Issue: The current debate over FREE ignores the one thing that is priceless: TIME
Commentary by: David Vinjamuri

The online marketing community is caught in a kerfuffle over Chris Anderson’s new book FREE: The Future of a Radical Price.  Malcolm Gladwell fired a salvo from The New Yorker and Seth Godin jumped in to defend Anderson.  Even John Gapper of the Financial Times has entered the fray, with a spirited interactive book review of FREE.

Anderson, in a straightforward extension of his thinking in The Long Tail, argues that with distribution costs declining radically (and marginal distribution costs on the Internet approaching zero), content wants to be free.  He points out that Free is a powerful concept, much more appealing than ‘cheap’.  As marketers have known for years, an offer of something for ‘Free’ fundamentally alters consumer psychology and decision-making.  He suggests that content should be free, that newspapers, record labels and other content providers should just get over it and find other ways to make money.

Gladwell makes a solid economic argument that content is not free, it’s almost free.  And that the only thing really approaching zero is marginal cost.  An airline might be able to put you in a seat for almost nothing, but someone still has to pay for the plane, just as someone still has to pay for all that bandwidth and infrastructure.

Godin makes the argument that Free is already here and that it’s good because it democratizes marketing and allows everyone to play.

Nobody, however, seems to consider the implication of all of this free stuff.  It is consuming the most precious resource in human history: Time.
For Anderson, Godin and perhaps even Gladwell, the Internet and all of the Free stuff is a goldmine.  As writers, they can spend their time panning the streams until they sift out enough precious dust to sate themselves.

For the rest of us, the new media world is rapidly giving us a headache.

Ask yourself the question, why do brands exist at all?  Because consumers are willing to trade something they make more of (money) for something they can’t (time).  Brands save us from the paralyzing indecision that we’d have every time we stood in front of a hundred kinds of toothpaste, or forty kinds of brown bread.

Yes, that’s right, we’re willing to pay more money for brands we know so we don’t have to spend Time deciding what’s good.

The fundamental problem with this world that we’re finding ourselves in is that consumers and marketers alike find ourselves drowning in free information.  It’s great that it’s free.  But we now spend more time than ever sorting and choosing and less time consuming.

The argument doesn’t matter, of course.  Godin correctly points out that what is happening will happen.  But the thought that newspapers will go away and their place will be taken forever by unpaid bloggers seems unlikely.  All of the good blog models on the Internet rely on people contributing ideas cheaply or for nothing.  Advertising hasn’t paid the freight for anyone.

So when this phase is done, when we no longer feel obligated to sort through 1000 meaningless, self-promotional Tweets on Twitter to get a good idea, what will exist?  Probably some big brands that charge us for stuff we all like and some small brands that charge some of us for stuff a few of us love.  And yes, some free stuff, too.

Of course it’s ironic that the one thing that’s clearly not FREE among all of this noise is Chris Anderson’s book.  That still costs $17.91.  To be fair, Anderson has said that Hyperion is going to let him make the book available for FREE online, but he can’t tell us just how.  We’re guessing that it will take us some time to figure that out.

Issue: What is the Brand Promise of Reality TV?
Commentary by: David Vinjamuri

The current fifth season of the reality show “Jon & Kate Plus 8” is the most popular in the show’s history, with the premier show drawing nearly 10 million viewers.  Part of the reason for the audience growth this season has been the marital troubles of Jon & Kate Gosselin, which came to a head as the couple filed for divorce on June 23rd.

One news item that followed this announcement begs a brand question: Kate claims in her divorce filing to have been separated from John for two years.   Initially the separation appears to have been limited to Jon moving to a room above the garage.  Now the couple has separated completely.  Other sources claim that the separation is “legal mumbo jumbo” and that the physical separation occurred just a week ago.  Whatever the truth, one fact is clear - the couple has had significant marital issues for much longer than they’d acknowledged.

Which brings us to the central brand question here: what is the brand promise of reality TV?  Is it to be real and honest?  Certainly a show on TLC (which was once The Learning Channel) would want to accurately represent the subjects.  And while Jon & Kate Plus 8 undoubtedly focuses on the kids, a primary reason many people watch it is to answer the basic question: how do you hold your marriage together with that many kids?

So the brand promise must be to honestly depict a family, with all of its flaws and foibles.  And by hiding that truth, for weeks or months, Jon & Kate Plus 8 let down its faithful brand advocates.  Which reveals an inherent problem with the reality genre.  Jon & Kate may have been doing the best thing for their family in trying to hide or at least minimize their marital problems.  But it was the wrong thing for the brand.  That is a difficult way to live.

