North Face of Hood

North Face of Hood, originally uploaded by Unsettler.

Vantage point is the Cloud Cap Trail right at the treeline.

This photo excursion seemed cursed — I blew a tire on the jeep on the road up, and Hood was shrouded in mist when I got to this spot. But I set up the tripod anyway, and within a few minutes, the wind chased the mist up the valley, and there she was, big as the world.


How Netflix Killed Itself with Kindness

During the dot-com boom of the early oughts, the New Yorkermagazine’s financial columnist  JamesSurowiecki wrote a piece called “How Kozmo is Getting Killed By Its Customers.”He explained the plight of dotcom delivery service, which lostmillions of dollars because its customers took advantage of its low deliveryfees to purchase one-off items, like a pint of ice cream. This caused Kosmo’sdelivery costs to outpace its revenue at rate of almost two to one. Surowieckirailed not against Kosmo’s flawed business model but against the bad behaviorof its customers; he called them “little terrors” and claimed that theirprofound sense of entitlement required a “New Economy mantra: Know when to fire your customers.”

I wonder if anyone at Netflix had occasion to readSurowiecki’s piece in the last month. Right now the once-beloved dotcom, if notexactly being killed by its customers, is at least being taken behind thewoodshed for a serious thrashing. Netflix’s former business model – a singlelow price for streaming and DVD rentals – was simply unsustainable. The companycouldn’t pay the licensing fees demanded by studios, win the rights to newstreaming content, and continue to ship DVDs at the same price it once chargedfor DVDs alone. But Netflix was in a precarious position precisely because ithad provided its customers with something that was too good to be true – anexcessively dangerous position that has sunk many more dotcoms than Kozmo. Ingame theory terms, Netflix’s predicament was the patsy position, in which thecustomer has very little incentive to continue the relationship if the branddoes anything to upset the delicate balance of cost vs. services. When Netflixdefected by raising their fees for the combined services, did their customershappily agree to it, reasoning that a price increase should be expected? Um,no. Naturally, they voted with their feet and left in droves; more than 800,000customers have given the brand the boot in the last quarter alone.
Netflix was missing a core insight than any behavioraleconomist could have given them: when pricing models in a given market – inthis case, the streaming content market – aren’t well established, you’reentirely at the mercy of your customers’ own perceptions, however irrational.Since Netflix customers had been given streaming content for absolutely nothingfor several years, their perception was that the streaming content is worth,well, absolutely nothing. If Netflix had never provided that streaming servicebefore, but instead introduced it in August for an additional six bucks amonth, they would not have lost customers, and their streaming service wouldhave taken off like gangbusters. Exact same price, vastly different priceperception. In the latter scenario, Netflix’s price increase would have beenseen as a form of cooperation, not defection – another triumph for a brandknown for delivering great service at low cost.
So what’s the lesson here? Online business models that keep prices low in order to fuel growth haveto pay attention to the end-game. Consumer perception accrues quickly to thestatus quo; that’s why it’s easy to sell taxpayers on the idea that letting atax cut expire on schedule is actually a “tax hike.” Above all, know what yourcontent is worth and charge accordingly. Believe it or not, your customers willthank you.

First frost

First frost, originally uploaded by Unsettler.

Probably *not* the first frost of the year at this spot, 5,000 feet up in the Blue Mountains in Central Oregon. Just the first one I’ve been around for. It’s a pretty area, lots of big mountain meadows, for which I am a sucker. This had all burned off an hour later, and I was fishing in shirt sleeves.

