“In Development!”
Saturday, December 10, 2005
Well, it’s official. After four months of meetings, pitches, emails, brainstorming sessions, hours of notes and “treatments,” I have a show “in development” at Showtime. Matt Solo (my agent at ICM) gave me the good news this past week. Adam and I had a mild teleconfence celebration, after which the enormity of the task ahead kinda hit us.
Our next step is to nail the pilot script. It’s got to be funny, pithy, and irreverent. It’s got to knock Bob Greenblat’s socks off. It’s got to be Emmy-worthy. I have complete faith in my co-creators, Adam and Jonathan, on this. As the TV newbie, I’m just happy to be involved, and am hoping that my specific expertise can help in some measurable way.
I know I’ve been a bit cagey about describing the show, so finally, here’s a broad lowdown:
It’s a half-hour single-camera comedy about how we, as a society, have gotten so obsessed with our “things,” that we’ve put them above all else. It’s about our desire and obsession with owning, using, and discarding. It’s about how and why we buy, how we’re manipulated into acquiring things we can’t afford, and how that affects our lives, our family, and our humanity.
We had a hard time selling it into the traditional networks because of the obvious implications for advertisers. But as I’ve said before in this blog, it doesn’t really matter what one opinion is, or a spoof says—marketing is a necessary evil, and as one of its prime modern progenitors, I’m happy that it exists, and don’t think society can survive without it. That said, what good is someone who can’t laugh at himself?
Anyway—onward.
The New, New Web
I was in a brainstorming meeting with a client, where we’ve been given an amazing opportunity: to completely blow up and re-create from scratch, a massive, highly-trafficked, news and content oriented Web site. Halfway through our definition of new features and functionality, I suddenly realized the true meaning of the word “inertia”.
See, progress always comes in the face of massive amounts of pushback. Sometimes, that pushback is almost implicit. We don’t tend to realize what we don’t know, so we try to find comfort in imagining the change of something familiar, in order to create something new. Usually, this works fine, but what’s one to do when the original that one imagines from is so flawed, that some of its fundamental paradigms must be questioned? Ah, therein lies the rub of true innovation...to admit that we’ve been sorely wrong.
If you read that last pargraph and are still scratching your head, let me explain.
The Web was originally created as a stateless method of exchanging information using a standard client. It was designed primarily for the text-based hyperlinking of files and details within a scientific community. As it became a vehicle of more general communication and information sharing in the general masses, we tried to force-fit several new features into a limited design concept. We added the ability to use images and color. We wanted prettier layouts than was originally designed, so we added the concept of laying out content in tables. We needed the browser to remember what it had been doing, we we created a way to remember sessions using “cookies.”
But then, we realized that the nature of the Web required that interactivity be not just designed by the content provider, but also by the user. So, we added personalization, and the limited ability of the user to enhance his or her own experience. People started self-expressing using personal home pages, and the volume of information that ensued required the advent of robust search engines.
The Web had evolved, and it had become clear that the fuzzy outline of a new paradigm that was visible in some locations needed to be clearly defined. We needed to document the characterstics of exciting new applications that were making their way into mainstream media. Thus began the official definition of Web 2.0, a term that came out of a closed-door brainstorming session between O’Reilly and MediaLive International.
Web 2.0 is what’s called a meme—a unit of cultural information that represents a basic idea that can be transferred from one individual to another, and subjected to mutation, crossover, and adaptation. There’s also a lot of backlash about the term being more of a marketing buzzword. But in the end, if it allows to collate and make sense of a certain systemic change in the way business needs to be conducted and human-centered applications need to be built, then marketing buzzword or not, I see a lot of value in the usage of the term.
While there still is a lot of discussion around what Web 2.0 really is, what can really hit home, is to show by a few examples, the evolution of Web 1.0 to Web 2.0.
A prime example is photo sharing. In Web 1.0, sites like Kodak Gallery provided the basic ability to organize and share photos. In Web 2.0, applications like Flickr creates a true collaborative environment for public and private photo galleries.