Issue: The Word of Mouth Marketing Association (WOMMA) cozies up to IZEA - the former PayPerPost
Commentary by: David Vinjamuri

David Gelles reports today in The Financial Times that IZEA, the former PayPerPost will be a sponsor of the upcoming Word of Mouth Marketing Association (WOMMA) event WOMM-U in Miami.  WOMMA is an industry association that has created an ethical code that members abide by.

IZEA is the current incarnation of PayPerPost - service that allows companies to pay bloggers to write favorable reviews (paid advertising, essentially) of their products.  Current IZEA customers include K-Mart, Air New Zealand, Universal Music Group and the resort chain Beaches.

The paid blog posts are very similar to advertorials.  The difference is that these blog posts are not labeled as advertising. This violates WOMMA guidelines and is still roundly condemned by influential bloggers.

The surprise here is that WOMMA would accept IZEA as a sponsor.  As Gelles writes: “This is a bit like if McDonald’s were to sponsor a PETA convention.”

The brand question for WOMMA as well as IZEA customers like K-Mart and Universal Music Group is simple: what is the effect of insincere praise on sincere brands?

While consumers may stumble across these sponsored blogs in search (although Google has downgraded their page ranks), and consumers may make purchase decisions based on these reviews, the practice is built on a foundation of sand.  The moment the underlying motive for the recommendation is revealed - money - the negatives for the brand soar.  Advertising if done well can be effective and word-of-mouth marketing is ideal.  Masquerading advertising as word-of-mouth is worse than unethical, however.  It is a fundamental betrayal of the trust that is the primary driver of the relationship between the brand and the consumer.

And not surprisingly, there’s also the chance for brands using these unethical techniques, like K-Mart and Beaches to get negative PR attention by being outed in places like The Financial Times and this advertising blog.

AN AFTERNOTE:

Ted Murphy of IZEA writes the following in the comments on the FT article (addressed to David Gelles):

1. David,
I am the first person to admit that we made some initial mistakes with PayPerPost at launch. When we created the sponsored conversation industry there were no standards. We have had to make adjustments along the way and have since created the standards by which our properties currently operate.

While we have created our own standards I would actually argue that there are still no Internet-wide standards. WOMMA has done a great job creating guidelines and an ethical code, however that code is interpreted very broadly and the member base is relatively small. There is no universal form of disclosure among word of mouth marketers, not to mention online marketers and affiliate marketers.

We have taken it upon ourselves to create what I believe is the highest standard of disclosure and transparency in online marketing. In addition to operating a completely open marketplace we insist that bloggers abide by our REAL Code of Ethics.

http://socialspark.com/code_of_ethics

No other WOMMA member that I am aware of has standardized, machine readable disclosure. Bloggers cannot submit a post for payment without having our standard disclosure badge included in their post.

I do not deny our fumbles of the past, but I feel it is important to recognize our current state of operation. We have come a long way and we continue to innovate. Look for another announcement around the disclosure topic at WOMMAU next week.

Ted Murphy
Founder / CEO of IZEA
Twitter : @tedmurphy

Our response is as follows:

Ted,

Disclosure, even machine-readable disclosure, is not an acceptable substitute for transparency. Blogs are by nature conversations, and the form has grown and been sustained by original, authentic voices. When consumers read blogs they have the reasonable expectation of reading the honest and unbiased opinion of the blogger. By adapting paid endorsement (i.e. advertising) to the blog format, you are using the form to deceive. A disclaimer at the bottom does not remove your responsibility to the consumer.

The ThirdWay Advertising Blog interviews World Wide Rave and New Rules of Marketing & PR author and social media expert David Meerman Scott:

So what are you doing six stories tall on the side of the NASDAQ building in Times Square in New York?
I was invited by GlobeNewswire as part of my World Wide Rave book launch to open the NASDAQ stock market in the first ever tweetup at a stock market opening. A tweetup is when people who know each other on Twitter meet in the real world.

Thirty people joined me on Monday morning March 30, 2009 at the NASDAQ MarketSite is located in Times Square, New York City. It was covered live on FOX Business News, CNBC, and other networks. I really appreciate everyone who took the time to participate with me. What a special morning.

In 140 characters or less -  Is Twitter actually useful for serious businesspeople?
Twitter is online conversation. Is conversation useful to businesspeople? Of course!

