This SiliconAlleyInsider Sub Headline Reveals Why You Must Move The Freeline

Stop Whining About How Elitist And Expensive TED Is [Just Because] You Didn’t Get Invited
Feb. 15, 2010, 9:17 AM

>> Too bad you missed it! Larry Page gave everyone a free Nexus One.

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via Silicon Alley Insider.

(Minor edit for colorful language.)

What is amazing about this (the subhead sentence after the headline), is not what it says about TED, but what it says about the future of content creation, and the question of charging for it.

Yes, Larry Page is a multi-billionaire who gave away free Nexus Ones created by his Fortune 500 (currently ranked #150) company, Google, to other well-to-do folks who were able to afford to pay $6,000 for the exclusive TED Talks experience. In doing so, he is following word of mouth (WOM) marketing model 101, of getting your product into the hands of key influencers, and hopefully winning them over, and getting them to evangelize your product.

But aside from all of that, he is showing what the future really holds: With ever cheaper reading & communication devices such as the Nexus One, it will become increasingly common to give those away to users, JUST to have SOME influence over what content (and thereby advertisements) they consume.

In essence, such a give-away represents A PAYMENT of the consumer for consuming content on the “gifters” platform. That is how important it is to get some, any slice of the attention pie. The getting of some of which implies that you will have opportunities down the road to do business with the “giftee” in the form of offers (ads or otherwise) that can be embedded with the content.

Note that it is taking for granted that a lot of content itself cannot be charged for. Why? …

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Online Ads = Punishment For Using Stuff For Free?!

Silicon Alley Insider in Wednesday’s post "How Google Can Make Money With Google Wave" is bringing up a point about online advertisement very much like the kind I have been making for at least the last 6 months. Here the key excerpt (my BOLD highlights):

Semantic advertising. […] Since conversations on [Google Wave] waves have to go through the server each time, a semantic engine could parse them on the fly and serve up relevant text ads. With enough data and training, a semantic engine could decipher intent, i.e. whether you’re talking about your trip […] last summer, in which case ads would be useless, or whether you’re setting up a wave to plan a trip […] with your friends, in which case ads for cheap flights and hotels are relevant.

Intent is the reason why nobody clicks on ads in social networks but they do in search engines. A semantic engine would know that 99% of the times you’re waving an ad would be irrelevant at best. So 99% of the time people wouldn’t see ads at all. Wave, Inc. might set this up on their own servers and allow others to set it up on theirs under a rev[enue]-share agreement.

Over the long term, Wave, Inc might also open an ad network […]. This would be good for consumers since they would get few ads, and only relevant ones, good for advertisers since they’d get high clickthrough, and good for Wave, Inc, since they’d have a high quality, expensive inventory. This might be the thing that makes online ads something other than punishment for using stuff for free, but actually something useful and exciting.

Problem: semantic technology is still inchoate and execution would have to be flawless for people not to find it annoying and/or creepy.

Read that 2nd to last sentence in bold again. Therein lies the crux of the failure of online advertisement in most areas other than search ads.

For more proof of how badly current ad models are failing, witness the stats that MediaPost Publications just posted in ComScore: Most Clicks Come From ‘Natural Born Clickers’ 10/02/2009:

Indeed, the number of people who click on display ads in a month has fallen, from 32% of Web users in July 2007 to only 16% in March 2009. Worse still, an even smaller core of consumers — representing just 8% of the Internet user base — accounts for the vast majority, or 85%, of all clicks.

Now while the strong "few users generate most clicks" imbalance is predicted by the 80/20 Principle, the reduction BY HALF in less than two years is indeed stunning, and cannot likely  be explained away with the recessionary economic background alone.

It is far more likely that users have systematically trained themselves to mistrust and hence to simply ignore online ads altogether (other than MAYBE search ads).

