The first, and arguably most outrageous, cardinal sin of marketing is to sacrifice long-term objectives in order to achieve higher than usual short-term profits.

A good example of this sin would be the recent mortgage meltdown in the financial sector; to quote the Harvard Business Review for a moment:

Arkadi Kuhlmann, ING Direct’s founder and CEO, is one of the most creative business leaders I’ve ever met. But he was able to distinguish between get-rich-quick industry fads and real innovation. “Every person who tries to do real innovation is going to be tempted by money, greed, acceptance, being in the middle of the action,” Kuhlmann says. “But at the core there is one fundamental difference: I know why I’m here. I want to make a difference. If I was into this just for making money, being a big accepted banker, I would have been tempted. But that’s not why I’m here. I am trying to build something that changes the business, that allows me to stay on the right side of the discussion.”

In HBR’s “Why the Mortgage Meltdown Hasn’t Burned These ‘Square’ Lenders” Mr. Taylor enumerates a list of lenders and major financial institutions who were not tempted with the promise of a quick buck, Mr. Kuhlmann of ING Direct being one example.

These “square” lenders are not getting burned by the current mortgage meltdown because they didn’t deviate from their core mission and stuck with their long-term objectives. Sure, these institutions may not have enjoyed the record profits of 2005-2007 like Bear Stearns and Lehman Brothers did, but foregoing those three years of great profits followed by the most infamous spree of financial bankruptcy since the savings and loans crisis seems like a good idea in hindsight, doesn’t it?

The Two Consequences of the First Cardinal Sin

There are two things that can happen to a business when it commits this first cardinal sin of marketing:

1. A company that commits this sin can permanently damage the trust between itself and its customers by deviating from its promises. This makes it increasingly more difficult to acquire new customers and retain old ones.
2. A company that commits this sin can find itself jumping with both feet into a market environment that it doesn’t completely understand. This can ultimately lead a company into a situation where costs begin to overrun expectations and in some instances, revenue.

The second of these two consequences has afflicted the financial sector first. Major financial institutions, like Lehman Brothers, jumped feet first into the sub-prime mortgage market and made a risky gamble based on a flimsy assumption: that the average retail value of homes in the United States would remain above $250,000. The assumption held up for three years and Lehman Brothers had great financial postings during that span of time, but as soon as the housing bubble burst and the average price of housing fell below the assumed level these institutions became insolvent.

As a result of this failure, these same financial institutions subsequently incurred the other consequence of this cardinal sin: the customers no longer trust the firm. Do you think that high-net worth individuals who had millions stashed away in financial instruments owned by the Lehman Brothers are going to reinvest back into that organization even if Lehman restructures following its bankruptcy filing? Hell no.

So let this be a lesson to all marketers out there, regardless of industry: never sacrifice your long-term objectives in favor of short-term profits. It’s not worth it.

Back on Earth we have to live with a sad reality: for every one hundred people who get pissed off by bad marketing there’s one schmuck who ends up rewarding bad marketers with his patronage, and that money reaped from that one schmuck is enough to make up for the other one hundred dissatisfied folks. And thus the bad marketer has no real incentive to stop being a bad marketer, so long as there’s always that one schmuck who makes it worth their while.

“Bad marketing” is a phrase that I usually use with “incompetent marketing,” but in this instance I mean marketers who just don’t give a damn about the repercussions of their work.

The extent to which a “bad marketer” is bad is debatable; in some instances they merely invade your privacy, and in others they knowingly deceive you and try to sell you on promises that they have no intention of fulfilling. Really bad marketers, the ones who sell products that end up killing or hurting their customers, end up on the ten o’clock news and lose their customers. What about the bad marketers in between?

What about the social network that captures your email address and resells it over and over again without your permission? What about the SMS info service that violates the national Do Not Call list and spams you with messages? What about the local business that hires door-to-door solicitors who try to interrupt your daily life to get you to sign up for some crappy service? What about niche news sites who plagiarize content from unknown authors? How do customers fight them?

How Have You Fought Them?

Please post your answers here on how you’ve tried to fight bad marketers - it can be anything from writing a letter to the editor of your local newspaper to just referring all of your friends to someone else. I look forward to reading your answers.

I had a run-in with a bad marketer during my short lunch break today. I’m a big fan of supporting local businesses - they add character to the neighborhood where I work and I simply wouldn’t enjoy working there were it not for these businesses. So today I decided to extend my patronage to a local deli owned and operated by a single family.

My lunch break is the only time I get to spend outside in the wonderful Southern California weather on any given day, so I usually grab an outside table and bring a good piece of reading material with me. I ordered my food and began reading my book at my table outside; after a few minutes of reading someone starts speaking to me.

