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.

.

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? …

…Because just like the devices it is shown on, much of that content is becoming commoditized.

There is an over-abundance of it, and certainly no scarcity at all. If the supply is going to infinity, and the demand is finite due to people’s limited amounts of attention, then the price is by necessity going toward Zero.

Now contrast this with the way that Old Media publishers have been trying to put the genie back in the bottle, and start charging for their content again, with so-called Pay Walls and other ill-conceived schemes.

Contrast it with Microsoft, which, when announcing the finally updated version of its mobile OS, made it clear that it intends to charge a licensing fee to handset makers, even though its market share in mobile has been languishing around 10%, and Google is giving away its Android mobile OS for free. All while Apple has built up a huge lead with its iPhone in the smart phone segment.

Silicon Alley Insider correctly points out that Microsoft’s stubbornness on this point is illogical, because even under the most optimistic scenarios, Windows Phone 7 won’t hardly be noticeable on their bottom line. It is however setting it up for failure in the race for market share and resulting mind share.

Microsoft’s question should be: How can we maximize our share of the attention pie for our mobile OS ecosystem? How can we catch, or better yet outflank, the iPhone?

Similarly, Old Media companies should be asking: How can we maximize our share of the attention pie for our news, opinion, and other content ecosystem?

Anything else is folly at this point. Once you have the attention, there WILL be opportunities to monetize, simply by virtue of people being in your ecosystem. Compare how street vendors benefit from people simply being at an event.

But you cannot choke off the oxygen and lifeblood of your ecosystem with Pay Walls, and other walls and barriers of any kind at the ENTRY point. If next to no one lives in your ecosystem, you won’t be selling very much to anyone.

And remember: The first sale is always the hardest. Why not make it much easier, and make the first sale…well…FREE. Someone taking your free offer still constitutes a sale, because they paid you with their valuable attention (time and energy).

Even better, PAY THEM to “buy” from you in the first transaction, as Larry Page has demonstrated with the Nexus One give-aways. Those cost real money, and yet it is still in Googles interest to be giving many more away.

Notice what Google has been doing all along, they have been giving away free copies of a lot more than just digital content (actually Google doesn’t create content at all): Google applications of all stripes and colors, including Gmail, Google “office” apps, Google Maps, Google RSS Reader, etc. etc.

Why? Because it keeps you on Google’s platform for a little longer, so that they might have SOME influence over what you are shown in terms of advertisements, and other offers that go along with the ecosystem.

Notice the deep misunderstanding by the parade of other companies, especially news and other Old Media companies, that have recently been trying to crucify Google over spreading their content through their search engine without reimbursement, not understanding that that content is typically lowest on the totem pole of usefulness:

The New York Times for example is still dreaming about charging for their news content, when it has about a 6 hour half-life (that’s why it’s called “old news”). Compare that to Google giving away productivity apps that can be useful to you for months and years.

What’s  your take away: Massively Move The Freeline, so that you may even have an ecosystem in which to sell anything.

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.

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…

… (plus S&H, which by the way likely covers his full shipping AND production cost), and given that the guy says he would even refund the S&H in case you weren’t satisfied, full "risk reversal" is achieved. He even appeals to you outright: "What have you got to lose?".

The only thing you put at risk is your time, plus the fact that he (and most other marketers) know and bank on the fact that most people never bother to return something, even if they are unsatisfied. It’s just not worth it to them to jump through a few hoops to get their $7.95 back.

In fact, it’s been shown that the longer a money back guarantee is set for, the lower the return/refund rate gets. People just put it off, and then forget completely. Counter-intuitive, but true nonetheless.

Lesson: Always use risk reversal, and offer the most generous guarantee terms you can conceive of.

5) Last but not least, there is a very clever copy-writing device built into the ad. The Video Professor says something like: "Now I’m not going to tell you that I’m going to make you the next MILLIONAIRE, selling an attic full of baseball cards…".

This is what I call a reverse income claim. Look what happened here: An actual income claim is illegal to make in just about all circumstances. But no one says anything if you put the little word "not" in front of it.

However it so happens that your Unconscious Mind, the ultimate seat of your emotions and motivational energies, does not deal in what could be considered higher-order logical functions such as a "not" – negation.

Try it out. See what happens if I say to you: "Don’t think of a blue tree."

In all likelihood you just pictured a blue tree in your mind’s eye, and then said to yourself "not". The Unconscious interprets everything directly first, and the Conscious Mind may then perform some of its more adult logic on it after the fact.

