A Tale Of Two Case Studies: Amazon, Pepsi, and Tangible Intangibles
2009′s end of year news came in the form of the Amazon Kindle e-book reader: on Christmas Day, for the first time ever Amazon sold more e-books for the Kindle than they sold physical books (Amazon.com). Charlie Sorrel, writing in Wired’s article, points out that this surge most likely comes from customers who received the Kindle as a gift, but acknowledges that whilst this doesn’t mean e-books outsold physical books over the Christmas period, “what this still means is that e-books are now mainstream.” Mashable made a similar remark, saying “e-book sales still pale in comparison to the countless paper books that were sold this Christmas season. We do have to give credit where it is due, though; it is another milestone for the constantly-growing e-commerce giant.”
2010 began with news surrounding the event that attracts the largest advertising budgets in the world: The Super Bowl. Namely, that Pepsi has decided to invest the $20 million earmarked for the Super Bowl instead into Social Media (ABC News). This is tantamount to saying that Pepsi sees more value in Social Media than one Super Bowl event, and whilst sure, Social Media has more longevity and legacy over a year campaign (especially with a $20 million spend) versus a few minutes of advertising, Super Bowl is a time-honoured tradition that Pepsi (and other superbrands) has been keeping for 23 years, and is the most watched televised event in the world.
You know me, and that I don’t want to repeat what’s already been said on these matters. What I do want to do is draw some commonality from these two headlines and draw some conclusions from them. In addition to my own thoughts, I’d recommend you read Augie Ray’s analysis of the Pepsi headline at the Forrester Marketing blog, as it provides further examples of other brands following suit.
Case 1: What is Real? aka A Problem With Intangibles
When I started reading the articles regarding Amazon’s selling of more Kindle e-books than physical books, I picked up on the something the continual reference to ‘the real world’ as opposed to the internet/digital world/social media. Amazon writes that they sold more Kindle books than “physical books”, but every other article that quotes them on the subject says “more kindle books than real books.” This translation from physical to real highlights one of the biggest barriers to generating revenue through digital media – that the perception is if physical equates to real, then non-phyiscal equates to non-real.
I’ve taken a bit of a jump there, but I believe it’s a right one. For most people, it’s ‘digital books or real books’, as it is ‘digital life or real life.’
So inherently, the problem is not only that digital goods are intangible, and therefore I feel like I’m paying for very little – people also believe, some-what subconsciously I expect, that digital goods are not real. I’m not going to get into whether this is correct or not, nor look at the ideas of augmented reality and the such and whether a ‘book’ is a ‘book’ even when it’s not bound like a book – I just think it’s a very practical way to get into the mindset of a early majority customer: imagine you’re buying something that isn’t real and tell me how you feel.
How do we overcome this? I’ll be honest with you, my expertise is in getting people together, so when it comes to selling products, I’ve got more questions than answers. There was a big discussion on this recently regarding the $47 ‘Beyond Blogging’ e-book, the comments on my friend Jim Connolly’s Ideas Blog being very interesting. This talk of charging more for intangibles over tangibles is a bit of a deal, and this is where I really do want to hear back from you! My thoughts on it are as follows:
I think education will take place, over time, and people will value intangible goods more (like they are starting to with music and video on iTunes) over time. iTunes is actually a great case study to consider – it provides a way to catalogue and ‘see’ your digital goods, creating a sense of tangibly owning them – (Coverflow, anyone?) This is despite the fact that iTunes is itself an intangible, digital product, used to purchase more intangible digital products. It has taken them all of last decade to chip away at the mindset, but now the mainstream is completely au fait with purchasing intangibles from them. Given that the Kindle is the tangible item that is used to purchase, archive, and access the intangible goods, then we have a way forward. And yes, the mainstream is au fait with purchasing digital goods from iTunes, according to these statistics.
What I am certain about is that loosely and independently downloadable files (like buying a ebook in PDF from someone’s website, via a redirect from PayPal) will simply not work with the mainstream. It’s not a tangible intangible. It’s not filed (customer: ‘where is my ebook now that I’ve downloaded it???’). It’s not carried out through a trusted channel. In other words, it’s not like the Kindle or iTunes. Like I’ve said above, iTunes and the Kindle make the intangible tangible, or as per my original point, make the non-real, real.
And yes, I know that the innovators and early adopters are happy to purchase e-books direct from sites – but think mainstream with me, because that’s where most people live. If I use my wife as an example, she’ll happily buy through Amazon or iTunes because she trusts it and it keeps her purchases together. She doesn’t just buy files from sites.
One way that I’ll be applying this for my clients is when it comes to book publishing. I have good contacts in a few publishing houses, who I’ll approach with the following proposal: print a small run of physical books, and make a digital version. Put both on Amazon, and only spend marketing budget on getting the physical book placement in very targetted locations. My agency then does it’s Social Media magic to promote e-book sales on the Kindle (with a physical version there too, available on demand after the initial availability is gone.) This gives the author stature, and access to a tangible platform for their intangible product, at a very low cost.
[On a side note, this also means the publishing house has very little risk, very little spend, very little work, gets a free Social Media campaign testbed (because hey, I’ll be pushing the book anyway), and if it works, gets a Social Media case study to take to the board. In return, I get published without going down the costly self-publishing route. I think this’ll work – I’ll let you know when I try it.]
Case 2: Brand Association and Social Media, aka It Doesn’t Work Without Purpose
We’ll discuss that tomorrow. Tomorrow, dear friends, tomorrow. Until then, do you want to discuss tangible intangibles with me?
Photo with thanks to libraryman.