Tuesday, July 31, 2007
Industry Note: The Next Economics of Marketing
"Companies say, 'It's an experiment' — but what are they learning?" Tobaccowala asks. "Basically, they're learning how to create an avatar and walk around in Second Life." Which is fine if that's what you want to do. Just don't expect to sell a lot of Coke."
You know, this is an astonishing quote - especially from an industry visionary.
It betrays just how deeply bereft of real strategic insight media is - and how sorely the media industry needs fresh DNA, instead of old dudes with the same old lame ideas.
This Wired article on SecondLife is misplaced in many ways. But Rishad's quote gets to the heart of the most important one.
Companies aren't going to SecondLife, Facebook, Myspace, etc to (as Steve Jobs famously put it to John Sculley) sell more sugar water.
They are going there to redefine the economic and strategic essence of marketing. To redefine how marketing creates value, and underpins long-run advantage.
As Rishad asks - what are they learning? Not so much about avatars (or profiles, whatever). Rather, one way they are redefining the economics of marketing is by relearning how to learn.
Conversely: Rishad's tired focus on "selling" is the moribund legacy of a creaking, rusting industrial economy - after all, the next word in that phrase is almost always "product".
This focus leads directly and almost inevitably to strategic error.
Yesterday, perhaps, marketing was about "selling". Today, a focus on "selling" will, more often than not, kill you dead. If you need to "sell", from a strategic point of view, you've already foregone enough value that you will likely be out of business soon.
Take Google, for example. How did Google so eloquently demonstrate this fundamental law of the edgeconomy? It built the world's most powerful brand (according to WPP, not me) in less than a decade - almost without any marketing.
There is a very direct relationship between Google's achieving this, and smart companies struggling to redefine marketing via communities and social nets. In both cases, firms are discovering the art of edge leverage.
Rediscovering the economic essence of resources and competencies (and perhaps, as Google has done, accomplishing the seemingly strategically impossible) - that's the point.
Not - emphatically not - selling more sugar water.
Selling is for "product" - not people. And especially not for markets, networks, and communities.
More simply: Next gen marketing isn't about selling. In fact, as David Ogilvy once pointed out, neither, really, was last-gen marketing.
Other than Google, who else is getting this right?
So if leveraging social networks for marketing isn't about selling, what would it be about? Would it be something like lovemarks
i.e. letting users spread the love of their beloved brands to their peers, thereby increasing brand awareness and monetizing the network effect offline? Or more like C2C commerce between prosumers?