So in essence the guy just put the idea of "making you a millionaire" into your head in this subtle way. And while you may consciously dismiss this, it is however likely to unconsciously increase your desire to try/buy the product. (Your Conscious Mind may actually create a set of more logical reasons to rationalize your decision to buy that was made at the unconscious level.)

Lesson: Be aware of reverse income claims when marketed to. If you decide to use them for your own marketing, be careful, as you may be treading on thin ice ethics-wise. Keep it reasonable.

So let’s stitch this post up: "Now I’m not going to tell you that you’re going to be the next marketing genius by applying these 5 tricks… but I can promise that if you do, your marketing will very likely be more profitable. Results not typical. Some restrictions may apply. Void where prohibited…" :)

Comment below if you enjoyed these tricks, or if you’ve noticed any other marketing elements in the Video Professor ads.

Best wishes and happy marketing

- Alex Schleber

While the competition is fun to follow, especially if your favorite team or alma mater is still in the running, I’d like to draw your attention to some factors in play, hidden in plain sight if you will, that add to the excitement:

While there are countless multi-round tournaments in any number of sports, only the NCAA has evolved a truly outstanding "portfolio" of brand names surrounding the tournamant and its stages, each of which make use of the principles of good brand names (first discussed here), foremost of the principle of "rhythm, rhyme, and speakability" including by way of alliteration:

First there is the already mentioned "March Madness" to describe the entire procedure. Then there are the named tournament rounds, the "Sweet Sixteen" (what is sometimes called a 1/8 final), the "Elite Eight" quarter-final, and the lastly the "Final Four" semi-final.

Note that in large part due to the alliterations, the NCAA terms roll of the tongue much more so than the traditional, generic terms.

Now you may be saying, "why does this matter so much, I don’t even care about basketball…"

It matters because enjoyment derived from saying a brand name is a strong predictor of the both the viral success as well as the depth of imprint in the consumer’s mental real estate of that name. Making it enjoyable to repeat, to say or think more often, will accelerate the spread of a meme through a population, and embed it more thoroughly in the individual.

Rhythm and rhyme, including alliteration (which you could see as a form of front-loaded rhyme), are pleasant and also more memorable to our unconscious minds (that is the reason why you still remember most advertising jingles to this day).

It doesn’t hurt that each NCAA "brand name" is reasonably short, while also still being sufficiently descriptive/evocative of the things they are referring to.

In fact, they even take out some of the complexity of having to think of the somewhat confusing traditional "quarter-final", asf. terminology (number of teams left devided by 2), in favor of simply counting the number of teams still in the tournament. Simplicity is typically good. Simplicity wins.

Yet none of the names are too generic to hurt differentiation in your mental real estate. And they all are easily understood, requiring no spelling out (unlike this massive brand name failure). But the alliterations providing a certain rhythm and rhyme are ultimately the most important drivers in this case.

The end result is, more people talk about March Madness and its rounds, more often.

It is very likely that you were already familiar with these NCAA Tournament "brand names" EVEN IF you’re not particularly following basketball. Now that’s strong branding. You would do well to apply these powerful principles to your own brand naming.

If you can’t get all of them lined up for a given name, apply as many as you can. One thing we do know is, "March Madness" is a winner…

In the lengthy post he argues his "basic premise [...] that the internet is not replacing advertising but shattering it", which due to its sweeping nature definitely warrants further examination. The post as of right now has generated well over 200 comments, on a Sunday, so it obviously hit a nerve.

Among other things, Professor Clemons makes the following points about advertising both online or via traditional broadcast media:

Consumers do not trust advertising. Dan Ariely has demonstrated that messages attributed to a commercial source have much lower credibility and much lower impact on the perception of product quality than the same message attributed to a rating service. Forrester Research has completed studies that show that advertising and company sponsored blogs are the least-trusted source of information on products and services, while recommendations from friends and online reviews from customers are the highest.

Consumers do not want to view advertising. Think of watching network TV news and remember that the commercials on all the major networks are as closely synchronized as possible.  Why?  If network executives believed we all wanted to see the ads they would be staggered, so that users could channel surf to view the ads; ads are synchronized so that users cannot channel surf to avoid the ads.

And mostly consumers do not need advertising. My own research suggests that consumers behave as if they get much of their information about product offerings from the internet, through independent professional rating sites like dpreview.com or community content rating services like Ratebeer.com or TripAdvisor.

While I would agree with all three points made, and would count them among important caveats for anyone choosing to advertise for anything in this day and age, I disagree with Professor Clemons’ basic premise. Here’s why:

I would argue that none of the major "Old Media" players online (or for that matter none of the "New Media" either) are anywhere close to having efficiently monetized their page views. Everyone is still clumsily fumbling around when it comes to intelligent targeting of ads, both as to offer theme, as well as to offer pricing.

