Category: branding

What Netflix Doesn’t Do

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Founders like to talk about "focus" a lot, but when it comes to creating focused brand messaging many find that it's actually a more frustrating and challenging experience than they expected. The reality is that you face a struggle between two conflicting instincts: the need to clearly and narrowly  define what your company does; and the desire to paint a compelling, expansive, and inspiring picture of what you envision your company will become. 

By definition, using focused and definitive language is an exclusionary act. If you say you build accounting software for SMB's you'll worry you might be in trouble when pitching a Fortune 500 contract. If you say you're a web shop experienced in building e-commerce sites, you are concerned that you'll have trouble with your dream of building a media website. And so on. 

I used the terms "need" and "desire" for a reason however. You may want to paint the most broad and rosy picture of your business, but in order to succeed with brand messaging you absolutely must be able to communicate quickly and simply what kind of thing you are. 

And let's face it, people know how to read past vagueness. So don't tell people you're a leading transportation logistics company if you're a taxi service, or that you're an mobile events food provider if you're a hot dog cart. People like taxis and hot dogs, and they might like you. 

For an excellent example, here's an excerpt on focus from Netflix's investor relations page: 

Netflix is a global Internet TV network offering movies and TV series commercial-free, with unlimited viewing on any Internet-connected screen for an affordable no-commitment monthly fee.

We don’t and can’t compete on breadth of entertainment with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google.  For us to be hugely successful we have to be a focused passion brand.  Starbucks, not 7-Eleven.  Southwest, not United.  HBO, not Dish. 

We don’t offer pay-per-view or ad-supported content.  Those are fine business models that other firms do well.   We are about flat fee unlimited viewing commercial-free. 

We are not a generic “video” company that streams all types of video such as news, user-generated, sports, porn, music video, or reality.   We are a movie and TV series entertainment network. 

Remember, if it's not immediately clear what you are not, then nobody is going to ever know what you actually are. 

Infinitely Improbable

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Lewis Packwood at Kokatu recounts an amusing and unusual tale of an online community rising up and thriving unexpectedly. Although considering the involvement of Douglas Adams perhaps the improbable should have been considered routine. The story comes from the early days of the internet (late 90's) and the building of a promotional website for a video game based on Starlight Titanic, a lesser known entry in the Douglas Adams universe:

Yoz was busy adding content to the nascent website, and one such feature was an employee forum for the fictional company Starlight Lines, the owners of the Starship Titanic.

"The idea was to present a read-only Senior Management forum in which you'd see some of the key backstory characters getting on each others' nerves. But we figured there should probably be a writeable forum for the lower-level employees, so I spent half a day hacking up a stupidly basic forum system."

Fans who had signed up for the mailing list received a cryptic email granting them password access to "the restricted Titanic Project Intranet Website" and then a follow up email apologizing for "the accidental email leakage." All of this in character of starship management of course, in the obtuse bureaucratic language Adams was famous for.

Satisfied with their humorous promotion, the team moved on. 

Yoz then quickly forgot all about the employee forum, but six months later he happened to take a quick peek. And there were ten thousand posts in there.

Bearing in mind that the forum was buried deep within the website and was (just about) password secured, this was a phenomenal result. But even more fascinatingly, the forum had evolved into an extension of the game itself.

Visitors to the forum had created fictional employees and passengers on the Starship Titanic and begun role playing as them. Someone would make up an implausible, Adams-esque scenario, and everyone else would react to it in character, resulting in some enormously complex storylines and in-jokes that developed and diversified over years. And this strange fictional world had appeared entirely spontaneously, without any input from Douglas Adams or The Digital Village. Indeed, Yoz was as surprised as anyone when he stumbled across it: "It was like ignoring the vegetable drawer of your fridge for a year, then opening it to find a bunch of very grateful sentient tomatoesbusily working on their third opera," he says.

Story: "The Secret Douglas Adams RPG People Have Been Playing for 15 Years"

The Undo Button

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Richard Fergie writing on E-Analytica illustrates perils for marketers when trying to outsmart ad-tech algorithms:

Before Christmas I ran a brand bidding incremental value test for one of my clients. The results showed that nearly all PPC brand traffic was canibalized from organic. We paused the brand campaigns. This is about what happened next.

