Saturday, January 05, 2002
The corporations like GM don´t need to hear us. It´s an open market. The Gonzo is an Web reality. Don´t talk about the bullshit math. Maybe the companies that want to came in the Internet would pay more tham the traditional bla-bla-bla. Maybe it´s no cheap to talk to us. But don´t be blind. The markets are changing fast. We are each time more living in a globally connected digital world. Companies that don't realize their markets are now networked person-to-person, getting smarter as a result and deeply joined in conversation are missing their best opportunity.. That´s it, and We are waking up and linking to each other. We are watching. But we are not waiting.
The nature of my equations is the nature of everyone's equations: revenue - expenses = profit. That is as true for GM as SPP. I've presented the math for cost of acquisition through broadcast media. There seems to be a sense here, odd to me, that this sort of advertising doesn't work, but of course if that were true, QVC would be off the air and Procter and Gamble would be bankrupt.
Now you propose a system where, over some unspecified period of time, 25K extra boxes of tangerine Jello are sold, but you don't provide a sense of what it will cost to sell those boxes. How much is it to underwrite a site? To reach how many people, on average? Who will have what liklihood of buying a box of Jello? In what time frame?
If you tell P&G you have a way to sell more Jello, you'll be politely shown the door. If you tell them you have a way to sell more Jello for the same money they're spending now, you'll be told to take a number. Only if you tell them you have a way to sell more Jello for less than they are spending now will you be ushered into the marketing directors office. GM is no different than SPP, protest about the math how you may. It goes on the balance sheet as a cost center, and unless someone can explain how it improves profits, its a non-starter.
(1) The Semi-Official Small Wonder Site, devoted in excruciating detail to that 80's sitcom you no doubt remember, if not exactly fondly.
(2) The Gibson Reasearch Corporation, brainchild of super bright and talented Steve Gibson (check out his creds). Gibson makes and sells quality security and computer mainenance software, and gives away a ton more for free, just 'cause. His work and site are passionate and personal. Since most of what he does is geared toward making personal computing safer and more reliable, companies like Dell should be crawling over themselves to support him and be affiliated - especially given the thriving discussion groups also going on at his site around his products and the issues they address.
(3) TV programming for fans of Gonzo: The Screen Savers, who have hosted Doc Searls in the past, and discuss things like (1) and (2) on the show. Their viewers must form quite a micromarket, with sponsors as diverse as Intel and VasoRect...
And BEFORE all of this happens, really smart jell-o company looks for communities of interest, not necessarily directly related to their business, but in some way, I say up to five hyper-discussions away, germane. Then really smart jell-o company underwrites and supports these communities, along with others, helping to build them into really strong viable places for voice and opinion. Eventually it comes full circle. Not all the time, and not at first. But wait.
I can see it so clearly I wish I could explain it to you better--Maybe someone else will chime in and help me be more clear. I'll let another gonzoite explain why it's not a smart use of your 30K to have the goal of "reaching" 200,000 people through broadcast media.
Thanks for taking part in a lively discussion!
Your post crossed mine in the ether. I think I understand your examples, and agree thatthose are Good Things, but I also think that fewer businesses than you think can profit from such intangibles. I'm posted out now, but will flesh that idea out later.
In the meantime, take a look at the math in my last post. I think of myself as having a pretty simple objection to the general applicability of GM -- as the Santa Fe folks say, "More is different" -- so tell me if I'm expressing it clearly.
However, it replaces these SPP costs with employee time. (Lets call phone fax etc bills a sunk cost.) Now, there are obviously situations where this is a big win -- Southwest Airlines has discovered that by letting its people talk to the customers in their own voice, they improve their bottom line. This is A Good Thing. Southwest has some pecularities to it, however -- its front line people are already in contact with the public, so there's no shelling out extra time; an airline ticket is a considered purchase; and Southwest tickets are cheaper. In otherwords, SWA is not trivially comparable to a) businesses that currently have low public contact (e.g. Intel), b) rely on smaller or less considered purchases (e.g. Staples) or c) have similar or higher prices than their cometitors (e.g. Coke).
