MarketerBlog

Pajamas Media: How Not to Name a Company

The management team at Pajamas Media has taken a lot of heat over the past week and rightly so.  There’s been chatter in the blogosphere and their naming-renaming saga even hit the so-called mainstream media yesterday.  While most of the criticism missed the point, Jeff Jarvis made some astute observations.  The central question for Pajamas Media isn’t the name, it’s the business.  They missed the essential steps of defining the business and the business model, and articulating the positioning to support that before they hired a naming consultant. 

As a “web 2.0” company it appears they fell prey to some classic “web 1.0” mistakes.  They grew starry-eyed with investor’s money and (apparently) spent more time planning their launch party at the Rainbow Room than working on their business strategy.  (And by the way, a launch party at the Rainbow Room with Judy Miller?  Exactly how many bloggers hang around the Rainbow Room these days?)

My advice to Pajamas Media is to focus on what you do and do it well.  If the collection of blogs has some equity under the name Pajamas Media then stick with that.  If there are legitimate business reasons to make a change for heaven’s sake do your homework.  It’s a stretch to believe that a “branding company” recommended a name that was already in use in the same sector.  But that’s no excuse for management not doing its own reality check.

And if all else fails you can always refer to my handy guide for naming your next company. 

Alphabet Soup: DRM, CGM and CRM

There are so many great lessons to learn from the recent examples of Sony BMG’s DRM (digital rights management) debacle, the “glamour don’t” of media and customer relations, and TypePad’s adroit handling of its service/capacity issues.  The bottom line:  one of the effects of the groundswell of Consumer Generated Media (CGM) is that customer experience and attitudes have an immediate impact on brand image.  In this case, good CGM = good CRM = positive brand image.

As a customer of both companies I was directly affected by each situation. Here’s a recap.

Early this year Sony BMG issued some 50 titles with a new form of “copy-protection software”.  The “copy-protection software” was actually a particularly egregious form of malware that in addition to surreptitiously transmitting user preferences to Sony, exposed computers to debilitating security risks.  The problem was discovered by security expert Mark Russinovich several weeks ago.  It wasn’t until after a public flogging in the blogosphere that Sony reacted – by providing a “patch” which left an even greater security hole.  It was so bad that on November 12^th, Microsoft posted recommendations about how to detect the software and plans to include it in its December malicious software removal release.

Finally, Sony BMG announced on November 15^th that it would recall 5 million affected CD’s.  The company posted a statement about the problem on its web site the following day.  Sony’s response was late and arrogant.  Good Morning Silicon Valley referred to it as a “… train wreck of an exercise in the absolute mismanagement of both technology and public relations”.  Even the Department of Homeland Security did a better job of responding to the situation than Sony.

According to industry analysts, over half a million users have been compromised by the program.  Attorneys in CA and NY have filed lawsuits for damages as well as a class action suit.  Sony’s brief statement on the topic contained neither an admission of wrongdoing nor a prescription of how this would be avoided in the future.  It positioned Sony as a hero for having taken the few meager steps it did, and made no mention of the potential damage (never mind just plain inconvenience) it caused.  Sony refused to engage in the conversation … they didn’t listen. 

I did some random sampling and found nearly a half a million hits on Technorati and over 8,000 on Intelliseek’s BlogPulse.  And there have been dozens of unflattering stories in other media outlets.  Whatever money Sony may have thought it was saving with this DRM policy it will clearly spend for the CD recall and in recovery from bad PR.  I haven’t tallied it, but the company has undoubtedly received millions of hits of negative publicity and consumer ill-will.

By contrast there is the lesser known story of TypePad.  As one of the largest blog service providers the company is going through exponential growth.  Customers began to experience intermittent services outages in mid-October.  As you would expect for a service provider at the heart of the blogosphere, there have been vocal, acrimonious complaints from affected users.

TypePad began communication about these issues three weeks ago.  Unlike Sony, who buried their response until late this week, TypePad put it front and center on their site.  Further, they sent an email to their entire customer base explaining the cause of the problems, outlining steps they’ve taken to resolve the issues, identifying additional areas for future improvement and offering a service credit for poor performance. 