What Digital Media Could Teach NPR About Pledge Drives

I’m a little grouchy this week. Morning is not my friend onthe best days, and the worst days are the ones in which the soothing warble ofNPR’s Steve Inskeep on my clock radio has been replaced by the screechy auralassault of an NPR station manager exhorting me to pledge. The pledge driveconcept appears to be modeled after a dog whistle – it emits a shrill blastthat only certain species can hear, and it draws us in not because we like itbut because we desperately need it tofriggin’ stop.
In the final days of the pledge drive, the reporters andstation managers start getting punchy from endless hours of pimping tote bagsfor cash, and their rationales for why you should pledge come unhinged: “You wouldn’twalk into a book store and steal books,then expect the other customers to pick up the tab for your stolen books, would you? Well, that’s what you’redoing when you don’t help pay for all the great content on NPR.”
I admit to getting perverse enjoyment from listening to theseweird, caffeine-fueled analogies, because they’re actually probing some hardtruths about how we get people to pay for things they might otherwise get forfree. The subject is of great interest to me because it’s one of many areas ofhuman behavior that can be illuminated by gametheory, which concerns itself with the incentives and disincentives thatdrive cooperation.
From a game theory perspective, you’d be hard-pressed todevise a worse system of incentives than the NPR pledge drive. Its fatal flawis that it rewards contributors and non-contributors equally – with freecontent – and punishes them both equally with jarringly interruptedprogramming. In game theory, this is known as the volunteer’s dilemma: all NPR listeners have a collective interestin keeping NPR on the air over the long term, but in the short term, you cancontribute nothing and enjoy exactly thesame benefits – minus the tote bag – with very little risk that yourpersonal failure to contribute will doom NPR. It’s a system that encouragesfreeloaders, and it gets them; only 1in 10 NPR listeners is also a contributor.
I have a friend who runs fundraising for public broadcastingin central California, and on a recent visit, I subjected him to my pledgedrive critique. He listened patiently, then said, “That’s a good point. So howwould you fix it?”
Um, OK, you got me there. NPR is part of a broadcast medium,and all my ideas about incentives and access to content are based on digitalmedia, which can be as narrowcast as you want it to be. And of course, as ataxpayer-funded entity, NPR is legally obliged to provide open access tocontributors and non-contributors alike. So any system of incentives would haveto start with that premise.
But in my fantasy pledge drive world, NPR could constructits incentives around whether I’d be subjected to their soul-deadening pledgebreaks. They would give me a strong incentive to make my contribution at the start of the pledge drive, because immediatelyupon doing so I would receive a code I could punch into my clock radio or carradio to shut off the pledge drive pleadings and return me to my regularlyscheduled programming. It sounds sci-fi in practice, but in principle, it’s notmuch different than me subscribing to so I can shut off the ads.
The increase in consumption of “traditional” content viadigital media offers the potential to solve classic problems like thevolunteer’s dilemma: in digital media, we have the ability to construct finelytuned incentives and pricing tiers because content can be distributedone-to-one.  In short, we can allowpeople to decide how much hassle they want to go through for access to content,and we can allow them to pay their way out of the hassle. This means we can rewardsubscribers without completely shutting out non-subscribers, who can accept thetrade-off of inconvenience for access. It’s taken us a decade to figure out howto do this well, but successful models like the New York Times’ new paywall system reflect a growing understandingof the behavioral economics governing content consumption.
That’s one of many reasons I’m excited about the amount ofcontent delivery converging around the mobile medium. Convenience is a bigincentive in getting consumers to pay for content, and mobile is all aboutconvenience (or at least it should be). NPR may not have figured out how tocrack this code, but some of their shows have.
I’m a fan of ThisAmerican Life, but I’m never near my radio during its scheduled airtimes.The TAL mobile app solves that for me, and it offers finely calibrated levelsof convenience based on what I’m willing to pay. If I’m willing to pay nothing,I get an ad-supported app that streams the latest episode. If I fork over threebucks, I get access to the episode archive, but I can only have one episodedownloaded at a time. If I want more, I can purchase individual episodes viaAmazon through the app.
That’s a smart content strategy, and it deftly avoids thevolunteer’s dilemma by giving me the short-term rewards of greater choice andconvenience in exchange for my cooperation. (Although I should acknowledge thatIra Glass still works a pledge pitch into his intro, and the app is prone tocrash. Nothing’s perfect.)
We may be a long way from NPR being able to unshackle its loyal contributors from the ear-manacles of the pledge drive, but I think we’re heading in the right direction in digital. In game theory terms, a state of equilibrium exists when content producers are getting paid (or funded), and consumers are getting the content they want at a reasonable price.  An equilibrium is a stable marketplace: customers tend to stick around, until the content producer does something to upset the balance. Sound familiar, Netflix?  Nope, I’m not even going to touch that can of worms yet – I’ll save it for next week, when the pledge drive is over and my mood improves.

Box car, last stop

Box car, last stop, originally uploaded by Unsettler.

This old wooden box car is a remnant of the railroad that ran up the Deschutes River Canyon, now a rail trail that sometimes features the surreal sight of fishermen mountain-biking in waders.

It’s probably a good indication of the pull that photography is starting to have on me that I brought my fly rod and my camera on this trip, but only used the latter.

Social Media Crisis Management: Four Ways to Put Out the Flames

You’d think the world would have had enough of silly love songs, but when Paul McCartney looks around, he sees it isn’t so. I feel the same way about social media crisis management. By now it should be like the Heimlich Maneuver: everybody sorta knows what to do, even if you haven’t actually had to dislodge a chunk of prime rib from your date’s windpipe, and you’re just hoping your skills never have to be put to the test.

But the topic is worth continually revisiting, because we marketers learn something from each fresh crisis. It’s an opportunity for marketers to check their crisis readiness while indulging in a little schadenfreude, which is a fancy German term for taking pleasure in the misery of others, and its social media equivalent, schadenfacenbooken, which is pleasure in watching someone else’s brand get flamed on Facebook. (This is not to be confused with schadenfacenbooken der zuckerberg, which is pleasure in knowing that while Facebook’s CEO is a 27-year-old billionaire, he’s still a dweeb.)

