Selling Persuasion to Persuaders
14th June 2011
If nothing else, I’ll play the Hobgoblin of the Little Mind and stay consistent: Social Media Marketing is bad persuasion not because it is inSincere (it is!) but because there’s no money in it. Consider this market maven’s take on Groupon.
Sure, it has 83 million subscribers. But just 15.8 million of them have ever bought anything at all. Really. That’s fewer than one in five . . . But look at the conversion ratios. In 2009, the company sold 69 Groupon deals per 100 subscribers. In 2010 it was just 60 deals. In the first quarter of 2011: just 34 . . . even though the company sold $645 million worth of deals, at a 42% gross margin, it nonetheless ended up losing $146 million at the bottom line.
As a standard persuasion play in something like the Cascade, sure, you can use social media for Exposure/Reception, but that’s old news in your Father’s Oldsmobile. The hype on relational marketing through social media is a New New Thing. Yet, when you look carefully at the business model, the numbers don’t add up.
Now, if I’m a VC running with that Cool Table, you bet I’m playing every trick I can pull to get a hot IPO out and make my killing the real old fashioned way: with Persuasion. The world makes new ones every day, including many suckers who fancy themselves as persuasion mavens, when they are only FauxItAlls. Marc Andreessen will eat you for lunch (pass the prawns, baby).
I also agree with Mr. Andreessen’s assertion that there is no bubble in technology right now. His first argument is the best: There can’t be a bubble because by definition a bubble occurs when no one thinks there is a bubble. And, he also knows the relatively low P/E ratios for great tech stocks like Google, Microsoft, or Cisco. So, technology stocks and hopefuls like Groupon or Facebook aren’t a financial bubble.
But they are a Persuasion Bubble. Lots of people believe that Social Media Marketing is a New New Thing of unprecedented impact when it is just another channel and one that seems to produce seriously weak effects where it really counts: the TACT. The fun paradox here is that a few people are using persuasion to sell Persuasion to other people who think they’ll buy that Persuasion for their persuasion on yet some other people.
It’s not exactly selling sand to a Saudi or ice to an Aleut, but selling persuasion to persuaders is pretty close.
More Sand!!! (Click to enlarge for even More Sand!!!)
