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PART IV

Sawdust More Thoughts On…

Starting Conversations

If you’re a big brand like Coke or SunChips, your brand is being talked about and you need to address the topic head-on. When you’ve got that conversation covered, you can spread out to talk more generally about beverages, refreshment, summer, et cetera. But if you’re Sally’s Orange Soda, no one is talking about you, so you need to do the reverse—create a general soda conversation first. You need to jump into every relevant conversation you spot, much like I did when I talked to people about Chardonnay and Shiraz in the early days, long before I responded to @garyvee’s. Once those conversations are up and running, you can start to talk specifically about Sally’s Orange Soda.

The Difference between the Power of Word of Mouth and Advertising

In mid-2010, National Public Radio officially changed its name to NPR to reflect its presence online and on digital devices. In an article for The Nieman Journalism Lab about how NPR is measuring the value of their Twitter followers and people who “like” it on Facebook, Justin Ellis writes, “It…makes sense that NPR wants to monitor its emerging platforms as they try to transform into a digital media company. Facebook and Twitter combined now account for 7–8 percent of traffic to NPR.org, an amount that has doubled in the last year.” More and more people are finding their way to the NPR website through links they see on Twitter and Facebook because of the social context that surrounds those links, a context created when consumers opt to receive NPR updates through their newsfeeds, or when they see the content because it was posted by a friend. You’ll pay attention to or interpret a comment about an NPR story from your mother or a coworker whom you respect far differently than you would if you found the article through a Google search. That social context and connection gives the content weight and importance that it wouldn’t otherwise have. The difference between how people respond to search engine results or a banner ad versus how they respond to Twitter or Facebook feeds parallels the difference between how people respond to advertising and how they respond to word of mouth. One is a random, faceless encounter that is easily forgotten; the other is a meaningful exchange worth passing along and sharing with others.

How Fear Blocks Innovation

It’s becoming more unusual for a big consumer brand to really innovate and create a great product. Vitamin Water didn’t come from Coke; Pom didn’t come from Pepsi. Too many big companies get stuck in the muck of their own fear and short-term concerns, which prohibits them from taking risks and following through on great, creative thinking. They’re too wrapped up in meetings and procedure and stock value, or worst of all, the politics of keeping their jobs, whereas smaller, scrappier companies are often still ruled by passion and have the freedom to experiment.

Agendas

There are a lot of people with a vested interest in making sure that brands don’t start using social media. You can point out plenty of weaknesses in social media metrics, but you can find just as many in traditional media. The reality is, however, that brands will eventually be able to track every consumer online—there is no truer metric. What would happen if brands started demanding the same metric standard from traditional media? What if they realize that they can spend their money more efficiently and effectively online than on television? There is a lot of marketing and advertising money—not to mention thank-you-for-doing-business-with-us gifts like baseball-game tickets, shows, fancy dinners, trips to Cancún, and cases of Dom P—at stake, and a lot of people will denigrate social media’s influence for as long as they can so they can keep their hands on it. In addition, those gifts are often exchanged between people who genuinely like doing business together. This means that even if another agency were willing to give them a better deal, they’d still spend their money with the agency that has treated them preferentially over the years. To say that business isn’t personal is ridiculous. P.S., you can start to create some of these relationships on Twitter, Tumblr, and Facebook. Who said social media isn’t B2B?

Changing Strategies

I usually see parallels between marketing and interpersonal relationships, but lately I can’t shake the thought that there are also parallels between how we market and advertise and how we wage war. The world wars were fought with blanket fire—big planes dropping many bombs from the sky, battleships, tanks. Everything was big and meant to overwhelm the enemy. Then we got into Vietnam, and we couldn’t use the same tactics—we had to fight one-on-one. More recently, in Iraq and Afghanistan, troops went from village to village, tribe to tribe, trying to stabilize dangerous regions all while winning the trust and the hearts and minds of the populace. I’m not passing any judgment on how we fought these wars, nor do I believe that the decisions we make in the marketing world can compare to the decisions the leaders of our armed forces must make every day or to the sacrifices made by our troops. I do think, however, that just as our strategies on the battlefield had to change, so have our strategies in the business world. There was a time in business when we had to fight big, and so it was necessary to rely on a big platform like television. TV was a tank; radio was a fleet of planes. Now that we are trying to go local, it’s been a real struggle for some companies; big isn’t going to help them win. Carpet-bombing Afghanistan wasn’t going to get us anywhere, nor will spending $44 million exclusively on a TV campaign, some billboards, and radio spots.