Mid January, competitor ads on the brand name terms became much more aggressive. We uhmmed and ahhed for a bit because we didn't want to waste money with no direct return but it was also obvious that these competitor ads were causing brand damage. At the end of January the decision was made to re-activate the brand campaigns.

"The undo button doesn't quite work the way you think it does."

For a variety of reasons (very generic brand name, high rolling competitors, other Google subterfuge) this account had always had a high CPC for brand terms (over $1). When we turned the brand adverts on again the CPCs for the brand campaign were the highest in the whole account. This was not good as it was eating our very limited budget.

What happened here is instructive. He had made a decision to run ads against the brand's words (this is the equivalent of running an ad linked to Amazon for people who search for the word "Amazon" in Google), and though it was nominally successful it was apparent that nearly everyone clicking on the ad (and costing money) was someone who would have clicked on the regular organic search results anyways.

So you start out with people Googling your brand name and clicking through to your site for free, and and up with people Googling your brand name and you paying a dollar or more for the same click. Whoops. 

The problem came in three stages. First he noticed his competitors were also bidding for the same words, and driving his costs up, and then when he decided to stop paying for those increasingly expensive clicks, he ended up with less traffic than when he started the whole experiment, and was forced to return and pay even higher prices. Spending money and effort to get fewer visitors is not a good way to make an advertising client satisfied.

Thankfully the story has a happy ending:

To figure out what was going on here I made the following assumptions:

  1. For these queries and advertisers, quality score is essentially click through rate.
  2. Google's estimate for our CTR remained unchanged from when the ads last ran.
  3. The estimate for the CTR of the competitor ads has increased since we stopped running brand ads.

This meant that our competitor's ad rank improved because we left the auction. When we returned our CPCs were higher because the actual CPC is the ad rank of the advertiser below divided by your own quality score.

Using this reasoning I predicted that brand CPC would fall as our competitor's CTR reduced now that our ads were back at the head of the auction.

Two weeks later it looks like I was right: the brand CPC is back to where it was.

An important lesson that with a flawed plan, an online marketing campaign is actually capable of causing real harm, beyond just being ineffective or wasteful. 

Making a Mint With The Value of Press

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The Mint.com story shows that often what people feel is an avalanche of “word of mouth” is really just great press.

OK, fine I'll admit it, I'm the last human in the world to dive into Mint.com. As an OCD spreadsheet wielder with every penny I have or don't have tracked and sliced and diced I never really thought it was for me. But today I decided it might be worth giving it a shot. It had some features I wanted to try and let's face it, no matter how good your spreadsheet is, chances are you're no match for a well designed application.

I have to say, I was more than impressed, and my turbocharged spreadsheet feels like a bicycle sitting next to a Porsche 911. I had dim memories of first being tipped by Jason Calacanis via his TechCrunch event with Michael Arrington, and was trying to remember the story of Mint getting off the ground. A quick google revealed this article and sure enough, it was only two years or so ago. They've certainly blown things out since. But reading the interview with founder Aaron Patzer lent even more insight:

We didn’t have money for advertising, so we started a blog. We didn’t have money for writers, so most of our original blog content then was guest posts from other personal finance blogs, plus a couple of columns on people’s worst financial disasters.

To build demand, we started asking for email addresses for our alpha 9 months in advance of launch. Then when we had too many people sign up, we asked people to put a little badge that said “I want Mint” on their blogs to get priority access. We got free advertising and 600 link backs which raised our SEO juice.

When it came time to launch, we choose TechCrunch 40 – why pay $20k for DEMO?

We decided not to do SEM – it’s too easy and too additive. Instead, we relied on press. It’s where I spent 20% of my time. I’m spending it right now while writing this.

The net result has been millions of visitors and 1.5m users essentially for free. Mint is not inherently viral like a social network – but all good things are viral by word of mouth.

And so here we are two years later. We’ve attracted over 1.5 million users, found over $300 million in savings, managed $50 billion in assets, and helped people track nearly $200 billion in purchases.

