Archive for October, 2007

Tom Anderson and Chris DeWolfe must be pretty upset today. The two founders of monster social networking site MySpace had sold it lock stock and barrel to NewsCorp for $580million in 2005. Just a few months later all of that investment and more ($900million to be precise) was recouped through a deal with Google in which it would became search engine partner for MySpace. And now Rupert Murdoch is considering swapping it for a 25% stake in Yahoo!

At the time, the deal seemed sweet: so sweet, in fact, that many observers thought Murdoch must have lost his wrinkled mind to pay that sum of money for MySpace. But then, in early 2006, Google (yes, THEM again) snapped up upstart online video site, YouTube, for $1.6billion, and its two founders, Chad Hurley and Steve Chen, found themselves a few hundred million dollars richer.

The MySpace duo fumed.

No wonder they took umbrage and started to think they’d been ripped off by wily old Aussie, Murdoch. MySpace had far higher numbers of subscribers than that Johnny-come-lately YouTube and a business model that was bringing in real cash, not just column inches. So, in June this year, Anderson and DeWolfe decided to ask Rupert for more cash in compensation - to the (name that) tune of $12.5million a year each - to stay on after their contracts expired! Murdoch has counter-offered with $7.5million each for two years and, as far as I know, the discussions are still going on.

But, hot off the press (and long awaited) news about a deal between Microsoft Corp and Facebook must be making the two MySpace founders more bitter still. Today Microsoft said it was paying $240million for a 1.6% stake in Facebook - a site a mere four years old that again has way fewer users than MySpace - valuing it at around $15billion (or 25 times the amount MySpace was sold for). Grrr! And Mark Zuckerberg, the 23-year old founder of Facebook, frees up some cash for a bit of money for pocket money (to buy a Lear Jet, for instance) while staying firmly in control. GRRRRRRR!!!!

The moral of the tale? There is none. Murdoch is a shrewd dude who saw the potential of MySpace and snapped it up as the, what now looks to be, bargain of the century. Mark Zuckerberg is half a century (53 years!) younger and is every bit as savvy. And DeWolfe and Anderson made it big, but perhaps sold out too early (easy to say in hindsight). So, sorry Tom and Chris. Buy me some Cristal and I’ll help you commiserate.

Yes, that Sgt. Pepper taught the band to play. But also the stock markets around the world went into free fall in the worst crash since 1929. I was there, working as a financial futures broker in the City of London. Starting on Black Monday - October 19, 1987 - indexes like the Dow Jones Industrial lost a third of their value over the following weeks.

But the reasons for the dramatic sell off were not particularly rational - in fact within 2 years the markets were back to where they had been before the crash - there was a ‘group think’ going on by the institutional investors that turned a market correction into a blind panic. They were all using computer programs based upon a set of almost identical assumptions to help them decide how to buy and sell stocks, so when certain prices were breached massive numbers of sell orders were triggered at the same time. As the market started to drop, more and more sell orders were automatically triggered and it became a self-fulfilling prophecy: sell the market because the market is going down.

The group think I saw 20 years ago is happening now in marketing. The mentality is to do something because that’s what others are doing, without thinking through the assumptions and to stop and ask ‘why?’ And, you know what, we’re starting to see the effects. The ‘business as usual’ crowd are losing out to the marketers and agencies who are questioning the assumptions about the role marketing plays in consumers’ lives and can find ways to do things in a fresher way.

As we say in the Punk Marketing Manifesto, “why not ask ‘why not?’” Assumptions are there to be questioned, not followed without thinking. As the money moves from the old ways of marketing to the new the need for change has never been clearer.

Are you psyched?

Our spanking new audiobook, “Arguments of the Punk Marketing Manifesto,” coproduced by Audible Inc., is now an iTunes Exclusive. So go, get one.

Why are you still here!

Check it out on Audiobooks by iTunes.

Poor box office on opening weekend for new Ben Stiller movie, ‘The Heartbreak Kid,’ is being blamed on the huge success of Halo 3, the third in the series of Halo video games by Microsoft Corp’s video game division.

Halo 3 sold $170 million in its first 24 hours of sales when it was launched on September 26, beating out previous record-holder movie Spiderman 3 for the title as biggest entertainment launch ever (of course Spidey 3 was a piece of crap, so it was just a matter of time). This shows how so NOT niche video games now are - they are going head to head with more traditional (read ‘dull’) forms of entertainment competing for the attention and pocket money of the fickle youths. And winning.

‘The Heartbreak Kid’ made $14million in its opening weekend, versus an expected $20-25million. And overall, box office receipts in October is down down down - it’s lowest level since 1999. Studio execs have been wondering aloud whether the success of Halo 3 can be blamed for the lackluster performance.

But we think there might be another explanation. Crap movies. Yes, Stiller’s movie (a project from the Farrelly brothers who worked with him on ‘Something Sticky About Mary’) just isn’t that good. The critics have panned it. If it was a good movie, the video game could wait a few hours. And there’s not much else out there to lure someone into the theater to kill a couple of hours on a Friday or Saturday night.
It’s all about content. And Bungie Studios, the newly independent studio that created the Halo series, got it right, while Dreamworks, the studio that produced the Stiller stinker, just didn’t .

So, movie men, ad people and anybody else in the content business, stop blaming external factors for your failures and start raising your quality standards. Then the people will come flooding back.

It all started on the day when people stopped putting in home phones and relied on their mobiles for most conversation. That was when corporations had to stop the crap – and start being really careful what they said. Because on that very date anytime someone saw something a little out of whack, they called, Instant Messaged, began to blog—and no longer waited till they got to work or a cocktail party to make a point known.

A long time ago, in the analog years, the Canada Dry company hit upon a PR wallop when they announced that theirs was the only non-caffeinated soft drink on the market. They intro’d that to some acclaim – and oh my, in a few weeks they were the #2 soft drink behind Coke for the first and last time.

Of course, it wasn’t true: several non caf colas were out there already (none Coke or Pepsi yet) and yet the machine had already taken off and everyone was buying up CD!

No more. Today the atmosphere is one where everyone knows everything. So say one thing out of line and you’re dead.

One of my favorite examples of bad press that hit someone in the ass when they weren’t expecting it was the sloppy Folgers brand, the market leader for Café Instant, introducing a new product Simply Soft — …made from specially selected beans that are roasted to reduce certain irritants to affect a sensitive stomach –P&G introduced it as a welcome alternative to the acidy coffees on the market. They said studies proved yada yada.

In the press release, Folgers’ owner P&G estimated that stomach-friendly coffees could capture 10 percent of the $19 billion in coffee sales in the United States.

Folgers forgot that going out screaming about a whim was foolhardy at best. The blogosphere went nuts and people started asking each other: What the heck?

Then the bomb dropped: “It’s as much mythology as anything. The evidence that coffee is injurious to the stomach isn’t there,” said Dr. Joel E. Richter on page one of the New York Times. The Times got that from reading about it online!

Someone walking down the street saw the billboard, short-messaged a buddy who blogged about it. And Folgers – owner of $422 of the market for Instant - was branded a liar just below the fold of a newly-reduced (and pissed about it) newspaper, that was looking for corporations to call out.

In an instant (coffee), Folgers was branded a liar. Big and fat. A lot of Maxwell House was bought that month, you can be sure. Only 12 million jars of Simply Soft left the shelves, a low for Folgers. Nah. The low for Folgers was in forgetting that cynical = investigation when today’s consumers are now the most knowledgeable ever. Once you forget that, you’re a goner.