Kickstarter Mythology Needs Some Retail Reality

Kickstarter mythology has outgrown reality.

(But let me be very clear. I’m NOT talking about Kickstarter art, music, and movie projects. It was designed for these and they seem to be running pretty well overall.)

I’m talking about Kickstarter campaigns that raise money by Directly Selling new Products that have never been built – and taking orders for lots of them. In the computer business we used to call this selling vaporware and investing in businesses dedicated to vaporware led to the dotcom crash. Segway and Google Glass were both massive vaporware disasters.

Now, by selling vaporware with Kickstarter, we’re seeing amazing train wrecks among the most highly successful money raising campaigns. These train wrecks are all made possible by the mythologies that drive Kickstarter and other crowd funding sites. (Incidentally, a comment below points out this is a far more dramatic version of the direct mail practice of “dry testing”. There is already FTC guidance on dry testing.)

The Mythology of Kickstarter for Inventors. Inventor mythology starts with a belief that it’s enough to come up with a good idea and some money to build it. And Kickstarter appears to “unshackle” inventors so this can happen.
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Cursed by Checkbox Video

You know the videos I mean – the ones made so the agency can check the box “Cool video complete”. (Of course, many of them aren’t very cool – at least to consumers. But we’ll hold off on that discussion.)

Checkbox work has always been a curse. Before it was video (back in the dark ages of the 1970s and 1980s) it was the checkbox slide show. When I was a client shopping for supercomputers in the 1980s aerospace business, if the salesman brought the slide show or video I’d skip the meeting. My team had learned that these checkbox presentations never communicated what mattered as we evaluated computers.

That was then and this is now. And what used to be merely dull and boring has exploded in that way only the web can make things explode… (It’s amazing how fast bad marketing choices replicate across the web.)
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iPad 14 – Electronic Magazines Prove (once again) That Content Trumps Bells & Whistles

Here’s an important tech axiom: Developers have far more interest in applying application bells and whistles than people have in using them.

I learned this lesson on my first project out of college. In that project I designed a network of Apple 2’s to display wire wrap harness instructions for avionics assembly at General Dynamics. (Back then I was a software engineer with a couple of degrees in mathematics.) Read more of this post

Salesmanship and The Myth of the New Consumer

Salesmanship is, and always has been, a critical skill needed to drive advertising success. Sadly, it’s a skill that doesn’t come out of J-school or portfolio school. Perhaps that’s why a meme has developed telling us that “sales is dead” (so consumers must somehow osmose products into their lives).

The basis of this ridiculous claims seems to be that the internet puts consumers in control (and I’m sure that’s how they feel in this miserable economy). Even worse, we’re told that consumers flee to territory uncontaminated by commercial interests if anyone attempts to sell something to them. (For more on the mythology of the New Consumer check this link.) Read more of this post

Despite Claims, Web Communication Is No More Respectful Than Traditional Advertising

Massive misperceptions lead industries into poor choices. But industry politics make people hesitant to call out those mis-perceptions – sometimes for fear of losing future work; at other times because its easier to go along with the crowd; and most often because it’s hard to find the courage to remind the world the sky is blue when “everyone” else says it’s orange.

Today’s topic of untruth is found in this line from a recent guest article on Media Post:

“In TV, you are forced to stop enjoying content in order to watch several minutes of ads. On the Web, the ad experience is more integrated and more targeted.”

Does anyone really believe this? Any honest look will tell us that the web may be the noisiest ad environment in history of mankind. And while it may be targeted, that doesn’t mean it’s any less offensive.

Web advertising regularly interrupts our enjoyment of content. On the commercially very successful HuffingtonPost, it’s random whether a new page you visit will pop down several screen inches then back up seconds later as aggressive top of the page banner ads expand.

On most news sites, pop up windows are a constant irritation. On more technologically advanced websites, ads expand and contract (apparently randomly) as you move your cursor around the page. If we choose to view a web video, we have to put up with pre-roll ads. And now we even have to fight new types of banner ads that take over the page we’re viewing and force us to click out of them or wait for them to finish.

I’d sure love to find the web utopia that guy was writing about. It sounds a whole lot better than the web we have.

Commercial messages even interrupt our enjoyment of social media. Friend a company and you’ll have to put up with their feeds on Facebook. (But isn’t Facebook most heavily used for, well, human friends? It is, after all, a social medium.)

But even worse, in social sites, companies design viral video’s to sucker people into friending their commercial endeavor, then bombard them with commercial messages. Ah, the fundamental dis-honesty of new media.