TypePad’s response was the polar opposite of Sony’s.  They immediately admitted problems and communicated plans for resolution.  Because they are a CGM company, they focused on CGM as a primary form of customer interaction.  I’ve read any number of stories about TypePad execs who have posted comments or sent emails to blog users.  Pete Blackshaw, CMO at Intelliseek, summed it up well:

"This is a great example of how you take a bad situation and use it to nurture fanatical brand evangelists. It's a classic example of an 'operational' decision that creates positive word-of-mouth."

Customer service is one of the most viral issues on the web.  But in the past customer service has been shunted to the corner, viewed as a “cost of doing business” and looked down upon by its more glamorous neighbors in advertising and marketing. 

Technology has increased exponentially the breadth and velocity of Word of Mouth (WOM), both positive and negative.  It used to be that “bad customer service” could be isolated, only a handful of unlucky phone reps took the heat.  Now with the stroke of a few keys the whole world learns of a problem. 

I saw a comment this week that Customer Relationship Management (CRM) is moving closer to the brand.  CRM is not moving closer to the brand, it IS the brand.  The brand promise must be 100% consistent with brand delivery.  Actively engaging in the conversation and listening to what customers have to say may be your most important brand strategy.  As Shel Israel put it:

“This is brilliant marketing.  It increases both my personal trust and loyalty. I was inconvenienced, but I’m not going to request free service, because the offer alone is good enough for me.”

You can’t buy that kind of brand loyalty and positive PR.  It seems like the company with a market capitalization of $35b and more than 150,000 employees could learn a thing or two from the small team of marketing innovators running TypePad.

Timeshifting – It’s Time For Marketers To Shift To Consumer Generated Marketing

In case you still had a question about it, there are a lot of people participating in consumer generated media (CGM).  Recently published research reports include some mind-boggling statistics.   Here are just a few. 

As of today, there are 21.2 million blogs listed in Technorati.  Blog Herald claims that as of the end of October, there were 100 million blogs worldwide.  A report by comScore Networks earlier this month shows that 50 million US Internet users visited blogs in the first quarter of 2005.  That is roughly 30% of all Internet users and 1 in every 6 of the total US population.  According to a study released in October by Intelliseek, users are on track to post nearly 2 billion comments this year alone.

There’s a proliferation of ways to engage in Consumer Generated Media, whether it’s publishing a blog with TypePad, sharing bookmarks with del.icio.us, swapping photos with Flickr or ranking local restaurants with Yelp. And it seems there’s a steady stream of new services announced daily.  TypePad reports that its traffic is increasing 10 – 20% per month, and that they’re pushing 3 terabytes of data through their pipes every day. 

In addition to the sheer volume of it, Consumer Generated Media is increasing its impact while other forms of media decline. The Intelliseek study shows that consumers are 50% more likely to be influenced by word-of-mouth (WOM) recommendations from their peers than by radio or TV ads.  Active “ad-skippers” are 25% more likely to create and respond to CGM via Internet message boards, forums and blogs.  Bernstein Research estimates that in five years the negative impact of ad-skipping and piracy on major media companies will be about $9 billion in revenue – a $155 billion hit to overall equity.  Both positive and negative word-of-mouth are equally influential and have nearly twice the impact of TV, radio or print advertising.

The industries most susceptible to CGM are what we used to call “considered purchases” – health, automotive and technology-oriented products/services (e.g.:  games, video, music, etc.).  And the recent profiles of bloggers show that they have an average HHI of $75k or more and are between the ages of 35 – 54.  In other words, they’re at the demographic sweet spot for most marketers. 

Given all of the evidence of the importance and impact of Consumer Generated Media, what are the implications for “Joe-Six-pack” marketer?

The most obvious is that marketers need to give up their old ideas of control and start testing this new model for consumer engagement.  You’ll be in good company.  A recent study conducted jointly by McKinsey and the Word of Mouth Marketing Association shows that over half of marketers will use blogs or WOM in the next six months.