Notice the interesting way he uses the terms "viral" or "word of mouth" and "press" almost interchangeably. It's a great illustration of a common misconception — which is this idea that all you need is to build something truly impressive and people will beat a path to your door. 

Granted, there's more than a grain of truth to that, brilliant ideas really do spread virally, and with lightning speed. 

 

But often what people feel is an avalanche of "word of mouth" is really just great press. Sure, often the press is "following" the word of mouth buzz. A classic example, perhaps the opening shot of the Web 2.0 era (or the final screaming death of the 1.0 era, depending on how you look at things), is F*ckedcompany.com, which Phil Kaplan famously created for the hell of it over a long weekend, emailed as a link to six people, and woke up a couple days later to find tens of thousands of visitors beating a hole in his servers. 

So, it happens. But more often than not when people say they "keep hearing" about something, or that "everyone's been telling me about" something, they don't mean real actual conversations. Most people move in pretty close-knit circles. What they mean is that everyone in the media has been telling them about it. What feels like word of mouth often isn't so much the presence of tremendous chatter from close, trusted friends and but rather the absence of an over the top, in your face marketing blitz. To be specific, paid marketing, like advertising. Like Superbowl ads. Like Pets.com.

And to go back to the F*ckedcompany.com example, the viral pass-along for that site was nothing short of remarkable, it was like a direct conduit into the zeitgeist. But if my memory serves, it made the Wall Street Journal within the week, and was on to Time, Newsweek, The Today Show, Rolling Stone, and just about everywhere in the media universe in a short amount of time. How many people discovered it through an email forward or water cooler conversation vs. the number that learned about it via some kind of "proper" media channel?

That's something you can only guess at, but it's one example of many. Zappos.com is another that comes to mind in the online/startup space, and there are more examples than you can count in entertainment, music, film, etc. 

In all cases they've hit a trifecta, that combination of a great product (yes, that's still the prerequisite, if you don't have that the rest of this is meaningless) with a core evangelical base of initial users and a successful effort to get that positive word of mouth coming from those who measure their audiences in millions. 

You bet the media has changed, these days the personality with the huge megaphone might be a tech hero with a six figure Twitter follower count. But social media is media. And that personality is a media personality, the underlying point isn't diminished one inch. 

It's not strictly impossible to see success happen purely organically, without any organized plan for publicity. Though I'd say it's nearly always when a founder or principal happens to be naturally press-savvy. But exceptions aside, more often than not it's a thoughtful, considered — and experienced — person or team at the helm, managing the media strategy. 

So, to bring it home with a pun — if you'd like to make a mint, you might want to think about who's minding your press. 

 

Where Pitchfork Meets Keynes

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I was having a discussion with some friends in the media and music business recently, specifically about the much-discussed (read: over-discussed) phenomenon where bands emerge and bubble up from the blogosphere and become overnight sensations in a teapot, taking the hipster world by storm, becoming ubiquitous in all the tastemaker places almost simultaneously. Someone commented that this phenomenon is really particular and endemic to the indie rock world — where there's a massive wave of over-hype and artists are thrust out into the world not even fully formed, subject to a premature "next thing" consensus and an inevitable backlash to come. 

I don't think this is confined to music at all. Political consensus among the chattering classes is probably the most direct and clear example, with so much media, so much airtime to fill on deadline, and so many predictions that "have" to be made in the face of subjectiveness and a major herd mentality. It's also common to quickly moving technology trends (iPhone, Twitter, lots of other gadgets) and even
financial opinions (Jim Cramer and Motley Fool come to mind especially). And probably quite a few other things. Just straight old TMZ style pop culture too.

But confining the discussion specifically within the confines of the music business, what I think is interesting is the degree to which the indie rock world
exemplifies a certain set of attributes. You don't see
the same hyper-"meta" discussions and self referential issues in other
genres so much, at least not in my estimation. In straight bubblegum pop you
might just as easily have the overwhelming hype and meteoric rise, and even
in more esoteric niches like country or jazz or even bluegrass you
definitely have flavors of the month, someone who makes a breakout
performance at a festival or a last minute substitution. 