And if you have Gmail (or similar “free” services), commercial messages regularly interrupt your privacy. I went to a Google presentation here in Portland recently. The presenter proudly discussed how, after he had moved here and emailed with his wife about their car, their GMail immediately featured ads from the local auto dealer. Yikes. I think we’ve finally found Eric Schmidt’s “creepy” (and people at the tables around mine thought so, too).

Are online advertisers desperate? This aggressive interruption on the web suggests that advertisers are desperately searching for impact. And the latest news confirms they might be.

Google is desperately searching for TV ad revenue because their other online sources just don’t have enough growth to make the stock market happy. And just last week Best Buy announced that they were returning to advertising on TV because they hadn’t been able to drive their mass business from the web.

So what about this whole issue of respect? I strongly advocate respect – real respect. But the respect that matters most is the respect between the company and their consumer. Over the past 20 years I find that agencies have developed an intense disrespect for their true consumer. And I believe clients are beginning to realize how ineffective their ads have become as a result.

Many ad agencies or creative teams no longer believe consumers want to know about products and the information needed to make intelligent choices as they shop. Instead, agencies focus first and foremost on “entertainment” and end up delivering little consumer value. It doesn’t matter if you’re using the oldest of the old media or the freshest of the new, this type of advertising will offend the consumer.

And what about the web? Truth is that the web should be much more powerful than it has become. It’s only by challenging these fallacies that we can make it so.

Copyright 2011 – Doug Garnett – All Rights Reserved.

How Segmentation Becomes Fragmentation: Online Advertising’s Incredible Blind Spot

In the late 1990’s, the tech industry hype machine went into over-drive telling us that the web would replace retail and become the biggest sales channel for every product on earth.

Of course, it didn’t happen. Today, brick & mortar retail dominates purchases – and does so while using the web as one of many communication options and as a small, but important, sales channel.

What’s the hype machine telling us about advertising? The same hype machine has re-emerged and is leaping at social media, viral campaigns, and online video as the magic that will rescue the web from a minority role in advertising. (This would, of course, bring all those juicy advertising dollars to the company’s and their VC’s who are behind the hype machine.)

Once again, these broad claims are bunk. And, with beautiful irony, the theory of web dominance in advertising breaks down because of what the hype machine also tells us is the web’s biggest strength: nearly infinite segmentation.

Web users sign on, search through a small number of search engines, then scatter around the web faster than particles pushed outward from a supernova.

Web advocates have rightly noted that this makes the web ideal for targeting – claiming that online promotions can have laser-like accuracy. (This accuracy requiring, of course, various forms of passive and invasive tracking of your every online action.)

Segmentation and fragmentation are two sides of the same coin.

If all we expect of the web is a highly targeted minority role in our marketing mix, then the web has segmentation. Or if you are selling a niche B2B product to a technical audience (like IT), then the web offers segmentation – and highly valuable segmentation.

But segmentation becomes fragmentation when we consider the idea of replacing advertising’s biggest gun: television. When compared with TV, web audiences are not merely fragmented but shattered into billions and billions of tiny shards. TV’s opportunity to move millions of consumers to action simply doesn’t exist on the web.

Consider it this way. If on it’s best days TV creates a power of 100, on its best days the web creates a power of 1 to 5. As a minority share of an integrated marketing plan, this “1” is important. But no matter how hard you try, the web’s 1 can never replace TV’s 100. (Or print’s 75; or direct mail’s 30 or radio’s 60 or outdoor’s 40 or…)

Sadly, if web advertising is all you’ve ever known, crawling around to gather enough shards to create micro-segments from nano-segments might make you think you are doing something big. (After all, it’s a lot of work and mere busy-ness can easily mask ineffectiveness.)

But if you have travelled the much wider world of traditional advertising, you’ll realize it’s impossible to use online shards in mass advertising to create anything more than a very nice minority role. (And here I should note that Apple is just one example of a savvy advertiser who knows this and relies heavily on TV while using internet advertising in a limited role.)

But heck, many web investors don’t want to hear this. And, just so, they’ll fire back. With what? Probably a Forrester research report showing an astronomical 20 year growth curve for the NEXT web invention – perhaps location based search engine optimization delivered via socially viral online video with a twitter core hosted on a cloud. Yup. That’s the ticket.

It’s time for the ad biz to grow up and confront the tech machine’s hype with advertising reality.

Copyright 2010 – Doug Garnett

“Free Internet TV” Will Hurt Consumers

Claims of “FREE!” drive purchases of cheesy TV products from Shamwow’s to those (supposedly) Amish heaters. But somehow, it escapes notice of the tech press that equally cheesy claims of “free” run deep amid marketing of the internet.

Free music, free newspaper articles, free magazines, and now supposedly free television. Everybody offers free. And it’s no surprise that consumers go for it.