In these situations, the resources companies would have to shift out of SPP and into GM would include a considerable amount of employee time, and since every 1000th hour of such time is a half-time job, it triggers the usual welter of W-2 related expenses. Furthermore, since you would want those employees to regard their employer favorably, you would have to pay them more than minimum wage. So lets say you have 1 FTE to devote to your GM strategy, at a salary + expenses of 30K (so this person is making maybe 23K a year -- an entry-level hire, albeit a motivated one.)
E.R. is around a $25 CPM, so for 30K I can reach an audience of something like a million two. Now lets say that a national spot is a blunt weapon, so maybe only 50% of those people would ever even consider buying Jell-o® brand flavored gelatin, and that they need to see my ad 3 times to have it register. This means I'm effectively reaching, for $30K, 200,000 people, some percentage of which will salivate over my ad showing a Regular Mom making Jell-o® brand flavored gelatin Freez-Treets® in the shape of Pol Pot.
Now how many people can our eager $23K a year hire reach? Lets say the average micromarket is 100 people. (I suspect its smaller, but we'll put our thumb on the scale...) and our new hire, Felicity J. Gonzo, has 2K hours/yr to spend with these excited, loyal, and passionately engaged MMMs (micromarket members). Lets say that Felicity has such a winning way with the MMMs that to kno-o-ow her is to lo-o-ove her, so she is 100% more effective than SPP. Ergo, she only needs to reach half as many people to be as effective as my three SPP :30 spots on ER.
To reach 100,000 people 100 people at a time in 2000 hours (assume she never talks on the phone with her friends or uses the company computer to book plane tickets while the boss isn't looking), she has 2 hours per year to spend with each micromarket.
Now you can slice this math any way you like -- pay Felicity less, make micromarkets bigger, give SPP a 10% catchment or 1% even, make Felicity 5 times as effective instead of just double, but there are serious counter-forces as well -- I can run my ad on cable for single digit CPMs, and, most worryingly, I might want to reach 100 million people, not just 1.
This last bit is a corker. The single, critical advantage of the SPP strategy is that, no matter how ineffective each ad is, it scales like a motherfucker. Strategies with low fixed costs and high variable costs always look terrifically competitive when they first launch, but the costs grow like weeds because unlike media, human costs only go up. So my biggest doubt about the GM idea is that, no matter how you arrange the costs, at some point in audience size, probably in the millions and almost certainly in the 10s of milliosn, the money you saved in not paying for your SPP up front blows up in your face in labor costs.
Ketchum pays me well to do what I do for them. In my daily travels on the net in the course of my work day, and in my spare time, I'm deeply rooted in this other world, involved in any number of micro communities with people of shared interests and concerns. We talk about all kinds of things. Sometimes I'm involved in these conversations during work hours. Okay, let's face it, I waver in and out of my micro life and my paid-for life all day and night. And I'm not alone. I know this because I talk to people.
Seemingly--if you look at the math--this would be a worst practice for Ketchum, wouldn't it? Why are they paying me my 40-hour-a-week salary if I'm weaving in and out of blogs and side conversations all day?
Intangible number one: I now know more about net marketing than anyone else in our office thanks to these new relationships.
Evidence: New business opportunity yesterday. Prospect asks us how the consumer internet has changed PR. I explain all about what is happening, consumer-to-consumer (C2C) right now, regardless of what businesses think of it, in these micromarkets, and their potential, and the role of the agency in helping businesses to help consumers reach one another. This is what the prospect wants to hear. So, am I not helping to tailor our messages, my employer's messages, more effectively? And without them having to pay me a penny more than they otherwise would?
Intangible number two: I can tap three great candidates for senior positions at our firm from those I've met in these micromarkets.
Evidence: I have *many* inquiries from amazingly-qualified people who've expressed interest in working for Ketchum, because I, as a representative out here chatting with my friends and foes, seem like I'm pretty darn happy with my job. And maybe I seem like I'd be a cool person to work with. How much would it have cost to target these senior candidates through traditional HR means? Not to mention, would we have found them? And would they care about Ketchum if they hadn't first gotten to know me? Calculate those savings.
