Below the Line

MediaWeek panelists weigh in on "Free"

As a follow-up to my post from yesterday about the UK launch of Chris Anderson's new book Free, I thought I'd share thoughts from the panelists: Stefano Hatfield, editor of thelondonpaper; Paul Brown, the UK MD of Spotify; and Rory Sutherland, Vice-Chairman of Ogilvy Group UK. All comments below are paraphrased.

MediaWeek: Who is making money out of "free"?

Brown: The general thought about music is that advertising is not the panacea. Radio has done very well with the free model. Pandora is projecting a turnover of $40 million this year. Licensing costs are high but there are successful free business models where there are paid and free elements. "Free" is a very powerful way of generating profit from high margin products. Spotify is only four months old but revenue is doubling month on month.

MediaWeek: How are free newspapers affecting consumers? Is the work of traditional journalists in jeopardy?

Hatfield: In the past three years, several jobs have been created at thelondonpaper and London Lite. But there aren't as many journalist jobs on each title. The Metro has about 100 people on staff. Fleet Street is going to have less journalists. It's a more dynamic and fast-moving process. When Michael Jackson died we did 24 pages in two hours.You have to be more creative when you can't spend 10 million pounds on a Madonna photo.

MediaWeek:Is there a down side to the "free" business model?

Sutherland: Jeremy Bullmore said some of the worst successful products in the world survived because they were free -- the metal coat hanger and the warm-air hand dryer. The end user had no say in it. White wine that is free is invariably worse than wine that you choose. 

Other comments:

• Free is not merely an extension of cheap.(Sutherland)
• Every time Craigslist makes a few cents, a few newspapers in Alabama go bust. (Sutherland)
• Volunteers do better than conscripts (employees), because they are passionate. (Anderson)
• Avocations were previously done privately, for free. Now they are done publicly. (Anderson)
• In the old days, "nutter letters" didn't get published. Now they do. They're called blogs. (Hatfield)
• A little bit of transaction (e.g. charging even one cent) places an amazing amount of friction.
• Once you're free, no one can undercut you.
• If something is born free and remains free, like Google, we don't think less of it. But the same doesn't hold true for things that become free, like The Village Voice. (Anderson)

Related Posts:
Free thoughts - the UK launch of Chris Anderson's new book
Digital serfdom: I want my UGC (an argument for fair compensation of content creators)
Trendy spotting: Spotify

Affiliate Links:
Free: The Future of a Radical Price
Long Tail, The Revised and Updated Edition: Why the Future of Business is Selling Less of More

Free thoughts - the UK launch of Chris Anderson's new book

Last week I attended the UK launch of Chris Anderson's new book Free. Anderson is the former editor of Wired magazine and author of The Long Tail.

The event, hosted by MediaWeek, featured free drinks (or was that payment-in-kind for some publicity?) and featured panelists Stefano Hatfield, editor of thelondonpaper; Paul Brown, the UK MD of Spotify; and the inimitable Rory Sutherland, Vice-Chairman of Ogilvy Group UK.

No such thing as a free lunch?
According to Anderson "free" used to be a "huckster's phrase" with offers such as "buy one get one free" and "free with purchase". Perhaps referring to advertisers as hucksters in a room full of people that work in the industry was not the best choice of words, but no one seemed to object. He gave examples of offerings based on "free" such as Jell-O giving away free recipe books to stimulate demand of a product no one had then heard of; King Gillette selling razors to banks who then gave away the razors with their "save and shave" program (customers then had to buy the blades); and mobile phone providers giving away the handsets for free in order to sell minutes.

He mentioned that advertising-based business models are also built on free -- a third party is subsidizing your free radio or TV programs. The internet has started with this "old media" model. "With a new media, you always adopt the old business model," Anderson explained.

Freemium - 21st Century Free
The new media model is freemium, where a company gives away 99% of its product/service/information for free and charges a premium for just 1%. This model is already in use by companies such as Spotify. Anderson's theory of the "radical new price" is based in part on the fact that "the cost of everything online falls by 50% every 18 months", a theory that is eloquently debated by Malcolm Gladwell in The New Yorker. (Anderson's response is here.)

