Communicating Poorly: Politics Sack Confidence

A new study by TNS, which is one of the world's largest research firms, reveals that 87 percent of Americans with $500,000 or more in investable assets are increasingly concerned about the deficit and its potential impact on retirement funds.

Although about 40 percent said they would pay higher taxes to offset changes to Social Security and Medicare, they are even more concerned about the growing deficit. In fact, 40 percent would accept changes to both Social Security and Medicare if it would help reduce the deficit. Their sentiment is shared by a growing number of Americans.

• 43 percent feel the current state of the economy will jeopardize their retirement plans.
• 40 percent plan to reduce the amount of money they spend compared to last year.
• 56 percent are concerned that the U.S. government may default on its debt obligations.
• 60 percent do not think the U.S. government should increase the federal debt ceiling.

Along with increasing concerns about the long-term prospects, investor confidence has dropped 11 points to its lowest level in about a year. Joe Hagan, senior vice president of TNS, speculates that increased stress and discomfort among investors will continue to cause declines in consumer confidence.

In fact, that has already happened. Confidence is lower than in 2009.

Marketers share similar concerns over the economy.

According to the Financial Times, investors are not alone. A recent IPA/BDO Bellwether survey reveals more companies in the United Kingdom — about one-fifth of those surveyed — were trimming advertising budgets. Even those that are not trimming budgets are looking at the remainder of the year with caution.

“Our view is that the economy may have slipped back into a slight contraction in the second quarter," Chris Williamson, chief economist at Markit, told the Financial Times. "This confirms that picture of very little growth in the economy. We expect marketers to remain cautious over the rest of the year.”

The United Kingdom is not alone. Marketers are cutting budgets again. This time it seems the decision has less to do with spending cuts as much as it relates to consumer confidence. While some people are attempting to look at the positive side of budget reductions, the more recent economic shakes have less to do with budgets than marketing executives reacting to a marketplace with lower returns on marketing investments.

While it is often prudent to increase marketing during a recession (because ad rates are cheaper and competitors are spending less), marketers are more concerned this time around because consumers seem frozen. Those who have limited or even disposable income are not spending it, believing they will need it in the face of increased taxes and budget deficits or default (both of which weaken the dollar).

What's the best course of action for the balance of 2011?

While cutting marketing budgets may seem like a viable option, it would be more prudent for most companies to re-evaluate their marketing strategies — focusing on long-term brand and relationship building as opposed to immediate hard returns on investment.

Keith Turco wrote a column for Forbes recently, attempting to shock a few readers away from what he attributes to analysis paralysis. He more or less believes that companies are not committing enough of their marketing budgets because they are too busy trying to make every cent trace back to a sale.

Analysis paralysis is certainly part of the culprit, but it is not the only factor. Market research is finding that more and more people aren't ready to buy because the political climate has remained heavily uncertain. This isn't isolated to any segment of the market, but rather the entire world. In terms of changing confidence, some economists see an end to the debt ceiling debate in Washington as the only chance for a reversal. (Others say it is the continued broken promises to ease the burden of unemployment.)

But even if it doesn't, marketing ought not to care so much. The simple reality is that the economy will eventually climb out of the recent hole it has been forced deeper into and consumer confidence will rise with better leadership. (And if it doesn't climb out, then it hardly matters how anyone plays their cards anyway).

And thus, marketing departments that shift tactics toward long-term strategic models will be able to better position their companies on an economic upswing than those who treat their marketing budgets like yo-yos tied to economic forecasts.

Or, in other words, when economic outlooks improve, any company would be better off with relationships in the wings than those who attempt to restart at the first signs of life with a very different kind of consumer. Changing consumer confidence is psychology.

Increasing Rates: Netflix Actions Speak Louder

The writing was already on the wall, but it wasn't writing that sent the real message. Netflix doesn't want to be in the DVD shopping and shipping business anymore. If you want to hold a movie in your hands, you are better off visiting your local Redbox.

The new price increase reflects its decision. Never mind those sensational headlines that scream 60 percent increases. The new plans are pretty straightforward. People can choose unlimited streaming (no DVDs) for $7.99 a month, unlimited DVDs one at a time (no streaming), for $7.99 a month (Blu-Ray is $2 more), or both services for $15.98 a month (with a broader selection).

If you're nutty, you can have as many as four DVDs out at one time. The price for that service is $34.99 per month.

