad-boy’ reputation. But, as in the case of News of the World, there comes a point where they over-step the mark and brands pass through a thin veil from scandalous to unacceptable. The paper seems to have gone there, in the public’s mind, with its actions over Milly Dowler.

Then what should they do?

The problem with dramatically wiping the brand from the face of the Earth by way of a response is that you bury the problem, and are seen to do so – which doesn’t address or resolve the deeper and more troubling questions such as why the brand was allowed to behave like this in the first place. Heads have rolled. Arrests will follow. But for advertisers the disquieting ethos has not been seen to be adequately resolved.

Nick Liddell, global strategy director at branding group Clear, provides some great insights in this article by comparing News Corp’s actions to those of a utility. Utilities, he points out are largely concerned with maintaining a reputation that ensures they can keep their license to operate. “The companies that are used to behaving like utilities understand that … having the brand is what makes them visible, and that being visible is what makes them accountable … [News Corp] could find that axing News of the World does nothing to make them seem more accountable.”

I agree wholeheartedly.

Whilst I am no crisis management expert, from a brand point of view, it seems to me that media organisations live and die on their integrity and on their ability to identify and quantify, as well as report, on what is happening. If I was advising News Corp I’d have put ‘demonstration of integrity’ at the very top of my list of priorities followed closely by ‘transparency of actions’. So I might have agreed to open the books to the relevant authorities, for example, or pressed for an independent review with a commitment to stand by the decisions. I would certainly have fronted the media and been as open and frank as possible.

Far from defusing the situation, the apparently impetuous act to close the paper (and I’m not convinced at all that it is as ‘impulsive’ as it may have been portrayed) and the perceived protection of selected members of staff has annoyed loyal readers, probably had little influence on regulators and increased suspicion that there is much more to this than News Corp is prepared to let the world see. And we haven’t even touched the sides on the messages that such actions send internally.

If the agenda has indeed been to protect the company’s license to operate, then I agree with Nick Liddell that the most meaningful thing News Corp could have done was to put up with the flak and continue operating. Having dealt it out for years to celebrities through News of the World, News Corp seems to have been a great deal more circumspect when the boomerang returned.

The wider message for all brands facing difficult or embarrassing situations is that you may prefer to say nothing and your lawyers might counsel you to say nothing – but for your consumers and for regulators, there is no comfort, or reassurance, in silence or silencing. In fact, there may be even more reputational risk.

In your face

By Mark Di Somma

I think you can read a lot of things into Facebook’s decision to team up with Skype. It certainly aligns with my “war of the worlds” theory in some ways. But what interests me is that, regardless of the technical pros and cons, it does actually make sense from a brand point of view. (I’m still far from convinced that Skype constitutes a sustainably bankable business, but that’s another argument.)

Facebook’s brand is all about people connecting. The introduction of Skype simply channels that sentiment into a different technology. Looking for new partners in an increasingly scaled and bitter war, they have literally searched as far as their own name. Who else is in the business of ‘face’ that’s big enough to feel like a meaningful ally? And it’s a simple reminder to all of us that sometimes the best diversification strategies are staring us straight in the … Quite.

Now all it has to do is work. No pressure.