At what cost free?
I would love to see a panel debate with those two, or a roundtable about the future of intellectual capital, creativity and investigative journalism. I briefly asked Sutherland after the event whether he thought the trend towards free resulted in creativity being devalued. After all, Ogilvy makes its money from creative ideas. He referred to former J Walter Thompson chair and Guardian columnist Jeremy Bullmore (who I find myself agreeing with more and more), who says that you should never write for free. But Sutherland added that writing for three hours per week is pleasurable, and people will do it for free, but any more than that and it becomes a job. And people want to get paid.

So are all of those people writing for free for three hours per week for online publications such as The Huffington Post who (unless there is more recent news) doesn't pay bloggers taking away jobs from people who are journalists by trade? This to me is where the debate gets interesting, but Anderson seemed to shrug off the notion that there would be a serious impact to journalism, giving an example of an exposé by a local blog about vegan restaurants selling products that were not, in fact, vegan. I doubt those same bloggers would volunteer to go to Iraq to determine whether the purported weapons of mass destruction were, in fact, weapons of mass destruction. Thank goodness we have the likes of Sean Penn for that. Hatfield did mention that we'd always have Reuters and the AP to cover those stories; however, isn't this consolidating information, power and influence on the some on the most important global issues - the issues that would most benefit from the opinions and investigations of trained journalists? But I digress. This is an issue for the intellectuals of our time to debate. At least, I hope they will.

More on "Free"
I will post comments from the panelists tomorrow.

Related Posts:
Digital serfdom: I want my UGC (an argument for fair compensation of content creators)
Trendy spotting: Spotify

Affiliate Links:
Free: The Future of a Radical Price
Long Tail, The Revised and Updated Edition: Why the Future of Business is Selling Less of More

Thanks go to David Quigg for the Gladwell links.

Trend spotting: Spotify

Last night I went to a Digital Lounge event with Spotify's UK Sales Director Jon Mitchell. Spotify is a streaming music service which was founded in Sweden in 2006 and has attracted one million users. The free service is also available in Norway, Finland, the UK, France and Spain. It's premium service is available elsewhere for £9.99 per month.

According to Mitchell, Spotify offers a "legal alternative to piracy". In fact, Mitchell boldly stated that their only real competition is music pirates, although The Independent has stated that they have "declared war in iTunes".

Spotify launched in the UK in October 2008; the UK has quickly become their biggest market with 10,000 people per day signing up for a free account. Unlike many "next big things", they have found that people who download Spotify use the service on an ongoing basis, with average user sessions of 60 minutes.

As a Spotify user and huge fan, I can say that main attractions for me are:

1. It's easy to set up and easy to use. The download is quick, especially as compared with the iTunes download which requires frequent updating and annoying prompts to download their preferred browser Safari. My view on new technology, as I've stated before on this blog, is that it must either be so simple that anyone can learn to do it, or so essential that everyone must learn to do it. Spotify is simple.
2. I can add as many tracks as I want, without hogging massive memory on my computer. Plus, there's no chance I'll lose the files.
3. People can easily share playlists on Spotify. With a few clicks via third party site ShareMyPlaylists, I added Rolling Stone's 500 greatest songs of all time. 
4. They have a great selection of music, having signed deals with all four major music labels.
5. I don't have to deal with iPods, which are not built to last and contribute to electronic landfill. 
6. The service is "smart" enough to not serve ads while you are working on PowerPoint or other documents.

They are the first streaming service to strike deals with all the majors, which took a major shift in the labels' attitudes. Mitchell said their initial response when asked if they'd provide their music for free was "F--- Off". It took two-and-a-half years to get them to change their minds. Spotify has also signed deals with CD Baby and independent music aggregator Merlin.

Freemium
Mitchell said the free model is not going away, as with some other services who are ending their free love. Instead, they will entice users to join their Premium service with unique offerings, such as access to U2's latest album one week before it was released. "We want users to have access to the free version so they can test it and see that it's easy to use and have the music they love," explained Mitchell.

Because of the ad-funded model for the free service, they "don't need 80% of their users to pay for the Premium service." However, Mitchell admitted that take-up of the Premium offering is currently low, but he expects it to improve as they educate people about upcoming features.

Demographics
Mitchell didn't go into too much detail about their demographics, but he did reveal that 20% of their audience is 45+. They can target ads based on age, gender and post code. This makes advertising on Spotify much more 1-to-1 than on traditional radio.

