What business are you in?

Sometimes, the first question to ask a client is “what business are you in” and when you get the “are you stupid” response, you’ve probably asked the most important marketing question to ask.

Netflix can’t answer this question properly lately. Their newest “innovation” is to replace their five star rating system with the simplified “thumb up/down” rating.

United Airlines failed this test by forcibly removing a passenger from a flight.

Apple entered the driverless car market, while admitting they blew it when they replaced the big cheese grater style professional Mac computers that were infinitely and easily expandable with the “trash can” model.

For Netflix, this isn’t the first time to question if they understand what business they are in. When they tried to split off the disc delivery service as Quicksilver and then DVD.com they showed they didn’t get it either. Netflix is the film fanatics club- for serious movie buffs to feed their habit. From the online reviews (which were hidden), to the removal of the DVD queue from the mobile app, from cutting off access to IMDB, Netflix has consistently isolated itself from its core business- being the movie purveyor to people who love movies. Even their default autoplay of the next episode gets it wrong- their core audience watches the credits, and doesn’t want to have them cut off (this feature, can be disabled in settings after searching).

Netflix built its brand on a better suggestion algorithm, now it tossed it.

While the bigger, newer audience may just be there to binge watch episodic TV, the people who built your business are not the people you ignore.

Read that last paragraph again after each example, substituting what the core business is.

United Airlines bloody logoUnited is an airline. Scratch all the added mystique and branding of “fly the friendly skies” or trying to romance air travel, which has been turned into a very dehumanizing experience for most commercial travelers, the primary reason people fly is they need to get from point A to point B faster than driving, a bus, a train. When you sell a ticket to a paying customer, forcefully removing him from his seat, once boarded has violated every part of your basic business premise.

To add insult to injury, this wasn’t an overbooked flight even, they were removing four paying customers so a crew could fly. Fundamentally, United’s business is to transport paying customers. Any questions?

MacPro 2012 vs MacPro 2013Apple is known for its ease of use in computing. It invented “desktop publishing” - which today sounds almost funny. Prior to the Macintosh and the LaserWriter, the ability for people to craft a page of print that had different sized type, photos, and print it themselves was unheard of (I know this is really hard to fathom for anyone born after 1984). They were the tool of graphic designers across the globe, the one people relied on to create everything from restaurant menus to revolutionaries handbooks. As Apple expanded the capability from print to video, the tools of the professional needed more horsepower, more options, more drive space, more memory. Apple saw things differently. Sure, the iPhone changed the world of communications, and the iPad finally made a device that could replace paper, but, the content that was viewed on these devices was crafted by the people who built Apple up- and stuck with them through some incredibly stupid moves.

And yet, the professionals are being shortchanged. The elimination of ports to be replaced by a plethora of dongles, memory and storage that can’t be replaced or upgraded, screens larger than 15″ for a portable no longer exist. Sure, Apple has changed the way they make money now- even though they fail to understand it (if Apple realized most of their profits come from app, software and content downloads, instead of device sales- they would have an answer for Chromebooks for education which are way cheaper than anything Apple tries to proffer and would have created an iPad priced to giveaway to newspaper subscribers to replace printing plants). The prices Apple charges for a terabyte drive in a MacBook Pro or a MacPro are now so insanely high, that professionals feel like they are being insulted when purchasing a new computer.

Apple doesn’t know what business it is in, at all. They are in the controlled content creation and delivery business, not a device or software business. The only thing that Apple should be worried about is putting content creation tools in the hands of the most people possible- and making it easy for them to monetize it through Apple’s secure and safe content delivery network. Cars are a distraction. Just because you can, doesn’t mean you should.

  • When you own a restaurant, you are really in the making people happy business.
  • When you are a school, you are really in the self-actualization business.
  • When you are an ad agency like ours, we’re really in the help you make more money business.

So what business are you really in? Really?

Subtracting value: learn from Apple #FAIL with maps in iOS6

Apple is famously and profitably successful because of their attention to design detail and simplicity and consistency of their user interface. And while they’ve made more than a few mistakes along the way, the replacement of the Google maps application which has been a part of the iOS operating system from day 1, may become a classic business case study in what not to do.

Taking away benefits/functionality from your customers without their consent is a very dangerous move.