In fact, this idea of making millions by giving things away was found in many of the irrational “business plans” that dotcom’s claimed would make their investors rich. It didn’t work then, but maybe things have changed.

How is “free” going for Wikipedia”? Wikipedia is the poster child for internet “free”. Except they are deep in the midst of a campaign attempting to raise $16M in donations just to keep their doors open. It’s a campaign that pitches quite hard. Makes me think that even for a donated content online Encyclopedia, “free” isn’t quite as powerful a business plan as we thought.

How is “free” working out for newspaper and magazine content? Bob Garfield wrote an AdAge blog entry recently about the incredible dark side of “free” print on the web.

He notes that print on the web is driven by sites that “aggregate” (bring together) content. Where do aggregators get good content? From newspapers or magazines. Except aggregator sites deliver content to you for free.

In a fit of business insanity, internet copyright anarchists imply that revenue from the hated banner ads on the site of the aggregator somehow trickles back to pay for the hard work it took to create that content. (Hard work is required to make well written, well researched, well fact checked, and well published content.)

Well, the revenue doesn’t trickle back. Garfield notes how “free” access has undercut the economic model that created good content in the US. But he also notes that even those aggregator sites are struggling to keep in business. Guess this model is so flawed that you can’t make money even when giving away content you didn’t make.

How would “free” go for TV content? Don’t expect too much. And note that it’s a double “free” idea that is being used to entice consumers to internet TV – payment free and advertising free. (Secondarily, there’s the idea that they can watch anything they want, anywhere they want, and on any device they want. But while consumers will pay for DVR’s, there’s no evidence of willingness to pay for it online.)

Double “free” is publicized with massive money from manufacturers of internet TV sets, creators of internet TV sites, the venture capitalists behind them, and the tech research agencies paid by the venture capitalists – all drooling at the idea of tapping TV’s big old vein of pure financial gold.

And, frustration with out-of-control cable TV costs means there’s very high consumer interest in cost savings. But do consumers really want what double free TV would mean? I don’t think so.

Double “free” TV over internet will kill content. The existing economic model supports an incredibly well developed, sophisticated, sometimes dysfunctional, but essentially effective eco-system – an eco-system that creates good TV, offers the single advertising medium which delivers the best economic impact and delivers most of what consumers want.

The net results for consumers would be the death of programming. Google claims they’ll stitch together YouTube content to make programming (of course, selling their own advertising time within that content). Don’t expect much. The existing ecosystem turns out everything from niche to mass hits – 30-Rock, The Daily Show, Survivor, Amazing Race, NFL Football, Antiques Roadshow, and CSI Miami on a big screen (I just can’t include “Darth Vader, Night Clerk” in that list). But it costs millions to deliver those shows – often over $1M per episode.

There’s some good news for TV. As Mark Cuban has pointed out, TV is different from print and music. Networks ARE aggregators. That means TV networks have been fighting this type of battle all along. They also seem to have learned from print and are being quite stubborn about protecting their right to get money in return for all the money they invest. Consider

– Hulu (funded by networks) started “free”, but is beginning to use subscriptions.
– The networks fight regularly with cable operators to maintain a viable economic model – even if that means people don’t get to see the World Series. We have to assume they’ll use all means to fight against a double free idea that hurts their business.
– An example of this seems to be that while networks work with Apple, they don’t work with GoogleTV. Maybe they know Apple wants to create viable media business models. But it seems the only reason to create GoogleTV is to try to steal advertising revenue that currently goes to the networks – revenue that pays to for programming.
– Now Hulu (funded by networks) has made it so that you can’t watch their programs on GoogleTV’s.
– Network testing seems to indicate that consumers are willing to watch online TV with traditional advertising breaks. In other words, the double free idea doesn’t even seem necessary for internet TV to work.

Internet TV should have a tremendous future and it will be stronger if the industry stops the promise of double “free”. Internet TV’s future comes with the truly exciting opportunity: integrating programming with interactive features that make the programming more valuable.

But sadly, companies aren’t talking about delivering more value. They’re getting wrapped up in dead ends – like removing advertising when there doesn’t appear to be monetized market power created by doing so.

So next time you hear someone talk about how great it is to get free programming on the internet, know that they’re really talking about a future of really bad programming. You may not like programming today (it’s fun to complain). But just imagine what it would be like in that free future.

Copyright 2010 – Doug Garnett

New Media Noise: Living in a Third World Airport?

I generally enjoy reading Bob Garfield’s work. So I read his recent AdAge blog post about new media with interest.