What's next for Spotify?

• Spotify announced this morning that the service will be available on the Google Android mobile. [Watch their video announcement.] Expect more mobile phone partnerships.
• They are doing some deals with radio stations so they can recommend playlists (and share in revenue). 
• Their web site states they are looking to work with "ISPs or mobile operators wanting to stand out in the crowd by adding a very comprehensive, legal all-you-can-eat music service to their current voice, TV and broadband services."
• Look for them to launch in other countries, with invite-only access or exclusively through tie-ups with telecomms companies. 

I'll be interested to see what else develops. I think there are opportunities for brands to use Spotify in unique ways, perhaps through mashups. Their founder also started affilliate marketing company TradeDoubler, so he certainly knows how to work with brands. Mitchell said he "can't wait to see what happens when brands and bigger companies get involved." I guess as the sales director, he has more than one reason to be excited about that.

I don't know if I've ever written such a glowing blog post about one company. I hope someone from Spotify sends me a t-shirt.

Your brand abroad

Global brands often struggle with how to roll out a global campaign. I was reminded of this on a recent trip to Budapest, Hungary when I came across this ad for BlackBerry in Business Hungary, the magazine from the American Chamber of Commerce in Hungary. Surely no native English-speaking creative team would hyphenate "al-ready" and "busi-nessmen".

Although they use a photo of a business woman and the somewhat cumbersome "he/she" pronoun, they state that "the device appeals mostly to businessmen".

(click to enlarge)

It looks to me like BlackBerry probably decentralized their advertising and let the regions do their own things, for their own markets. This isn't a bad strategy, but usually that means the markets are doing the creative in their own language in a way that appeals to local audiences. In this case, they've gotten it all wrong by (I'm guessing) writing copy for an American brand in Hungarian, then translating it into English. Surely they could have just adapted a U.S. or UK ad?

Related post:
Rolling out a global campaign

Built to last -- a recession marketing trend?

iPods don’t take a licking. A few months back, my iPod stopped working. I got the dreaded “sad iPod” icon. I tried the suggested solutions on the Apple support page to no avail and was ready to try the controversial “6th” solution: ramming it on a pad of paper. I asked some people about how long their iPods lasted and no one seemed to mind that these things crap out regularly. (A sign of greenetically incorrect eliteness, if you ask me.) Although iPods, according to their own report, and other electronic items, according to The New York Times, are supposedly built to last for three years, the reality is that many break down before this.

I hate having to replace something that should have lasted a lot longer. It’s a waste of money and generates needless landfill. Can you imagine if Sony Walkmans broke down so easily 25 years ago? Why are we so permissive of non-durability? While in recent years, brands have been focusing on the “fluffy” stuff like inspiration, now that we’re in a recession, I predict durability will again become a selling point.

Which brands will deliver campaigns like The Energizer Bunny, Timex’s “Takes a licking but keeps on ticking” or Built Ford Tough? (The former two are on Ad Age’s list of the Top 100 Advertising Campaigns of the Century.)

Sites like eBay, Gumtree and Craigslist are establishing a re-sale value for every imaginable item. Will any brands follow the lead of the auto industry and promote a high re-sale value in their marketing communications?  

Certainly, luxury brands with high-quality craftsmanship are in a prime position to respond to the current economic climate by positioning their product as an investment, something Patek Phillipe has done for awhile now with their ad campaign focusing on buying “for the next generation”.

A much smaller (and more affordable) example is our client ShopCurious which sells unique and designer vintage items. They have been encouraging customers to eschew a slavish addiction to high street trends and disposable fashion in favor of quality items which will last. The value in buying quality is that if you buy something classic that you really like, you can keep it for a long time and it will always look good and function well, i.e. they are “built to last”. 

If this company selling trash cans can use "built to last" as their key selling point, any brand with a quality product can.

Kate Stendahl contributed to this blog post.

These brands ain't afraid of no ghosts

It looks like Ghostbusters is making a comeback - at least in the advertising world. 118 118 used the Ghostbusters theme song in their latest ad, even hiring Ray Parker Jr to sing updated lyrics such as "I ain't afraid of no goats".

Citroën has incorporated the tune in the latest ad from Euro RSCG.

