Mindsoul’s Weblog

April 20, 2008

Marketing Revolution

Marketing Revolution

Few days ago I listened to a live talk by the amazing Seth Godin over a conference call created by Edith Yeung and her wonderful site San Francisco Entrepreneur . Seth talked for about 45 minutes in reference to his new book Meatball Sundae, followed by few minutes of Q/A. The talk was absolutely fascinating to me. In that relatively short talk, Seth made it clear why we’re right now at the start of a new revolution similar in caliber to the previous handful of magnum revolutions triggered by for example invention of the steam engine, or electricity, and the like.

The following is from the notes I took during that talk. I want to share them with you and perhaps you’ll get a sense of why I felt Seth Godin‘s views are so incredibly compelling and significant. In a way, he described a new industrial paradigm that is upon us like a tsunami weather we like it or not. I feel he showed a new paradigm of business and marketing that is certainly a natural evolutionary future to the era that coming to a close. The rest of this article I am writing here is all my note of what Seth Godin covered.

Seth said right now we’re at the start of this new revolution. And at the start, things look very different than later on when the dust has settled. For example at the start of the auto industry, there were 2300 car companies, and Ford was just one of them.

What happens in a revolution and what are the elements of this new one? Consider this in a factory: In a factory, from the beginning of invention of factories, factory is laid out in a straight line. That is because when steam or propulsion was invented, they build one engine in one end of factory, that engine turns a shaft, and that engine that powered the shaft, powered all the rest of the equipment in the factory, like lathes, etc. Interesting, still factories are made same way.

Seth then went to talk about how most people have grown up with the television. And anyone or company with money could interrupt anyone else with TV ads, mailer ads, news paper ads, etc. For example Charles Revson has a little cosmetic company called Revlon and in 1947, he buys TV ads, those ads get him some distribution, which helps him sell more stuff, then buys more ads, and sells more products. Or another example is say Cisco builds products, hires sales people, sells products, makes money and hires more sales people and sells more products.

Model was the same, use media, location, to interrupt people, make enough money for those interruptions, to interrupt more people.

Well if you interrupt a lot of people and sell a lot of products, you need things that more and more people want. Meaning you need average stuff for avg people. Six Sigma, on time, as everyone expected. This model is organized around mass media, like how the factories were organized around the main drive shaft of the. Seth said this is what he calls a meatball, hence his new book title Meatball Sundae.

The revolution we’re at the beginning of is, similar to that TV engine. The interruption model, average products for average people is now broken. For example direct mail used to get 1% result and that was a very good result. No longer direct mail gets even that 1% result as people mostly throw away their junk mail. TV ads are broken also. Not one new consumer brand has been made from scratch from TV ads, in past few years. No new brand is now built on backbone of TV.

Go back 100 years before, Josiah Wedgwood, Charles Darwin‘s grandfather, was a potter. At the time that people were poor. He saw changes like shift in way things can be made or marketed. He used it as opportunity to reinvent what it is like to be in business: marketing, sales based on commission, showrooms, etc. His brother ended up dying poor, never made a living. Josiah died with $42M in the bank (more money relative to what Bill Gates has now).

The point is if you see a revolution, you have obligation to rapidly take advantage of it rather than denying it or trying to ‘fix’ it. Not asking you to change your marketing, but to change your meatballs. If you want to play in the new world, don’t bring your meatballs.

An example is Gillette (an example of a traditional industrial process company ) has no right to my attention in this new world. My attention too precious. Gillette has to make a choice to go with the trend or accept they are not going to take advantage of this. Now don’t we deserve of our fair share of success in this new revolution?

Some trends about this new paradigm in marketing are shown below. Businesses can either embrace some and change what they do all day, or go back to what they are doing, not both. We can’t say, go to Coca Cola’s Facebook. This is not about new tactics to do the old things. It is about a new way of doing business.

New Trends:

1 ) New media allows everyone that makes something to establish direct connection with people who used it. No middle man. People who are middlemen will have a tough time. An example of this new trend is sonos.com that sells $1000 device that makes music in every room in your house, replaces $50,000 device sold by a custom installer. A custom installer will never be able to catch up to Sonos products. If interaction with consumer can be profitable to you, you can build a whole business on that. For example book publishers have no idea who buys their books. But magazines do. Knowing who your users are changes things.