Defending Social Media Throughout My Career

I was the baby-faced kid at the conference table surrounded by wine experts and old-timers who thought my video blogs were a joke, even an embarrassment to the industry. Even when it became clear that my methods were yielding profitable results for Wine Library, my family liquor business, and I started getting media attention as I proved my entrepreneurial chops, I faced constant skepticism and condescension. I got used to it a long time ago, and I actually enjoy the debate. I’m not scared to defend and debate the value of this emerging shift in the Web, because “I told you so” may be one of the most delicious flavors in the world. Now, if I’m wrong, I’ll deserve the “told you so,” but I won’t be sorry that I said my piece. Too many people are scared to share their visions and thoughts in public or even in board-rooms. Having a strong vision is important for your personal brand. Don’t be afraid to say what you think. Ever. That said, don’t forget to listen, either.

Drawing Lines in the Sand

I think it’s sad when someone who says he or she wants a fruitful career refuses to try something new because the numbers don’t seem promising. I understand that people crave security, but I don’t understand the complete lack of curiosity I sometimes see. Every time you draw a line in the sand, you’re robbing yourself of a learning experience that could serve you well in the long run. Lines in the sand will only box you in.

The ROI of Emotions

The ROI of a social media user is deeply tied to that user’s sense of community and the emotional attachment he or she associates with a product. You could offer me a Jets T-shirt for eighty bucks and a Cowboys T-shirt for a dollar, and I would still never buy the Cowboys shirt. My emotional attachment to the Jets is that strong. A teenager who loves Vitamin Water enough to follow the brand on Facebook isn’t going to be satisfied with a gift card from Snapple if Vitamin Water treats her better whenever she interacts with them online. She may be appreciative and grateful for the gift, but the second she has her own money she’s going to spend it on the brand that means something to her. The heart wants what the heart wants. Snapple might get the initial purchase, but Vitamin Water has the relationship, which will translate into far greater revenue in the long run. Those who are willing to look (and there are too many marketers who are not) are witnessing the humanization of business; it will have one of the greatest impacts on commerce we’ve ever seen.

How Nielsen Ratings Work

Let’s review how the ratings system works. Selecting for demographics that best represent the country as a whole, a computer program randomly targets households with television sets and asks the inhabitants to monitor their television-watching habits. Only about 50 percent of households agree to participate, so the ratings companies then have to try to replace the uncooperative homes with homes that best match the same demographic makeup. In 2009, there were about 114,900,000 households with televisions. Of those households, only about 25,000 homes were monitored. That means 99.9 percent of American households were completely ignored.* This is not necessarily news to the marketing, advertising, and media-buying community.

The sample does get broader during the sweeps months of November, February, May, and July, when Nielsen asks about two million people to submit diaries. Paper diaries. Sent through the mail. You don’t have to be a psychologist to think of any number of reasons why these diaries might not accurately reflect a person’s TV-watching habits. On top of that, only about 50 percent of the diaries can be used, because so many are never returned or are filled out improperly. A quick search on the Internet will hit many articles written by Nielsen participants revealing, albeit sheepishly, that they thought about fudging their reports and altering their TV-watching habits (and some of them actually did). Those confessions are just from the raters who bother to share their experience; how many others could be out there?

Nielsen admits there are weaknesses in its process. In 2009, the company released a report that stated its ratings might have been inaccurate by as much as 8 percent. The reason? Participants weren’t using their People Meters correctly. Ultimately, no matter what corrections and adjustments it makes, Nielsen still has to rely on the accuracy and honesty of the individuals in the mere 25,000 homes it is monitoring. Someone has to push the button identifying herself as the viewer; someone has to remember to mention that she spent ten minutes during a half-hour program chatting with the Girl Scout who came to the door.