Some people are complaining, saying that they will dump the DVDs all together and Netflix will lose money. No they won't. As soon as the company can dump DVDs and Blu-Ray, the better. The entire point of the price fix is to force you to make the choice that Netflix has already made. CEO Reed Hastings has said it.

"We are now primarily a streaming video company," Hastings said.

Initially, Netflix investors couldn't be more thrilled (although some started selling as customers pushed back). They had every reason to be thrilled, because unless you cancel the service, there is a plan. And the plan looks pretty great on paper. In fact, there are more changes that Netflix is looking at, including scrubbing the household model customers are used to and moving everything to an individual member basis.

"When our focus was primarily DVD rental, we talked about our opportunity in terms of households, in particular the number of households with broadband access, which is more than 70 million households. Another way to view our potential opportunity is to consider the number of households that subscribe to home entertainment, which includes cable and satellite subscribers, a market estimated at about $68 billion in annual revenue. In either case, we were describing a very big potential market, giving us a lot of room to grow.

More recently, as streaming has become central to our business, we believe there may be an opportunity to change our focus from a household relationship to an individual relationship, since streaming is viewed on personal devices, such as phones, tablets, and laptops, as well as on shared large screen televisions. As we think about this long-term shift from a household to a personal relationship, we are starting to think internally that our opportunity could be viewed as the number of mobile phone subscribers, a group that both invests in electronic content and can afford $7.99 for home entertainment. Needless to say, that is a large opportunity.

The evolution toward individual memberships will take time, and we are still thinking about how to best do it. One option could be to allow an account to add additional concurrent streams (using the analogy of our DVD business, it would be like choosing a higher-priced plan that allows a subscriber to have more DVDs at home). Or it could be that there is a price point that would encourage multiple accounts in one household. In either case, our long-term goal is to evolve the Netflix service so that it feels more natural to have a personal account. We will also be working on broader Facebook integration which we hope will further the notion of personal accounts." — Netflix, July 14, 2011

Every communication counts when choosing a service provider.

Personally, this is one of the fundamental flaws with most media "rental" agreements. The companies in charge are empowered to rescind their contracts, raise rates, and change services any time they want. This extends to not only Netflix services but cable and satellite companies too.

But where Netflix really stands out is in its blatant mission to not only increase its rates today, but tomorrow too. It has been sharing this news with investors for some time; customers not so much. The Investor FAQ says it all. They want to manipulate customers into streaming only and then divide their accounts among individuals inside the household.

More than likely, customers will do it too. Sure, there will be some grumbling, but entertainment addiction is alive and well. Most of us gave up free broadcast for upwards of $100 or even $200 a month services (plus mobile) and we still purchase DVDs or their digital equivalent anyway.

At the moment, Netflix is hoping you won't notice the above graphs and it expects the colorful commentary to die down. Maybe it will. Maybe it won't. Personally, I'm split. But then again, I'm not a Netflix customer.

Don't get me wrong. The communication was rotten. Netflix could have phased it in much like it plans to phase in personal accounts over household accounts, making it so people don't notice so much and "feel more natural." But at the same time, the only recourse Netflix customers have (short of organizing with stated objectives) is to dump the service en masse.

I don't think they will. I think most will do exactly what Netflix wants. Netflix wants to get out of the mailing business, which costs considerably more than its streaming arrangement. So, if you dump mail, you're not really protesting at all — you're doing Netflix a favor. That favor isn't nearly as big as the favor you will do when everybody in your home wants an individual account, but this is clearly the first step to make it happen.

It's a plan that is, very literally, worth billions for a company that suddenly makes people reminisce about Blockbuster. But for communication pros, the real lesson goes back to not mixing your investor and customer messages. Everything is public nowadays.

Looking For Roots: Pepsi Skinny To Go Retro

So what do you do after your latest campaign riles eating disorder groups because of the skinny can? To borrow from an old Coke tagline, take the pause that refreshes and look back to the days when your brand meant something.

Pepsi recently approved a line of retro T-shirts to bring back memorable Diet Pepsi and Ray Charles' ads for "You Got the Right One Baby, Uh-Huh!" The campaign was launched in the early 1990s and included 11 commercials over the span of three years.

