Using a Crowd to Draw a Crowd

One of the subjects discussed in this week's class was increasingly popular use of "user generated content" (UGC).  Sure, there were examples of this before the internet (submitting jokes for popsicle sticks or drawings for cereal boxes), but the advent of the internet and the social media platforms that followed have made this an exciting new opportunity for businesses.  Now businesses can ask their followers to post things directedly to their Facebook page, Youtube, or on Twitter (using a hashtag) and they can immediately join into the conversation.  Below is a list of a 3 very different examples of user generated content done right:

1) Nissan - #VersaVid

Nissan utilized the power of Vine and Instagram and challenged users through a commercial to go to their website and print out a paper version of their new Versa car.

"Fans then had to record a short video using Instagram or Vine and post it with the hashtag #VersaVid. The six best videos will receive a $1000 dollar Amazon voucher, with three featuring in Nissan’s upcoming US commercial."
 Via.

The videos were clever and easy to make, even thought some users created some brilliant ones.  It was effective because it did not require fans to expel too much effort and yet entered them into a fun competition where they could be recognized and win a prize.  

2) Threadless (a Chicago based T-Shirt company)

Threadless has gone even further than requesting users to occasionally submit content, they have turned this idea into their business model.  The originally just e-commerce t-shirt company (they now have 2 stores in their home city of Chicago) solicits designs from an online community of artists.  Since the company began in 2000, Jake Nickell and Jacob DeHart have, "...received 257,921 designs since its founding in 2000 and paid out $7,120,000 to 1,374 artists, who make money each time someone buys their design."

"Artists and designers are encouraged to submit their files for scoring. For seven days, the Threadless community scores the design 1 to 5, leaving comments; that feedback helps the Threadless team decide what to print. When a design is selected, the artist gets cash upfront and royalties based on the number of products sold with the design.

Threadless founder Jake Nickell's goal wasn't to build a multimillion-dollar business, but to "give the creative minds of the world more opportunities to make and sell great art," he said in an interview."

Via.

A threadless artist goes to work.

3) Tosh.0

A television show that has taken the lead from companies such as Threadless and taken it to television.  Think of "America's Funniest Home Videos", remove the family friendly branding, and inject it with the sarcasm of the ADD generation.  

The show is hosted by comedian, Daniel Tosh, and has been airing on comedy central since 2009.  Each week, Tosh' "writers" comb the internet for the most disgusting, strange, humorous videos they can find and then Tosh comments on them using his own brand of comedy.  

The popularity of the show is founded on UGC and the variety of competitions and challenges the Tosh poses each week.  Tosh also uses Twitter to communicate with viewers, often during the show.  Many shows have begun to follow suit, but Tosh executes better than anyone.  Editors' note, I do not personally enjoy this show, I find it a bit juvenile, but I have to admire his ability to engage his audience.

Some "best" moments

Buyers Be Aware: How the Internet is Killing Brand Loyalty

               This week’s discussions examined a lot of the aspects the make for effective advertising on the web, but one aspect that caught my attention was the deterioration of brand loyalty, or more specifically, the fact that consumers today are far more informed than in previous generations and therefore have far more buying power.  Whereas in the past, a brand could stand for something and therefore inspire trust, today consumers are more likely to align with the product itself over the company. 

                In Geoffrey James’ article, “Brand Loyalty is (Almost) Dead”, James writes, “The customer's predisposition to buy a particular brand reduced sales cost while allowing the seller to charge more for the product, even if it was virtually identical to a non-branded competitive product.”  

                Building a brand used to be incredibly important to a company’s bottom line because it would inevitably reduce costs on advertising dollars.  A brand became synonymous with the quality and consistency of the products that they were selling, so consumers would be able to identify a name and a logo and instantly be “sold”.  The internet has slowly destroyed this idea for a plethora of reasons, but I will highlight three.

