Umair Haque on Investing in Customers

A powerful concept:
Instead of spending a bunch of money on marketing & advertising (e.g. Super Bowl Concept), why not take that & instead spend it on delivering value to customers. The value would be embedded in the product & service itself.

Case Study 1: Google:

At the most basic level, instead of carpet-bombing consumers with traditional ads to build its brand – “Google is Search Done Right”, a glisteningly plastic spokesmodel tells you ad infinitum – Google makes a revolutionary strategic decision: it doesn’t actively advertise much, if at all.

That decision, in turn, opens the path to a second, even more revolutionary decision: to implicitly invest in consumers instead of advertising to them.

How? There are no ads on Google’s homepage. Why not? Orthodox strategy tells us that Google’s crazy not to plaster the homepage with ads: that real estate’s worth literally (hundreds of) billions of dollars. Why is Google passing up free – and seemingly easy – money?

Because ads impose costs on consumers – and that’s why consumers are busy tuning them out, and tuning each other in. And that’s how Google invests in consumers: Google is foregoing revenues so consumers aren’t forced to view costly ads on its homepage. From an economic point of view, in fact, the amount of revenue Google foregoes is the amount Google is investing in consumers, every second of every day.

More simply: it’s by directly investing in consumers – instead of investing in advertising, which ends up imposing costs on consumers – that Google has built the world’s most powerful brand in less than a decade.

Case Study 2: Nike
Nike, seeing the writing on the wall, is beginning to rethink communications as a set of services that listen to and benefit consumers, instead of impose costs on them. For example, Nike+ offers runners services which keep track of their running schedules, offer advice, and track their progress towards goals.

As a recent NYT article noted:

“…Behind the shift is a fundamental change in Nike’s view of the role of advertising. No longer are ads primarily meant to grab a person’s attention while they’re trying to do something else — like reading an article. Nike executives say that much of the company’s future advertising spending will take the form of services for consumers, like workout advice, online communities and local sports competitions.”

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