The situation of internet users ignoring internet ads is apparently becoming so dire, that comScore et al. are beginning to sound like TV advertising execs in their pitch to ignore the bad news (from the same post):

"Marketers who attempt to optimize their advertising campaigns solely around the click are assigning no value to the 84 percent of Internet users who don’t click on an ad," said Linda Anderson, comScore VP of marketing solutions and author of the "Natural Born Clickers" study. "That’s precisely the wrong thing to do."

Rather, as comScore research has shown, marketers need to embrace the fact that non-clicked ads can also have a significant impact on consumers.

Basically, the argument goes: Ignore the fact that no one is clicking your ads anymore, those ads are still somehow reaching consumers on a subconscious level, and will (magically) continue to build your brand (and ultimately sell your stuff) that way.

When the Internet guys are telling you to forget "measurable" and instead extol the virtues of Madison Avenue-style image advertising, you know something is afoot.

Now it is fair to point out that people do in fact retain contents that they saw even if the "seeing" never reached the level of top level consciousness. As such, in a recession, one might argue that there could be value in a company advertising simply to "ping" the consumer in a "we’re still here" sense? (Especially if the collapsing ad rates make it cheaper than ever to do so…)

But now remember the phrase from the first quote: "…the thing that makes online ads something other than punishment for using stuff for free". Then think about how sure anyone could be that their mere ad presence actually engenders much love from anyone at this point.

Rather than ask themselves the hard question on how to finally make online ads work, online ad stake-holders give you evasive platitudes. That’s simply not enough.

5 Marketing Tricks Courtesy Of Those Annoying Video Professor Commercials

There is almost no way that you haven’t seen them. Those mildly annoying commercials featuring the "Video Professor", touting his "educational" wares (they are on seemingly most TV channels dozens of times a day).

And while he’s been around for years, lately his ad, centering on a "How to Sell on eBay" course CD that he wants to send you, for FREE no less, has been particularly obnoxious, I mean, persistent…

So what could you possibly have to gain from taking a closer look at it?

Actually, a number of extremely valuable marketing tactics:

1) To start with, the mere fact that the guy has been around for as long as he has, and that his latest offering has been running for something like 9 months straight in a down economy, should tell you something: It should tell you that the ad is profitable. No one can afford to run a paid TV ad for long if the math doesn’t add up.

Lesson: Study ads (in any medium) that repeat unchanged week after week, month after month, year after year. They must be getting "it" right (product, offer, sales copy, etc.).

2) Now point 1) is doubly important because he is, as we already said, giving the eBay course away for free (plus "a small shipping & handling"). He is "Moving The Freeline" as StomperNet’s Brad Fallon would call it. Which must mean that the ad is effective by way of THE BACKEND sales, just as he actually states in the ad:

Enough people take him up on the free offer, and then later buy additional courses from him ("you’ll be SO satisfied, that you’ll come back for all your computer learning needs…"), that the ads are then profitable.

This is called "Lifetime Value of Customer". As long as it is higher than the cost of the TV advertisements (or your medium of choice) plus product, fulfillment, and overhead costs, you can make a profit. Bingo.

Lesson: "Move The Freeline" on the front end offer to get many more prospects into your sales funnel, then focus on the backend for your profit. It is MUCH easier to sell to an existing customer (even if all they have ever paid you is a "small shipping & handling"), than to convince someone from scratch.

3) The Video Professor’s forthright explanation for why he can afford to give the "lesson on eBay" away is the perfect execution of a so-called "reason why". You have to give people a good reason why you would either discount or give something away, lest they become suspicious, of either your motives, or of the quality of the product, etc.

His simple, colloquial "backend profits" explanation satisfies the viewer’s need for a reason why. And it’s actually quite elegant this way, though other reasons might have worked as well to some degree.

Lesson: ALWAYS give a "reason why". ANY reason is better than no reason. It’s simply how our brains are wired.

(In experiments, researchers have found that even a circular formulation such as "I need to make a copy because I need to make a copy" got better response/compliance from test subjects asked to let someone skip ahead of them in a copier line, than when there was no "reason why" clause in the request at all!)

4) Given that the eBay course is free…

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