To summarize what happened- Apple and Google are no longer friends because the open source Android mobile operating system has gone head-to-head with the proprietary and highly regulated Apple iOS. Apple deleted the Google Maps application in favor of their own mapping software with iOS6- despite it not being either an improvement or even a good replacement for the original software. When you start making the New York Times about your product changes, it should be a bit of a worry.

Screen grab of tweet that Apple left out transit maps because Apple users only drive BMWs

Apple’s reckless deletion of functionality of transit maps in their iOS6 mapping app brings satire to the surface

Missing are the highly useful public transit details- a system that is invaluable in NYC, and much of the data that has been tweaked and refined over the years by millions of users. Frankly, Apples map program is being forced on users as an “upgrade” when it isn’t. This isn’t what the customer bought when they bought their iOS devices.

The right to take away a purchase after it’s been bought is a slippery slope, that smacks of “Big Brother” - the very same one that Apple so famously rallied against in their classic Superbowl ad 1984 that launched the Macintosh. What’s next- publishers having the right to come to your home and take back books that you bought because they were too useful? (Textbook manufacturers are becoming guilty of this- but that’s another matter).

Rumors abound that Google is going to release a version of Maps via the Apple store- however, that would and could possibly sink the chances of the Apple maps app from ever reaching parity. Digital maps data is improved by the size of the user base, a primary reason Google was probably willing to allow Apple to use their data when the iPhone launched before they had an Android OS.

Google could probably rake in millions by selling their app on the iTunes store now, but the shopkeeper, Apple, despite a chance to gain 30% of sales may still block it from happening (debate is raging on this subject).

But this is a lesson for all marketers. The restaurant that used to offer free bread that now charges, the gas station that stops offering free air both risk alienating customers by taking away something that was previously accepted. Once one fast food chain began offering free refills on soda for dine in, going back is nearly impossible as is not offering the same option.

Apple may be getting cocky at the wrong time and place as the newest king of corporate monopoly, but we’ve seen companies make potentially fatal flaws before: thinking they know what’s best for their customers and trying to force a reset. Quikster anyone?

Don't do this at home: Netflix kills its brand

Don't do this at home: Netflix kills its brand

Netflix logoNetflix meant movies. Before internet streaming was a reality, Netflix delivered movies to your home, with no late fees, no hassles and they had the library that no one else had. They killed Blockbuster. They killed the corner video store. They were the king of the movies at home business- and their stock price showed it.

Along with Amazon and Apple and Google and even OKcupid- Netflix had built the most incredible profile of their customers needs, wants and desires. They were trusted to recommend movies- and their recommendations were great. They were the site for the movie lover.

First error was eliminating user generated content on the site. All the debates about movies- all the amateur reviewers- all got booted. This should have been the warning sign that the people in charge cared more about moola than movies.

Then came the price hikes. Not only were they big- they also started charging premiums for Blu-ray. But, we all know that the post office is going bankrupt because of companies like Netflix taking advantage of their horrible pricing structure.

the Qwikster logo?Now the doozie- forget the idea of being your one stop for film, Netflix is going to split into two units: a streaming service that gets to hold onto the brand “Netflix” and the delivery of DVD service that becomes- get this “Qwikster” (not to be confused with a ton of other similar brands). Yep, the movie lover has to split their account between two services: a streaming- the one where you can watch whatever strikes your fancy when the disk you have isn’t quite right- or in transit, or the library that has everything.

The reality is the streaming service can be offered by anyone- including the studios. Netflix was recently dealt a huge blow when Starz pulled their library. Amazon, Apple, Hulu all can do the exact same thing. Where is the differentiation of Netflix?

The DVD library brand- Qwikster- gets the red envelope. A brand new brand- that does the same thing as before. Where is the value there?

The responses from consumers, the people who own the brand (because companies that think they still own their own brands are idiots) have voted this split down and ranted against it. The stock price has been tumbling. A bigger disaster than New Coke? Or “Herb the nerd” in the making?

Or is it just brand suicide?

If there is one lesson to be learned from this move- is that you may not be in the business you think you are in. Netflix believes they are in the movie delivery business- when in fact, they were in the ultimate movie store clerk who could hook you up with the perfect movie every night. Unfortunately- someone just fired the clerk.

You can watch the CEO of Netflix introducing the new service- fail:


The Google set top box will change everything

Google and Dish Networks are reportedly teaming up to create a set-top box. The tech blogs are all abuzz about the chips, specs and tech. The partnership with Sony, Motorola, Logitech and all the mips and ghz crap.