"Mr. Charles stated that the Diet Pepsi campaign was one of the highlights of his career and that 'You've Got The Right One Baby, Uh-Huh!' was one of his most popular songs," said Valerie Ervin, president of the Ray Charles Foundation.''

The nostalgic appeal of the shirts aligns with the current Pepsi Throwback beverage line. It features Pepsi packaging from the 70s and 80s. So much for change.


The campaign, a conservative move compared to its progressive backfires, returns Pepsi to an arena it plays well in — piggybacking on pop culture. At least it did back then.

While it will receive a boost for the retro branding, it might be too late for retro novelty alone. Earlier this year, Diet Coke unseated Pepsi as the second most popular carbonated soft drink.

In fact, since ushering in its new logo and turning to social media, Pepsi endured a 4.8 percent decrease in sales volume. Total volume has been declining since 2004. Some of the decline is related to soft drinks; the rest is consumer choice.

The Curious Casuality Of One-Off Connections.

Pepsi initially launched its first throwback campaign about three years ago. And each time it toys around with the idea, it sees some gains. And then the retro campaigns end, creating another quandary.

The retro campaigns indirectly undermine the decades that Pepsi spent trying to bolster its youthful underdog appeal as a pop culture promoter (a role it seems to have forgotten for almost a decade). That's not to say Pepsi doesn't have any other good ideas. It does from time to time, including Pepsi Refresh.

But good ideas and brand connections are different things. You can like Pepsi Refresh and never drink it. Simply put, the connection is to the cause, not the beverage. So chalk up that good idea to drinking too much social media Kool-Aid.

You cannot simply connect to the current culture by signing on. Lesson learned: People DO NOT connect to social media. They connect via social media. And once there, they connect with some brands, ideas, and people.

A few years ago, some of the people the public connected with were Michael Jackson, Ray Charles, and Cindy Crawford. And, any brand could leverage such notoriety for a price.


What was the price for Pepsi? For about two decades, Pepsi relied so much on other people that it forgot to make a connection between the consumer and the product. So, it continually benefitted from great short-term sales and dour long-term prospects. Unfortunately, it forgot to leapfrog to the next pop hero.

Since nobody really knows what Pepsi stands for anymore, the only way to regain any footing is to give up on introspection. Ergo, they don't need retro as much as they need Justin Bieber.

Unfortunately for Pepsi, they don't have him. Bieber has been spotted on more than one occasion drinking Coke without the need for an endorsement deal.

Communicating Too Much: Brand Fatigue

Ask most marketers how to measure the effectiveness of a campaign and, inevitably, most will say reach and frequency. Reach is the total number of people the campaign message reaches. Frequency is the number of times people see the message.

They are not alone. Anywhere else, it's much the same. Many public relations firms measure the number of stories that run and potential readership or viewership of the communication. Social media is keen on the number of followers (and number of followers those follower have) and the frequency of shares and retweets. Entire "influence" scoring systems revolve around that number.

But is there a point when too much of a good thing becomes a bad thing?

Andrea Godfrey, assistant professor of marketing in the School of Business Administration at the University of California, Riverside, thinks so. She co-authored “Enough is Enough! The Fine Line in Executing Multichannel Relational Communication.” The study included almost 1,200 people over the course of three years, with most participants being exposed to communication over a three-month period.

What Godfrey and fellow researchers (Kathleen Seiders, an associate professor of marketing at Boston College, and Glenn B. Voss, an associate professor of marketing at Southern Methodist University) found was that multi-channel communication does not always yield the results marketers might anticipate. In fact, over communication can quickly lead to brand fatigue.

Specifically, the researchers used more intrusive methods of marketing — phone calls, emails and mailings — from an auto dealership to determine optimal effects of multi-channel communication. What they found was that people could only tolerate three phone calls, four emails, and ten mailings before suffering from brand fatigue and reacting toward the brand with a negative response.

Interestingly enough, when the researchers increased frequency in one channel, tolerance for more communication dropped among all channels. For example, when the number of phone calls is increased, the tolerance for email decreases. They also found when there is one mail contact, the ideal number of email contacts is approximately five, but the ideal number of email contacts drops to one when the number of the mail contacts is five.

“We probably need to rethink the idea that to have a strong relationship with customers we need to be communicating with them all the time,” said Godfrey.

The researchers attribute the increased tolerance toward direct mail as "junk mail" numbness as well as the general perception that junk mail is less intrusive than more interruptive communication channels. That probably isn't all there is to it. Direct mail generally is better crafted than phone calls and emails.