(Or rather mostly lack thereof, as when trying to employ Madison Avenue "image advertising" without any clear offer being made. Which, if it ever worked on TV, etc., certainly isn’t working online. In fact, online it may increasingly create a negative image of a company/brand/product as "someone" who just doesn’t get it).

This is astonishing, when all it really takes is some common sense about selling people stuff that makes sense in the CONTEXT of what they were already doing.

First, let’s get clear on the fact that an article or opinion piece in e.g. the New York Times provides a lot more pointers as to readers’ state of mind/interest than most Google queries ever could (as do Web videos posted on such sites), so the failure to target properly is in part simply a form of laziness.

While it is true that a news reader does come with, on average, less intent to buy anything compared to the problem/solution mindset of many search engine users, the data we can glean from the readers of an article, especially the LONGER they stay on that page reading, is much richer.

They must be interested in the subject matter of the article, and will tend to approve of the author and likely his general area of expertise. They will also be in a news or opinion mode depending on the piece. So what you should offer them in this case is more news or opinions RELEVANT to the topic at hand. Make the information offered exclusive and/or in-depth, and make the offer cheap enough to ideally keep it in the range of an impulse purchase (offer a Paypal option to keep things simple and secure in the reader’s mind).

For example, German Newsmag DER SPIEGEL was selling in depth dossiers from their archives (including PRE internet!) for a few bucks at one point, not sure if they still are.

Sell books (more INFORMATION) related to the topic at hand, in fact, some newspapers ought to be able to do OK just as an Amazon super-affiliate (earning 4% or more on the referral to book or similar pages on Amazon). Especially when compared to the poorly/non-targeted ads they are now showing, e.g. I saw a comparative car insurance ad placed against a financial opinion column. That connection can only be called tenuous at best.

For another example, just earlier today I viewed a video excerpt from the Today Show on MSNBC.com about micro-blogging service Twitter going mainstream, and they served up an ad for KRAFT dressing or something like that as a pre-roll ad. Completely pointless and a waste of my time and theirs, but in reality this kind of thing is still totally common, on MSNBC.com, Hulu.com, etc. Everywhere.

Basically on all Web properties of Old Media companies (and most New Media companies for that matter). It is still the standard handed down from pre-internet TV advertising days. It’s as if content awareness and keyword-based targeting had never been invented yet…

What if they had served a super short pre-roll ad that said: "Stay tuned after the end of the video, we’ve got a major surprise relating to Twitter for you", and then in a post-roll ad try to sell me something related to Twitter, social media, smart phones (to post to social media from my phone), etc. etc.

That would make at least some marginal sense. Getting me to opt in to a list by offering a free useful/in-depth report e.g. on how Social Media is changing the world, and then try to sell me off of there would be even smarter. Remember, it’s difficult to go "from Zero to Sale" in one step, especially if the price point is outside of "impulse purchase" range.

Or better yet the ad could attempt to hand me off to the account/profile for KRAFT foods on Twitter in order for me to connect there, maybe offering a special gift/incentive for doing so. You get the point, the only limit here is your imagination guided by basic common sense and direct-response principles.

By the way, if you’re not capturing prospects’ email addresses and then marketing to that list, you are making the biggest mistake of all. Back to the opinion piece/columnist example, they should all have big, fat lists ranging in the 100’s of thousands if not millions of subscribers (and the NYT in this example could retain an "ever-green backend" commission from the columnist on any follow-up sales via such a list being built for the columnist).

Also, there should ALWAYS be a big bright ad for the columnist’s current book placed for crying out loud, and if you’re really smart you’d switch that ad out every 20 seconds or so (motion drives attention) to an offer for… the audio-book version, earlier books, "Columnist XYZ sayz…" quote mugs, T-shirts, etc. etc.

Anything will be better than what they are doing now. It bears repeating: All it takes is some common sense about selling people stuff that makes sense in the CONTEXT of what they were already doing.

The bottom line is, any online content property like the NYT simply needs to do a lot more with all of the attention that it already has. In an information economy, attention is the only scarce resource. And they happen to already have plenty of that very resource. It is a CRIME to fail to monetize it efficiently.

To bring it all the way back to Professor Clemons’ post, while I will agree that advertising may currently be largely failing online, in my view this is due not to some basic law of the internet (because there is a good number of people successfully marketing online), but to the fact that it mostly hasn’t even been TRIED, in any intelligent reading of that word, by the usual suspects of major media.