Latest Posts

The power of occasions

By Mark Di Somma

Habits are powerful, but occasions may be even more so. I think they engage us so effectively because they combine time and focus. And because of that, they provide permission – it’s OK to behave this way or that. It’s OK to do something you wouldn’t do on any ordinary day.

If you’re a smart brand, you’ll find a way to hook into that; to link what you’re about to what people are thinking about on specific occasions. You’ll give them a reason and a way to excel at the emotion of the moment.

On Valentine’s Day it seems appropriate to look at a brand that used the occasion of declaring love to forge one of the most powerful marketing campaigns of all time.

De Beers have turned a diamond into the embodiment of eternity with their sublime catch-phrase ‘A diamond is forever’. They’ve linked the optimism and romance of occasions like engagements and weddings with the promise to stay together ‘till death do us part’. They have encapsulated all that in a single symbol that is desirable, exceptional, immediately recognisable and intended to be presented on a specific occasion of peak emotion and worn from that moment on.

Then they charge the earth for it. Just to make it even more special.

Genius.

The value of market valuations

By Mark Di Somma

Now it’s Twitter’s turn to be valued like a phone number, and it seems I’m not the only one thinking this is just a little OTT. Google’s Eric Schmidt says there are clear signs of a bubble. Great. Then he adds: “But valuations are what they are. People believe that these companies will achieve huge sales in the future.”

Isn’t that the point of bubbles? They’re based on valuations, and hopes, which people say are beliefs, and for some reason we accord these valuations the status of quasi-science. They are of course nothing of the sort. They are today’s guess, this minute’s emotional response, a numeric whim – surely that was the point of the GFC.

Let me apply another quote from my friend Gren. Twitter worth $10 billion, with the potential to grow into a $100 billion company? “That’s dumber than a box of hammers.” Or maybe not. At least with a hammer you can nail something down.

Groupon humour. Save us please.

By Mark Di Somma

So everyday discounters Groupon chose the most expensive ad day of the year to draw attention to themselves, and somehow came out the other side looking cheaper than their specials.

Is that funny? Does it even make sense? Could they be more glib?

Here’s their justification.

Sorry but this wasn’t clever advertising. Or smart, edgy or provocative advertising. To me, this was just outright dumb ego-drumming dressed up to be “dangerous”. I’d have fired agency Crispin Porter Bogusky just for presenting that work … (Shame. They were a great agency once.)

So why did Groupon do it? Fame, laughs, traffic …?

Attention is a very dangerous metric when it becomes an end in itself. In the bid to cut through the clutter of the most intense ad-space, the temptation is to throw out all the rules just to get the looks. But if you raise awareness and compromise or confuse the integrity of your brand, was that moment’s notice really worth it?

And if you just did it to get people talking about you, does that change the fact that you were prepared to trivialise the plight of a culture just to get attention? Was this just another Kenneth Cole?

From a reputation point of view, what does this spot say about Groupon’s sincerity as a brand? About as much as the CEO’s apology I would have thought.

If I was a Groupon investor, I would really, really have my doubts – not just about the way my money was being used, but about the judgment of those charged with using that money responsibly. Perhaps the next time Groupon came looking for backing I would do exactly what they suggest – save the money.

Huff or puff?

By Mark Di Somma

What to read into AOL’s acquisition of The Huffington Post for 32 times earnings? Another sign of a social media bubble? A bid for respectability by the corporate that, for many, has defined the unsuccessful merger?

Just as importantly, I’m struggling to get my head around the brand compatibility. Huffington Post – smart, sassy, informed. AOL – huge (though nowhere near as big as it was), dial up, looking to get back some high ground. Seems like Huff is looking for scale here, while AOL is looking for the quality they believe will drive advertising sales. I hope this doesn’t turn into a bun-fight between resources and returns. I’d also hate to see Huff Post’s integrity and feisty character compromised by the juggernaut.

And while Arianna Huffington herself may have done this partly because she’s worried that the Post is erring towards “the innovator’s dilemma” of sticking too closely to its strategy, I’m sure I don’t need to remind her that corporate history is littered with the wrecks of brands who tried to be too clever, forgot their core business or diversified/expanded their way into oblivion.

New words and altered meanings

By Mark Di Somma

Sue sent through a list of new words and altered meanings from a competition run by The Washington Post. These were my favourites:

Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.