In addition, as we all know, television-watching habits have changed drastically in the past few years. Nielsen issued a 2010 report stating that 59 percent of people watch television and surf the Internet simultaneously, 35 percent more than the number of people who did so in 2009. Thirty-five percent more in twelve months! Nielsen assures us that it has systems in place to account for the swell in cable and digital channels, DVRs, and the fact that people are watching TV on their iPhones and playing around with all kinds of multimedia while the television plays in the background. I would love to know what kind of technology could make tracking so many platforms possible, but that information is proprietary and confidential to Nielsen, and I can understand why. Still, if this is how social media was tracked and I tried to sell it to a room full of executives in 2011, don’t you think they might point out some big holes in the system?

It’s important to remember that The Nielsen Company was not always the only game in town. In the 1940s and ’50s, Nielsen competed against five other ratings companies: Videodex, Inc., Trendex, Inc., the American Research Bureau, C. E. Hooper, Inc., and The Pulse, Inc. The Claude E. Hooper company was the market researcher during the radio golden age and became enough of a presence in TV, until Nielsen acquired it in 1950, that it was common for television series producers to ask each other, “How’s your Hooper?” But Hooper sold, the other guys disappeared, and advertisers, ad agencies, and media buying companies put their faith in Nielsen.

What Touches People

People laugh at me because I get so pumped about the New York Jets. Well, how is that any sillier than standing in line for nine hours to get the first copy of the newest book in the Twilight series? Or six hours for the new video game, Sneakers Smart Phone? Now that brands are touchable, there’s no reason to think that with some creativity, they can’t create the same emotions as a sports team or a pop culture event. The brand that touches and creates the most emotion wins.

Campbell’s knows this to be true. In a complete revamping of their marketing strategy, they are investing heavily in biometric tools—measuring skin moisture, heart rate, breath, and posture, for example—to help measure the subconscious, emotional reactions consumers have to their products. This research resulted in big changes to the look of their condensed soup cans, which they hope will evoke more emotional reactions from shoppers.

The Broken Corporate Game

The CEO of BP left with a multimillion-dollar bonus. He’s in charge during the worst environmental disaster of all time, and he leaves with money spilling out of his pockets. When a leader’s worst-case scenario doesn’t look that bad, there’s no reason that person should care desperately about the fate of his or her company. If that CEO’s contract had said that the stock price needed to be at a certain level or he would lose everything, he would have treated the whole oil-well situation differently. When the worst-case scenario is pretty, you’re never as scared or antsy as you should be. Period!

Playboy Corporate America

Corporate America is rewarded for hookups and one-night stands, and that’s how much respect most corporations show toward their customers. Don’t hate the player; hate the game.

Billboards

There is no chance in heck that as many people as the companies tell you are viewing billboards are viewing billboards. People are so distracted with their mobile devices they’re barely looking at the roads, much less looking at billboards. Oprah is right about this one—cars should be no-phone zones. I’m scared to share the road with other drivers!

I Like TV

Just to make it really, really clear: I am a fan of traditional media; I just have issues with the creative work and the pricing. I see what people are putting out there in print, on radio, and on TV, and I don’t believe they are pushing the creative envelope enough. And, because of the massive changes in viewership, I don’t think I should have to pay for this media as if it were still 1994 and radio, TV, and print were the only mediums getting people’s attention.

Surveys and Customer Cards

When you ask a consumer to fill out a survey or comment card, you’ve already influenced the answer you’re going to get. As soon as people are asked for their opinion, they filter their replies. Maybe they’re afraid of getting someone fired. Maybe they want to sound smart. Maybe they don’t want to hurt the feelings of the person asking the question. Maybe they are mean. But on social media, you’re seeing people’s unfiltered conversations, reactions, and opinions. That’s a gold mine of information for the brand brave enough to look for it.