What social media tool do you see on the horizon as the potential Twitter of 2011?

The new social media tools that take off are those that provide a new and valuable way to communicate. LinkedIn, YouTube, Twitter, and Facebook are all examples of new ways for people to interact online. The next popular tool will not be a “me too” - it will be another service that allows us to communicate in a new way.

What are the simplest things that a brand manager can do to make his budget go further during a recession?

Realize that you can create valuable information online that people are eager to share for free. There is no cost to post a YouTube video, to distribute an ebook, to make a Twitter stream, to comment on a blog.

What was the most surprising story you heard while writing “World Wide Rave?”

I love the story of Lisa Genova. She’s the author of Still Alice and her manuscript was rejected by all the New York publishers so she self-published. As a result of her excellent blog and other social media initiatives, her book became a success and was acquired by a major publisher for a huge advance and the new edition debuted on the New York TImes bestseller list has been an international bestseller.

I love it. From rejection to bestseller all because of social media.

Tell us the best piece of marketing advice you’ve gotten from a non-marketer.

My father, a vice president of sales for technology companies, told me that if you are excellent public speaking, then you will always have a job.

If you became CMO of General Motors tomorrow what would you do differently?

I would immediately fire myself and name myself to a new position of “GM evangelist” and spend 100% of my time on social media and the speaking circuit.

What is one of your favorite small brands?

I really like GoPro - it’s a company that makes a camera that I use when I go surfing. http://www.goprocamera.com/

Your best travel tip?

Don’t stress. Relax. Read for pleasure. Chill.

What will the recession change permanently about branding?

There are better ways to get attention than buying it with advertising. You can earn it by creating valuable information that people want to share.

Brand: Amazon
Product: Kindle DX
Target: Students and Newspaper Readers
Rating: ***
Reviewer: David Vinjamuri

Description:
Amazon today launched the Kindle DX, a new eBook reader with a larger screen than the recently introduced Kindle 2.  The screen measures 8.5″ x 11″, the size of a sheet of ordinary notebook paper.  The device retails for $489 and appears initially to be targeted at students and newspaper readers.  Amazon has concluded deals with a number of textbook publishers as well as several universities including Case Western University, Pace, Princeton, Reed, Darden School at the University of Virginia, and Arizona State University.

What Works:
The Kindle DX will undoubtedly be revolutionary for students if textbook prices can be lowered enough to compensate for the cost of the device.  Parents and orthopedists will ultimately thank Amazon as younger children ultimately adopt the device and ditch absurdly heavy backpacks.

The bigger news about the Kindle DX is that it shows that there is still a slim chance that traditional newspapers might avoid extinction if they act quickly and decisively.  The availability of newspaper content for free on the Internet, the defection of classified advertising to Craig Newmark ’s brainchild craigslist as well as the increasing use of Google News and Google search by consumers to source news have combined to put newspapers in a dangerous state.  A number of smaller papers have closed and even giants like the New York Times show signs of weakness.

Large screen eBook readers like the Kindle DX show a possible path to salvation.  By eliminating the cost of printing and distribution and making the screen large enough to accomodate some advertising, the Kindle DX may persuade readers to subscribe to newspapers again.  Like the Kindle 2, the Kindle DX has a 3G wireless cell chip in it that allows newspapers and books to be downloaded immediately without connection to a computer.  The Kindle DX also has a more substantial web browser - presumably to allow the newspaper advertising to be more funtional for advertisers.

The concept is good.  This reviewer often reads the NY Times on the Kindle 2 long before he ventures to the lobby of his manhattan building to discover which creative new place the delivery company for the Wall Street Journal has deposited the paper.

What Doesn’t:

Amazon is not helping itself with the absurdly high price for the Kindle DX of $489.  This makes the Kindle DX more expensive than most netbook computers which allow readers to wirelessly read newspapers for free, as well as accomplishing other tasks the Kindle DX cannot do.  While this is also true of the Kindle 2, the Kindle 2’s size makes it feel more like the replacement for a paperback book.  Amazon may be able to achieve economies of scale for the Kindle DX simply by pursuing it as a textbook replacement, for which it is better suited at the pricepoint.  But it will not create a breakthrough for newspapers without a minimum 50% price drop.

