Tag Archives: Economy

When Innovation Is So Bizarre, It Must Be From Mars

Not on my block!  Though I do give Brainiacs From Mars credit for capturing the spirit of the times by offering to cover the mortgages for struggling homeowners, their idea is one that’s sure to raise eyebrows – if not fists of fury from the occupants of neighboring houses. The mechanics of their bizarre marketing product is that they will paint your entire house (except the roof, windows and doorways) with whatever brand has engaged their services for anywhere from one to twelve months.  During that time, the homeowner’s mortgage payments will be paid by the company.  In the midst of these financial troubles, it could be the perfect solution for someone who is struggling to make their payments or finds that their mortgage is under water. But, the true cost for the homeowner – and the advertised brand – could be  a million times more than it is worth.

As municipalities are taking measures around the world to curb the proliferation in advertising and the cacophony of imagery and messaging that comes with that, these executions could be quite steep. The happiness in São Paulo, Brazil continues to spread since they passed a law cracking down on visual polution  and, while the citizens had something to complain about before the crackdown,  their ad placements weren’t even close to the brazen disregard for visual decorum that this product provides.

The folks at Brainiacs From Mars are smart, though, in how they may be able to control the prices they have to pay for placement.  For instance, they will most likely only be agreeing to paint homes that are on well trafficked roads.  Those houses are typically cheaper than the houses that have little to no traffic or are well covered by a wall or flora.  While it might be enticing for a homeowner with a 3 or 4K+ monthly mortgage to have a few month’s of paid support, their homes will most likely will not be in play. The houses that are selected for participation will naturally have considerably lower costs and higher visibility. Brainiacs founder, Romeo Mendoza, hopes to paint up to 1,000 homes.  We’ll have to see if their realized numbers come close and how the mix nets out.

Those painted houses will attract a lot of attention – good and bad – and will most-likely cause a stir and even further regulation and community guidelines.  Even with the crazy nature of this one, I place it behind the rooftop QR codes I wrote about a couple months ago in the “What are they thinking?” category because of its real visibility.

John Cougar Mellencamp caused excitement when he offered to paint MTV’s Party House pink in 1984 for some lucky winner. Sadly, I don’t think this is going to have that same type of excitement.  Surely, there could be some buzz if someone actually agrees to paint their house with a brand, but the brand should think long and hard whether they want to be a part of it. The portrayed brands will definitely be at the forefront of people’s thoughts. It seems unlikely that those thoughts will be kind. As for me, I’ll be happy to have a house branded in my neighborhood – when I’m living on Mars.


The Future Landscapes and New Economics of Original Content

Amid the beginning of the dot-com lunacy at the turn of the millennium, a company called Digital Entertainment Network (den.net) formed as an online channel for original content.  They were positioning themselves to be a form of competition for the traditional broadcast and cable outlets – programming niche original content for youth to access through their computers.  At the time, FBC was getting stronger in its run against the big three networks (ABC, CBS, NBC) and in the spring of 1998, there were only 171 national cable networks.  DEN couldn’t help themselves from getting attention (both good and bad) due to their publicity machine, extravagant parties and the legal issues of its founders.  At the time, it seemed like an interesting model, but not one that could last into the future. Regardless of the content, we really had no clear vision of what that landscape would be and what the economic play would be.

Seeing DEN was one of the things that pushed me to make the move from being a network development executive into digital.  I didn’t think DEN, or any other online video platform at that time, was a recipe for success in the future.  I didn’t know what the future held, but I wanted to jump in near the beginning to see where things would take us. 

DEN went away early in 2000 and the larger dot-com implosion came soon thereafter.  Since then, the world, technology and the outlets for original content have changed beyond anything many imagined.  Besides the more than 500 cable channels that are vying for attention on television sets along with the now big four networks, online video sites and their serving capabilities have improved dramatically and there’s so many ways to view video beyond the television sets and computer monitors.

In addition to the challenges of getting your “channel” seen or even generating awareness about its existence, there’s numerous ways to interact with the content and each other that were either dreams or creative lab tests at the time.  Suffice it to say, the model has evolved and we are all trying to keep up with it.

YouTube launched its program to pay 100 content providers good sums of money to provide sufficient content for their own channels.  They just announced four channels – all focusing on extreme sports – yesterday and there is sure to be more. How they plan to promote and discern between the four remains to be seen.

Episodes of shows on television are appearing on sites across the spectrum – both legitimate and not-so-legitimate. Viewers are expecting to not only watch shows, but to vote on them, communicate with their friends during them no matter where they are and view their content anywhere at any time. Content is being created and now has the ability to be sold in so many forms without the help of traditional media companies (e.g. the previously covered Louis CK concert at the Beacon Theatre). All of these are vying for eyeballs.