The quality of the message, suitability of the message, and sustainability of a message all play a role in the effectiveness of communication. Phone calls are generally the most interruptive and least well crafted. Email is somewhere in between.

Although phone calls, emails, and direct mail were the cornerstone of the research, marketers might want to consider the potential impact of other multi-channel communication, especially online. While brands — including individuals who have become quasi-brands in and of themselves — can benefit from having an online presence, too much communication from a single source can backfire.

With the addition of Google+ for example, I noted that more than one person has sworn off adding Chris Brogan, Robert Scoble, and few other active but less prominent voices on other social networks (I'm not one of them, yet). Collectively, you might call it A List fatigue, but there are plenty of louder B-list communicators that are being ignored too.

To help put it all in perspective, remember to take a break and see things from the consumer's point of view. As consumers, we quickly grow tired of television commercials that air with too much frequency during a single program (especially if they accidentally air back to back). We all grow weary of seeing the same automated messages spilling across every network, doubly so if it is shared by multiple people with different headlines (save hefty shares for substance). And, with more direct messaging, you can offer a "sale" only so many times in a week or ask people to "read" a post so many times in a day.

Entertaining People: Where Apple Might Be Right

Apple isn't known for its social network prowess. Ping is marginal as a social network at best. It functions like a network, but doesn't feel like one.

But there is something that Apple is doing right, when compared to the rush of Google+, Facebook, and Twitter to generalize the point of being all things to all people.

And that is, for the most part, simplifying things to a singular or primary purpose. We see it in how it treats apps; and the same concept works for niche social networks.

iTunes Festival 2011 London solidifies broadcast-digital convergence.

Downloading the iTunes Festival 2011 London for review was almost a no-brainer. And if you ask me or the reviewer, it's not perfect but nonetheless brilliant.

It also has a primary purpose. You can watch a festival concert streamed live or (since most are in the afternoon) after work.

Applied to television networks, it could potentially give people the ability to watch a television program on the first run or automatically have it waiting for them. And depending on how networks want to play it, they could provide a permanent collection or limited-time viewing opportunities with the option to purchase an episode or series for download.

There may even be some potential non-intrusive revenue models beyond selling the program. For iTunes, the buy button only appears before and after the concert or anytime you pause it. It's clean. A television broadcaster might include related merchandise and/or sponsors just as easily, and (although it ought to be reflected in the price point) embedded commercials.

The real bonus in terms of the iTunes Festival 2011 London, of course, is that it truly makes the concept of any device, anywhere, anytime a reality. You can play it on your phone, on your tablet, or on your television. And, depending on how cloud services come along, you won't have to worry about storage or (hopefully) safety.

Our reviewer also considered that a social networking function might be welcome too. It could be fun, he concluded, to chat with people who check-in with a live streaming performance. The function could be optional, of course. (Sometimes it's nice to skip the socialization of everything.) Or perhaps a network/app feature could open up afterwards, allowing viewers to chat about the show.

But what I especially like about the festival and apps in general is that they keep online experiences tied to how we perceive offline experiences. If you are in the iTunes Festival 2011 London app, you are at a concert. And any behavior, even if you are watching from home, is indicative of a concert hall.

Why apps and niche social networks will have a longer lasting life.

You won't find that on increasingly bloated social networks. You might want to share an article, but your friend wants you to join a video chat. You might want to post a picture, but then get caught up in a barrage of instant messages. You might want to share something funny, but then an associate will send you Farmville requests. And brands, well, they're even worse.

This is quickly becoming one of the problems with bloated social networks. As much as you can dictate your own experience, your friends (and any brands you follow) are being given more and more power to dictate what you will do. (Heck, they are even spilling into search relevance, no thanks to +1.)

But all this stands to reason. Big big open generalized networks are like giant rooms with everything going on at the same time and no walls to distinguish anything. The stereo is playing, the television is on, and ten people are trying to perform.

The result is chaos, something I'm always prepared for when I sign on to any of them. One person is talking politics. Another is telling jokes. Some are watching television. Others are playing games. And half of them are screaming "look at me" or "look at my wall."

An app or well-defined niche network, in contrast, is exactly the opposite. If you sign in, you have a reason to be there and everybody else who might be signed on is there for mostly the same purpose too. It feels more than right. It feels like life.