Most advice on social crisis management quite rightly focuses on prevention, because an ounce of prevention… you know the rest. I can recommend several good reads on the subject here, here, and here, but my aim is not to provide an analysis of the barn door after the social media horses have escaped. Let’s assume instead that the horses have already run amuck, are trampling the vegetable gardens, and that your CEO is calling to find out what you plan to do about it. I’ll outline four common crises in ascending levels of severity and offer advice on how to remedy.

1. The scathing brand assessment

From Amazon reviews to forum complaints to full-blown blog-based diatribes, the scathing brand assessment is woven into the DNA of social media. Its popularity is not simply a function of consumers having more access to outlets: as I have argued elsewhere, negative feedback is a natural and necessary way for consumers to gain equilibrium in the marketer-consumer relationship, as consumers find their voice in what has historically been a one-way conversation.

Let’s stipulate that you know about negative feedback soon after it occurs, because you’re actively monitoring social dialogue about your brand. (If you’re not monitoring, I don’t have room in this article for the scolding you’ve got coming to you. You need to go wait in the corner until the article is over.) The reality is that most brands choose not to respond directly to the majority of negative feedback they uncover. This is, in part, the same human instinct that might stop you from thrusting your arm into a badger’s den. Marketers fear making a bad situation worse by giving consumers cause to heap further negativity on their response.

But this way of thinking is misguided. Consumers aren’t griping for the sake of the gripe. OK, some of them are, but most would like to know that they’ve been heard by the brand. It’s very rarely the best course of action for a brand not to respond at all, but the way you respond makes all the difference.

I’d like to be able to tell you that I’ve unlocked the secret formula for responding to scathing assessments, but I’m just as happy to tell you that someone else beat me to it: namely, Yelp. I’m prepared to declare that Yelp’s guidelines for brands large and small contains everything you ever needed to know about responding to negative social feedback. Their wisdom is both clear and complete. See for yourself.

The rules really are as obvious as Yelp makes them out to be: Remember that these are your customers, acknowledge their position and don’t fight them on it, and tell them what you’re going to do to fix it. As exotic as social media can seem, and as hostile as digital natives sometimes appear, the ground rules are ground rules because they work. And Yelp’s approach works just as well for big brands as it did for Floyd’s Gas ‘N Sip in Topeka in the wake of the rancid beef jerky crisis.

2. The rogue employee

The high-stakes US-Soviet negotiations that ended the Cuban Missile Crisis nearly fell apart when, instead of standing down, a rogue U2 spy plane out of Alaska strayed into Soviet air space. When Kennedy learned of the incident, he grumbled, “There’s always some son-of-a-bitch who doesn’t get the word.”

Brands may feel a bit like Kennedy when they take the trouble to put social media governance policies in place and find that a single employee has gone off the rails and created a social media dust-up that jeopardizes their best-laid plans. Again, in the interests of staying focused on the horses that have escaped the barn, I won’t preach about the need to have a social media governance policy in the first place; you can read that sermon here instead. Whether you have a policy or not has some bearing on your available legal actions toward a rogue employee, but I’m more interested in how you respond to the public in the wake of an employee’s bad behavior.

Let’s take a recent and widely publicized example: the social media agency employee who accidentally tweeted on Chrysler’s official account that motorists in the Motor City did not know “how to f**king drive.” Chrysler first claimed their Twitter account had been “compromised,” then outed, blamed, and ultimately fired their social media agency, which ultimately fired the offending employee.

While Chrysler got half the crisis management equation right by acting swiftly, they got the other half wrong by acting heavy-handedly. In such crises, brands should indeed distance themselves from errant messages, but that part isn’t especially hard: few consumers would actually believe the Twitter rant was part of Chrysler’s official brand stance, so not much needs to be said. You acknowledge the mistake and move on.

By firing the agency and/or the employee, Chrysler ripped the veil off everything that his human, fallible, and therefore authentic about social media interaction, inadvertently portraying itself as a corporate puppet-master guarding its brand at all costs. Brands that are agile in their use of social media take an implied stance with consumers that leaves room for error: as long as we stay honest with each other, we can afford to trip on our tongues once in awhile, and it will all be ok.

A simple acknowledgement, a bit of distance, and a dash of rueful humor are most often the right ingredients for handling rogue employee incidents like this one. For instance, Chrysler had recently hired Eminem as its celebrity spokesperson. Eminem… expletive-filled tweet… Do I have to draw a map here?

3. Social backlash

Even as social media marketing reaches its mature stage, brands that continue to sit out the social media dance persistently cite one primary reason: fears that their honest efforts to engage will be met with a storm of hostility. These fears are stoked by several years of widely publicized incidents in which brands’ social engagement has provoked backlash: Motrin running afoul of moms with a snarky viral video, Target caught secretly paying for positive mentions on Facebook, or Gap’s ill-fated attempt to crowdsource its logo change.