There's many more intangibles, which if you want to hear them, I'll summarize and post on my other blog so as not to take up too much real estate here.
As for your observation that I "pay $45/month for DSL, but what about my time? at what hourly rate? Divided by what audience size?" Again, you're hanging too much on things being linear and they are *not* linear on the net. I'm doing ALL of it at once, Clay. I'm at work, at home, in micromarkets, talking with clients, talking with peers, learning to think better, to write better, all in the course of an ordinary day, for the same paycheck. And yes, I still manage to bill at nearly 100%, which makes me ever more loved by those who pay me.
Why do I do it? JOY! Simple, plain, pure joy.
So Clay, it doesn't matter if it doesn't make sense mathematically. It's happening. Maybe we need a new formula to describe what's going on? I think you'd be the perfect guy to create it.
Friday, January 04, 2002
You pay $45 a month for DSL, plus how many hours of your time? At what hourly rate? Divided by what audience size? When you're done with that math, the (dollars spent/audience reached) figure is gonna look pretty grim.
So no, Gonzo is not free, and I'm not a baby. It has the same costs any marketing operation has, particularly people's time, but because it isn't broadcast, it doesn't scale well. (Complexity in broadcast networks scales with N; in group-forming networks it scales with 2^N. Ruh roh.)
As for "So what if paying attention involves a re-allocation of operating expenses? Learn to like it." there's only one thing that would make me like Gonzo Marketing or Total Quality Management or Learning Organizations or any other new thing, and that's if it allows me to raise my prices, lower my costs, or increase my volume without additional investment. What I'd like to see are some assertions about the math, because it don't mean a thing if it ain't got that profit maximi-Zing, and it seems to me the math is Not Good for existing mass market goods.
Oh, and its my real name. Why wouldn't it be?
** "Not his real name." Among other things, the e-mail domain is a dead giveaway... Or, am I spoiling all the fun? If so, my apologies, and here's a consolation prize from the folks at Sanrio, self-promoters the likes of which not even this crowd can approach: Kitty Credit.
*** By the same token, the more each of us - as worker - develops loyalties and passions about those to whom we devote our precious time.
You're talking about what has been, but we're talking about what's coming, and in some cases, what's here. Better yet, Gonzo is free, baby. Not expensive. It just takes some creativity, wide-open thinking, and discarding of fear on the part of businesses. Group communication is cheap (jeez, I pay $45 a month for DSL and look at who I get to talk to). So don't be so worried, Clay.
But then, maybe I'm a doofus.
I can buy ad space for "Women 18-35" on TV shows my media buyers tell me chicks dig, the transaction cost of that is low and the CRM costs are low -- one group, one way message, one buy, done.
If, on the other hand, I have to have genuine conversations with my customers, the number of groups goes up, message tailoring costs go way up, and my CRM costs shoot through the roof. Gonzo Marketing, in this view, automatically reduces per-transaction margins, as well as making those margins variable because of my customers' new (and expensive) desire to communicate with me. So if unit margins go down and lifetime value of a customer also goes down because of increased CRM costs, I can only make it up in volume.
This proposition may work for occaisional high-margin purchases (think Gulfstream), but it stinks for the mass market (think Coke).
Group communication costs rise with group size because the only thing that can have a genuine conversation with my customers is a real live human being, which is looking like a $15/hr expense all in, and even if the number of people I am forced to hire is kept to a log scale relative to audience size ( an iffy proposition), GM looks to me like a way of making my customers happy and loyal, while shredding my quarterly numbers. If I run a business, what am I supposed to like about this?
Jeneane is quoted in the "Advance Praise for The Bombast Transcripts" section with the following: "Chris Locke takes the nonsense that is business, wraps it in the sensibilities of art and philosophy, and transforms it into something much more palatable for the regular guy." Wow...you should write for a living or something.
In lighter news, we've had some new team members join us--hopefully they'll post soon. As you see, Marek's stopped by. David W. is becoming somewhat of a regular. Even Locke shows up now and again. Other gonzophytes should be posting soon. Now if we could get Doc to add his thirty-two cents. That'd be a treat.