Even the production of those shows has dropped in price considerably as technology has allowed us to film HD footage on such easily accessible tools as our mobile phones.  Most computers are coming with at least a basic editing suite with near-professional versions becoming more affordable each year.

The reality is that there is so much more original content (good or bad) coming from different sources that we are still yet to see what the big play will be.  The big companies that are looking to establish themselves as key digital distribution platforms – like YouTube, Netflix, Hulu and more – will continue to pump money into the products to try to generate an audience that is either advertising or subscription supported or both. There is no doubt that the monies going into these productions are significantly smaller than those budgets for content back in 1998 and the amount of buzz that needs to be generated to reach a certain level to make them profitable is more than what was required back then.

What effectively was derived from a standard platform back then has changed so much in such a short time that it has even soundly shifted the foundation that the original platform of television on which it was built upon.  The general feeling in the established media back then was that of superiority. No matter how intrigued or excited we were by the possibilities of the future, nobody really saw it and prepared those established outlets to be able to deftly move along with the flow.

Ultimately, storytelling is storytelling.  Even without the clear economics, we now have access to so much more than before – and so much more of a fragmented audience to try to reach. Yes,  there are more outlets to get the content out there, and the key difference may be in the one that really aggregates everything in the best way possible.  Currently, if someone wants to search for content, it is relatively hard to find with so many different platforms.  For broadcast type stuff you need to pay for, you’ve got to look at outlets like Hulu, Crackle or Netflix.  The outlets to find content of all types for free consist of those like YouTube, Revver, Break and many, many more.  Throw in iTunes and you’ve got even more outlets.  All this leads to more challenges when trying to find content – let alone pay for it.

We have so much more to discover before finding that next standard. It will be in flux for quite a while longer as the players try to re-establish their footing in the quickly-changing marketplace.  The economic possibilities for Original Content and their outlets remain huge and complex – is it enough to just stay in the game?  I’m certain DEN wishes they still in play. And I am certain we all can’t wait to see how it all plays out.

Positioning the Brand For the Rebound

Just because the economy is bad and your brand is not enjoying the growth it has been seeing previously doesn’t mean you have to hunker down and keep doing what you’re doing.  In previous posts, we’ve mentioned ways you can use the downtime to get stronger either in your existing business, business practices or innovation.  But, what about in your branding? 

Please don’t go out and update your branding just because business is slow, but perhaps now is the time to take an objective look at whether your business or brand needs to be re-positioned and see if you might be best served to work on that in a down time so that when the economy’s outlook brightens, consumers can also get a new outlook on your product.  When the economy rebounds, it is not certain that consumers will return to the products they were using before.  As such, it may be assumed that they will be looking at new ones to take their place either based on revised personal or business priorities.

It doesn’t even need to be a major overhaul.  It can be a tag line or a simple change in part of your logo or identity.  Have you changed the way you do your business that provides benefit to something other than your bottom line – community, environment, lifestyle, etc. – that may connect with a new type of consumer?  Have you been lying low after embarrassing business situations where a new identity or even the conveyance of a new corporate consciousness could help you rise from the nadir?

Effectively, you always need to be aware of how things have changed and the affect it has on your branding – even in good times. Make the most of what is happening in the world around you to ensure that you are best suited to move forward smoothly upon the rebound in the economy.

Visionary Leadership in a Bad Economy

The economy has always played a large role in business, and in its current state it is highlighting a major concern across the board – the lack of Visionary Leadership.  Unfortunately, too many companies are managing their business to maintain margins instead of using this time to develop opportunities to grow once the financial issues work themselves out, if not sooner.

Companies, communities, organizations, etc., have always been governed by the feeling that if you are not growing, then you are shrinking.  There really is no room for standing still or battening down the hatches.  We see this in business, politics, sports and more, yet it is maddening to see it happen again and again.  It does not mean that entities should spend, spend, spend in the hopes of a turnaround.  It does mean that leadership should push for development of product, communications, strategy, distribution and even worker advancement.

A friend reminded me how Wrigley Chewing Gum was not produced during WWII due to its factories being used for military production, yet they continued to market the gum throughout the war.  Upon the war’s completion, sales of the gum went through the roof due to awareness from efforts when the product wasn’t even available!

Of course, that’s somewhat of an extreme example, but the basics are absolutely relevant – don’t miss the opportunity to build toward the future now.  If there are things that need to be completed for your business now to ensure success in the future, why wait 90 days to commence planning for growth programs that can be implemented once cash-flow stabilizes?  If you wait, you’re that many months behind in your ability to capitalize on opportunities.