In almost all cases, these backlash incidents have some basic blunder at their core, like not being engaged with the audience you’re targeting, or failing to set up ground rules for engagement. But again, prevention is not today’s topic, so let’s assume that the social media ship is already on fire and listing badly, and you’re contemplating whether it’s better to drown or go up in flames.

The most common mistake brands make in these instances is replacing dialogue with monologue. It’s reflexive: embattled brands fall back on traditional PR tools for crisis management, reasoning that press releases and official statements have the best chance of ringing out loudly and clearly across the media landscape.

But in a social media crisis, a press release is just more kindling for the fire; it’s easily misunderstood and misconstrued because it can’t talk back. Even when it appears to dampen the flames, the hurt feelings remain. Motrin tamped down the Motrin Moms incident by pulling the offending video and issuing an Official Apology on its website, but that’s a poor substitute for direct, boots-on-the-ground dialogue with the moms that expressed anger.

To extend the metaphor, brands have to think of these crises as not simply a matter of putting out the fire, but also repairing the smoke damage. Once the brand’s response has been established, the response has to be tailored to every conversation in every medium, through direct, 1:1 dialogue that’s humble, honest, and specific. Brands that haven’t devoted the resources to building active dialogue in social channels have no business trying to leapfrog direct engagement with in-your-face campaigns that are ripe for backlash.

4. Brandjacking

The social media crisis type most responsible for increased sales of antacid among marketers is the “brandjacking” variety, in which consumers take over, either directly or through satirical commentary, some aspect of the brand’s identity. In the most notorious example, the Mars candy brand Skittles launched a site redesign that entirely replaced the traditional brand material on the home page with live feeds from user-controlled social media content related to Skittles. This prompted pranksters to steer all Skittles-related conversations on those channels into obscene territory, invoking uses of the candy best left to the imagination. The site came down in 48 hours.

More recently, Greenpeace launched a parody ad attacking Nestle’s lack of action against deforestation in its palm oil harvesting; Nestle tried to invoke its trademark to have the video removed from YouTube, then responded to flaming on Facebook by scolding fans who created satirical versions of its logo. AMC invoked its trademark rights to “Mad Men” to force Twitter to suspend the accounts of fans who, playfully and affectionately, tweeted as the show’s main characters. A surge of fan backlash and negative publicity forced the brand to relent.

Brandjacking is a sticky wicket, because brands do, of course, have certain trademark rights that must be protected. The brandjacking typified by the “Mad Men” tweets demands an especially careful approach, because consumers are expressing affection while they’re violating your trademark. Coca-Cola’s solution is worth emulating: In April 2009, it was revealed that the second most popular “fan” site on Facebook (after Barack Obama’s) was Coca-Cola’s. The site was not owned or administered by Coca-Cola, but rather by two unaffiliated consumers. Coca-Cola’s response was to fly the site’s creators to the company’s headquarters to thank them for their brand evangelism and to ask what the company could do to help. Facebook’s rules required that the site be shut down or turned over to Coca-Cola, but the company wanted the two consumers to continue their effort, so they agreed to jointly administer without interference. The company gained a measure of brand control while

Since satire is protected speech, brands will gain nothing by imitating Nestle’s heavy-handed response to negative parody; they should instead follow the direct engagement strategy outlined in the previous section and open up a dialogue with consumers. The temptation to brandjack a company stems at least in part from the perception of a large brand as monolithic, unresponsive, and unassailable. It’s a lot more fun to go after a player that deserves to be taken down a few pegs; this has been a basic rule of satire since the ancient Greeks.

Companies that are highly engaged in brand conversations through social media don’t necessarily shield themselves from brandjacking; they merely defuse its explosive potential by shifting the weight of the conversation toward the positive. For instance, the Venezuelan-owned oil and gas company CITGO has been the target of vehement denunciations in social media because of Venezuelan president Hugo Chavez’ anti-American rhetoric. The company’s response has been, in part, to create an online user-generated content contest that rewards participants for acts of charity within their communities. Notably such a strategy does not at all attempt to engage the Chavez issue directly; rather it simply seeks to start a different, more positive conversation, and to put company resources behind driving that conversation forward. Thus the effort has been effective not in making the Chavez comments disappear – no social strategy can accomplish that – but in diluting them within a larger conversation about the company’s efforts to reward good deeds.

Finally, no crisis management advice would be complete without a shameless plug for the role of the agency. While the largest brands have made huge strides in building social media infrastructures internally, the reality is that most mid-sized marketing and PR departments are managing social media on top of everything else, leaving precious little time for monitoring and responding. The advantage of working with a specialized agency is that they’ve had to perform the Heimlich more than once, and are less likely to break a few ribs in the process.