Developing Networks: Google+, Facebook, Twitter, Mordor, Etc.

With everyone else reviewing social networks — spurred on by the introduction of Google+ — I'll pass on any specifics. Suffice to say that Google+ is a crisper version of Facebook with some added features like video chat.

The added features aren't likely to remain exclusive for long. Facebook might already be working on a solution to add it. (Hat tip: Jamie Sanford by way of Ike Pigott). It won't be long before Twitter starts barking up the same tree. And that's what inspired this post, along with a conversation fragment with Geoff Livingston, Dane Morgan, and Tony Berkman.

How Many General Social Networks Can One Endure?

My guess, ultimately, is one to none. Google, Facebook, and Twitter are moving in a peculiar direction. Specifically, it looks like they are moving forward but they are really moving backward. People don't want one social network to do everything. Do they?

One Ring to rule them all, One Ring to find them, One Ring to bring them all and in the darkness bind them...

Rings and circles. I can't really trust them, even if I like them. They might be easier than Facebook groups (and less annoying). They might attract much less spam than Twitter, even if that will change as the population explodes. But at the end of the day, Google, Facebook, Twitter and a half a dozen others are looking for the One Ring. And if anyone gets it again, it will end badly.

Again? Yes, again. The original welder was America Online. We just didn't think to call it that at the time, but it was a social network that for several years meant all things to all people (still does, for some, if you can imagine).

Ironically, it was Google, Yahoo, and other search engines that cut the One Ring from the finger of those service providers after Apple relinquished eWorld and the online experience descended into the darkness of Sauron Case. The world was a better place without it, much more colorful and diverse. So why on earth would anyone want a repeat?

As humans, we can't really help it. All of nature is predisposed toward order. We thrive on it, making bigger and bigger systems until the weight of it becomes unsustainable. History is littered with the rise and demise of such empires. And, we often forget, Internet is too.

MyBlogLog and Technorati come to mind. One collapsed and another was greatly diminished as each of them began the quest to operate beyond their spheres. In part, it's because as prone as humans are to order, they are equally prone to seek freedom and the wonderful chaos that accompanies it.

Niche Networks Tend To Better Define Environments.

Much like the historical and fantastical empires, it seems to me that generalized networks become unsustainable. People like to confine their activities to the definitions of their environments: they act one way at work and another way at a concert; this way at a church and that way at a bar; this way on one social network and that way on another.

Follow the same group of people from the bachelor party to the ceremony to the reception to the after-reception party to the gift opening, and the social norms will change. Same people; different behaviors.

Major networks, on the other hand, provide the same environment and then ask you to behave differently based on the people in the room. It's backwards, mostly because any social behavior is established by the first person who blinks but only because we're all grasping at straws.

Three Rings for the Elven-kings under the sky, Seven for the Dwarf-lords in their halls of stone ...

Maybe it's because human sociology and adaptability isn't attached to groups of people as much as the environment. We almost can't help it.

This might also explain the primary reasons Facebook (originally a college network) was fast and loose on the front end and slowly became more formal as family members and future employers asked to connect. It's the likely reason quick exchange conversations have taken a back seat to link sharing on Twitter. And it's probably the reason Google Buzz crashed when it failed to establish a culture of what to do there. It wasn't just a matter of who was there, but the purpose of the space.

One of several projects my team is working on right now is a social network of sorts (social network is the closest definition without giving up details). For the last three months, I've been working as one of the principal developers while the board seeks out about $3.5 million in initial funding. (Once we have funding, I'll be allowed to share some alpha invites for a few people.)

What we are doing differently is focusing considerable attention on the environment. And, given it will have a much narrower purpose (with no incentive to pine away your hours looking for conversations to establish presence, eyeballs, or gratuitous activity), it won't compete with any existing network. Instead, it will feel more personal, important, and purposeful — someplace you go for special occasions as opposed to the daily grind.

In some ways, it is what the big networks ought to have been thinking about. Google had some semblance of authority, Facebook had some semblance of social casual, and Twitter eventually became (and then abandoned) a modern version of an AOL chat room.

So does anybody else have it right? There are a few developers who seem like they are on the right track. Of the biggest, it seems to me Apple is one of them. If you want to know why, drop by on Friday when I intend to flesh out why the iTunes Festival 2011 London App represents the future of entertainment.