If you look closely at the Justin Lee Collins Show ads, you'll spot an unmistakeable Stay Puft Marshmallow Man t-shirt. He's already tried to "bring back" Fame, Dallas and The A-Team. Can a Ghostbusters reunion be far behind?

I am who I am because of Google

I've noticed a new call to action: "search online for". For instance, the radio ads promoting Orange's "I am" campaign in the UK close with "search online for 'I am'" and Channel 4 TV ads simply display a search symbol with the text "search for Channel 4".

This is a departure from giving customers a web address to remember, or certainly giving them a toll-free number to call. It is also recognition that search is the thing. Most web surfing experiences these days begin with a search engine - so why not make your call to action relevant to the user experience?

There are a few side benefits of this approach. You can, to some extent, control what your customers and prospects are searching for. This means you'll be more likely to connect with those people, i.e. they won't get led astray by other competitors and unrelated companies who show up for your keywords, or keywords you haven't anticipated. It also means that you have a better chance of controlling your pay per click (PPC) costs. You don't have to guess what keywords your customers are most likely to use. You do, however, have to make sure that you show up on page one of all search engines. 

Another benefit is that you can separate out campaign traffic from general brand traffic. Customers searching for their nearest Orange store could search for "Orange," "Orange mobile phones" or "Orange Chelsea", while customers searching for the campaign can do as they've been instructed and search for "I am".

It also means that you can use less attractive URLs. The "I am" URL is www.i-am-everyone.co.uk. So on the radio, it would be "visit us online at 'I dash am dash everyone dot co dot uk'." It doesn't make for very punch ad copy.

Finally, using "search for" as a call to action aids in a brand being able to "own" a word or phrase. If Orange wants its customers to associate the brand with "I am", telling them (on the radio) or showing them (in print or on TV) is not nearly as powerful as getting them to type the message into their web browser - this helps fix the term in their mind as being associated with that brand.

Below are the search results for "I am" across Google, Yahoo!, MSN and Ask. As you can see, not only does Orange have two PPC ads per search engine, they are in the top 10 natural search results for each. (Click on the image to see the details.)

Interestingly, Channel 4 did not run PPC ads; their number one natural search result must have given them confidence. Things change fast in search, however; I hope they are checking their search rankings frequently.

£30 of free Google AdWords

Since my post on feeding the Google machine has been quite popular, I thought I'd post the latest voucher code for Google AdWords.

Just go to the AdWords site and enter the promo code: 3GXH-KG9U-YGNK-R9PK-NJS.

This is for new accounts only in the UK and Ireland. You may have to pay a £5 activation fee. Offer expires 31/12/08. I don't know if this is a unique code, so it might only be available to the first person who tries - first come, first served! Report back if you've tried unsuccessfully to use it.

Enjoy!

Three ways to stand out

Sometimes to make your message stand out, you need to think big, think outside the box and take risks. Here are three ideas to get you started:

Beautiful but temporary. This guy creates massive sand art at low tide, and it's gone by high tide. Just watch the first 10 seconds of this video as it shows a few clips of his work. While the physical work of art is ephemeral, it lives on online. It’s like a cooler version of crop circle advertising.

Tacky but attention getting. Advertise your product with body art – just make sure it’s appropriate for your audience.

Big and bold. Who could forget the Sony Bravia ads: the bouncy balls, the paint explosion and the foam bubbles? These were developed to illustrate product features in a totally new way. The viral aspect included watching the ads on you tube, and the 'making of' videos had as many or more views than the ads themselves.

Might as well jump

The creative minds behind Adam Carolla's The Man Show must have been let loose on the advertising world. Trampolining seems to be the latest advertising trend. At least three brands have "jumped" on the trampoline bandwagon: Maltesers, Muller Light and Fiat Grande Punto.

Does anyone else think that using a trampoline after eating yogurt is a bad idea?

Online Marketing and Media: seven easy lessons for sharper online marketing

As I mentioned in my last post, I recently attended the Online Media and Marketing conference in London. I attended a seminar held by Alex Burmaster, a European Business Analyst from Nielsen Online. Here are some of the “lessons” he was offering:

1. Understand the bigger picture. You are probably a small part of someone’s online experience. While in previous years, there was room for every online business to grow, now you need to steal market share.

People are becoming more habitual and are visiting 10% fewer sites than they did last year. Some exceptions are coupon/reward sites – these have seen their audiences grow by 70% in the UK.