Amazon also touted newspaper partnerships which would help subsidize the cost of the device with a long-term subscription.  This turns out to have been more wishful thinking than substance, as the New York Times announced these subsidies would only be available for rural readers who could not get home delivery.   This is really a missed opportunity for the newspaper industry which should be supporting these new devices in every way possible (free reader with three year subscription, anyone?).  Instead the New York Times continues on with the stone age marketing techniques that brought us the classic ploy of penetration pricing (offering new subscribers lower prices for a short time), thus assuring that the most loyal readers will be punished with the highest prices.  The Times business managers should peer from the top floor of their new building over to Sony-BMG and the ruins of the rest of the music industry to understand what happens when an industry fails to adapt its revenue model to technology.

Branding Bottom Line:
Amazon introduces an amazing innovation for the citizens of Monaco.

Issue: Disney Investment in Hulu brings ABC programming
Commentary by: David Vinjamuri

Today Walt Disney is reported to be taking an equity stake in Hulu under a deal that will bring ABC content like Lost and Desperate Housewives to Hulu.  In just over 24 months, Hulu has gone from being yet another silly startup funded by old media giants NBC (GE) and Fox (Newscorp) to the dominant long-form video destination on the web with ad revenue expected to surpass Youtube in 2009.

The formula to success however, has nothing to do with Web 2.0 wizardry.  Quite the opposite.  This advertising blog believes that Hulu is great because it’s brought the simplicity of the 1950’s to online video.  The magic formula has two parts:

1. Put everything in one place
2. Don’t overwhelm programming with advertising

Hulu defied corporate tradition by linking to content they did not carry.   If a prime-time television show could be found anywhere on the Internet, watching it was as simple as going to Hulu and searching, whether that landed you on Hulu or a media web site.  This probably seemed foolish to competitors at the time.  Why send customers away?  But it turned Hulu into the Google for long-form video content - the best, most relevant place to search and find television shows and movies.

The second part to Hulu’s success was dictated by the online environment, which is notoriously unfriendly to interruptive video advertising.  Consider two ways of watching an episode of FOX’s hit drama ‘House’.  Turn on FOX on a Monday night and you’ll get the full episode of House - 42 minutes - served up with 18 minutes of advertising.  On Hulu, watch the same episode with just five commercial breaks of thirty seconds each.

What’s not immediately obvious is that the second strategy works better - even before Hulu starts targeting the ads it shows based on your user profile.  Why?  Because you’re much more likely to watch a :30 second ad than a three-minute advertising pod.  In fact with DVR penetration increasing to record levels, it is becoming clearer that fewer and fewer television viewers are watching advertising at all.

Hulu is a great success, but the point here is that part of their magic formula is simple: they aren’t greedy.  If television networks hadn’t progressively crammed more and more commercials down viewer’s throats, we’d probably still be watching there, too.  Ask FRINGE …

Brand: Fiesta (Ford)
Execution: Web, Twitter, Facebook, Experiential Marketing
Target: Urban Drivers
Rating: *****
Reviewer: David Vinjamuri

Description:
To launch the 2011 Ford Fiesta, a new version of the subcompact car, Ford is using a year-long experiential marketing campaign called Fiesta Movement.  Ford interviewed over 1,000 hopefuls to award 100 of them keys to their own new Ford Fiesta for six months.  They will complete “missions” which will involve using the cars in different ways and “lifestream” the results over social media.  In parallel and during the week of the New York Auto Show’s opening, Ford invited key Twitters and Bloggers to test-drive a 2009 Euro-spec Ford Fiesta, which will is the car that the U.S. 2011 model will be based on.

What Works:
Ford hired Crayon social media guru Scott Monty to run its social marketing programs and he has put together a clever offering for the Fiesta.  Ford realized that a significant portion of subcompact sales (particularly of hot models like the Honda Fit and Nissan Versa) are clustered in five key cities around the U.S.  This made a social networking strategy viable for the brand launch of the new Fiesta. The Fiesta occupies a key market niche for Ford, one which has been long dominated by Japanese brands and is led by the Honda Fit.  The 2011 Fiesta will bring a Euro-sensibility to the small car niche as the design will be brought over from the model currently on sale in Europe.  Ford is following a classic influencer model on one end, with activities like blogger/twitterer test drives conducted around the time of major Auto Shows.  At the same time, the Fiesta Movement offers both the chance for word-of-mouth marketing and consumer generated advertising similar to the Nissan Sentra launch where blogger Adam Horowitz was challenged to live out of the car for a week.

The targeting and the social networking make this launch a good test case for both twitter and expanded social marketing programs in the car arena.

