- Image by Abri_Beluga via Flickr
y European friends and colleagues talk a lot these days about the US deflation – the decline of prices of goods – and current counter measurements by the government, like adjusting interest rates and other diverse stimuli packages.
I get a new J. Crew (appareal) coupon every day, together with ‘special’ offerings by SnapFish (online photo printing), Burlington Coat Factory (coats, baby, maternity stuff), Fandango (movie tickets online), and OvernightPrints (online printing of business cards and brochures). So every day I have a “80% off”, “no shipping costs”, or similar offering, all of which make me wait even longer, because maybe there is a better deal coming along. Lesson learned: the price alone will not increase demand. Kind of a no-brainer we knew already.
So what is creating demand? Talk. That’s how advertisment works. Sometimes with price, but most of the time with emotions. Even low-price offerings appeal to you in a once-in-a-lifetime opportunity way, not by price. That’s why Whoot and similar pages have such a success, or why Frank Kern, Ed Dale, or Dan Raine have such a huge success with their 30day challenge (Go to http://www.thirtydaychallenge.com/ to find out more about Internet launches of products). The German MediaMarkt advertisement for electronics and kitchen appliances (“ich bin doch nicht bloed!” – “I’m not stupid!”) makes it clear: this is not about the price, it’s about you not being the idiot who doesn’t get it.
Barriers for Broadband Internet Access Subscriptions (Source: Connected Nation)
ook at the research result by Connected Nation on the right: from the roughly 50,000 individuals that were asked why they didn’t have a broadband subscription at home, only 23% answered that price was a matter, and only 14% said that they didn’t have broadband available (multiple answers were possible, hence the >100% sum).
That tells us a couple of things:
A reason for Internet-TV
his is exactly the reason why Broadband-based TV, Video-on-Demand, and similar offerings are so important, while they might not make any money by themselves: Advertisement of these services in non-Internet media will reach people who up to now did not see a need to get Internet access. Broadband-based TV is a service even’”offline people’ will understand. If they ‘get’ the value of such a service, they might actually sign up (if they own a computer – and that’s the reason why for a while Internet Service Providers started selling and bundling laptops and other PCs with their Internet Access offerings).
Of course ISPs could advertise things like YouTube (or RedTube, YouPorn, or PornoTube for that matter), Twitter, LinkedIn, Xing, Facebook, etc. – but would the non-subscriber understand the value, and would the value be enough to substitute or supplement his existing ‘offline’ TV subscriptions, news sources, communication means, and social networks? I guess not.
So why are ISPs engaging in price-wars? Because any advertisement or campaign that generally awakens the demand for broadband Internet access also advertises for any competing ISP, so the price-war is there to finally win people over to a specific provider. It’s like asking for a “Kleenex” after sneezing, but actually meaning any kind of soft tissue for your nose; or for putting “Saran Wrap” onto your shopping list, while you actually mean any kind of plastic wrap / cling wrap / cling film.
Should the government start twittering?
ack to our economic crisis: In order to increase demand of goods and services and stop the deflation the government needs to address more than the prices. We were joking around at the office whether the Government should hence start twittering to increase demand. But then again: what and how would the legislative, judiciary, and executive branch tweet? For “products” like medicaid or education? Buy homes? Order things? While this seems like a joke, did you notice how government messages shifted from
“Reuse. Repurpose. Recycle.”
to
“Invest into the future. Invest in green energy.”
Right, you get it: reusing and repurposing does not increase consumption. Investing does.
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Boy-oh-boy did I get angry and confused emails about the last paragraph about recycling and investing – at least more than usual ;) No, I'm NOT against investing into “green energy” (whatever that is).
All I didn't say but wanted to say was: There was a time where investments were things done by corporations, millionaires, and rich people. As this was less than 1% of the population, the general message was very personal: reuse, repurpose, recycle. With the shift in who invests and how we invest, the message shifted, too. The idea is to pool money for development to achieve more good than a single person could achieve. So far, so good. But especially the last presidential campaign showed that every single individual can make a difference. So *please* don't forget to “reuse, repurpose, recycle.” :)