History lessonsWhile the world economy has been bouncing back of late, we are all more than aware that the recovery is fragile -- and so are many of digital's companies, small and large. Thus, it's more important than ever for us to be smarter and learn from our own mistakes, as well as the mistakes of those around us.
The beauty of digital is that there have been so many initiatives in this fragmented arena that history's lessons come fast and furious. And yet, it's human nature to assume that our individual situations are somehow unique. We are, of course, wrong.
I say "we" because I have made such mistakes many times over the years, dashing down the seductive path of feeling my challenges are unique, only to realize some months or years later that, nope, my situation was not at all special -- and that I am at square one just like those who came before me.
There's an adage that says the essence of stupidity is doing the same thing over and over while expecting different results. Here's my take on eight things we all need to avoid doing again.
1. Trying to Outcool AppleCan't be done. There are ways to compete with Apple. But "outcooling" isn't one of them.
2. Shiny Object SyndromeOh, where to begin on this one? Remember when every brand and its mother were launching widgets?
Remember when most brands sites were trying to be destinations? When chatrooms were popping up on toilet paper sites? None were bad ideas per se; the problem was that we ran into these shiny spaces willy nilly, without a reason or a strategy.
Are brands still doing this? Sure. But fewer. Let's keep that trend going.
3. Fostering consumer control without guidanceUsually it's not what people want. I once worked at a startup that boasted that its database was so big, consumers could search for something and get 1,200 options in results. Wouldn't they looooove that?
Of course, people don't want 1,200 options. They want the best outcome for them. Most of the time, they want three options or so to choose from, with a big blinking arrow over one of the choices that says, "Best value!"
OK, that was comment bait. But I assure you I don't think consumers are stupid. They are smart. Smart enough to realize that three choices are about all most decisions are worth when you have to decide and run and buy the Dragon Tattoo book for book club and pick up your daughter from Scouts. All in 30 minutes. Most things just don't matter more than three choices' worth. And the human mind can only process so many choices anyway. Heck, ask a realtor about the advisability of showing someone 30houses.
There's more to this point, though. Consumers want control of outcomes, not process. Witness MySpace. MySpace gave people total control of their pages. Here's the result:
And here:
What people wanted were profiles that allowed them to express themselves. Without guidance, they got profiles no one wanted to visit out of fear of visual and audio assault.
The new MySpace profiles address this issue rather well. We'll see if it reverses the slide.
4. Trying to make up for it in volumeLots of yummy morsels here. Let's start with Kozmo.com, the company that would deliver virtually anything to your house for nothing. What's wrong with this picture?
Or Webvan, the company that -- oh, I'll let Wikipedia tell you:
While Webvan was popular, the money spent on infrastructure far exceeded sales growth, and the company eventually ran out of money. For example: Webvan placed a $1 billion (USD) order with engineering company Bechtel to build its warehouses, bought a fleet of delivery trucks, purchased 30 Sun Microsystems Enterprise 4500 servers, dozens of Compaq ProLiant computers and several Cisco Systems model 7513 and 7507 routers, as well as more than 80 21-inch ViewSonic color monitors, and at least 115 Herman Miller Aeron chairs (at over $800 each).
You've got to sell a lot of Cookie Crisp to make up for those costs.
Or, my personal favorite, Pets.com, which thought it would be good business to ship 40 pound sacks of dog chow by UPS and beat retail prices. During one period, according to Wikipedia, they spent $12.8MM in advertising and sold $600K in pet supplies. And the pet supplies went out the door at 1/3 of the price they went in for.
But on the other hand, consider Amazon. Now the world's largest bookseller, I have the personal satisfaction to tell you that during 2000, I don't think I ever paid more than a nickel for a hardback. I became expert at getting $25 off $25-plus purchases and ringing up totals of $25.05 with shipping.
Now, Amazon survived this largesse -- God knows how -- and in the end I became addicted to receiving daily deliveries of boxes with smiles on them. Since that time, I've spent more than $20,000 with Amazon over the years -- so perhaps that strategy wasn't so dumb after all. Though I'd never say giving me "Nothing Like It in the World" for a nickel was a smart thing. But it was a mistake the company survived, to flourish in the end.
5. Marketing on attributes versus benefitsMuch hardware and software promotion focuses on data points indicating attributes that are expected to serve as sufficient inducement to purchase. There are certainly segments of the audience that already understand the benefit of something and find the data valuable as a way of distinguishing between items.
But history shows over and over that benefits and brands can trump attributes in most B2C businesses, including hardware. Which of these two players do you think will make your music sound better?
Player A:
Player B:
In fairness, some of the sharpest big companies in the Valley have figured out how to make attributes into benefits.
It can be effective, but it often costs a ton of money to do it.
6. Thinking "better" is always betterIn digital, lots of time and energy gets spent building that better mousetrap. Which is excellent. But by what person's definition is "better" defined? In our industry in 2010, trash bins are full of the stationery of defunct startups that focused on things that people didn't actually care about.
Henry Ford once said, "If I had asked consumers what they wanted, they would have told me a faster horse." So it's important to innovate in areas that aren't necessarily things people are clamoring for. But at the same time, having a rich understanding of the target's problems and tastes is also important.
7. Confusing your needs with target needsRecently a publisher tried to sell me a heavily male-skewing site as a great place to connect with women. Now, I get it that technology makes it possible for a site to predict gender reasonably well, but do you honestly expect me to say, "Hmm. I could message on sites that attract 90 percent women and have relevant context. Or! I could choose a venue with 15 percent comp that has nothing to do with my category. Hmm. What to choose? What to choose?"
8. Ignoring privacy concernsTwo years ago, two companies called NebuAd and Phorm launched services in conjunction with ISPs that tracked every activity of customers for the purpose of gathering data for ad targeting.
In the U.K., Phorm was partnered with three ISPs -- BT, Virgin, and TalkTalk -- which make up a large portion of total U.K. connectivity. As part of the process, the company quietly worked with BT to test its platform on thousands of consumers who were not informed of the test. Consumer anger and regulatory ire ensued, and all three ISPs have dropped out of the plan. The company has shifted to a consumer content personalization strategy (eventually including ads) and an opt-in versus opt-out model. According to The Register, it has lost more than $100 million, with little possible revenue for the foreseeable future.
Today, consumer groups and the FTC are voicing concerns about cookie-based targeting, especially behavioral targeting. FTC Chairman Jon Leibowitz has demanded industry action. While our industry has made efforts in the past to address privacy concerns with regard to ad targeting, these measures have been widely viewed as inadequate. Now a cross-industry coalition has proposed a self-regulation program centered on the "Power i," an icon that will appear on ads. Clicking on the icon will offer consumers information about the companies collecting and using data to target, along with choices in how they participate (or don't.)
Our industry would do well to embrace this program and raise its level of vigilance regarding privacy and ad targeting.
ConclusionPeople far wiser than me say that if you don't make mistakes in digital, you aren't doing your job right -- because there are no certainties in a medium that changes hourly. And because part of the magic of digital is that innovation requires tons of trial and tons of error.
I once heard a speaker say we should rejoice in our mistakes. I am too much of a boomer to rejoice in anything other than hard work that leads to incremental success. But I do believe that failure should not be a source of shame. The decision to rejoice in errors is entirely yours. But we can all agree that it makes sense to concentrate on making new mistakes rather than repeating old ones.
But should Amazon ever want to repeat its $25 off $25-plus purchases couponing...