2 ) Every single person you will interact with is a loud mouth critic, front page reviewer for New York Times. No difference. All customers are equally capable of amplifying good news or bad news. They have ability to tell lots of people lots of things. Idea that every consumer is powerful, gives you new found strength. littlemismatch.com sells socks that don’t match. They understood 12 year old girls have sock problem. They organized their company arround the spread of the idea. These are all marketing decisions.

3 ) Telling stories. You used to be able to control how you talk about your product. One minute on TV, etc. Now it is noisy, 500 friends on Facebook, etc. You don’t have time to go deep to look at spec sheets. We rely on shortcuts: stories, what people tell and believe. You need to tell a story. That story needs to be true. Can’t defraud people.

4 ) Speed: Certainly changed the way lot of business was done, like Fedex. Amazon compounded it with one click shopping. I want all items to line up by price and popularity. New need for speed. Not hurrying up. Reorganizing. That you’re so much faster than everyone else. A difference between businesses that can organize around the speed and ones that can’t.

5 ) Long tail. Power law curve. In old days there was a limited shelf space. There was a limited spectrum. We saw ‘top 40s’ or hot products and the like, because there was no room for more. Long tail said people can pick what they want. Half of all movie rentals or movies sold on the web are what blockbuster doesn’t even carry. Sames applies to everything, cars, consulting services, insurance, etc.

6 ) Outsourcing: competitive speed advantage. In the past owning the factory gave you control, security, confidence. But now not owning the factory gives you ability to switch on a dime. And example is the trend now of outsourcing programmers to different countries.

7 ) Dicing the world to tiny little bits. This is represented by Google. Google means you don’t get to decide where you put your stuff. Tt teaches us that you no longer have the power to control any interaction.

8 ) Number of infinite media channels: Every Google search is a media channel. Every blog is a media channel. What media channel I can build a business around is the question. If you can find a media channel that matches what you have to offer, you win. First you find the channel, then the business.

9 ) People to people: examples are Kiva, Paypal. You win by enabling connections between one person and another. This is new the school. What businesses like to give, is relationship between them and individuals. Yet Kiva creates ability for person A to connect with person B directly.

10 ) Who and how many: Too many people focuse on ‘how many’, like how many hits or new users come to the site. But key question is how many influentical people are accessing the site. If there are 12 people reading this but those people are influential, thats advantageous. Maybe you don’t care how many people visit your site who also read what is new with Paris Hilton.

11 ) Gatekeepers. Editor of newspapper has power to ignore a story. It matter what type of Public Relations firm you hired to get access to the media. But gatekeepers are going away. They are replaced by leaders. Leaders are like a head of tribe. Bunch of people are following them. Any one can be a leader where people enjoy following him or her.

12 ) Sinefeld curve: Its is like an upsidedown bell curve. On the bulge of the curve, there is danger. All the way on left is scaricity, other end is ubiquity. In middle is where no one wins, its not rare enough to be scarce or ubiquitious. You need to be in one end or other, everywhere or nowhere. People pay for things that are scarce.

Before and After: which side of line are you betting on:

1 ) Limited number of media outlets vs. infinite number of media outlets

2 ) Limited physical retail outlets vs. countless online retail

3 ) Emphasis on horizontal, vs. vertical success niches

4 ) Marketer to consumer communication vs. consumer to consumer communication

5 ) Barriers between consumers and makers, vs. permeability between consumers and makers

6 ) Spam vs. permission

7 ) Limited by factory owned, vs. outsourced, limited by imagination

8 ) Long product cycles vs. fads

9 ) Market share vs. fashion

10 ) Features vs. stories

11 ) Organization that has advertisings as major expense vs. innovation as its major expense

12 ) Mind set of large overhead is same as stability vs. small overhead is equal to low risk

13 ) Customer support vs. community support

14 ) Focus groups vs. launch and learn

Seth said one of his favorite companies is 37signals.com. It is fasterst growing most beloved software development company selling business to business products in a whole new way. They do blogs written by people that actually run the company. They interact with people who read the blogs. They build the products based on consumer interaction and feedback vs. what focus group tells them to. They make what they love instead of what a consultant tell them to build. They’ve written a book and given it away for free online, and they sold more copies of that book in PDF, more than anyone else. If you look at how you can build an entire organization around a bet on a new revolution, this is one of many examples.

