There are two kinds of interaction in social webs – asking and telling. The traditional view of social influence is all about telling. The new view is more about asking, and carries with it a particular implication for what brand marketers want consumers to do. Ask, don’t tell.
Google is emblematic of this new view. A search on Google returns a list of Web pages ranked by relevance. The algorithms of relevance are proprietary, but a few core principles are known. Chief among them is the number of other Web pages that link to a page in the list – the more links, the higher the rank.
In measuring the number of links to a page, Google is applying the idea of asking. Google is not looking at how many times a page links itself to other pages, or ‘tells’ other pages about itself. Rather, Google is looking at the number of other pages pointing to a particular page, or ‘asking’ that page for information. Relevance is a function of inbound ‘asks’ not outbound ‘tells.’
Contrast this with an older idea that is the cornerstone of word-of-mouth as traditionally understood by brand marketers, that of two-step flow. Two-step flow posits that opinion leaders follow mass media to form their opinions, then along their opinions to followers who rely on them for guidance. Two-step flow doesn’t rule out asking as a conduit of influence, but it is mainly about leaders telling followers. Consequently, for years, brand marketers have focused on identifying and persuading opinion leaders, who can, in turn, tell others about their brands.
There is nothing wrong per se in trying to win over tellers not askers. A strong network of people with influence to spread the word is useful. Past word-of-mouth successes are testament to the impact of this approach. But whatever the past successes, this is not the best approach for the future.
For one thing, recent research has challenged the traditional understanding of how social contagion works. As network researcher Duncan Watts has put it, the contagious spread of influence “depends far more on the overall structure of the network than on the properties of the individuals who trigger it.” In other words, contagion happens because people are asking for it not because tellers are pushing for it. A breakout phenomenon satisfies what people are asking for, and once people are asking for it, anybody, not just highly influential tellers, can trigger a contagious outbreak of social influence.
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It’s said that the marketplace is cycling faster than ever these days. No doubt this is true, but at least a part of this sensation of a brisker pace is an illusion that brand marketers should scrutinize carefully.
The iconic illustration of faster cycles is the oft-cited speed at which media technologies have reached an audience of 50 million. Radio, it is claimed, took 38 years to reach 50 million; TV, 13 years; the Internet, four years. It’s a very dramatic recitation. But it’s urban legend. It’s hard to know this, though, without a lot of spadework. A Google search returns well over 130 million Web pages with some mention of these data, and very few of these pages cite any independent authority.
For example, a United Nations report authoritatively references these data. Many other authorities cite this U.N. report. Yet, the report itself footnotes no primary sources. Additionally, the U.N. report presents these data as if they apply to worldwide audiences, even though audience sizes are difficult if not impossible to measure in much of the world. So it’s no surprise that the pertinent geography of this urban myth occasionally gets confused. A Goldman Sachs report published during the height of the dot-com bubble asserted that these data related to media technology growth in Asia.
Ground zero for this urban legend appears to be a 1998 U.S. Department of Commerce report that relied on a 1997 Morgan Stanley report on Internet retailing co-authored by legendary Internet analyst Mary Meeker. The geography issue, at least, is resolved because both of these reports cite these data for the U.S. marketplace. But the Morgan Stanley report contains only vague references to primary sources, making it tough to independently examine the underlying figures. This is not to suggest anything untoward, only to take notice of the fact that these data buttress a central belief about the nature of the 21st century digital marketplace, so it seems entirely appropriate to apply the time-honored principle of trust but verify.
That is exactly what Gisle Hannemyr did in an article for a 2003 issue of The Internet Society. Hannemyr’s Internet bona fides are impressive. In 1991, he co-founded the first ISP in Norway, and later, other Internet businesses. In 2003, Norwegian members of an association of entrepreneurs and investors called First Tuesday voted him Internet personality of the decade.
In a meticulous and exhaustively referenced analysis of media audience growth, Hannemyr traced the origins and early history of the three media at issue (along with the telephone, a communications technology notably omitted from the Morgan Stanley growth comparisons). Then, compiling audience data from all available sources, Hannemyr computed an estimate of adoption rates. Details of Hannemyr’s analysis are readily accessible, so there is no need to belabor them here. It’s his bottom-line that’s key.
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Segmentation is making headlines. The journalistic reprise of some inelegant remarks by Abercrombie & Fitch’s CEO and the eruption of a scandal involving IRS scrutiny of conservative non-profit groups have come together at the same moment to put the spotlight on targeting, which, of course, is what segmentation is all about. The ensuing outcry has pummeled targeting from both sides – in the case of Abercrombie & Fitch it’s criticized as too exclusionary; in the case of the IRS it’s condemned as overly – meaning unfairly – inclusionary. The fact of the matter, though, is that it’s one or the other only when it’s poorly done. This is the takeaway for brand marketers.