Wednesday, January 02, 2002
You put it perfectly, Steve. I do think, though, that RB's "The Internet is all about me" rant, which he now renounces, was getting at something different. The canvas the Net gives us let's us go nuts about ourselves and our viewpoints. I can sing myself electric to the entire bloody world. That's exhilirating, although also delusional and egotistical. It changes the old equation where a handful of us were broadcasters and the rest of us were audience members. It's no accident that the Age of Conformity came into existence as TV sets went into everyone's home. It's no accident that as Web access goes into everyone's home we're entering the Age of Assholes. And I mean that in the very best sense :)
Tuesday, January 01, 2002
The marketing world is based on the notion of sellers trying to communicate to buyers. How do we know that the 17,000 year old cave paintings at Lascaux, France weren't really ads for the latest hunting tools? The goal is to convince buyers that they need (or better yet cannot live without) what you're selling. In some cases the need is real (food, water, shelter) and in others the need is artificial (furry toilet seat covers, Belgian waffle makers, Naive bottled water). The perferred method of communication is one-way messages.
But buyers have always had a harder time trying to communicate to sellers. No thanks to sellers (non-human corporations). Their stuff is real. But they are not. Anyone who's ever dealt with customer service knows it's an oxymoron. Technology has been the buyer's best friend when it comes to communicating to sellers...or better yet other buyers. Guttenberg's little invention gave fire to the masses, and it didn't take long for the conflagration to begin. Next stop, Consumer Reports. The Internet has done the same kind of thing.
Marketers spent centuries creating three enormous one-way streets for communication: Print, Radio, and Television. It was mass marketing to support mass industry. Then along came the Internet, and it blew the lid off everything. Joe/Jayne Smith didn't have their own magazine or radio program or television show...but they had the Internet...and they used it to go the "wrong way" down the one-way street. Email, Usenet, chat rooms, message boards, and Web sites gave local yocals global voices. Next stop, Google Groups.
And now for my point (albeit long winded). Ask anyone in marketing or advertising what the most valuable form of communication is and most will tell you word-of-mouth. It's the Holy Grail of the ad world. Get it and your widgets will live forever. But their one-way messages don't create word-of-mouth awareness. Only engaged people do. And when you connect a few million people then some interesting things are bound to happen. The Internet is one giant word-of-mouth cocktail party, but advertisers aren't invited. And because the Internet is all about me (my connections, my ideas, my interests) then I have the power of word-of-mouth. Watch out.
Monday, December 31, 2001
Sunday, December 30, 2001
As to being for others, I have come around to thinking that if I take care of myself (the precise details of how to accomplish which, I admit, continue to elude me), the others will get along just fine. Better, probably, than if I were to dedicate my life to what would have to be -- if you think about, wouldn't it? -- my idea of what would be best for them. Having said that, I want each and every one of you to know that I do love humanity. Deeply. So much that it hurts. In fact, it hurts so much that I say every morning when I awake: fuck em. let God sort em out!
The question that can be asked is how do we accomplish being for ourselves and being for others. And how do we reconcile the effects that being for ourselves has upon our being for others.
Gonzo marketing requires expressing your passion about things. We are not only passionate about ourselves, unless you mean that in some lame-ass way that fudges the math. Here's the math: A cares about B and talks about B in an honest voice. To say that this always means that A cares about A is true, but to say that A always only cares about A is false. Fudging it would mean we couldn't tell the difference between: (1) Benetton putting out a book letting condemned prisoners have their say because Benetton (that is, the marketing people at Benetton) thinks capital punishment is an abomination and (2) J. Crew putting out a brochure about how comfy-yet-rugged their doeskin fucking mukluks are.
I really like what RB says about the Net being all about me. There's a ton of truth in that. Every time we speak we do so with the arrogance that what we're saying is worth hearing. Me me me. Absolutely. But, that doesn't mean that we are our only topic; most of us - even RB - spend much more time talking about how the world looks from our point of view. That we're always gazing from our point of view is inevitable; that we're always gazing at ourselves is not.
And then there's also this little thing we call listening that the focus on the me-ness of voice misses.
So, bite me.