As a sidenote — I actually think classical is a close second to indie in the
herd-hype department, with that last example of a last minute substitution
and seemingly coming out of nowhere being a great example of how many well
known artists — most notably Leonard Bernstein and Lang Lang, among others
— got their big breaks. And both suffered a torrential backlash several
years into their career as well. 

But anyways, the basic concept is pretty well established. What's
interesting to me is that in indie rock (which I should make sure to define here as the hipster, Pitchfork, blogger world, etc — not in the indie=independent sense) it seems to have come to dominate
the landscape. 

And of course, it conjures up parallels in economics. Specifically the classic quote about the stock market and investing from The General Theory, by John Maynard Keynes: 

"Professional investment may be likened to those newspaper competitions in
which the competitors have to pick out the six prettiest faces from a
hundred photographs, the prize being awarded to the competitor whose choice
most nearly corresponds to the average preferences of the competitors as a
whole; so that each competitor has to pick, not those faces which he himself
finds prettiest, but those which he thinks likeliest to catch the fancy of
the other competitors, all of whom are looking at the problem from the same
point of view. It is not a case of choosing those which, to the best of
one’s judgment, are really the prettiest, nor even those which average
opinion genuinely thinks the prettiest. We have reached the third degree
where we devote our intelligences to anticipating what average opinion
expects the average opinion to be. And there are some, I believe, who
practise the fourth, fifth and higher degrees."

I've always thought this was a pretty good metaphor as well for the worst
parts of the hype machine that seems to swirl around indie rock, in the way mentioned above. The issue here isn't that you have a scene that's incredibly dynamic and
changing, that artists come out of nowhere and get a ton of hype and then
recede. There are plenty of reasons why you'd see those kinds of things happen. For example, another just-as-plausible hypothesis would
be that it's an artistic scene that is intensely focused on novelty, hence
the quick rise and short shelf life of many such artists. 

But I don't think that's quite it. I think it's the self-referential nature
of the whole thing that is the most fundamental attribute. Everyone is
looking at what everyone else is doing. In economics or ecology you'd
describe it with some concepts from complex adaptive system dynamics, where
you have systems or implied algorithms that are self-referential and loop back on themselves, and have both positive and negative feedback loops working at cross
purposes. Not too far from the idea Keynes intuited in the 1930's in the quote above. 

So the more hype builds around you the more success you have. That's a
positive feedback loop, a network externality. If 10 influential indie blogs
plug you then that might lead to 30 more the next month. But there's a
negative feedback loop. The more success you have the more you arouse the
distaste and backlash of many members of the community.
You have everyone looking at everyone else to see what they think before
they make up their mind. 

People's opinions of an artist's intrinsic merit
are in part based on their perception of who else likes them, what kind of
people like them, how many of those people there are, and how long this has
been going on.
Like in the beauty contest example above, many participants are picking the
prettiest competitor at a beauty contest not based on what they personally
like, but based on their impression of what they think other people's
impression will be. 

So you have two countervailing forces at work — and the result is the
classic boom-bust cycle that has tons of parallels. In ecology the textbook
one is watching deer populations skyrocket, then they eat all the available
food, and then half of them starve and die. Then they do the same thing over and
over again. In economics it's the classic business cycle boom/recession wave
in the stock market and economy as a whole.
It's the natural outcome of a wicked combination of positive and negative
feedback loops, both governing the same variable, in this case success and
prestige and "hype." 

Or to simplify: 1) The more successful you are the more people like you. 2) The
more successful you are the more people hate you. Pour them together, and
you get breakneck change, massive and premature over-hype and massive and
premature backlash. Both often divorced from any underlying actual merit of
the music in question. Just like financial bubbles tend to affect the good
firms as well as the bad, both on the way up and the way down. The truly
great stuff endures, but when you're looking at a week to week timetable
that boom-bust cycle is all you can see.

I think it's food for thought. The interaction of positive and negative feedback loops in self-referencing systems with network effects is well known in complexity theory to be the driver for some very interesting emergent phenomena, not just in simple rules-based systems but in applied social sciences as well. Perhaps there are some parallels to be drawn in marketing, media, and even entertainment and popular culture.