Bad Marketer: Excuse me, sir!

Aaron: (looks up above the fold of his book, not putting the book down)

Bad Marketer: I’m here to tell you about the local Chiropractic Practice which is offering a free back massage if you live or work in the area. Do you live or work in the area?

Aaron: No. (Resumes reading)

Bad Marketer: (Turning to the person sitting at the table next to mine) Excuse me, sir! I’m….

Yes, I lied to the guy. When dealing with bad marketers I always take the path of least resistance when it comes to getting them to shut up and leave me alone.

I proceeded to watch this guy pester everyone else who was sitting outside. He even went inside and started badgering the people inside the deli, including families with small children, and then he repeated the exercise with a small Mexican restaurant a few doors down. Most offensive of all, however, was when he approached an elderly couple who were just trying to get out of their car; he effectively cornered them between the parking lot’s fence and the other cars.

Maybe I’m overreacting here, but this really pissed me off - not because of what he was trying to sell, but because of these two things:

1. I didn’t appreciate the interruption and I’m sure no one else did either.
2. I felt like I was put on the spot against my will and basically cornered by the marketer; it really felt like an invasion of my physical space and my privacy. That, to me, is unacceptable.

I see people get more upset over spam emails than they do about this kind of marketing; spam emails are annoying, but they don’t invade your privacy or violate your physical space in the way that a solicitor does. I’m having one of my "am I wired differently than everyone else?" sort of moments; do most people assume that this kind of in-your-face marketing is so common that they don’t even react to it? And somehow spam email is less common and thereby more worthy of a negative reaction?

TechCrunch basically made the point yesterday: TwittAds is a bad idea. I wanted to add my two cents from a the perspective of someone who spends a lot of time asking himself “would my company want to buy ads on this site?”

The point of TwittAds is thus: put advertising on your personal Twitter page and hope that your followers click on your Twitter ID, view the ads on your Twitter page, and hopefully execute some monetizable action (like clicking on the ad.) This advertising model indicates a fundamental misunderstanding of advertising from a buyer’s point-of-view.

Seth Godin says thus about advertising in his influential book, Permission Marketing:

From an advertiser’s point of view, the single most important tactic is frequency. Frequency is a simple concept: How many times is your ad presented to a single individual? In practice, though, frequency can create a number of pitfalls.

When advertising agencies measure their campaigns, they look at reach and frequency. Reach is a fairly simple metric. How many different people were exposed to the ad? Frequency, as we’ll see in a moment, involves some more artful measurements.

Seth’s wisdom is still relevant ten years later. Twitter is weak on reach to begin with; the Twitterers with the most followers, like Mr. Scoble, have around 34,000 followers. Assuming that the TwittAd advertisers are trying to target the followers of influential Twitterers running an ad on a single Twitter page, even for someone like Scoble, has insufficient reach to even merit the attention of modest advertisers. The obvious solution to that problem is to place the same ad across a number of Twitter home pages, which I will dissect in a moment.

On the surface Twitter appears to be a perfect mechanism for frequency, at least until you look under the hood. Let’s look at a sales funnel I cooked up:

So where did I get these figures? I made a reasonable estimate based on contextual advertising performance for the final Twitter home page to Advertising Landing Page CTR rate, and the first two rates are determined by my own personal experience with Twitter (I actually read about 1 in every 100 Tweets that I am subscribed to.) I’m not trying to perform exact science here, I’m trying to make a point about how pitifully small a reach of 34,000 is.

So here’s a formula for how we determine the CTR for a particular Twitterer:

Advertising Clicks per Day = Audience * (Number of Tweets Per Day * Average Number of Tweets Actually Noticed by Followers) * CTR from Noticed Tweets to Twitterer’s Home Page * CTR from Twitterer’s Home Page to Advertisment

Let’s plug in some values for Robert Scoble, who is the best-case advertiser that for TwittAd:

Audience	33,482
Avg # of Tweets Per Day	100
Tweets Noticed by Followers	0.01
CTR Tweets to HP	~0.01
CTR HP to Ad	0.01

If you do the math using the numbers that I’ve supplied you learn the Robert Scoble would generate between 3-4 clicks on an advertisement per day. Pitiful.

As Erick Shoenfeld pointed out in the original TechCrunch, the home pages of specific Twitterers are simply not a popular destinations for Twitter users. What Erick didn’t mention is the huge noise problem with Twitter - even if Scoble sent out 100 tweets a day no one reads all of them; in fact, most of them are not read at a level beyond mere skimming.