Targeting is a core, purposeful activity undertaken in support of organizational objectives. It is essential for organizations to narrow their focus in order to concentrate on their mission and not waste scarce resources on things or people not central to that mission. Organizations accomplish this by targeting.
No organization can do everything or serve everyone. Admittedly, some organizations have a more all-encompassing remit than others, but those organizations serve their broad mission by subdividing into smaller units, each of which has a narrow focus. More than anything else, it is the target on which a group is focused that motivates efforts, unifies allegiances and defines the dividing lines between operating units.
Implicit within targeting is the presumption that the targeted segment has value worth the attention. By definition, then, non-targeted segments do no. In fact, this is the measure of a good segmentation – does it differentiate value? A good marketing segmentation must do more than simply divide consumers into groups with contrasting attitudes. If every group has the same buying potential, then the attitudinal differences don’t matter because modifying products or ads to match one set of attitudes versus another won’t concentrate marketing development or spending on high-value customers. Only segmentations that differentiate value offer a useful marketing roadmap.
The definition of value varies by organization. Abercrombie & Fitch is trying to maximize profits; the IRS is trying to collect all taxes due. Targeting by Abercrombie & Fitch should differentiate groups on the basis of potential profit contribution. Targeting by the IRS should differentiate groups on the basis of tax status. But the core purpose of differentiating value is where targeting gets controversial.
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The category killer of advertising was invented a long time ago. It still rules. It’s called TV.
One of the longest-running predictions in the history of marketing is the death of TV, a prediction that has been wrong decade after decade. TV has enormous staying power.
TV’s death knell chronology is instructive. From the very outset of broadcast TV to this day, lowest-common-denominator content and consumer resistance to advertising have been proclaimed as nails in its coffin. Remote controls were going to kill it by ending attention to ads. When I was a neophyte researcher in the early 1980s, cable was heralded as the end of networks and thus the end of TV as we knew it. The next batter-up as TV killer was videotaping. After that, pay-per-view, premium cable, satellite TV and videotape rentals.
By the late 1990s, the Internet was in full flower, with streaming and small screen videos being touted as the end of TV. Next up was video games, especially because it took away young men. Then TiVO. Then piracy. Then online video. Then DVRs. Then smartphones. Then cord-cutting.
On and on goes this belief that TV has hit the wall. But take another look at this chronology. What you see is not the emergence of TV killers but, instead, the evolution of TV. TV evolves. The business model of TV has gotten more complex and more sophisticated over time. TV is a robust medium unique among other media in its ability to morph its content and sources of revenue to stay current.
Henry Blodget of Business Insider wrote last year that TV would crash into a wall just like newspapers because of fundamental, underlying changes in consumer behaviors that have antiquated its business model. Blodget warned that newspapers looked great until the very moment they went off the cliff. That, wrote Blodget, is why the current success of TV is not a relevant guide to the future. But Blodget is not clear on what he means by TV because TV is not, nor has it ever been, any one sort of content or business model. TV has always responded to shifts in its competitive environment by changing. It will do so yet again.
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A recent Wall Street Journal headline stopped me in my tracks: “Is Innovation Killing the Soap Business?” When I put this story down, I was even more confounded. Could it really be that doing right by consumers was causing such consternation among laundry detergent manufacturers? Apparently so, but only because there seems to be a misunderstanding about innovation.
The complaint is that Procter & Gamble (P&G) changed consumer usage behavior for the worse with its innovative Tide Pods product. Each Pod is a so-called “unit dose” capsule, or a premeasured amount of detergent per load. By eliminating the need to pour, consumers don’t have the opportunity to pour too much or over-use detergent. The result is a lower volume of consumption and a decline in category dollar sales.
In other words, to put a sharper edge on this, the complaint voiced by competitors suggests that at least some part of the laundry detergent business model in years past has been based on consumers misusing the product, thus spending too much money. So instead of looking for innovative ways to help consumers save money, some manufacturers were sitting back, cashing in on consumer mistakes, and hoping to continue selling detergent indefinitely as a hush-hush game of gotcha.
The point of disruptive innovation is not to lift all boats but to reward the innovator who puts tired old business models out to pasture. As a result, the new solution may well shrink the category as demand shifts from old wasteful, over-priced products to new higher value products. This looks to be exactly what P&G has done, so it’s no surprise that the category is down.
In fact, P&G has done more than just knocked competitors back on their heels; it has redefined the category. Measured in the traditional way as defined by old product forms, the category is declining. But measured in the new way as defined by the form of Tide Pods, the category is growing like gangbusters. Aggregate totals depend on how the aggregate is defined, and Tide Pods have changed the definition of the category.
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