“Most Brands Still Irrelevant on Twitter”

While I was writing this book, Ad Age published an article called “Most Brands Still Irrelevant on Twitter: Marketers Are Certainly Tweeting, but Users Are Barely Listening.” Maybe someone at your company sent this around saying, “See, I was right to insist that we not waste our time on Twitter.” I’d like to point a few things out about this article:

1. The article actually explains the problem: “While marketers such as Dell, Comcast, Ford and Starbucks have been, at times, clever participants on Twitter, the majority of marketers use it as a mini press release service. Only 12% of messages from marketers are directed at individual Twitter users, meaning marketers still see it as a broadcast medium rather than a conversational one.” So you see, it’s not that Twitter doesn’t work; it’s that most brands aren’t using Twitter correctly. It’s like saying that a trumpet is broken because the first hundred people who try to play it suck. You can’t have a relationship with someone if you won’t shut up and let him or her get a word in edgewise. Brands have to realize that it’s not all about them. When they do nothing but push product, there’s no reason for the consumer to say anything back. It’s like that friend you have who always talks about herself and never asks how you’re doing. Eventually, she gets tiresome, and you lose interest in keeping up the friendship.
2. “Brands only engage 18%.” Well, whose fault is that?
3. Twitter is four years old, and we should treat it like any four-year-old. Give it a little time to grow up and mature before dismissing it.

Getting Started

You don’t have to be Michael Phelps, but for God’s sake, put on a bathing suit!

Jeff Bezos’s Missed Opportunity

Bezos bought two of the few companies that have most interested me—Zappos and Woot. Woot.com is a site that sells one cool, discounted electronic item per day. When the item runs out, the sale is over, and everyone has to wait until midnight of the following day, Central Time, to see what new awesome thing is on the market. When Woot launched in 2004, I said, “Shoot, I should have built that! I soooo get it!” It’s the site that inspired me to branch out of wine retail. Amazon bought it in June 2010, but it should have bought the company three or four years ago. I’m a little surprised that it took Bezos so long to see Woot’s potential, since the single-option, restrictive buying trend seemed so obvious. And I am really disappointed in myself for not taking action and launching a startup around the same idea. I made a half-assed effort with a site called Free.WineLibrary.com, but it didn’t take off. It took me until 2009 to get the formula right with Cinderella Wine. Kudos to the founders of Groupon and Living Social for running headfirst into the opportunity and executing so successfully.

Apologies

LeBron James was apparently counting on the public’s capacity for forgiveness when he decided it would be a good idea to announce on live national television that he was dumping his hometown team, the Cleveland Cavaliers, to play for the Miami Heat. Talk about stabbing the people that love you in the back! Still, Cleveland will probably eventually forgive him. But if he were smart, he’d have taken note of his fans’ anger, put together another live TV appearance, and say, “I had my reasons for going to Miami, but Cleveland, I’ve been a jerk, and I’m sorry.” And if his handlers or agents had been smart, they would have been watching Twitter while LeBron made his announcement, seen the public reaction, given him a talking-to during a commercial break, and allowed him to express his regret on the spot for upsetting so many people. That would have been news! In any scenario, however, his apology would have to be genuine. There’s never a time when real doesn’t work.

Hiring and Firing

I value good teamwork more than almost anything. Though I rarely fire anyone, over the years I’ve had to let go of five of the most talented employees that have ever worked at Wine Library, because they just couldn’t play nice with the other boys and girls. That was culturally unacceptable in my company.

Leadership and Culture

Bill Parcells is the best coach of all time. Screw Phil Jackson—I could have won a few championships with Jordan, Shaq, and Kobe on my teams. Parcells is the greatest coach in history because he went to a rotten New York Giants team and won two Super Bowls; went to the New York Jets, who had won four games in two years, and in two short years got them within one game of the Super Bowl; went to the Patriots, who were one in fifteen, and took them to the Super Bowl; went to Dallas and made them a consistent playoffs contender; and then to Miami, where he coached the biggest turnaround in one season in NFL history. He wins through building team morale, hiring the right people, and instilling the right culture. He brings his DNA. In this new world where people can communicate more freely with not just customers, but with employees too, the Bill Parcells style of leadership will become more and more necessary.

Talent

Companies that resist the Thank You Economy are going to see an exodus of talent. The people who understand where the culture is going but don’t get support from their companies are going to find the courage to leave for new pastures. In communist societies, people resist covertly. They’re suppressed; they fight the system; and as soon as they can, they leave.

One day these companies are going to realize that they have to get on board. They’re going to look internally for the leaders to take them there and execute, and find that the people they need bailed out of frustration a few years earlier. They didn’t appreciate what they had until it was too late.