2. Know thy audience. There are twice as many people online who are over 50 versus under 18. According to Nielsen, this is how internet usage in the UK stacks up by age:

• 2 - 17 years old - 4.2 million
• 18 - 24 years old - 4.2 million
• 25 - 34 years old - 7 million
• 35 - 49 years old - 9.6 million
• 50 + years old - 9.2 million

It was also interesting to see where those with the highest incomes were spending time online. These are the top 10 sites visited by people with a household income of £50K+ in the UK:

1. Holiday rentals
2. Home web sites
3. Toptable
4. View London
5. Bank of Scotland
6. Companies House
7. LinkedIn
8. Monarch Airlines
9. Hilton
10. Inter Continental Hotels Group

3. Harness the power of video. Every product you have should have a demo video. Videos are viral, engaging, digestible and search friendly.

4. Harness the third screen – mobile. The average uplift for campaigns using mobile is 13%. For B2B, it’s 4%. Location-based GPS has an audience of 1,273,000 in the UK, and 2% of UK mobile subscribers.

5. Listen to what consumer-generated media tells you. It’s worth noting that 54% of people posting opinions about a brand first attempted to contact the brand by e-mail – so get your customer service right!

6. Act on it. Give people a chance to tell you what they think directly. Have a link on your site for customer testimonials.

7. Go the distance.

I Don't Feel Like Dancin'

Is creating a brand dance a new trend? Here are three examples of companies who have tried to get customers engaged with their brand through dance. Just think what would happen if they combined their brand dance with a brand scent!

Lambrini

Becks

Comfort

Comfort has even released the single to this song on iTunes and was given to club DJs to incorporate into their live sets.

Where to find Inspiration

Here’s a quick list of places to find inspiration for those in creative, strategic or account management roles – and client side roles as well! Use this list if you’re feeling stuck or want to get “out of your head”.

As I’ve mentioned previously, I think it’s important for the account team to add value to the client. So get inspired, come up with a few ideas and let your client know you are thinking about their business goals, not just the current job numbers you’re working on. Don’t guard your ideas – share them with your client. One thing I’ve found is that when you share ideas, more are sure to flow in.

·         Take a walk outside. Take a walk with no purpose. Meander around. Notice interesting architecture at the tops of buildings, the color of leaves, the noises, the smells. For an added challenge, take a camera with you and try to come up with the most interesting picture of “nothing” that you can.

·         Change your mode of transport. Some people get their best ideas in the shower; I seem to get mine in the tube. Maybe it’s because I wish I were somewhere else. The bus is great for staring out the window and observing human behavior from a safe distance.

·         Magazines. Read a general business magazine like Business Week to get back in touch with what’s happening in other industries.

·         Fiction. Read a fiction book that has nothing to do with your job, your industry or your client’s industry. It will get your mind working in a different way.

·         Visit a museum. Notice the unique shapes, styles of dress, colors, patterns, technological innovations, etc.

·         Go retro. Shut off your laptop. Get out your pen and paper or a typewriter if you’re trying to write some clever copy. Forget online image banks and go back to the old-fashioned way of creating a mood board – clip images from magazines, books, your own photos, etc.

·         A mile in their shoes. If your client has a physical location (e.g. retail store), visit the store as a customer. What kind of people are shopping there? What kind of people are working there? What do you notice about the way the store is set up? What would make you want to visit this store, or buy more?

Please leave a comment with any suggestions on where to find inspiration.

As for where not to find inspiration: marketing trade journals, television shows or existing ad campaigns. Everyone else is looking at those things, too – that’s how we end up with an advertising “Hundredth Monkey Effect” with many different agencies creating similar campaigns.

Truth in Advertising: there's a wrinkle

Awhile back, I saw the following in a casting call:

“Careful and specific applications for: Caucasian actress. She should be elegant, confident and well grounded. Perceived age of 45 years old; however, we are looking to cast younger women who look older than their age as their skin will be better (there will be several close ups). Please note ages on suggestions. Skin tone on the face must be smooth. The actress must be extremely attractive with fantastic skin. No dialogue.”*

It got me thinking about truth in advertising. Of course, consumers know that when they buy, say, L'Oréal Wrinkle De-Crease, they're not going to magically look like Claudia Schiffer (although I keep hoping...). But if the copy is talking about the product benefits such as "visible results" and the image is showing someone who purportedly has experienced those visible results, doesn't the consumer have a right to know what they are really looking at?