Only Marketplace seemed to have a grip on what it really means- Google will have yet another way to learn your behaviors and deliver relevant ads to you.

Google is big brother. They read your e-mail through gmail. They know what you are interested in by what you watch on YouTube, what you search for on Google, they know who you called and what you talked about via Google Voice and they can even read your Google docs and check your Google calendar. It’s a Google life.

As the kings of sponsored search- they provide ads relevant to what your interest is RIGHT now. Tie all that info together and you can see the advantage of you watching TV through their Google Settop box. Forget the networks selling ad time in their show- the Google set top box will have a stockpile of ads that they think will be just what you are interested in already sitting in your box waiting for just the next commercial break in your programming. Sure, they’ll kick some of the ad revenue back to the content producer (they know making content is expensive (sometimes) and that people should get paid for making programming YOU like to watch). They just don’t think you should watch anything that isn’t specifically relevant to you.

They’ll be so good at analyzing all that data that they’ll even offer to run the ads for next to nothing- as long as you use Google checkout via your Google SetTop box so they can skim off the credit card processing fee plus a few points for delivering the sale.

No other company has as much access to data as Google does right now. The few other players in the field- Amazon, Apple, Netflix and a few dating sites including the really interesting dating/market research site OKCupid- can only put a few pieces of the puzzle together. Even Apple with it’s Mac/iPhone/iTunes environment can’t also provide search results (although they could gather data via their Safari browser and their elegant operating system).

Is this move by Google good- or to be feared? Their mantra is “don’t be evil” but, at some point, life can get pretty boring with everything coming to you picked by someone else. What happens with political ads? Public service messages? At what point do we want to step away from the giant database of human intentions?

It will most certainly change the world of advertising and media buying. Clients will be freed of all media buying planning- just serious demographic/psychographic profiling in order to identify target markets. Then again- maybe that will be part of the next Google algorithm.

The only problem left will be how to figure out what content to watch- but, then again- Netflix and Amazon have already figured out the whole “you like this- then you’ll like this” deal- so maybe, it won’t be an issue. Google’s only remaining hurdle is how to deliver all this data- but, that’s why they are starting the Google Fiber project, so it won’t be long.

Posts about the Google SetTop Box:

How a Google-Powered Set-top Box Could Make a Splash

All Giz Wants: A Google Set Top Box That Doesn’t Suck

Google and Partners Seek TV Foothold

Marketing has changed: The Netflix BluRay price increase FAIL

I saw a tweet from Jason Calacanis before the e-mail hit my inbox. Netflix was raising rates for a second time in 5 months on blu-ray disc access. If you are in marketing at Netflix, please note, he has 64,188 followers. Take that- and retweets- and you see the exponential nature of Twitter- instantly.

His original tweet:

NetFlix Blu-Ray bait and switch FAIL! Jump from $1 a month to $4 a month automatically?!!? http://post.ly/CYQ

Then, follow over to a twitter search on “Netflix” and you see the effect- instantly- the twitterverse is alive- with cancellations, downgrades and unhappieness. This is an opportunity for Blockbuster- but, they probably don’t know how to take advantage of it.

Over on Engadget- it’s breaking news:

Ruh roh. In a move that will undoubtedly cause an incredibly raucous stir, only to fade away as movie renters realize that Netflix is still the best deal going, America’s most adored by-mail rental service is hiking the price of Blu-ray rentals once again.

via Netflix raising rates for Blu-ray subscribers by around 20 percent.

The comments are flowing- who knows how many people will be blogging about this, and what kind of damage will be done. The pricing increases are heavy handed to begin with- but the automatic “Opt-in” to a price increase is a brand suicide move. Never, ever, force an automatic price increase without some kind of action by the customer.

On the Netflix site - their blog has an announcement- and the feedback isn’t going so well. Might be time to reevaluate how this works. Maybe a per-disc surcharge for blu-ray?

Either way- be careful how you treat your customers these days, they have the tools to talk amongst themselves and plot your downfall. Both Netflix and Twitter are populated by opinion leaders- who are very tech savvy. Your brand is only as good as your community around it. Netflix’s brand value is totally connected to the way their customers feel about them (as well it should be).

Watch this in the news. It’s going to be brutal.