Communism in Corporate America

The economy and our culture are inextricably linked, to the point that, in my mind, they are one and the same. If you understand the culture we’re in right now, you understand that there’s nothing an employee can say that will irreparably damage your business, especially if you fix it quickly. That’s what capitalism understands and communism doesn’t.

Tony Hsieh’s Letter to His Employees

When Amazon acquired Zappos, even the way the acquisition was announced was culturally significant. Tony Hsieh, CEO of Zappos, wrote an incredibly personal letter to Zappos employees explaining the details of the transaction, what it meant for the company, and how it would affect their jobs.

Date: Wed, 22 Jul 2009

From: Tony Hsieh (CEO—Zappos.com)

To: All Zappos Employees

Subject: Zappos and Amazon

Please set aside 20 minutes to carefully read this entire email. (My apologies for the occasional use of formal-sounding language, as parts of it are written in a particular way for legal reasons.)

Today is a big day in Zappos history.

This morning, our board approved and we signed what’s known as a “definitive agreement,” in which all of the existing shareholders and investors of Zappos (there are over 100) will be exchanging their Zappos stock for Amazon stock. Once the exchange is done, Amazon will become the only shareholder of Zappos stock.

Over the next few days, you will probably read headlines that say “Amazon acquires Zappos” or “Zappos sells to Amazon.” While those headlines are technically correct, they don’t really properly convey the spirit of the transaction. (I personally would prefer the headline “Zappos and Amazon sitting in a tree…”)

We plan to continue to run Zappos the way we have always run Zappos—continuing to do what we believe is best for our brand, our culture, and our business. From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different.

We think that now is the right time to join forces with Amazon because there is a huge opportunity to leverage each other’s strengths and move even faster towards our long term vision. For Zappos, our vision remains the same: delivering happiness to customers, employees, and vendors. We just want to get there faster.

We are excited about doing this for 3 main reasons:

1) We think that there is a huge opportunity for us to really accelerate the growth of the Zappos brand and culture, and we believe that Amazon is the best partner to help us get there faster.

2) Amazon supports us in continuing to grow our vision as an independent entity, under the Zappos brand and with our unique culture.

3) We want to align ourselves with a shareholder and partner that thinks really long term (like we do at Zappos), as well as do what’s in the best interest of our existing shareholders and investors.

I will go through each of the above points in more detail below, but first, let me get to the top 3 burning questions that I’m guessing many of you will have.

TOP 3 BURNING QUESTIONS

Q: Will I still have a job?

As mentioned above, we plan to continue to run Zappos as an independent entity. In legal terminology, Zappos will be a “wholly-owned subsidiary” of Amazon. Your job is just as secure as it was a month ago.

Q: Will the Zappos culture change?

Our culture at Zappos is unique and always evolving and changing, because one of our core values is to Embrace and Drive Change. What happens to our culture is up to us, which has always been true. Just like before, we are in control of our destiny and how our culture evolves.

A big part of the reason why Amazon is interested in us is because they recognize the value of our culture, our people, and our brand. Their desire is for us to continue to grow and develop our culture (and perhaps even a little bit of our culture may rub off on them).

They are not looking to have their folks come in and run Zappos unless we ask them to. That being said, they have a lot of experience and expertise in a lot of areas, so we’re very excited about the opportunities to tap into their knowledge, expertise, and resources, especially on the technology side. This is about making the Zappos brand, culture, and business even stronger than it is today.

Q: Are Tony, Alfred, or Fred leaving?

No, we have no plans to leave. We believe that we are at the very beginning of what’s possible for Zappos and are very excited about the future and what we can accomplish for Zappos with Amazon as our new partner. Part of the reason for doing this is so that we can get a lot more done more quickly.

There is an additional Q&A section at the end of this email, but I wanted to make sure we got the top 3 burning questions out of the way first. Now that we’ve covered those questions, I wanted to share in more detail our thinking behind the scenes that led us to this decision.

First, I want to apologize for the suddenness of this announcement. As you know, one of our core values is to Build Open and Honest Relationships With Communication, and if I could have it my way, I would have shared much earlier that we were in discussions with Amazon so that all employees could be involved in the decision process that we went through along the way. Unfortunately, because Amazon is a public company, there are securities laws that prevented us from talking about this to most of our employees until today.