In this post he recounts being bombarded in a foreign airport by loudly shouted commercial offers. I know what he’s talking about — offers for time share presentations, people who want to be your “friend” so you’ll use their taxi, people who want to help with your luggage (for a fee), offers to sell you hats, sunglasses, food, … The list goes on.

As I read I thought: Bob, you’ve nailed it. Welcome to the world of new media – that cacophany of demanding voices violating your privacy.

But that wasn’t what he meant. He thinks the old world of media was a lot like this airport because it was based on interruptions. (I can sort-of buy that.) And, he suggests that future advertising won’t be that way. Huh? In fact, he implies a utopian vision that is so commercial-offensiveness free that humanity must be surviving without ever having to admit that society depends on commercial interests.

To be fair, Bob Garfield is reflecting conventional wisdom among the advertising elite. So let’s think about this supposed utopia.

I’ve seen something like it someplace. Hmmm. Where… Let me think. Oh, yes. Star Trek, Star Wars, and Avatar — all movies with utopian visions of the future created as an author’s fantasy – not by reality.

What’s the reality about new media’s intrusiveness? When you stop and really listen to new media, I find it intensely more intrusive and insistent than old. (And I know I’m not alone.)

Consider your mobile life. In the old days, apart from some outdoor advertising and point of purchase, once we left our homes, we were advertising free. Now it is the avowed goal of the tech industry to bombard us with advertising the minute we touch a mobile device.

Consider your ability to ignore advertising. In the old days, you could go get a beer from the fridge. Now, you have to endure that 15 seconds of pre-roll with a meaningless Old Spice ad just to find out if an online video is at all interesting. (Of course, I’m told that most people just skip those ads by opening other windows on their computers.)

Consider how new media advertising invades your personal connections like in social media. If I discuss woodworking projects with friends on Facebook, I’m followed for weeks by advertising for woodworking tools who want me to “like” them. GO AWAY!!! I don’t want them, don’t care, and resent the intrusion on my personal space. STOP IT!!!

Consider the new media “bait & switch”. Rather than honestly tell you “here’s an ad for a product we think you’d find interesting”, many agencies tell their clients to deceive through content. There’s an extensive literature about how to sucker consumers over to your website so you can bombard them with commercial messages.

Consider the lies. Lies travel farther and faster than truth in social media. So, the new advertising elite learn they have to reject meaningful & useful messages because they’re too complex – and because only a few types of messages will ever get seen in new media.

Consider how many messages bombard us. A couple of years ago AdAge noted that in the old days, we were presented 500 commercial messages in a day and research showed we remembered 1 or 2. Now, we are presented with 2,500 commercial messages in a day and research shows we still only remember 1 or 2. In other words new media, with its pervasive stridency, is training consumers to ignore advertising at a higher rate. And that means we’ll have to yell louder and more insistently just to be heard.

There is a fundamental societal flaw at work here. We used to have an unspoken agreement about advertising as a society. The agreement included ideas like “our society needs advertising to create and sustain jobs”, “consumers want to learn about products that are meaningful to them”, and “the ads pay for making good content”.

What made this work were specific media structures and limits on how advertising was used in those structures. Now the structures are changing. And those limits are gone so the best advertising agencies compete to see who can intrude on our personal lives at the fastest rate.

In a third world airport, the situation is different. The airport noise that strikes Bob (and myself) as so loud is part of their social contract. But it’s not part of ours and neither is the intrusiveness of new media.

The real issue is what we want for the future in our society. An airport cacophony that follows us everywhere? Or advertising that delivers both economic strength and quality of life? Only time will tell whether we get what we want. But without dramatic intervention, the captains of the advertising industry seem hell bent on rushing to the airport.

Copyright 2010 – Doug Garnett

Offline Advertising is Necessary for Online Growth

Note: I originally published this post in 2010. Electronics retailer Best Buy announced in February 2011 that after a TV hiatus (and weak Q4 2010 sales) they were returning to TV because there simply weren’t enough online opportunities to drive their mass market business.

If you are pure B-to-B or consumer marketer with extremely limited goals, then this article may not be for you. But if you need to drive growth in large markets, then read on.

And start by considering Angie’s List, Eharmony, and GoToMeeting. All are perceived to be pure “online plays”. Yet each surprisingly uses massive TV advertising campaigns to drive growth.

Dig a little deeper and we find that Zappo’s gets the highest online sales per customer when consumers receive printed catalogs.

And our list goes on. TV plays include GoDaddy, Vonage, and Hulu… I even saw a report recently that non-profits with extensive online interaction commonly see the highest donations from off-line efforts like direct mail.