The other problem with advertising on Twitter is the lack of context of the advertisements - how in the hell do you make sure that the right Twitterers with the right messages become advertisers for the right products? It seems like an impossible challenge to me. Anyone who wants to advertise on Twitter pages is going to have to advertise on more than one, period, and how you do that with any level of appropriate audience discrimination seems infeasible. I guess the philosophy of TwittAd is to take a handful of ads and broadcast it to one amorphous, untargeted audience and hope that the combination of “frequency and reach” can yield enough sales for advertisers to overcome the huge waste of marketing dollars spent on the uninterested portions of the audience.

This is just Web 1.0 advertising with Web 2.0 spoilers - indiscriminate broadcast advertising is ineffective and smart advertisers avoid it. This is the principal reason why the original Web 1.0 bubble crashed - the failure of the indiscriminate broadcast advertising model. Once again Web 2.0 entrepreneurs disappoint me by failing to learn the lessons taught in the first crash.

TechCrunch reported that GoDaddy is having a tough time keeping up with the demand for these domain names and is actually canceling a large volume of the orders.

The comments on the TechCrunch thread are pretty hilarious, most of them are from spammers looking to buy up trademarked domain names in hopes of getting a premium from corporate slowpokes in the future. Given how much I dislike the industry of domain parking I couldn’t resist sharing my schadenfreude in the TechCrunch comments:

I have to admit, I am really, really enjoying listening to the domain parking crowd squeal like stuck pigs over this one. Those guys make it a pain in the ass for startups to get decent branded domains without having to come up with goofy names. If GoDaddy decided to run a train on anyone, I’m glad it was those low-lifes.

And I think that comment accidentally made me the center of attention. Whoops. So I’m going to go ahead and clarify myself here:

Domain Name Parking is a Useless Industry

Capitalism is great; I love it. The idea is to exchange valuable goods and services in exchange for currency. What value does the domain name parking industry offer? Nothing.

Here’s the business model behind domain name parking:

• Be the fastest person to go to GoDaddy.com;
• Buy up potentially popular domain names, including registered trademarks and brand names;
• Mark up the price;
• Hold them indefinitely, adding zero value to them other than giant AdSense units and “male enhancement” advertisements; and
• Hope that someone has a branding need for a given domain name which is so urgent that they’re willing to pay you for the rights to the domain name.

Basically all the domain name parking industry does is make things more inconvenient and expensive for people who actually want to produce valuable web services. Domain parkers aren’t paid because they add value, they’re paid off to stop preventing other people from creating value!

Domain Parkers Are Counter-Productive

So why do I dislike them? Because they are the enemy of efficiency - they make it take more effort to buy domains and they make it more difficult for entrepreneurs to create web services with names that are easy to brand and remember. The biggest reason for having a good domain name is to make it easier for users to remember!

If anything makes me dislike domain parkers, it’s not because of my work as a marketer, it’s because of the basic economics concept of utility, and domain name parkers don’t have any utility! These guys are low lifes - they don’t do anything to add value to anything; all they do is take possession of intellectual property and become an annoyance for anyone who actually wants to use that property until someone decides that it’s finally worth it to pay them off.

Should Anything Be Done to Stop Domain Name Parking?

If domain names didn’t cost $10/year and nothing to maintain then we wouldn’t have this problem. A higher cost per domain would keep a lot of these parasites out, but it’d also make it much harder for people who want to add value to buy up good domains too.

What about making the domain name purchaser demonstrate that he or she is going to utilize it before agreeing to sell them a domain name, like how patents and copyrights work? That won’t work either because it’s a giant pain the ass - ask anyone who’s filed a patent.

Really, there’s no feasible way to keep domain name parkers from being pests and the best way to get around them is to come up with unique domain name ideas, like many of the Web 2.0 service names. In addition the costs domain name parkers present to fully-funded startups and profitable companies isn’t that high - the people who get screwed are private individuals and bootstrapped startups.

So is there anything that should be done to stop domain name parking? As much as I’d like to see an end to the practice, there isn’t anything that can or should be done. But hey, at least we can enjoy watching the fur fly over at TechCrunch.

What none of these bloggers talk about, however, is the subject of why marketers hate bloggers.

I’m not in the mood to write out any lengthy anecdotes this morning, so I’m going to stick with a simple list.

