Friday, February 17, 2012

Giving Away Things For Free is the Best Promotion and a Key to Making Money



Yesterday, I went to the barber for my once-every-six-months haircut. As I was talking to the girl who cut my hair, I was amazed that here was this 25-year-old woman, cutting hair, who understood more about the Internet and the new media than 90% of the company executives - especially at big media - that I meet. Perhaps it is because she was young that she can easily grasp simple concepts.




The first simple concept is that giving things away for free is the future of marketing and advertising. We see successful companies and people around us doing that all the time, but far too many organizations cannot make the logical connection in their heads and make the jump to that end in order to help their own company.


Giving away useful items or content for free is the best (and cheapest) form of promotion you could possibly get. When she had finished cutting my hair she gave me a freebie. It was a plastic business card carrying case that had her hair salons name imprinted on the top. Every time during the day that I give out a business card I see that name. Now, many people would think, "I wouldn't be caught dead with a plastic business card holder that had some other company name on it!" But not me. I find it wonderfully useful and smart.


Simple, cheap, effective. I look at it several times a day.


I went to a meeting at a huge television content, DVD sales, marketing and distribution company yesterday. I showed it to them. They were marveled at the simplicity and low-cost (and effectiveness) of this promotional concept (I mean, once I explained the logic).


Most company executives cannot get their heads around the concept of giving things away for free in order to make more money. But think about what I have always said, "Google is one of the most profitable companies in the entire world today and they give away everything for free! Now, how do they do that?"


Google is one of the most profitable companies in the world, right? So why don't you and your company emulate them?


I often go to TV stations (alas, they are all sinking ships!) and ask them why they don't monetize their web pages. Every single major broadcasting station in Japan still has a web page that looks like it was designed in 1999; it is just a digitized company brochure.


I have to explain to them the concept of Web 1.0: Digital brochure; Web 2.0 using blogging and two-way communication with bloggers and users; Web 3.0 user generated content like Facebook or Twitter.


Web 1.0 was popular between 1999~2003. From 2003, smart companies started instituting Web 2.0. From 2005~2006 very smart companies started instituting Web 3.0.


Today's major broadcasters in Japan? ALL of them are still using Web 1.0 concepts. They are losing money on their web pages. Seriously, it's all I can do to stop crying (or laughing).


Think about that Google quote again, folks; "Google is one of the most profitable companies in the entire world today and they give away everything for free!" Can you imagine for a second the massive advantage a TV station in Japan has over Google? Google didn't have a broadcasting arm that they can use that is already in the homes of over 130,000,000 people! The TV stations did! They do! But they don't use that to their advantage!


It is even more ridiculous when you consider that the initial phase of designing something like the basic Twitter platform probably cost in the neighborhood of $150,000 ~ $200,000 (USD) but to make and produce a 30 minute TV show for 6 months costs about $400,000! 


It is even more ridiculous when you realize that almost every old TV station  person you talk to thinks that if they give away free content on their webpage, no one will watch their TV shows anymore. Talk about not seeing the forest because of the trees! What in the hell are these TV people thinking about?


The real question could be, "Do these mass media people really understand the market as much as they like to claim they do?" I don't think so.


Here's a good example of a TV station (in the USA of course) that understands what I'm talking about and now 1/3 of their profits are derived from the Internet: http://espn.go.com/


The major broadcasters and media in Japan refuse to entertain the idea that their web pages can become a profit vehicle. They know their businesses are dying but they insist that, "We are a TV station" or "We are a magazine"... Why don't they realize that they are "media" and "consultation" to provide sponsors what the sponsors want to buy?


When, oh when, will these people open their eyes?


But I digress....


The other interesting thing this hair-stylist told me about was that she and her friends have come to stop looking at the very top results of a Google search. Why? Because everyone and their sister have figured out it's a paid advertisement at the top that's been highlighted and no one believes in paid advertising anymore!


I thought that was very telling about the way young people think and perceive. It was the same for us long ago with the Yellow Pages, right (remember them)? We knew that the paid ads were not from the best services or products but from the ones that had big budgets. Everyone knows that big budgets do not necessarily equal good products... Just look at General Motors cars for evidence of that!


As an aside, here's a funny example. Below is a screen capture of a Google search for "London Flight":


CLICK ON IMAGE FOR LARGER VIEW



At the top of the page you'll see a paid ad for British Airways, Air France and Lufthansa. These paid ads cost about $15,000 (USD) a month (maybe more) average. British Airways pays more as they are at the top. Everyone who sees this page knows that those top three are not the cheapest, nor necessarily the best flights or deals... In fact, since they are paid ads, they are viewed with, for lack of a better term, suspicion by most people. People have become smart enough and sophisticated enough in 2012 to recognize that those top three are paid advertising. People today, no longer look at those. They will look lower down the page, to the top 5 or so after the paid ads.

In this case, who do we see? www.cheapflights.co.uk. Guess what? Cheap flights shows me that they are most probably the cheapest and best deal: they didn't spend a penny to get the true #1 rankings on a Google search! I won't tell you how they do this (I know - and you can find that information in this blog in many places as I have written about it extensively before)... But you can bet that a company, like British Airways that is spending, in Japan alone, a few hundred thousand dollars on this sort of advertising cannot be cheap (nor smart?)....

Oh, but you say, "What about people who want better service or flights?" Folks, don't misunderstand. I'd wager a donut that cheap flights also offers those and I'd like to point out that British Airways does not need to advertise to their existing customer base. Advertising to a new customer base and getting new customer is the Holy Grail and entire point of advertising.

Bad marketing campaign's don't only happen in real world

Oh, but I've gotten off the point here again. The point is giving things away for free in order to get new customers. Think about that. How many, especially Internet, companies offer free services then, once someone likes the product or service, the upgrade costs a bit of money and membership?

Aha! Those are everywhere! That's right. Google does that; Linkedin does that; there are too many to name.

Find a way, THINK of a way to give away free content and product or service in order to gain new customers. Actually make an effort with your team in doing that today! Get out of the old fashioned mold and the old fashioned way of doing things.

Find that FREE! and you might be finding a goldmine! 



Thanks to Ed Jones for the FREE blazing sun red with glitter Gibson air guitar! I will always cherish it, Ed!

3 comments:

Andy "In Japan" said...

Hey everyone, Mike told me he's buying free beer for anyone who posts a comment on this blog.

Three cheers for our pal, Mike-san!

Where do we go to get our free beer?

mikeintokyorogers said...

Uh, yeah! Sure. Just go into your favorite izakaya and order any beer you'd like. In fact, order several. They're all on me. I'll pay you back when I see you next time!

Jimbo said...

That story about the TV execs reminded me of something my marketing professor preaches almost daily: You're not selling a product, you're selling a feeling, an experience. Kodak doesn't sell film or cameras, they sell memories. If they had stuck to being "a film company" they'd be out of business right now! Instead they adapted to new, digital camera and printing technology and they keep on truckin. The most crucial part of running a company is figuring out what it is you are selling. Once that's figured out, the rest is just details.