What would happen if you spent $50 Million dollars on cultivating better online relationships instead of on banner ads?Imagine that you are a big brand and your annual ad budget is several hundred million dollars. Now imagine that you took a large fraction of the online marketing budget, coming to a total of $50 Million, and invested it in building better relationships with your consumers? What do you think would happen? Would your business be better off in 2010, 2011, than if you had spent that $50 Million on banner ads and other online display advertising?
Over the weekend, I read a fantastic (albeit looong) article in Portfolio (no, I don't subscribe, I just got the article passed on to me),
"The End of Wall Street's Boom" by Michael Lewis, the author of the book
Liar's Poker. In this great article, Lewis traces the history of this year's stock market crash all the way back to the roaring 80's. He explains - better than I've read anywhere else, so far - how the sub-prime mortgage industry came into being, and how it turned the entire financial industry into one big toxic dump.
The most inspiring aspect of the article is the story of Steve Eisman. Eisman's small investment firm was one of the very few groups of people who not only had the vision to see how upside down the investment world had become, but also had the courage to put their money where their mouth was. Eisman was baffled by how crazy the mortgage market had become, and he invested heavily in betting that he was right. In my favorite anecdote, Eisman and his business partner Vincent Daniel, go to visit the C.E.O. of a major firm who decides the rating that investors use to decide whether certain mortgage bonds are worth buying.
The C.E.O. [of rating firm Moody's] even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”
“With all due respect, sir,” Daniel told the C.E.O. deferentially as they left the meeting, “you’re delusional.”
I love the idea of a guy who's willing to call bullshit when he sees it. No matter where he is, or who he's talking to.
Have you ever been in a meeting with a client and wished that you could tell them that they were delusional?
What are the online marketing industry's sub-prime mortgages? What are clients betting hundreds of millions of dollars on in spite of its ineffectiveness (unless you think that a click through rate of 0.25% is a success)?
I think brands are wasting hundreds of millions of dollars on banner advertising.
As brands begin to take a more critical look at their marketing budgets in 2009, I'm going to be a champion for spending less on pretty banners and microsites, and more on fostering meaningful relationships with the people who actually care about your product.
I believe that the biggest reason that brands currently spend the majority of their online budgets on display advertising, is that it is a known quantity. People know what to expect. They know what is relatively good. They know how many "impressions" they can buy, and the know how many clicks they get. But,
just because a thing can be measured, doesn't make it worth something.I bet that first major brand to foster a vibrant community of true fans - people who listen when you talk, people who give you regular direct feedback about what you do, people who talk to other people about what your brand stands for - will change the game. (Barack Obama, anyone?)
The key is to transform earned intimacy into action.In 2007 and 2008 companies dabbled in relationships. But, most just viewed emerging social spaces like Facebook, as a more effective way to target display advertising. Even when they attempted to establish relationships, with some kind of group or forum, brands weren't interested in listening, they only wanted to collect, i.e. "Can we get more fans than our competitor?"
Building relationships is hard work. And it requires a lot more than just a wave of the social media magic wand. Relationships require time; and most importantly, relationships require people.
I'm sorry, but a brand can't be in a relationship. Only people can be in relationships.What if your brand built a small army of people within your organization who had the brand's backing and the skills to directly engage with the core consumer audience. $50 Million worth of real live human beings who were empowered to talk directly with fans, to respond in real time, and to become the voice of the consumer within the brand.
We have the tools we need to do this. We have ways to measure the effectiveness of our efforts. We have the money. What we need is a brand who's willing to stop the insanity and bet against the market. Any takers?
Why would a teenager pay $4 so that their little avatar can walk around the virtual world of Gaia Online dressed up in Elvis' white-rhinestone jumpsuit? How does Facebook get away with charging $1 to allow you to copy a little .gif image file onto your friend's wall? Why are virtual goods a $1.5 billion dollar world-wide industry?
