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[caption id="" align="alignright" width="243"]Lady Gaga performing on the Fame Ball tour in ... Image via Wikipedia[/caption]
For some time, marketing has been dominated by the theory that the way to success is getting your most loyal consumers to buy more. As a result, it’s become popular for marketing “guru”s to declare the end of mass marketing. There’s just one problem: it’s not true. The best discussion of this reality that I’ve seen recently is found in Byron Sharp’s book “How Brands Grow” (2010, Oxford). Let me share a few of the realities I found in this excellent, and challenging, read. Remember the “80/20″ Rule? It’s Wrong. In the 1930′s an Italian economist named Pareto suggested that 80% of a country’s wealth come from 20% of its citizens. Since then, this suggestion has been applied where it shouldn’t and been turned into a “rule”. (One such rule might be that “80% of manufacturing errors come from 20% of the process” – something that is sometimes true.) In marketing, the 80/20 rule has come to claim that 80% of a company’s sales come from 20% of its consumers. Marketers use this to claim that the fastest way to increase profit is to convince the 20% to buy more – an idea that glorifies niche marketing and loyalty programs.

In Marketing...there Are Fundamental Problems With the 80/20 Rule.

Sharp analyzed this rule with hard marketing numbers from a large number of client campaigns. Let me note three findings:
The most loyal 20% of consumers drive only 50% of purchases – not 80. The top 20% are the most expensive (in marketing dollars) way to increase sales. I’ve found they are often fully satisfied and don’t want/need more from your brand. Today’s loyal are tomorrow’s disloyal. Sharp documents the human animal’s polygamous brand tendencies – making purchases from a wide range of brands. One result of brand polygamy is that a very large number of today’s loyal customers will be less loyal in the future.
Net out: Loyalists may just be the worst place to invest a large portion of your communication dollars. So How Do Big Brands Succeed? Sharp suggests part of the answer is in the Double Jeopardy Law:
“Small brands have far fewer customers and those customers buy slightly less often.”
So brands that grow big do so by reaching out and expanding their base of consumers. For a taste of what Sharp has to say, see his presentation in this Ted video. Sharp points to Apple as an example. Tech competitors blame Apple success on fanboys. But Apple has become big because my neighbors have iPods, iPhones and now iMacs. (Just look at the vast amount of Apple hardware on airplanes owned by people you’d never expect to buy Apple.) This is true of brands like Nike and even, I suspect a brand who makes loyalty the centerpiece of their marketing like Nordstrom. In a category close to my heart, it’s true for DeWalt drills. Yes, a lot of contractors buy them. But contractor sales don’t make DeWalt huge. DeWalt is huge because suburban garages are filled with DeWalt drills. Doesn’t Social Media Show Niche Marketing is More Powerful? Not when you analyze the total communication picture around social media. “New media success stories” are mostly mass media success stories given additional legs in social media. How so? In most cases, new media’s role is to create enough awareness to get mass media outlets to deliver coverage in TV, print, newspaper, radio, etc… Then, and only then, does the big impact start. It's amazing what a little print can do for a business. If done well, it can drastically change the outcome of any campaign. For two examples look at Susan Boyle’s record sales or Lady Gaga’s massive YouTube numbers – both are the result of traditional media exposure. (Just notice how much print space Gaga gets.) And the recent Old Spice campaign generated

This post was written by SmartBrief technology editor Susan Rush. If you think social TV is only for young, hip viewers, you are mistaken. Live televised events or TV series that have loyal fan bases are perfect candidates to add social TV elements — that was one of the takeaways from the “Social Television — . Where will social TV work? To open the session, panel moderator Richard Sussman of The Nielsen Co., pointed to the success the 2010 Oscars had with Facebook, noting that “Facebook was the winner of the Oscars.” Shows like the

The Super Bowl turns us all into ad critics. It’s the only night of television where the ads are really considered part of the show. Some of the most innovative, most beloved ads of all time have debuted during Super Bowls past — but then again so have some of the lamest. The debate over what worked and what didn’t can go on long after the final score is in the books. That debate used to be a strictly water-cooler phenomenon, but social networks allow these adds to take on lives of their own. Last summer’s viral frenzy around the “Old Spice Man” videos was so intense that it’s easy to forget that the campaign began with a Super Bowl ad. It’s a virtual certainty that every ad that airs on Super Bowl Sunday will have a social media component — even if that just means

Strom Thurmond was my wingman in college. Not literally, of course. I only met him once, for about a minute in the spring of 2000. But I got a story out of that meeting that I would later tell to almost every girl I ever tried to impress. Part of that stems from the fact that I went to a university where people talk about politics all the time, but mostly it’s just a really funny story. But I can’t tell it to you. It’s totally apolitical and G-rated. I now tell it in lots of non-date scenarios, including once in a successful job interview, but it would flop on a blog because to tell it right, I have to be able to touch your elbow at one point. The story falls apart without that gesture. And that’s why I told it over and over again. Touching someone, even briefly, creates a bond. You’re creating a literal symbol of the personal connection you now share. It is powerful voodoo.

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This morning’s New York Times reports on the the 2010 Nielsen wrap up. And the summary? “TV Viewing Continues to Edge Up” (click for link). In fact, TV prognosticators, programmers and ad practitioners today have to sort out the contradiction between: (a) the venture funded hype about internet TV, (b) the legitimate possibility that some kind of internet distribution could harm the TV business, (c) the good consumer value that might be created with various kinds of internet distribution, and (d) the continuing health of traditional TV. (Beyond the Times, last week we received this solid report about cable subs from Time Warner.) TV clearly will be changing. But will it be destructive change like has happened to newspapers? I doubt it. TV is a very healthy industry – there’s lots of money and