Ignoranus : A person who’s both stupid and an asshole.

Intaxicaton : Euphoria at getting a tax refund, which lasts until you realize it was your money to start with.

Giraffiti : Vandalism spray-painted very, very high

Sarchasm : The gulf between the author of sarcastic wit and the person who doesn’t get it.

Inoculatte : To take coffee intravenously when you are running late.

Decafalon (n.): The gruelling event of getting through the day consuming only things that are good for you.

Glibido : All talk and no action.

Coffee, n. The person upon whom one coughs.

Flabbergasted, adj. Appalled by discovering how much weight one has gained.

Abdicate, v. To give up all hope of ever having a flat stomach.

Negligent, adj. Absentmindedly answering the door when wearing only a nightgown.

Balderdash, n. A rapidly receding hairline.

Testicle, n. A humorous question on an exam.

Circumvent, n. An opening in the front of boxer shorts worn by Jewish men.

7 lessons from the Sevens

By Mark Di Somma

Mickey Mice, surgeons, musclemen, vampires, men in tutus … yes, it’s Rugby Sevens weekend in Wellington. And that means teams of people dressed thematically and wandering the streets of the CBD. Welcome to a brand of rugby where the games themselves are virtually the backdrop for the actions and celebrations going on in the crowd and beyond the stadium.

But there are also some important lessons for the marketers amongst us. Here are my seven out-takes from the madness:

  1. Sometimes the event is strongest when it carries the name but isn’t actually the focus. In other words, it becomes the platform or prompt for a wider circle of participation. That wider circle may be where the money is.
  2. As per yesterday’s post – if you change the format, you also challenge the expectations of what must take place. In the case of Sevens, the change of game format has evolved into a social prompt for an audience-wide costume-party.
  3. If you give people genuine permission to behave differently, the initial hesitancy will give way to an atmosphere where people strive to outdo one another.
  4. Interpretations will vary dramatically. Once they can see what’s in it for them, some will always push the permission harder than others.
  5. If they are going to go out on a limb, most people would rather do it with someone else. There’s security, presence and confirmation in numbers.
  6. People may watch what’s going on rather than participating directly. That doesn’t necessarily mean they disagree or disapprove. In fact, even their tacit approval can be highly constructive.
  7. By Sunday it will be all over again for another year. As soon as you remove the event/atmosphere that fosters such behaviour, people quickly revert to type.

The real power of endorsements (and other opinions)

By Mark Di Somma

The purser on the plane this morning reminded us as we landed that the airline had just won two industry awards. She didn’t name them but the point was made. Endorsement brings that extra degree of confirmation that we as consumers have made a good choice. It plays to our collective wish to make wise purchases. It tells us we got it right.

The lack of specifics doesn’t matter. Schemas – the snapshot opinions that we form of people, places, things – are hugely powerful influencers. They help us navigate too many choices, too many questions, too much conflicting information, too little time. They motivate us to engage.

Without realising it, we form schemas for almost everything. Some are positive. Some are negative. Some are unjustified, either way. But the most common one is actually blank. It says “I don’t know what to think”. People literally don’t have a clue.

The reason is simple. You didn’t provide one. Your website looked the same as everyone else. The email you sent them was formulated and vanilla. Your business card has a swirl and an acronym and looks like everyone else’s. There were no endorsements or references, nothing to hold on.

You played it safe, you left it up to them. And there’s a price for that.

That’s a wrap

By Mark Di Somma

Format is really just a polite word for expectation. The way something is meant to be packaged.

Years ago, they told The Doors they’d have to recut “Light My Fire” to make it a single because it didn’t fit the format – too long. It was an OK single I guess, but it was nothing like the real thing. Change led to compromise. The original didn’t cram into a single for a reason. It would be like trying to make a 3 minute version of Bohemian Rhapsody. What are you going to leave out?

But the reverse is also true – works that may have one or two good ideas, repeated and padded to try and make them look and feel more substantial, to make them extend into the format.

