You Got the Big Break. Now What?
When we last left PenAgain’s owners, they had achieved the small-business Holy Grail: an order from Wal-Mart. They had no idea what was about to hit them.
By Gwendolyn Bounds, November 13, 2006; Page R1
The real power structures behind the advertising industry appear to be staring at the Internet for the first time. The big agencies, in particular, are wondering how to make money as the vehicles they once relied on lose influence in the market. It was probably people like Warren Buffett who finally convinced them that something actually really scary is happening:
Photo: Thomas Hawk
“The outlook for newspapers is not great. In the TV business, a license from the government was essentially the right to a royalty stream. There were basically three highways to people’s eyeballs, and companies like P&G, Ford, Gillette, and GM would pay a significant amount of money to be get on those highways and advertise their products to a mass audience. But as the ways to get in front of people’s eyeballs increases, the value of those highways goes down.”
What’s a marketer to do? They are desparate for attention. In many cases they even threaten to drop campaigns if they don’t get editorial coverage.
“Almost 50 percent (48.9%) of senior marketing executives reported paying for an editorial or broadcast placement – and almost half of those who haven’t said they would…If 65% of consumers assume that the products, companies or services they read about are there because someone paid for them – and half of marketers have actually paid for media coverage – the press, PR industry and news consumers are all in trouble.” (via Forbes.com)
Buying coverage isn’t how you get people to spread the word about your product. It’s also shortsighted if not suicidal to damage the credibility of the vehicles that you rely on to communicate trusted messages with your customers.
There is another way, however.
I’ve been watching Colin Roche turn his PenAgain invention into a real story with real coverage from big outlets over the past 3 years or so now. I don’t think he has spent a single dollar in marketing, yet media coverage only improves and as a result sales keep soaring.
This stratgegy is not for the weak. Colin keeps a handful of pens in his pocket at all times. He hands one out to everyone he talks to pointing out the latest enhancements such as the new packaging or the new flip cap spring. He makes people feel like they are helping a guy startup a cool little company with him.
He slips it into conversation whenever he gets a chance. He sends his pens to famous people. He sends them to reporters and editors. He chats with store owners who are selling his pen knowing that they are going to help sell it, too.
Everyone is not only a customer in Colin’s eyes, everyone is a potential marketing vehicle for him.
Colin has also refined the “story” of his company. It’s all true. He did in fact dream it up in detention in high school. And the name did come to him after someone woke him up and he said, “I was dreaming about that pen again.” But it’s these anecdotes that make his company feel human and interesting to talk about.
Colin also just started blogging and is now collecting photos of people using the PenAgain on flickr. His flickr photo stream looks like the walls of a New York City diner covered with images of people shaking hands with the owner.
He’s doing all the right things to help people who love his product share his enthusiasm for it.
Contrast his marketing efforts with traditional advertising agencies and you’ll find people stuck with a system that doesn’t work. Agencies get paid more for the expensive print and television campaigns than they ever will for search marketing. They have no incentive to jump into the online space and will continue to sell their clients on the virtues of big expensive branding efforts.
And then you have the media buyers who get paid for allocating a big budget across media vehicles that meet the agency’s campaign goals. But since the goal is usually wide exposure, media buyers have to use vehicles like TV and big circulation magazines to justify their existence. And there’s no incentive to spend less than the budget…quite the contrary. The more they spend, the harder their job is which means they can justify billing for more.
Agencies and buyers are both wrapped up in a dynamic that profits from the waste they create. This worked when there was more friction in the distribution process, as Umair Haque will tell you, but media has taken a lube bath on the Internet and the need for an expensive shoehorn to squeeze expensive campaigns through no longer fits. (yikes…bad mixed metaphor there. sorry.)
“Edge platforms have a number of key features. The most familiar are that they’re often massively distributed, and open-access….they can usually almost completely vaporize the fixed costs of production from most of the resources that are necessary and sufficient to compete in those industries.”
“Advertisers can get away with moving slowly – for now – because they are the ones with the money. Funny how that works. But this won’t last for long, as one client and then one agency discovers that the lazy, traditional, one-stop-shopping of TV upfront and the big-media lunch circuit is inefficient, wasteful, untargeted, irrelevant, and ultimately damned irritating to your customers.”
At the end of the day, the product vendor doesn’t want to work as hard as someone like Colin to sell their product. If they did, then they would be inventing their own things and selling them to the world. The moment they hire an agency to take on that work, they have jumped into a spending whirlpool.
What they should be doing instead is talking about their product every day with everyone they meet and crafting the story that will get other people talking about their product for them. They need infectious enthusiasm for their products, not clever billboards.
Product sales isn’t getting any easier. In fact, it might be getting harder. Since the Colin Roche’s of the world are learning how easy it is to manufacture interesting products, and anyone with a computer can tell their story on the world’s stage, it probably means that selling things is more competitive than ever before.
If marketing industry leaders want to retain the downtown office spaces, nice chairs and designer clothes by riding on cushy vendor marketing budgets, they have to reinvent themselves in ways that make them invisible again. Forget about the Clio awards. You need to get back to work finding ways to get your clients and their customers talking with eachother about eachother.
I recommend starting out by pretending you have no budget before that becomes the reality.
Several authors have proven that blogs are a great complement to writing and then selling a book. They are also excellent companions to operating and marketing a business.
Colin Roche, entrepreneur and inventor of the PenAgain, began publishing a blog this week in response to some big buzz generated by an article in the Wall Street Journal last week. The piece was about how the Wal-Mart distribution system works for product developers from a small businessman’s perspective. The small businessman in this case was Colin with his PenAgain.
The PenAgain story is great. A guy has an idea for a radical new pen…while in detention in high school. He prototypes it in his garage. He gets investment to produce it several years later. Then he hits the streets and sells and sells and sells.
Right now is the point in the story just before he hits it big…or does he?
“During the trial, PenAgain will get space in the special displays, known as “end caps,” at the edge of aisles, in the thick of consumer traffic. The prime positioning will give the product a fighting chance: After 30 days, the stores need to sell close to 85% of the 48,000 pens Wal-Mart ordered if the product is to be considered for wider distribution throughout the chain.”
Part of Colin’s strategy so far has been about paying close attention to what people think of his product. He is constantly watching people use his pen and listening to their advice. And I’ve seen what happens firsthand. There is no shortage of advice for a guy that is trying to launch a product that people can hold in their hands and buy on a supermarket shelf. Everyone has an opinion for Colin.
So, it makes sense that he step into the blog world and open up that dialog to a much wider pool of opinions. I’m hopeful he’ll entertain us and inform us about the entrepreneur’s journey.
For example, he needs to give us performance reports and share the tactics that work and the ones that don’t work. He should give us insight into what his day is like and what the market is doing. People will want to know how many pens and how many distributors he has to work with so that other entrepreneurs can compare notes. They’ll want to know price pressure, competive details and lessons in distribution.
Most importantly, for blogging to have an impact, he needs to consider the people who share their thoughts with him in the blogosphere as trusted advisors.
John Battelle mastered the art of integrating a blog into the author’s writing process. He posted thoughts daily and watched people react. He let them inform him and correct him. He then incorporated those discoveries into the story that became his book. And when his book finally shipped he had an instant base of buyers and marketers.
Unfortunately, John hasn’t adopted the same approach for his new business. Perhaps Colin can show us how it’s done for a startup.
Disclosure: I’m a friend and advisor to these guys.