Free!

“Old marketing” is about to take ownership of both customers’ and investors’ imagination and cash flow in the “connected” space. “Free”, “discounts” and “coupons” seem to be the new digital brand.

Recent examples and experiences from the digital realm presents connected technologies as nothing more than a platform to accelerate companies’ ability to give away their products at a discount – rather than innovate and change business:

1. In May a senior executive on the global stage exemplified digital success with its ability to move heavily discounted products at an unprecedented rate
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But to which extent is this a success digital should be proud of? What is the value of helping a company decrease or eliminate its profit per product sold? How sustainable is this strategy in the long run? How does it move marketing, communication and business forward?

It seems that we are spending all this time, resources and brilliant minds figuring out how to use digital to accelerate the old tried and tested “cheap” marketing techniques – instead of introducing ideas that are completely new: Concepts and programs that increase the willingness to pay a premium for the brand – or connecting people with the brand over time.

2. At the PSFK Good Ideas in Mobile, back in 2009, Alistair Fulton of Deloitte (now Microsoft) said:

“I really worry that after all this time most thinking about brand interaction with mobile in connection with location comes back to mobile couponing.” – Alistair Fulton, Director, Windows Embedded at Microsoft, (At approx. 26.30)

These insights were forgotten two years later when PSFK publishes a how-to article on the same subject:

“The future of location-based mobile coupons has arrived – you’ll soon be able to walk by a Starbucks and a coupon will be pushed to your phone thanks to recent developments in mobile advertising.”
– is.gd/1NVVGc

It might be that insight and wisdom is short lived, and it is right to exchange wise decisions with experience and reality? Or are we becoming more traditional and “safe” the closer we get to using the technology – not only talking about it?

To further strengthen this argument: Back in 2009 the whole Good Ideas in Mobile panel agreed that the mobile cliché of location-based couponing is – and should remain just that – an old cliché.

3. As far as I can tell this video introducing Google Wallet presents nothing more than a unimaginative and boring couponing program connected with the a bread & butter search advertising strategy
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To put this into context, take a look at VISA’s own mobile payment video, presenting the technology behind the banking system – which is not accredited to Google as far as I know
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All Google is doing is adding a digital layer on top of the VISA technology to accelerate the couponing itself. For a company leading the way in digital innovation, and looked to by so many companies world wide, it is important to remember that its own business model (advertising) makes it remarkably ill positioned to show companies and marketers the digital future outside where they are today
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The opposing argument here is that any activity that generates first time customers, even at a steep cost, could still be used to invite these customers to a longer loyalty program – and that the expensive incentive is just a smart lure to a long-term strategy inevitably paying of the huge initial cost.

As mentioned to me by Michael Koenka on Twitter:

“…but discount programs can be good ways to incentivize (sic) participation – which does build product xp/loyalty if done well…” @MDKoenka

The problem with this argument, is that customers ascribing to coupons are not very valuable customers – quite the opposite:

“Heavy users have actually grown from representing 11 per cent of all American households in 2009 to 13 per cent in 2010. Fully 70 per cent of all couponing last year is attributed to these “enthusiasts.” – http://is.gd/0eBCZh

13% of American households, which the article also claim are exploiting and misusing the couponing system to such a degree today that the whole system needs to be rethought, represent 70% of all couponing activity.

Coupons come across as a lousy short-term strategy and will probably fare even worse if one measured the long term value.

Free does not represent a sustainable business model or an aspirational marketing activity. Digital is in danger of becoming cheap marketing on speed, at the same time as we are lauding its potential to revolutionize industries

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Digital needs to prove to companies and c-level executives that it is mature enough to support a business model, not merely a coupon model.

We need to demonstrate that we help companies sell products at a premium, not give them away for free.