What if all cosmetic companies had to label their ads: "This advertisement has been airbrushed"? It seems only fair to consumers. 

After the recent smoking ban in England, I read somewhere about how restrictions on cigarette advertising resulted in some of the best ad campaigns -- print ads actually showing someone smoking have been banned in the UK since 1986.

So let's see how creative the cosmetic companies can be...

* For the record, this casting call was not for L'Oréal.

Digital Serfdom: I want my UGC

If content is king, then why are the content creators being treated as serfs?

The content creators (serfs) are doing countless hours of labour, just for the right to “live” on the content distributors’ (landholders’) “land”. While in the feudal system, serfs earned a percentage of the product they produced, today’s digital serfs merely occupy server space – in most cases, they don’t see a penny of the digital landholders’ profits.

This market evolution is already having an effect on the creative industry. For instance, The Writers’ Guild of Great Britain, which operates on revenues from fees based on a percentage of member income, is facing an increasing operating deficit. The Guild has the same number of members, but revenues are down significantly. What this means, is that British writers, on the whole, are making less money.

Meanwhile, Google has been accused of trouncing on writers’ rights by digitizing books still under copyright – thereby reducing residual income to writers.

Actors in Britain are also suffering with a union that is too weak to enforce a fair deal for rights to re-use content in online media. For example, ITV recently announced it is putting ads on its broadband streaming download service. The IPA raised a concern last year about actors’ and musicians’ rights. ITV’s response? Wait a year, and do it anyway.

If you or your clients make money off the back of user-generated content, I urge you to think about fair compensation for content creators. They are not all kids sitting around with free time and a camcorder; and actually, they shouldn’t be. Don’t you want the best creative talent to contribute to your site? Talent is worth paying for. If you don’t think so, then walk down the hall and ask your copywriter if he’ll write your next campaign for free.

We all think we’re getting something for nothing with UGC, but the reality is we’re contributing to a system that is making it difficult for creative artists to make a living. We need to encourage talent and create a model that is sustainable for content distributors, online advertisers and content creators – instead of just fattening up digital landowners like YouTube with its Google billions.

Free content comes at a price.

Feed the Machine - £30 of free advertising from Google AdWords

If you've been following the search wars, then you'll already know that Google has 77% of the market share of UK online searches [Hitwise, June 2006]. This business is reportedly worth 1.6 billion dollars to Google. That's right, over a BILLION just in the UK. It's mind googling – ahem, I mean mind boggling.

Well, now's your chance to get started with a little freebie from Google AdWords. It's worth a try to gauge which keywords will deliver results for you, and to find out how much they'll cost. Here's the blurb from Google, which appeared in MarketingWeek in the 8 March 2007 issue:

Please go to www.google.co.uk/aw-voucher18 and request a £30 free AdWords voucher now. We will then send you an email containing your promotional code and will explain how to set up your campaign in as little as 15 minutes. There's no additional spend commitment, so this offer is risk free. Start advertising today!

This promotional code can only be used for AdWords accounts that are less than 14 days old. Only one promotional code per customer.

Oddly, they haven't listed an expiry date for the offer. Just be sure they send you the promo code before you get started.

Robot Invasion

 

Should actors start worrying about becoming obsolete? Honda, IKEA and GM have all recently used robots in their advertising campaigns – Honda and IKEA did not feature any human actors at all. Certainly one benefit of this is not having to pay robots any royalties or international usage fees. Someone should alert Equity and the Screen Actors Guild!

It’s another interesting trend. Is it because technology is so integrated into our everyday lives that these companies think we can relate to robots?

Inspiration is Everywhere

I've noticed a trend in advertising over the past few months: Inspiration. Companies  want to inspire you with ideas on how to decorate your home (Ikea), where to travel (Expedia) or what to buy for Valentine's Day (Amazon). If you don't feel inspired enough, how about Inspiration the perfume (Lacoste)? I was even surprised to see HMV jumping on the bandwagon, with an apparently irrelevant use of the term – "Be Inspired" by watching 24?

It's a reflection of a strong economy. The message is inspiration and aspiration rather than saving money or improving quality as have been the trend in the past.