                First a foremost, the consumer has become infinitely wiser as information on products and companies has become readily available via the web.  Thinking of trying a new restaurant?  Check Yelp for user reviews beforehand and you will find a host of pros and cons that will either sway or dissuade your from ultimately dining at said establishment.  If you really dig around, the chances are you will be able to paint a fairly accurate portrait of your proposed dining experience without ever setting foot in the venue. 

One Yelp reviewer found himself in a legal battle over a negative review.

               The same applies to other businesses in all industries.  Before I purchase anything from Amazon, I always read the customer reviews.  I pay incredibly close attention the bad ones because it is important to know ahead of time whether or not there are any particular areas where the product might fall short of my expectations.  When making larger purchases (i.e. expensive clothes, technology, auto, etc.), I will dig around for weeks so that I can spend my dollars with the greatest amount of certainty.

                Of course there are negatives to this approach.  All people are going to be different and while there is safety in numbers, shouldn’t we also consider the possibility that our tastes might differ from the 40, 50, or even 500 other reviewers?  It is also important to think about the sort of people that spend their time reviewing a product.  I have personally found myself reviewing products or experiences far more frequently, but for the most part these reviews were the result of extremely satisfied or extremely dissatisfied opinions.  I rarely take time out of my day to review something that I am indifferent to or had a neutral experience with, but who knows?  Perhaps there are a lot of people out there desperate to share their mediocre encounters.

                The second reason that brand loyalty is floundering is that a lot of products (especially tech products, aside from design) are becoming essentially the same.  James points out that due to outsourcing, you might be purchasing two different brand name computers with parts being manufactured in the same plant.  In the end, the only thing separating the products becomes the price, the customer service, and perhaps the warrantee.  The product itself is not symbolic of the brand name.  When I would purchase a PC in the past, I would look for something that made it different, better, than the others, but ultimately the company that assembles the computer from parts that are shared among several different companies can only hope to charge you more for your brand name.  This might have flown in the past, but I can tell you with confidence that I paid way too much money for my Sony VAIO years ago and it ended up being a piece of crap.  So why did I pay so much?  Sony assured me I was buying a machine with supreme capabilities, but all I did was pay for lies.  Sorry Sony, I’ll take my chances with a lesser known brand these days, my wallet and my anxiety will thank me later.

The choice is yours, choose wisely

                The last reason that brand loyalty has gone out the window, and a point that James does not introduce, is that the internet has created such a low barrier for entry into the marketplace that literally thousands of new competing products are being unveiled each day.  The only way for these products to compete is through design and cost.  I purchased a case for my Moto X Android phone from a company that has been around for just over a year.  Guess what?  I love it.  The reviews were positive, but more importantly there was something innately exciting about having a case that none of my friends had.  I was something that I felt made me unique.  The flood of new products coming out make this sort of feeling possible, it’s about finding your individuality amongst a sea of conformity (a subject that is fascinating in itself and should serve for an interesting post at a later date).  The point is, there are more options than ever and if you are not risk averse to trying something new and the opportunity is there, then why not go for it? 

Nailed it.

                The death of brand loyalty is more closely aligned with older generations.  It is hard to forget that having the right toys, shoes, clothes, etc. was a dramatically integral part of your youth.  Children are easy to sell, and while teenagers are fickle (today’s brand might not be tomorrow’s), at least they can temporarily agree on what is cool. 

                Finally, James argues that powerful brands like Coke and Apple don’t have brand loyalty.  Coke has distribution loyalty and Apple has product loyalty (products that work well together).  If a store doesn’t offer Coke, buy a Pepsi.  If Apple makes a crappy product, don’t buy it. 

Recognize these?

                What does this mean for business?  We know what it means for consumers.  We have the power now becausewe have the information.  Do businesses give up on brand building?  I don’t think so, I think companies will just need to recognize that building a brand is more important than saving advertising dollars.  I would like to see brands take an innovative approach and really stand for something.  Look at Chipotle.  Look at Johnson & Johnson.  Look at TOMS shoes.  Hell, even look at MTV.  These brands stand for something that coincides with what they are selling.  They are selling passion, an experience, hope, or a lifestyle, and with that a guarantee and a promise that the company will not betray their message.  We may not be able to win more sales with a strong brand in the age of the internet, but we can certainly win over peoples’ perceptions.  In the end that might end up making all the difference. 

