Fundamentals are fundamentals for a reason. They don’t change. We tend to get carried away by newness, and assume that everything needs to change. As the French saying goes, “plus ça change, plus c’est la même chose” – the more things change, the more they stay the same. We tend to forget this. I remember the heady days of e-commerce and dotcoms where we believed that the laws of gravity and economics had been repealed – that assets and profits did not matter. Just visit the warehouses and data centers of Amazon.com to see how many bricks it takes to support the clicks! And we believed that “pure-plays” were the way to go. However, I tried to remind people that “customers don’t come in offline and online versions!”
And so it is today. In all the excitement about social media and digital marketing, I see fundamentals take a backseat yet again. The Second Digital Gold Rush is in full swing. Eyeballs are back as valuation metrics (Twitter and Facebook being two stellar examples). And while people are making real revenues this time (Groupon, for instance), I don’t believe these revenues are sustainable long enough to justify the valuations. Groupon’s valuation of north of $15 billion is hard to justify. Yes, they have stumbled upon a brilliant model to deliver customers to the door to merchants (and their new offering GroupnNow is a brilliant way to match demand and supply in real-time for providers with high fixed costs and demand volatility), but this too shall pass. Remember how excited we were about eBay as a radical new way of doing commerce (“Dynamic Commerce”)? People eventually got tired of chasing auctions, and now PayPal is the saving grace for eBay. Similarly, merchants and customers alike will discover that Groupon-like services end up selling services that customers don’t necessarily want at prices that merchants cannot really afford to acquire deal-loyal customers.
I was asked recently by an executive from a large technology company – “how do we do good digital marketing?” My response – “Do good marketing digitally!” Digital marketing is still marketing! True, social media has some unique characteristics, but it is still merely a tool and a means to an end. In executing a social media campaign, you still need objectives, a target audience, a creative value proposition and metrics. I continually remind people of this “back to basics” idea. I feel that while we should have our “head in the clouds of new possibilities”, we should also have our “feet on the ground of fundamentals”. After all, a person with his head in the clouds and his feet on the ground is a very tall person!