Another example could be reference encyclopedias. In Web 1.0, researcher-driven resources like Brittanica Online allowed for the anywhere-anytime searchable access to volumes of data previously only accessible through massively heavy books. In Web 2.0, Wikipedia is a globally accessible, volunteer-written-and-reviewed collection of articles that forms an encyclopedia that almost anyone can contribute to.
And those aren’t all. Evite.com has given way to Upcoming.org. Personal Web pages have been abandoned for blogs. Editorial “directories” have made way for “folksonomy”, or tagging. On the visual side, the use of CSS and standards-compliant browsers have created the ability to design beautiful and managable Web sites where information display can be controlled by the user. Play around here, and see how easy it is to manipulate screens to fit exactly what you want. Corporate entities such as AT&T and MSN have also jumped on that same Web 2.0 bandwagon.
Such a list can go on forever, as discovered by the O’Reilly brainstorming session. An in-depth technical discussion of Web 2.0 principles is beyond the scope of this blog, and there are people far more qualified than I who can teach and inform about its nature. What I’m interested in summarizing, however, is the marketing impact of this shift to the Web as a platform for user-controlled information.
As marketers, we’re trained to push information to the right people in the right place, at the right time. We spend hundreds of millions of dollars in analytics that are supposed to help us narrow down prospect lists by attitudes, propensities, and desires. We spend millions on TV commercials and full-page ads with murky measures like “reach” and “frequency.” We’re pan-handlers of information whether we like it or not, and while it worked well in the past, there are just too many voices in the atmosphere for our impact to be the same as it once was.
But now, with the Web as a platform, we have the ability to supplement our marketing programs with high-impact tactics that use the participatory and “pull” nature of the Internet. Search engine marketing is the single largest driver of eCommerce economics today. Over 60% of Top 100 eCommerce traffic comes from paid search placements around specific keywords and phrases. With RSS, we can syndicate our content and advertising proposition to locations that our target customers are more likely to be. Mobile techology allows for instant customer gratification of news and information. The Cluetrain Manifesto was right. Markets are conversations. The new Web allows us, as marketers, to get right in there with all those loud, gossiping folk, and amidst the rapid exchange of popcorn and soda, find a way to sell a bunch of stuff.
Which brings me back to inertia. Corporate entities that have previously relegated the development of their Web platforms and applications to IT departments will do well to re-consider that notion. The responsibility for Web strategy should be brought into the marketing department, preferably as a core component of the overall marketing mix. If techies are the only ones singing praises of the new Web, its possible that you’ve been ignoring that particular water-cooler suggestion. Don’t. Listen carefully, because it is, in fact, the voice of the future.
Happy Diwali!
Monday, October 31, 2005
I’ve been noticeably absent.
This, constant reader (as King might say,) has only to do with not having enough hours in the day to accomplish all that’s required of my various interests and, of course, job.
At work, I’m shuttling between New York and Los Angeles (while living in Chicago,) launching a new couture jewelry brand on one coast, and helping re-define a multi-channel value proposition for a major entertainment cable network on the other. To save daylight, I’m constantly taking the 11:15PM redeye from LAX to JFK, and shuffling into work bleary-eyed from airplane oxygen. I now know more about diamonds than I ever dreamed possible, and have decided that LA’s not such a bad town after all—it’s actually kinda growing on me.
At play, I’m happy to say that ICM recently agreed to rep me in their TV-Literary department. I’ve always wanted to say, “Call my agent,” and now, I can. I’ve been working on a breakthrough new reality concept with John Feist, while on the scripted side, Adam Belanoff, Jonathan Prince and I have decided to take our irreverent look at the world of human greed and manipulation to premium cable, and are due to pitch Showtime and HBO in the next couple of weeks.
This coming Tuesday is also Diwali, the Indian new year, and to all of you who celebrate it, or are simply looking for a wish of good cheer as winter snakes its icy tendrils into a colorful, but dying fall—Sal Mubarak!
MTV and Popular Culture
Tuesday, September 06, 2005
I spent this past weekend at the national conference of the Network of Indian Professionals. NetIP is a unique group—it is an entirely volunteer run organization that puts on these incredibly robust conferences, where like-minded young Indian professionals can come together, network, socialize, and discuss issues that pertain to culutral identity, business, and India.