Q/A part:

1 ) More you do for people you’re trying to help, better you do

2 ) No way its not always possible for organization to change fundamentally to make best use of new marketing. E.g, Rolls Royce kept building cars by hand for 70 years long after everyone else switched to factory assembly line. But you gotta pick, plenty of room for meatball companies. You need to decide as individual what organization you need to work for and which kind you want to run.most talented, hungriest, fastest moving, are going to be the ones leaving first, and I think leaving first is better than leaving last.

3 ) Permission marketing vs. new way shown in Meatball Sundae? Answer: Measure! If you measure how many people have given you permission, measure how deep the permission is, ff you keep track of the open emails you’ve sent, then everything will improve. What you measure determines what you get.

4 ) How new marketing impact non profit space, constituents other than customers. Lots of non profits moved donation process online and realized what was not the answer. Reason people give money to non typical profit is complicated, no magic bullet found to repeating this online, need to find it. Internet and social networking makes it easier for non profits to deal with people they are helping. E.g. story of what happens when you take 3 kids in poorest part of India and give them computer with Internet access and with Wikipedia, and within days they are teaching themselves English, and within weeks they are far better off intellectually, emotionally, and in terms of professional opportunities, than they were before.

5 ) Without interruption media, how can you get people attention in the first place if you have something to offer? It starts with geeks and nerds, they are looking for you, looking for things that answers the questions. For example If you write a brilliant book on Civil War, there are people that are looking for it and will find you. But too often people use the ‘how people can find the product’ as an excuse to spam the world, and if that is what you need in order to get the word out, you should make a different product.

6 ) Seth started Squidoo with a small number of people, to raise money for charity, and also for a place for individuals and small businesses to spread the word about something they cared about. An example Kate started a page on Squidoo about laptop bags, which is now the number one page on the Internet if you search for laptop bags. I’ve gotten email from laptop bag companies that say they get 35% of all their revenue from this one page that is being featured by this one woman. Its good for Kate, laptop companies, charities we support, ec. There are 475,000 pages on Squidoo, there is a new kind of ecosystem, a sophisticated platform to use to spread the word.

Challenge, is not to say should I have a Squidoo page, or Facebook page, or Hugpages page, challenge is how do I do all of these things so that I can find the group of people who are looking for me, how do I give a consistent story and spread a message by helping people find the information they are looking for as opposed to going on an endless ego-driven parade of me me me me talking about why they should buy from me.

7 ) What is your advice for people who’s career was build on interruption media marketing, how we take our expertise and make it work in new resolutions? People that work in traditional media are really good in telling stories. For example if I ran an ad agency, I’ll go to my client and say we gotta stop interrupting people and we gotta start making stuff people want to talk about. Let us sit with the engineers, customer service people, with product designers… let us invent products that people want to talk about. Apple didnhyped the iPhone, other people hyped the iPhone, they hyped it because it was a product worth talking about. Someone needs to design the iPhone of every category, the iPhone of car insurnace, of talent representation, of conference, etc. And who better to do that than people who have gotten so good at connecting to people telling their stories. Seth believes that is a huge opportunity.

8 ) If you have us with one idea to ponder after this call, what would it be? It would be to Stop Pondering, START! Start now, just go. Seth gave an example that Edith didn’t come a large organization, Edith is not backed by some giant monolithic corporation, but every 1000 people on this conference call has interacted with Edith. Edith has figured out how to find a tribe of people, connect them to each other, build a business on the back of helping people accomplish what they are trying to accomplish. And the thing is if Edith can do it in that space, there is another million spaces that need it done, and there’s another million categories that people are waiting for someone to step up and say yeah I can do that. And the amazing amazing thing that is going on right now, is that, you don’t need to pay money to a TV station, don’t need to pay money to Google to get listed…. all you need to do is to START!


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