3 Reasons Why Marketers Hate Bloggers

1. Some demand bribes - In Lifehack’s “How to Get a Blogger to Promote Your Product” the author mentions that bloggers like to receive gifts, but not bribes, from companies that want reviews for their products. What the author doesn’t mention is how many bloggers will demand some form of payment up-front. “Oh that’s cool, want me to mention how your software can actually solve many of the IT problems that I often write about? Maybe if you comped me a free site license I’d consider it…”
2. Some bad reviews become vendettas - If someone from the New York Times or the Washington Post gave one of my products a bad review they probably wouldn’t log onto Amazon, copy and paste the bad review and give me 0 stars, repeat the exercise for CNet, Yelp, and so on. They wouldn’t log-on to Twitter and tweet about their bad experience with my product, and so forth. Some bloggers act vindictively when they have a bad experience. If you take a look at some of the bad reviews I’ve given you’ll notice that my bad review starts and stops with Marketing Ninja.
3. Some write reviews with a clear, personal bias - Reviews are meant to be an objective account of one user’s experience with a product; a number of bloggers don’t fundamentally understand the concept of “reviewing a product on its own merit.” I’ll read reviews of new product offerings by Dell or Microsoft and somewhere towards the middle of the article I’ll read “yes, Popfly is a moderately average web service but Vista still sucks and the anti-competitive practices of Microsoft have set the software industry back two decades.” What does Vista have to do with Popfly? ABSOLUTELY NOTHING. Many bloggers can’t shake off the old habit of writing things from a purely personal angle and in the process end up writing a review that is simply unfair. Vendettas against companies, previous product offerings, and resentment about prior experiences with the producer in question should be left at the door when reviewing a product.

What are the other reasons why marketers hate bloggers? Feel free to add to this list.

There’s a great post on LifeHack today by Dustin Wax about "How To Get a Blogger To Promote Your Product." I originally began this blog entry as a comment on LifeHack in response to Dustin, but it quickly became evident that I’d need to dedicate an entire post to the subject.

As someone who is both a blogger and a marketer by profession I can appreciate both ends of the situation:

• Bloggers don’t want to lose integrity or audience members by appearing to simply shill product that any marketer throws at them and
• Marketers want to move product and use bloggers to inexpensively reach new potential customers.

From A Blogger’s Perspective…

I’ve been asked to review some stuff before on the behalf of marketers and occasionally I’ll review products, like Trackur, because I think it’s a product that my audience might want to know about.

A Good Encounter with a Marketer

I like getting asked to write reviews for products and services that fall within my domain as a blogger; for instance, I was politely approached by a publicist for a major technical books publisher who wanted me to review one of their new works on ASP.NET, a technology that I was blogging about at the time I was approached.

They sent me a free copy of the book and I wrote what I thought was a pretty honest review and in return they offered to send me another book of my choice from their library - I can’t remember if I ever followed up or not.

Either way, I’d classify that encounter as a positive one because:

• I felt like the marketer had done his homework - I felt special because the company had picked me out, of all people, to review one of his company’s new texts that applied directly to my field and my blog; it’s a nice compliment and it’s something that a lot of bloggers would like to experience every now and then.
• The product review was applicable to my audience - When I write a review I can’t just do it because I want to feel acknowledged by a marketer; I have to know that it’s something that my audience might be interested in. The product was applicable to my audience, but I don’t know how well my review went over with them given that I didn’t get many comments.
• The marketer got some recognition for his book - The marketer ultimately got what he wanted - exposure, however minor it may have been.

A Bad Encounter with a Marketer

I’m not going to call any specific companies out on this, but let’s just say that most marketers don’t know what the hell they’re doing when it comes to approaching bloggers. I’ve been asked to review products that have ZERO to do with my blog, interests, or my audience; this is what Wired’s Chris Anderson was complaining about in his directive against PR people.

LifeHack has already produced a great list of the things that marketers can do to reach out to bloggers more effectively, but I’d like go on record and explain some of the things that bad marketers do to irritate bloggers:

• Don’t do their homework up-front - All many marketers see when they look at a blog are traffic figures and opportunities to convert; they don’t stop to consider the preferences and tastes of bloggers and, more importantly, the bloggers’ audiences.
• Are relentless - "Don’t take no for an answer" is an old sales philosophy which has no place in connecting with bloggers. If a blogger tells a marketer "no" on the subject of doing a product review and the marketer keeps pushing then he might end up creating a P.R. disaster for his own company, depending on the blogger’s temperament.
• Don’t let bloggers know that they are appreciated - Many marketers forget their manners and don’t say "please" or "thank you." This is irritating, impersonal, and it often makes some bloggers feel belittled.
• Aren’t willing to take bad news - Too many marketers want to exercise full control over what the bloggers write and what the bloggers say about his company’s products. If a blogger writes an honest review, a review which may include some opinions that are not marketer-approved, the bad marketer’s first response is to perform damage control and sometimes this includes weak attempts to discredit the blogger.

A lot of marketers simply don’t get how to treat bloggers properly. However, as you will see in my post on Monday, there are plenty of bloggers that try to pull some pretty sketchy stuff with marketers like me. Have a good weekend.