THE BLURRED LINES OF INTERNET TAXONOMY

The subject of internet taxonomies was raised this week and it is something that I have always been fascinated by.  I think now, more than ever before, companies are starting with a thread of an idea and evolving into something entirely different.  Before the internet, it would have been far more difficult to seamlessly crossover into other markets, but e-commerce has enabled small start-ups to determine their core values, establish themselves, and branch out successfully.  

Of course there have been instances where companies have disastrously failed to expand their empire.  Even the most well-known and resourceful corporations have tread into territory that they perhaps should not have.  Microsoft is still struggling with their foray into mobile phones (operating systems) and despite the money being filtered into marketing for Bing, they are still undoubtedly miles and miles behind Google search. 

Speaking of Google, they are undoubtedly the greatest example of a firm that has not adhered to any specific taxonomy.  The closest category you might place them in is simply “tech firm” because, while they started with a revolutionary algorithm for collecting data on the web, they have expanded into dozens of different markets and continue to do so.  If Google sees a lucrative business opportunity, they are likely to seize it, because they have the talent and the funding to do so.  Google (not unlike Apple) have expanded into mobile phones, television, natural energy, cars, medical technology, and even space travel. 

An Amazon.com factory worker

Google is not alone, far from it in fact.  Amazon.com began as a book retailer.  Now, you can purchase just about anything on the Amazon market.  Zappos.com began with shoes alone.  As was mentioned in this week’s lecture, these expansions are possible because of the platform in which the businesses are built, which defies all classic brick and mortar structures.  Amazon recognized that their operations gave them a strategic advantage (which is why they were able to acquire Zappos, although Zappos introduced new elements such as free return shipping).   Internet taxonomy is fluid.  That means that there are opportunities for these large businesses to diversify themselves.  A company like Google or Amazon can identify their strengths and then build from them. 

Tony Hsieh, CEO of Zappos.com

Often these startups begin with one product and become something entirely different.  This is not uncommon, even pre-internet era.  The classic example is the Post-it Note.  Dr. Spencer Silver, in his attempts to create an effective long lasting, heavy duty adhesive, created a “low-tack”, reusable formula.  It is difficult to imagine a world without Post-it Notes and yet the genesis of the product itself was a fluke. 

Just as important as the product and service is the economic model of the company.  Again, the internet has made it possible for companies to sustain themselves through methods that before would not have ever been considered.  The “Fremium” model has allowed a lot of companies to enter markets with an edge and establish themselves quickly.  Spotify is a great example, a company that has licensed hundreds of millions of songs, allowing users to access the library for free, and driving a strong portion of their revenue from ads that play every few songs.  Like Netflix, the premium service is fairly inexpensive ($9.99/month), and now at least a quarter of the 20 million Spotify users are paid customers.  This model has pushed the valuation past the $3 billion mark. 

In case you haven’t caught on just yet, the excitement of the tech industry doesn’t so much lay in the products or technology itself but the sexy and innovative methods of delivering the product to the market. 

“Silicon Valley”, a current HBO program in its first season brilliantly satirizes this world, where suddenly the geeks have become rock stars.  The central character, Richard, aspired to create new media sharing platform akin to Napster and named the start-up “Pied Piper”.  The idea is not novel by any means, but venture capitalists come knocking as soon as they see that he has managed to engineer a file compression system that is entirely lossless and faster than anything on the market.  Richard suddenly realizes that the product isn’t the music or the media sharing, but the possibilities derived from his superior programming.  

Thomas Middleditch as Richard Hendricks on HBO's "Silicon Valley"

And that is the point.  A brilliant mind can have every intention of taking one path and ignore the fork in the road altogether.  Technology can be boundless and transcendent.  Internet taxonomy therefore is a category in itself, but is otherwise a very foggy subject.  If I lay a piece of wood down in front of you, you might see a table, but I might see a surfboard.