I won’t bore you with the details of what all the sessions included, but I was particularly intrigued by the introduction of a new brand—MTV Desi. I spent some time with Nusrat Duranni, the new head of MTV World, and the champion behind MTV Desi. (By the way, “Desi” originally meant “person of Indian origin,” but has now come to be a catchphrase for anything Indian.)
Nusrat is a gaunt, brooding, striking man who bears an uncanny resemblance to a young, sober Bob Dylan. When I first met him, he was fashionably dressed in a dark slim-fitting suit over a red shirt, with a pencil-thin black tie. I sat on a panel with him and the simply stunning Saira Mohan, where we discussed the emergence of the new Desi in popular American culture—the gradual recession of “Habib” as the Indian stereotype.
MTV Desi is an incredibly cool concept for several reasons, but not for those that most young Indians would be interested in. The acceptance of ethnic symbolism in popular culture has always required board platforms that created context for it. Take for example, the yin-yang symbol, or the medeival cross, or the Serpent and sceptre—these are all ethnic and religious symobls that have materialized in popular culture, and for periods of time, represented that particular age’s definition of “cool”. Now, with the advent of the Internet, and with a platform and catalyst as broad and powerful as MTV, we can surely see Indian symbols fast becoming part of the mainstream culture.
The trick that Nusrat and his team will have to master is not so much the creation of content; in fact, given that they’re in just about every country around the world, recycling content to create the “MTVization” that ethnic concepts need in order to be accepted by trend-seeking Americans will be easy; instead, the true test will be in their ability to create marketing platforms from which that brand inculcation can happen as rapidly and smoothly as possible. They will need to focus on different but inter-connected elements of brand-building (in my opinion, through the use of popular celebrities) that get trend-followers to start living the “desi” concept in their lives. DJ contests that focus on the best mixes that use MTV Desi music; and perhaps even licensing content to nightclubs so that imagery can start to become part of everyone’s leisure life.
Currently, MTV Desi is only available as part of DirectTV, but I’m hoping that they’ll get their cable deals done soon enough—it’s a fantastic concept, and I for one, am pleased as punch about it.
Ameniti Revisited: United’s “Vapor Service”
I was looking at my referrer listWeb pages from where people
clicked through to my site. for this site today, and have an interesting statistic for you: 25% of my search engine traffic comes from the search results for the word “Ameniti.” A few months ago, I had written a tiny article about the launch of the Ameniti Club by United Airlines, and some of the features it provided. I had, without reading the fine print, suggested that it was a good deal, and that it was worth considering.
Well, I was wrong.
Ameniti is essentially a simple, prevalent marketing scam, run by hundreds of companies around the world. It relies on three things to make its numbers and insane amounts of profit: 1) Annuity revenue. 2) Breakage. 3) Slick, beautiful brand marketing. They are purported by large, solid companies, and are considered standard business practice. They prey upon two things: one, a consumer’s tendency to overestimate product usage, and two, his inability to decipher fine print in the face of a glossy, beautiful brochure or Web site.
It hurts me to say this, because I am responsible for some of those slick, beautiful brand marketing messages. However, I have a simple theory around service offerings that don’t add value: great marketing for a bad product will just put you out of business faster.
Think of it in terms of a simple graph. On the X-axis is Adds Market Value. On the Y-axis is Gains Market Share. If a business adds a ton of market value, but doesn’t gain much market share, then it is ripe for a great marketing idea, and has unrealized revenue potential. On the other hand, if a business gains tremendous market share but doesn’t add much market value, at some point, the inflated value will correct itself—very suddenly, and very quickly. I call this a “vapor” service or product. The ideal situation is for an offering to add market value while incrementally gaining market share. No company better epitomizes this strategy, in my mind, than Google. One of the reasons for their explosive growth is that they continue to find ways to add market value while they gain market share in search. They do this by continually adding services that extend their brand proposition of bringing the world’s information to your fingertips.
So, why is Ameniti a scam?
Because it doesn’t work.