It’s relatively easy and inexpensive to mount a small-scale test, and you’ll learn a tremendous amount in the process.  Think about it in two phases.  First, employ CGM/WOM to better understand your markets and their opinions about your products and services.  Use the process of Active Listening to identify active networks of producer-participants and their attitudes about your category, your company and your competitors.  Then, equipped with a better understanding of your “center of gravity” in the blogosphere, use CGM/WOM to participate in the conversations.  Test blogvertising as a way to help find product/service/brand evangelists.  Ask agenda-setting bloggers to write reviews of your product or service.  Use these efforts to start building momentum among influentials, who in turn will spark the rest of your market.  Most importantly, don’t try to create fake buzz.  It’s transparent and antagonistic, particularly for topics where there are already networks of active participants.  Create Commons, a nonprofit advocacy group, learned that the hard way when they created a marketing program using a buzz marketing agency and were soundly trounced in blogs of the grassroots advocates they depend on for volunteers and funding. 

Consumer Generated Media is a potent combination of user participation and open source architecture.  Test it, learn how it works for your category and brand.  But be respectful of what it really is:  a complex, often chaotic network of overlapping conversations between information seekers and sharers. 

The Positioning Statement – The Essence of Marketing?

Several weeks ago I wrote a post about the process for naming a company.  This week I thought I’d focus on one particular element of naming:  positioning.  A great positioning statement articulates the essence of a company.  As the ancients would have said, it’s the “eidos” of a company.  All evidence to the contrary, I did in fact suffer the slings and arrows of a classical liberal arts education.  I’m not going to make the mistake of trying to define the word “eidos” here.  I will assure you, however, that this Wikipedia definition is off the mark.  And I’ll make a plea for some assistance from my more erudite colleagues.  We need to harness the wisdom of someone who’s actually seen beyond the back of the cave to define/describe that concept.

Before you can choose a name or build a brand, you have to figure out what you are (and are not) and the process of creating a positioning statement often helps a company do just that.  There are several critical questions to ask when crafting a positioning statement.

Ÿ         Who is your intended audience or market?

Ÿ         What is the motivation – e.g. need, problem or opportunity the brand intends to fulfill?

Ÿ         What is your business, product or service?

Ÿ         What is the benefit – e.g. how does the brand deliver a relevant and emotionally compelling experience?

Ÿ         What differentiates it – what are the functional benefits and personality that combine to make the brand distinctive?

In the Consumer Generated-Open Source-Web 2.0 marketing environment the media really has become the message or in this case the brand.  The Janus-like nature of users (who both consume and create) means that every interaction becomes part of the brand.  The CGM-savvy marketer needs to identify brand advocates by engaging in the process of Active Listening.  This process synthesizes traditional consumer insights techniques/resources with learning from Consumer Generated Media to identify and describe the “center of gravity” for your brand, product or service, and the relevant networks of active producer-participants.  Their conversations and interactions will help build your brand.

The positioning statement is the strategic framework in which to consider naming options and to create a visual and verbal identity system – the early steps of brand building.  So it’s critical to get it right, and it’s one of the hardest things for a company to do.  It’s easy to get caught up in meaningless jargon or to end up talking to yourself (or your competitors).  To prevent that, test your positioning statement with the following criteria:

Ÿ         Is it credible – will people believe it?

Ÿ         Is it relevant – will people care about the premise?

Ÿ         Is it unique – can you legitimately own this, and will people see it as distinctive?

Ÿ         It is sustainable and leveragable – will it enable the brand to stand the test of time?

To quote Jerry Blanton’s comment on my original naming post:

“It should be crafted with care and with simplicity in mind and err on the side of real words versus mumbo jumbo.  Does your positioning statement have phrases like "solutions provider, "best of breed" or "a leading company"?  Take them out. They neither differentiate you from your competition nor do they actually mean ANYTHING. You won't have lost anything; quite the opposite, you may end up with real words that mean something to you and your employees.”

Thanks Jerry, I couldn’t have positioned it better myself.