We’ve been on friendly terms with Amazon for many years, as they have always been interested in Zappos and have always had a great respect for our brand.

Several months ago, they reached out to us and said they wanted to join forces with us so that we could accelerate the growth of our business, our brand, and our culture. When they said they wanted us to continue to build the Zappos brand (as opposed to folding us into Amazon), we decided it was worth exploring what a partnership would look like.

We learned that they truly wanted us to continue to build the Zappos brand and continue to build the Zappos culture in our own unique way. (I think “unique” was their way of saying “fun and a little weird.” :)

Over the past several months, as we got to know each other better, both sides became more and more excited about the possibilities for leveraging each other’s strengths. We realized that we are both very customer-focused companies—we just focus on different ways of making our customers happy.

Amazon focuses on low prices, vast selection and convenience to make their customers happy, while Zappos does it through developing relationships, creating personal emotional connections, and delivering high touch (“WOW”) customer service.

We realized that Amazon’s resources, technology, and operational experience had the potential to greatly accelerate our growth so that we could grow the Zappos brand and culture even faster. On the flip side, through the process Amazon realized that it really was the case that our culture is the platform that enables us to deliver the Zappos experience to our customers. Jeff Bezos (CEO of Amazon) made it clear that he had a great deal of respect for our culture and that Amazon would look to protect it.

We asked our board members what they thought of the opportunity. Michael Moritz, who represents Sequoia Capital (one of our investors and board members), wrote the following: “You now have the opportunity to accelerate Zappos’ progress and to make the name and the brand and everything associated with it an enduring, permanent part of peoples’ lives…You are now free to let your imagination roam—and to contemplate initiatives and undertakings that today, in our more constrained setting, we could not take on.”

One of the great things about Amazon is that they are very long term thinkers, just like we are at Zappos. Alignment in very long term thinking is hard to find in a partner or investor, and we felt very lucky and excited to learn that both Amazon and Zappos shared this same philosophy.

All this being said, this was not an easy decision. Over the past several months, we had to weigh all the pros and cons along with all the potential benefits and risks. At the end of the day, we realized that, once it was determined that this was in the best interests of our shareholders, it basically all boiled down to asking ourselves 2 questions:

1) Do we believe that this will accelerate the growth of the Zappos brand and help us fulfill our mission of delivering happiness faster?

2) Do we believe that we will continue to be in control of our own destiny so that we can continue to grow our unique culture?

After spending a lot of time with Amazon and getting to know them and understanding their intentions better, we reached the conclusion that the answers to these 2 questions are YES and YES.

The Zappos brand will continue to be separate from the Amazon brand. Although we’ll have access to many of Amazon’s resources, we need to continue to build our brand and our culture just as we always have. Our mission remains the same: delivering happiness to all of our stakeholders, including our employees, our customers, and our vendors. (As a side note, we plan to continue to maintain the relationships that we have with our vendors ourselves, and Amazon will continue to maintain the relationships that they have with their vendors.)

We will be holding an all hands meeting soon to go over all of this in more detail. Please email me any questions that you may have so that we can cover as many as possible during the all hands meeting and/or a follow-up email.

We signed what’s known as the “definitive agreement” today, but we still need to go through the process of getting government approval, so we are anticipating that this transaction actually won’t officially close for at least a few months. We are legally required by the SEC to be in what’s known as a “quiet period,” so if you get any questions related to the transaction from anyone including customers, vendors, or the media, please let them know that we are in a quiet period mandated by law and have them email tree@zappos.com, which is a special email account that Alfred and I will be monitoring.

Alfred and I would like to say thanks to the small group of folks on our finance and legal teams and from our advisors at Morgan Stanley, Fenwick & West, and PricewaterhouseCoopers who have been working really hard, around the clock, and behind the scenes over the last several months to help make all this possible.

Before getting to the Q&A section, I’d also like to thank everyone for taking the time to read this long email and for helping us get to where we are today.

It’s definitely an emotional day for me. The feelings I’m experiencing are similar to what I felt in college on graduation day: excitement about the future mixed with fond memories of the past. The last 10 years were an incredible ride, and I’m excited about what we will accomplish together over the next 10 years as we continue to grow Zappos!