Let’s break it down. You start by paying a $295 fee per year, which is pre-paid. For that amount, Ameniti claims to provide several luxury travel services. The highlighted ones are:
- A free companion ticket every time you buy a ticket on United Airlines. (I know, that sounds fantastic.)
- Automatic membership in Starwood’s Preferred Guest Program at the Gold level.
- 25,000 bonus miles per cabin every time you book a cruise on select lines.
- 24/7 access to a “Global Concierge” service.
- Free membership in Hertz’s Gold Club.
They have a few other benefits, but for the sake of our analysis, these main ones will do. Let’s start with the one they highlight as the hero—a free companion ticket every time you buy a full fare ticket on United Airlines (economy and up for North American travel, business and first for international.) Now, at first glance, this seems like a fantastic deal. The marketing positions the proposition brilliantly, namely, taking your spouse or significant other on a business trip with you. This makes sense, since 90% of personal travel purchases within the United States are done using discount airfares; however, companies tend to sometimes allow the purchase of full fare tickets.
This is where the fine print comes in. Turns out that even on full fare tickets in Economy, you still need to make sure that your ticket is not under United’s E,M,U,H,Q,V,W,S or T Class. Which doesn’t mean much, right? So, I ran a little experiment tonight. I checked online fares on ual.com for a round-trip from Chicago to New York for this coming weekend. I got a price of $485 per ticket, on a W class ticket. I then called Ameniti and asked them what a full fare ticket would cost me on the same routing. The price was $1392. Finally, I asked my corporate travel agent what a full fare would cost me on the flight. She came back with $755.
I wanted to give the club the benefit of the doubt, and thought that perhaps it would be better for international travel booking. And so I went to UAL.com and checked on tickets from Chicago to London, starting September 6th. The price was $707. The same seat, full fare, would cost me $2495 to avail the Ameniti benefit.
Why do companies do this?
The economics of the vapor service are simple. Let’s say the acquisition cost per customer is $50. Revenue from the customer is $300 (rounded). Since the cost of running the club is limited to the personnel that need to service the customer and general G&A, the club has a relatively fixed (or scaling) cost structure. So, at 50,000 members, revenues just from subscriptions are now at $15,000,000. The cost structure to service this base is surprisingly small—less than $50 per customer per year. How? By outsourcing the call center to a professional concierge and call management company, and keeping a lean management team. That means, after $2,500,000 for customer acquisition, an additional $1,000,000 for general marketing, and $2,500,000 for servicing and G&A, the initiative makes an amazing profit of around $9MM per year. That’s a PBT of over 50%! This number only goes with up more customers signing up.
Also keep in mind that the consortium companies like United end up making higher margin sales as a result, because they encourage members to buy full fare tickets to take advantage of their membership. Other participating companies like Starwood have a steady stream of members into their SPG program, where they’ve proven to increase revenues by auto-granting certain members Gold and Platinum status.
Mass-funded services like Ameniti can, in fact, work. For instance, American Express’ Platinum card is an excellent example of a set of services for an annual cost that, if used well, can pay back massive dividends to customers. Of course, they run the same free companion ticket scam as well, but their additional benefits more than makes up for that treachery. The trick, as a consumer, is to make sure you sit down and do the math. Even if Ameniti’s airline costs gave you a small discount from buying two separate tickets, you still need to figure in the sunk cost of $295, plus the additional costs involved with using the service. For example, if you’re flying to London, and want to use Arrivals by United (essentially a tiny bathroom with showers, and ironing services,) does their “nominal” fee of $50 make sense? Instead, you should consider using that money for a nice meal, or use it go shopping. Now, if you’re really hell-bent on trying out Ameniti, use this link to a 3-month trial for $10. Please remember to cancel before the 3 months are up, or else you’ll get billed for the full $295.
Do they think you’re stupid?
In fact, they do.
Ameniti, in the end, is a marketer’s nightmare. It is ridiculously easy to sell that kind of stuff, because, you (dear consumer) are gullible as hell. You take marketing bait without thinking twice, and we count on you doing that. But when the product has no chance of living up to expectations that marketing sets forth, angst is sure to abound.
Like I said, great marketing is the fastest way for a bad concept to go out of business.