Category Archives: Advertising

The Dogshit Bar: A Memorable Market Research Concept

I can’t tell you the number of times I’ve seen market research that suffers from one key problem.  It goes something like this:

  • What do you think of PRODUCT’s user interface?
  • Do you think PRODUCT should be part of suite or a standalone module?
  • Is the value of PRODUCT best measured per-user or per-bite?
  • Is the PRODUCT’s functionality best delivered as a native application or via a browser?
  • Would you like PRODUCT priced per-user or per-consumption?
  • Rank the importance of features 1-4 in PRODUCT?

The problem is, of course, that you’ve never asked the one question that actually matters — would you buy this product — and are pre-supposing the need for the product and that someone would pay something to fulfill that need.

So try this:  substitute “Dogshit Bar” (i.e., a candy bar made of dog shit) for every instance of PRODUCT in one of your market research surveys and see what happens.  Very quickly, you’ll realize that you’re asking questions equivalent to:

  • Should the Dogshit Bar be delivered in a paper or plastic wrapper?
  • Would you prefer to buy the Dogshit Bar in a 3, 6, or 9 oz size?
  • Should the Dogshit Bar be priced by ounce or some other metric?

So before drilling into all the details that product management can obsess over, step back, and ask some fundamental questions first.

  • Does the product solve a problem faced by your organization?
  • How high a priority is that problem?  (Perhaps ranked against a list of high-level priorities for the buyer.  It’s not enough that it solves a problem, it needs to solve an important problem.)
  • What would be the economic value of solving that problem?  (That is, how much value can this product provide.)
  • Would you be willing to pay for it and, if so, how much?  (Which starts to factor in not just  value but the relative cost of alternative solutions.)

So why do people make this mistake?

I believe there’s some feeling that it’s heretical to ask the basic questions about the startup’s core product or the big company’s new strategic initiatiave that the execs dreamed up at an offsite.  While the execs can dream up new product ideas all day long, there’s one thing they can’t do:  force people to buy them.

That’s why you need to ask the most basic, fundamental questions in market research first, before proceeding on to analyzing packaging, interface, feature trade-offs, platforms, etc.  You can generate lots of data to go analyze about whether people prefer paper or plastic packaging or the 3, 6, or 9 ounce size.  But none of it will matter.  Because no one’s going to buy a Dogshit Bar.

Now, before wrapping this up, we need to be careful of the Bradley Effect in market research, an important phenomenom in live research (as opposed to anonymous polls) and one of several reasons why pollsters generally called Trump vs. Clinton incorrectly in the 2016 Presidential election.

I’ll apply the Bradley Effect to product research as follows:  while there are certain exception categories where people will say they won’t buy something that they will (e.g., pornography), in general:

  • If someone says they won’t buy something, then they won’t
  • If someone says they will buy something, then they might

Why?  Perhaps they’re trying to be nice.  Perhaps they do see some value, but just not enough.  Perhaps there is a social stigma associated with saying no.

I first learned about this phenomenom reading Ogivly on Advertising, a classic marketing text by the father of advertising David Ogilvy.  Early in his career Ogilvy got lucky and learned an important lesson.  While working for George Gallup he was assigned to do polling about a movie entitled Abe Lincoln in Illinois.  While the research determined the movie was going to be a roaring success, the film ended up a flop.  Why?  The participants lied.  After all, who wants to sound unpatriotic and tell a pollster that you won’t go see a movie about Abe Lincoln?  Here’s a picture of Ogilvy doing that research.  Always remember it.

ogilvy

Too Much Money Makes You Stupid — Let’s Make an Alec Baldwin Viral Video

There are two sayings I like when it comes to the unicorn bubble:

  • “Too much money makes you stupid”
  • “Any idea’s a good one when you’ve got $100M burning a hole in your pocket.”

Startups are supposed to be focused.  Startups are supposed to need to prioritize ideas and opportunities.  Just as startups weren’t supposed to buy Superbowl ads, startups aren’t supposed to have hundreds of millions of dollars to plow through in the name of creating brand mystique either via huge-budget events like Domo’s Domopalooza or would-be viral videos, like the one below.

But wait, you protest, didn’t Salesforce always do aggressive marketing and wasn’t that risk-taking part of their greatness?  Well, yes and no.  A good part of their early marketing was guerrilla PR done on the cheap.  Yes, they also ran big events, but they mostly found a way to pay for them — Salesforce raised $53M in VC before going public.  Domo has raised nearly 10x that.

Now, I have no particular beef with Domo. Other than being next-generation BI, I must admit to always having had some trouble figuring out what they do — in part due to the abnormal secrecy they had in their early days.  I know they don’t compete with Host Analytics so I have no beef there.  I also know they have sexed-up the BI category a bit, and they’ve certainly done a great job of positioning themselves as a cool company and have created a lot of buzz in the market.

But at what cost?

Domo has raised $483M.  It does cause one to wonder about their capital-to-ARR ratio, which is a great overall capital efficiency metric and one that no ever seems to talk about.

  • While I don’t know in Domo’s case, I’d guess for many unicorns that this ratio is 10 to 20x — where the company is running a kind of perpetual motion machine strategy where you generate the Halo Effects hoping to drive the sales that justify the valuation that you got on your last financing.  This strategy, as many will discover, works well until it doesn’t.  If the epitaph of Bubble 1.0 was about Network Effects, that of Bubble 2.0 will be about Halo Effects.  Remember Warren Buffet’s famous quote:  “only when the tide goes out can you see who’s swimming naked.”
  • I know for a reasonably capital-efficient SaaS business the capital-to-ARR ratio might be 2-3x.  Perhaps an order of magnitude difference.

Back to our core topic — what’s an example of something that looks like a good idea when you have $483M burning a hole in your pocket that, well, might not look like such a good idea if you were forced to lead a more frugal marketing existence?

How about  a YouTube mini-series with Alec Baldwin?  That’s exactly what Domo did.

Here’s episode 1 about “rancid data” which, among several issues, breaks the fundamental rules about how to make a successful viral video.

The Big Cheese: Velveeta Network Marketing with House Party

I caught a Facebook status update from childhood friend and neighbor, Gene DeRose (who, among other things, founded Jupiter Communications), which linked to a Wall Street Journal article about his new company, HouseParty, and the big Velveeta House Party that they are running on Super Bowl Sunday.

Always interested in marketing, this got me asking: what’s a House Party? The answer: a modern-day, high-tech interpretation of the old Tupperware party.

From their site:

Is a House Party like a Tupperware party?

Yes… and no. There are many appropriate analogies to be made to the successful phenomenon that is a Tupperware party, but a House Party is different in one key way: hosts of house parties are not paid representatives of any of the products that are showcased at the event.

Instead, a House Party host is typically a brand ambassador – a consumer that already has a positive association with the brand(s), and who is likely already out doing something we simply want them to do more of: telling their friends about the brand. House Party finds the most viral of these consumers, and gives them ways and reasons to do more of this advocacy while also allowing us to guide and sculpt some of it, peek in on how it’s going, and track it.

I suspect there’s some cool data mining technology involved, because they somehow identify the “most viral” of the House Party applicants. For example, for The Big Cheese, only 2,500 of the 15,000 applicants were selected.

Good luck with the concept Gene and Parker: it seems like a good one.