—Tony Hsieh

CEO—Zappos.com

Compare this letter to some of the stiff, jargon-filled letters most CEOs send out to their companies when they make big announcements. They may as well have been written by HAL, from 2001: A Space Odyssey, for all the genuine personality, compassion, and concern they project. Very few employees feel safe after receiving one of those, yet I imagine that most of the Zappos staff who read Hsieh’s letter believed that the decisions made on behalf of the company were made with the right intent. And good intent, as we’ve discussed, goes a long, long way.

How Innovation Feeds Culture

You can never lose by going out on a creative limb. Even if your campaign doesn’t result in the sales you might have hoped for, your company culture will benefit from having tried. Talent wants to follow talent. Any creative team who sees that you tried something innovative will keep you in mind when they’re ready to job hunt.

Choosing a Community Manager

Put the best people in charge of social media, not the people you don’t know what else to do with. Teams don’t pick the chubby, out-of-shape guy first if they want to win; you shouldn’t pick the second-rate player to do something that requires smarts, empathy, and flexibility.

Viral Ping-Pong

People like surprises. When somebody who is known for his or her television or film appearances shows up on Diggnation, a popular video blog, or starts tweeting great content, it becomes noteworthy; it’s like suddenly getting a peek inside the head of someone you’ve always wanted to get to know better. It can work the other way, too.

If Hallmark ran a TV commercial for Mother’s Day and featured a bunch of popular online characters and their moms, like Kevin Rose, iJustine, and Tony Hsieh—or if these Web celebrities did a “Got Milk” print campaign—I’m sure the ads would go crazy viral. Seeing those personalities on television or in print would take the public by as much surprise as if they saw a fish walking down the street. There are a lot of impressions to be made if brands would take advantage of the reciprocal relationships between traditional and social media.

The Interplay between Traditional and Social Media

There’s still a perception that traditional media works—that people see it—and social media doesn’t. What a lot of people fail to realize is how much traditional media is seen because of social media. The 2010 Grammys experienced a 35 percent hike in viewership since 2009, and was the most watched Grammys event since 2004. Credit could be given to the stellar mainstream lineup, or an increase in country fans, or various promotions, but I’m sure social media had something to do with it, too. When Pink started spinning, wet and nearly naked, in a Cirque du Soleil–style harness while singing “Glitter in the Sky,” Twitter went nuts, leading people to think, “Huh, maybe I should tune in.”

People who weren’t planning to watch the Grammys saw that their friends were watching the Grammys and saw that there was some crazy stuff going on at the Grammys, and tuned in. We used to do that. We’d be watching something awesome on TV and pick up the phone and say, did you see that? If we were super advanced, we might have three-way calling and be able to talk to two friends at the same time! But what were we going to do then—hang up, dial another friend, and another? Of course not! With one click, we now can tell everyone we know to get their butts in front of the TV before they miss the awesome show.

Tactics

Intent will make your tactics work better. Your re-tweet tactic will work really well if you care like crazy for a year before you try the tactic, and even better if what you do isn’t really a tactic at all; it’s just what you do. It’s like when you’re nice to someone and then you ask the person a favor…that person is a lot more likely to do something for you if you’ve been a great friend and neighbor than if you’ve ignored him or her the whole time you’ve lived next door to each other.

I use tactics, too, but my engagements far, far outnumber them. Tactics are like dessert. Dessert is great unless you eat it with every meal, every day.

Earned Media

In the spring of 2010, Vaynermedia facilitated a campaign between the New Jersey Nets and the geo-location site Gowalla. The goal was to raise brand awareness and bring more fans to the games. The Nets dropped 250 pairs of virtual tickets around sports venues, including sports bars and gyms, near the Nets’ arena in New York and New Jersey; anyone who checked in with Gowalla could find the tickets and redeem them for real ones to the final home game of the season. Virtual merchandise that could be redeemed for real team memorabilia would also be awarded to people who checked in at the game.