There’s a few other major keys or benefits (other than increasing the bottom line) to solid leadership and no stagnation:

  • Team Morale – If production is down, the opportunity to use staff resources to research and develop future opportunites leverages capital and builds enthusiasm for the future.  It’s human nature for people to grow worried about possible layoffs, but providing a goal of the future keeps things moving forward and best prepares the company for the upturn.
  • Resource Management – The above practice also allows for employees to exhibit or develop their skills in a growth capacity.  Where management might not see team growth opportunities when the company is resting on its laurels – the challenge for innovation and growth really allows people to shine – if they want to…
  • Positive Trust – Too often, upper management will use fear as a way to motivate.  Some will even say that the employees don’t want to know the truth if it is dire.  The opposite is the case in both instances.  By being open about any situation that could affect staff numbers or output, it removes the opportunity for rumors.  If done right, it can challenge teams to come up with solutions that will be heard by upper management. No matter how strong upper management is, they might not have been in the trenches for a long time – if at all.  The ones in the trenches often have golden nuggets of opportunity to share if they are allowed to.  If an employee is going to listen to the truth, be welcomed to participate in the turnaround and decide to not step up or leave, they probably weren’t part of your growth plans to begin with.  Again, its human nature to want to do the safe thing and stay put, but it is also human nature for most people to derive joy and pride from being a part of something bigger.  Don’t cut them out of the solution decision making or assume they can’t handle the truth.
  • The Yes Test – If too many people are looking to only offer what leadership wants to hear – more often than not – it’s wrong.  Good decisions and growth come from honest discussion.  It means that opposing views can be presented if relevant and nobody at the table feels that they must agree for fear of getting the axe.  Granted, all out dissention is probably not the best thing, but you wouldn’t have hired the team you did without feeling they can best represent the company’s goals.  Don’t make the mistake of creating an environment of yesses.
  • You don’t know it all – The best managers have been open to ideas other than their own and then worked the best ideas into the companies’ actions.  Those who think they know it all and don’t trust those around htem will undoubtedly sink the ship.
  • There is never an option to stop motivating.  Again, human nature demands it.  It is not always best to lead by example – because that example can be missed.  Leading requires clear communication and consistency so that the ship can maintain its, hopefully growning, trajectory.

The list could go on.  Ultimately, the opportunity for growth does not require taking unnatural risks.  Sometimes, it requires you to take no risks at all – just proper management of existing resources.  Don’t just look to cut for the sake of cutting – you’ll probably cut your nose of to spite your face.

Take the opportunity to be visionary.  There’s far too many positives that come from it.

Groupon’s Valuation – The 30 Billion Dollar Question

Regarding Groupon and it’s valuation, I agree with many of the concerns that Diane Mermigas brings up in her On Media post, “Is Groupon an Overvalued One-Trick Pony?” With the economy doing what it is doing and the opportunities for competitors to reproduce the mechanics easily and quickly, Groupon could very easily be (and most likely, is) overvalued.

One of the beautiful things about the speedy entry of Groupon into the market was its simplicity, but that could certainly cause trouble in the long-term.  The thing is, having 83 Million users – and growing – is nothing to shake a stick at.  It seems that Groupon understands that and is spending a dramatically high amount of money on advertising, awareness, retention and registration – effectively to keep growing at a pace that nobody can catch up to.

Unfortunately, the power of that 83M number is seemingly lost in Mermigas’ post as it relates to marketing opportunity for businesses.  Whether it is because Groupon doesn’t do a good enough job in espousing that reach as a resource to introduce your brand or product to fresh eyes and expand the base, or analysts aren’t looking at that when considering the dollar value, I don’t know.  There are many items and experiences that Groupon – and their competitors’ users would not have known about or tried had it not been for this.  I don’t believe that Mermigas downplays that power and realize that this particular post’s posit is about valuation, but the relevance of that marketing value must be a part of the valuation picture.

When bringing up the possible shift to brands only offering steep discounts to their own apps greatly contrasts that 83MM+ opportunity to grow your base. Additionally, the downgrading of value in the 18-34 female demo due to their less likely income goes directly against the reason for discounts to be there – not to mention that prime target age in fostering brand/product affinity and loyalty. My how things have changed since that demo was the ultimate demo to reach…

So, yes.  Groupon is seemingly overvalued, but some of its key components should not be pulled from the equation of what makes it a success. Those exclusions add back some of the value that was deemed lacking.  If meticulous exclusion applies, then it draws all valuations into question.