But many in the ad biz have drunk the kool-aid of the cult of online advertising. At some point they bought into the idea that “all online” was the future. (In part, agencies buy into this because while it may not make their clients much money, it has tremendous impact on their bottom line.)

And now, rather than finally recognizing online limitations, social media fantasies have become the latest excuse for never leaving the web. (This, despite strong and conclusive research showing that consumers DON’T get new product learning from social media.)

Offline Media is Powerful. Most often, I’ve found that online purists haven’t experienced the power of traditional media… Power that moves markets… Power that drives mass results fast… Power that can be exceptionally cost efficient… Power that far exceeds what’s possible in the cloistered world of online, social media, mobile, email, and other media hyped “cool” options.

So why are so many online companies now relying heavily on offline media? Because it drives growth.

Online advertising’s limitation is that people have to know they want your product before it’s effective – they have to know what you make and why they might want it. Online resources are superb for searching out answers to questions and sometimes purchasing the product. But online’s generally a poor medium for driving out a message about something innovative and unusual.

This is critical if growth is your goal. Growth almost always requires getting your message out to new people, in fresh ways, in order to bring them to become interested in your product.

It’s fundamental: If you are an online player and want to grow, you need offline media.

Not that Apple is the perfect marketing example. But they clearly understand the limitations in online advertising. In fact, onliners have complained for years that Apple doesn’t spend enough of their advertising budget online.

Hmmm. Looking at their growth, Apple seems a lot smarter than those who suggest they need to do more online advertising. By observation, I think Apple figured out that succeeding online doesn’t require advertising dollars. And, they must have found that the bulk of their advertising dollars are most effective in TV and other mediums.

Even with targeted markets, the companies who thrive without off-line advertising are few and far between. So if you’re looking for growth in your online (or offline) business, then you should look first at your offline strategy. Because moving forward may require that you first look back.

Copyright 2010 – Doug Garnett

Wishing it was true? Internet TV advocates trumpet flawed research.

There’s a survey circulating right now by a group named “Say Media”. I won’t link to it because it’s irresponsible to circulate mis-leading research.

Scoop is that Internet TV advocates are shouting that the survey shows that around 1/3 of the adult population in the US has turned off cable in order to get their TV online. (To be fair, the Say Media report doesn’t say this.)

Are some advocates so desperate that they’ll believe anything? This research is seriously flawed. To begin, it relies on…wait for it…online surveys. Yikes. Doesn’t anyone pay attention to methodology anymore?

So, an online survey finds a larger portion of 1100 people are more active…um…online by using more online TV. THEN, those results are projected to the entire US population (and we’re given the usual drivel about +/- to make it sound like solid research).

To understand how flawed this is, let’s look at a similar hypothetical. If you stand outside the stadium at a Lacrosse game and interview sports preferences among those leaving the stadium, you will find that most of your interviews prefer Lacrosse to American Football (especially if your wording encourages that answer which is common in this flavor of research).

And if you can find enough people to interview, then you can get some statistician to give you +/- error percentages so that you can claim that you found that the majority of Americans prefer Lacrosse to Football.

And, you would be entirely, wholly wrong. But that’s essentially what it looks like they did in this survey.

In addition, the “researchers” observed their online habits. (Huh – take people who claim that they went off TV but you only watched them online?)

And, they did eight (8) in-depth interviews too. Eight? They probably found those eight among their friends.

What else might be wrong here? For decades people have lied about their TV habits – minimizing the amount of time they watched. Because it’s an issue where social pressure suggests they’re “bad” if they watch too much TV. In order to accurately guage TV habits, research has to be extraordinarily sophisticated. The best work invades people’s homes.

Just for fun, let’s try to figure out what they really found out with the research.

– First, they only interviewed people online. It looks like only 70% of US adults are online.
– Second, of that 70%, only about half will participate in online surveys. And, that half is likely to be the most online savvy.

In other words, their survey applies to the most online savvy 35% of US adults. Of that 35%, 13% were disconnected and 20% were connected, but reducing their viewing. Except, it’s reasonable to guess that half exaggerated their disconnectedness.

SO, they found a small group (6%) of adults that are disconnected. Yawn. Oops. I mean “write a big press release. Because we just found out that what we’ve known about TV for 50 years is still true. Not everybody watches.”

Until we can learn more, put a massive RED WARNING FLAG on this research. Significantly more reliable research has shown that there is no degradation in TV viewing habits – only an increase in viewing now that people can view it on their mobile devices.

So we have to wonder about the motivations of the groups that cobbled together this marketing masquerading as research. Is it possible that it’s VC funded to make certain that investments in GoogleTV pay out? Possible. But we don’t know.

Copyright 2010 – Doug Garnett