Here’s the reasoning behind that action – if it’s a book, it must be 180 pages, so 180 pages it will be. Otherwise it’s not a book, it’s an extended essay or a long article or a something else. It must be that long in order to justify the price, to give people a sense of value. Just like films that are less than an hour long aren’t really films, they’re short films. Proposals that don’t reach 30 pages are an outline. And an address that is less than so many minutes cannot be a keynote …

The implication is always that those works that don’t fit the format shouldn’t be taken as seriously. Format is a badge of authenticity. Break the format and there’s a fear on the part of the structuralists that your audience might feel cheated.

What gets overlooked of course is that an idea in its best form is as long or as short as it needs to be to explain it properly. One page or a hundred, 5 minutes or 205, three bullet points or a full media slidedeck. That is where its real value lies. That’s what those who are reading, watching, listening or hearing are really paying for. That’s the insightful bit, the gift, the real thing of value.

I guess too that’s what iTunes and Amazon Singles and all the other format breakers are really asking: What’s the gift alone worth if the rest of the format – too much or too little of it – is just wrapping paper to you?

How do you value a crowd-based brand?

By Mark Di Somma

What is the value of global friendship and can you actually assign a price to it? Facebook’s own stats say that the site now has more than 500 million active users, and that 50% of them log on to Facebook in any given day. That means Goldman Sachs’ implied valuation of $50 billion suggests every active user is worth around about $100.

Is that a lot? I actually don’t think it matters. The much more interesting question is: $100 – to whom? Users are not paying money to talk to their friends, post their photos and catch up on what’s going on as they generate content on Facebook, but if Goldman Sachs is right, then that’s what their millions of activities will generate for someone else.

So who’s anticipating the $100 of value, and just as importantly, how? Investors, yes. But based on the production of what?

There have been any number of comparisons between Facebook and Google – but to me, they overlook a fundamental difference. Google does produce something: a very powerful search engine, based on a ‘secret’ algorithm. Facebook is much more of an environment.

Facebook’s valuation is about 25 times revenue for 2010 according to this article in Bloomberg (that means Goldman Sachs would have to wait 25 years to even draw even on the top line) and, perhaps inevitably, that’s generated bubble talk. A quarter of a century is a long time for any business. In the world of online commerce, it’s unprecedented. So perhaps it’s no surprise that an article in Fast Company reports that 69% of investors who took part in a Bloomberg global poll thought that Facebook is overvalued. Just 10% thought it was “properly valued”, 4% thought it undervalued and, interestingly, 17% (a little under one in six) had “no idea”.

I asked Mike Tisdall about this – and his view was that the extended timeframes only apply of course if the current year’s profit remains static. His view is that Goldman Sachs are counting on that profit growing exponentially over the next few years. Yes, Facebook’s profits have grown in recent years, but $500 billion’s a long road don’t you think?

Conventional market wisdom of course says the value of a Facebook-type offering will commoditise. But then, how does commoditisation play out if users are paying nothing now?

The only way that I can see it happening is if those expecting to receive $100 of value per user now (and presumably more over the years ahead as the numbers swell) come to believe that target is unrealistic. Patience could well be a factor – if they become impatient, what price would they take to get some return on their investment? And how would that affect the markets?

There are of course any number of other factors that could jeopardise value, triggered not by the investors themselves necessarily, but perhaps by the community – a sudden exit via a shift in fashion, for example, a spooking based on concerns about privacy, unexpected disclosures or new moves by Facebook (perhaps to reinforce the value in the business model) that participants find unacceptable.

The other thing we can’t know is what’s the critical exit rate? If 10% of regular users left, would that take the momentum out of the business model? Would it take 5% – or 15%? The lesson from Tunisia and Egypt is that once crowds get going, things happen pretty quickly.

Then there’s the whole situation of an environment like Facebook going public – does that mean that if its market price does go up, participants are essentially working for the institutional investors for free? Or will the IPO itself be crowd-based? In which case, governance could be interesting.

I foresee complications.

And the temptation to return to the conversation we had ten years ago – that one that starts it’s a different business and therefore traditional valuation models don’t apply. Remember where that one landed? Come to think about it, remember where we’ve just been? That was all about valuations too as I recall.

The delicious irony of a crowd-based brand, and something to keep an eye on with the proposed social media floats, is that brands such as Facebook, Groupon and LinkedIn become both stronger and potentially more vulnerable as they grow. On the one hand they are looking to consolidate and express value on the board; on the other, they rely for participation, validity and volume on a dispersed community whose views and reactions to going public are the real speculation.