Business insiders wrote that the Gowalla campaign was a failure because only 15.2 percent of the Gowalla winners made it to the game, but they were mistaken. First of all, we knew there would be challenges to getting people in the seats: the Nets had had a lousy season, the game was on a Monday night, and the arena is extremely hard to get to via public transportation, which is the only way many New Yorkers travel. Given those obstacles, a 15.2 percent conversion rate wasn’t too bad. Second, what the critics didn’t realize is that by writing about the campaign, even if only to criticize, they made it work by extending the story. It also got a lot of positive attention from ESPN and bloggers. Last, the participants themselves had a great time and helped make the campaign work. Their numbers may have been small, but many of them tweeted and sent photos of the event throughout the evening, and continued talking about their experience for days after the game.

Some people suggested that Gowalla might have gotten something out of the campaign, but not the Nets. The Nets did enjoy added business, though, and on top of that, they could now claim to be a brand that’s willing to push creative boundaries. Only “B”-playing businesspeople would look at that campaign and dismiss it as a waste of time. Forward-thinking, creative individuals saw the initiative and thought, “There’s a brand I want to work with.” People who care only about the numbers often miss the most interesting part of the story. In the end, Gowalla and the Nets each got exactly what they wanted from the campaign.

Squeaky Wheels

Some people recognize that in these early days of social media, complaining will get them some attention. It can be frustrating to interact with these squeaky wheels, especially when you suspect they’re just trying to get attention or free stuff or to hear themselves talk, but you have to take the high road. You can’t ignore these people; you have to care, no matter what. That said, you have to be a good judge of when it’s time to move on.

The Biggest Mistakes Companies Make with Social Media

1. Using tactics instead of strategy
2. Using it exclusively to put out fires
3. Using it to brag
4. Using it as a press release
5. Exclusively re-tweeting other people’s material rather than creating your own original content
6. Using it to push product
7. Expecting immediate results

Anyone Who Cares About Legacy Must Take the TYE Seriously

Mr. Buffett, if you want everything you’ve built to last long after you’re gone, make sure that your companies are introducing Thank You Economy sensibility into their business practices. Actually, any investor would do well to heed the same advice. If you’ve inherited a family business and you want it to be strong for generations to come, it’s up to you to start shaking things up and instilling TYE culture from the top.

Fish the Small Ponds

Facebook is not the only significant social media platform, but many people think they have to fish in the big ocean and ignore the pond. The ponds are rich sources of revenue. Before we launched Vaynermedia, AJ and I were going to start a fantasy sports site. Had we chosen that path, we probably would have spent much of our money on Facebook ads, but we also would have spent countless hours engaging in the fifty most prominent fantasy sports blogs and forums. They wouldn’t have had as many eyeballs as Facebook, but those eyeballs would have been a committed, dedicated potential audience. It is time for companies to allocate to the ponds some of the money they’re pouring into the big oceans.

Why Big Companies Focus on Big Platforms

Right now in big companies there are four people or perhaps six people on staff making decisions with a $40 million budget. They spend their money on agencies, bringing in consultants, paying outside people to come in and execute their campaigns. Of course they have to focus on the big platforms—they need a huge payoff to justify all the money they’re spending. So what you hear in these meetings is “Let’s get this one platform right before we do the next one.”

It’s going to take a lot more people. You can’t have just one person flying a plane and dropping sixty bombs; you need a lot of people on the ground going one-on-one. Businesses have to quit outsourcing everything and start building up their internal teams around these new platforms.

Why People Respond to Social Media

I’m not saying that business leaders don’t know how to run their own businesses; I’m saying that they can do an even better job. Eventually, the marketing shifts that merely give them an advantage now are going to be prerequisites for success. We connect on a human level, and consumers are going to expect that kind of connection when they deal with you. A lot of people who have been in the hospital will complain that they sometimes didn’t see their doctor for days, and then when she came in she was aloof and academic and studied her patient like an interesting case, not a human being with feelings. It’s the nurses that often make people feel better when they’re in the hospital. When patients leave, they’re often eternally grateful to the doctor or surgeon who saved their life or made them feel better, but they often hold deep-felt affection and gratitude to the nurses who brought them extra pillows and took the time to explain things, who altered their regular shifts to make sure they were on the floor when their patient came back from a procedure. When these people talk about their experience, they’ll recommend the doctor, but they’ll rave about the hospital nurse and the care they received. They needed the doctor for her expertise; they loved the nurse for her compassion and care. Brands that win in the Thank You Economy will figure out how to provide both—what consumers need and what they want.