What Doesn’t:
A movement that starts a full year before the product launches is a huge commitment, so Ford will have to keep its eyes on the road to avoid crashing this one.

Branding Bottom Line:
Ford thought it was all a great idea until it put this blogger behind the wheel.

Brand: Charmin
Execution: Online, iPhone Applicantion
Target: Mobile Bottoms
Rating: ****
Reviewer: David Vinjamuri

Description:
Following its longstanding theme of using experiential marketing to help people find good toilets, Procter & Gamble brand Charmin has introduced a website and iPhone application that allows users to locate a free toilet anywhere in the world using Google Maps.  The application is GPS-enabled on the iPhone 3G.

What Works:
A simple, brilliant application that may be the best brand-sponsored widget ever created.  Procter & Gamble solves a real-world problem by cataloging the world’s free toilets and connecting this information to Google Maps which is already the preferred location application on the iPhone.

What Doesn’t:
Reports have not yet come in to assess the accuracy of the Charmin toilet database.  If the information is not kept accurate and up-to-date this little iPhone application could become a big pain in P&G’s behind.

Branding Bottom Line:
Charmin mapping the world’s free toilets is probably more useful than NASA charting the lunar surface.

A few quick thoughts for those of you still looking for the silver lining in the cloud of gloom that surrounds us …

1. Find your core customer  - This is trickier that it sounds because your core customers may not be the biggest spenders.  They are the people who attract others to your business, who are the “acid test” for your brand and who represent your brand in the minds of other customers.
2. Become a direct marketer - Test everything before you commit large dollars.  Instead of running a huge promotion, try it on a small group of customers and see how it does.  Send out an e-mail to 1,000 prospects before you reach out to 100,000.
3. Add value instead of cutting price - If your price is grossly unrealistic, lower it.  But first consider bundling in extra value at current prices.  Add samples, extra services or custom consultations.  You’ll increase the value of your offerings but help maintain your price points, which are harder to raise than cut.
4. Narrow your brand positioning - A recession is a tempting time to try to be all things to all people just to maintain revenue.  But people are drawn to expertise more than ever in a recession and nothing shows expertise better than a narrow focus.  Even if you don’t cut products or services, make sure your communications focus on your core expertise.
5. Look for opportunities - Save marketing dollars to spend opportunistically.  Large competitors in particular tend to make marketing cuts in big chunks and implement them very quickly.  This can leave bargains in media or even PR.  Watch your competitors closely to find the best moment to spend instead of pre-planning all of your expenditures.  If your business is seasonal, save extra money to capitalize on unexpected media or PR opportunities during your high season.

You may know the details by now (and if not see Jackie Huba, Susan Gunelius or Stuart Elliott at the NY Times for excellent recaps), but Tropicana has suffered a new media thrashing at the hands of brand advocates unhappy with the new packaging by The Arnell Group.The enthusiasts are correct here, the packaging does indeed look more generic than the familiar packaging it replaces.  The brand name is recessive and the product shot of the glass of orange juice stretched over two panels of the carton makes the product look like private label.  The new packaging is also less functional, as it is harder to identify the form (with or without pulp, with added calcium, etc) as that information was banished from the main panel to the top flap only.  Finally, in spite of Peter Arnell’s elaborate doubletalk, showing the juice on the package rather than the orange was a huge mistake for a brand whose primary competitive claim is that it is squeezed fresh from oranges and not made from concentrate.

The two more interesting questions from our point of view are:

1. When should I spend the money to redesign packaging?
2. How can I avoid a Tropicana fiasco with my own re-branding campaign?

Here are a few thoughts:

1. Rebrand when you have news - a significant product innovation or dramatic improvement is a good reason to rebrand
2. Rebrand if your market position changes - if a competitor threatens your brand positioning and you need to focus, narrow or shift the position
3. Rebrand if you have new, innovative packaging - a packaging innovation is a good time to rebrand or just refresh the packaging look
4. Refresh if you want to update the brand image - if the brand is stale and needs an update, make evolutionary changes to modernize the packaging

The Arnell Group would have served Pepsi and the Tropicana better to focus on refreshing the packaging rather than entirely rebranding it.   The Pepsi logo rebrand was no less pointless than the Tropicana packaging overhaul, but it will be far less damaging because Arnell merely refreshed the logo by tilting it and adding a bulge.

Part of the lesson here is that if you don’t really understand what a creative guy is telling you, there’s probably a reason for that.