Sunday, July 25, 2010

Old Spice ad campaign - Made to Stick

What makes the recent Old Spice advertisement campaign so memorable?

During the recent world cup soccer finals, I recalled seeing an advertisement for Old Spice that "broke my guessing machine". A well built and good looking black man (Isaiah Mustafa) was the spokesperson, not a white man surfing the tube of giant waves. Among all the advertisements that day, this one stuck in my mind. Days later, I read about this ad campaign becoming one of the most followed and watched videos on YouTube. Borrowing ideas from Chip and Dan Heath's Made to Stick: Why Some Ideas Survive and Others Die, here is why I think the message stuck.

Simple - the old spice man can smell good despite baking a gourmet cake in a kitchen he built himself. Why wouldn't a lady want her man to Smell like a Man, Man by using the old spice bodywash?

Unexpected - my guessing machine was broken seeing the unexpected spokesperson, jolting me into attention.

Concrete - direct imagery to indicate that old spice's fragrance lasts - an adventure loving (walking on a floating log), hard working (built a kitchen with his own hands), fun loving (biker) person who still smells good.

Credible - looking at this strong and good looking guy, why wouldn't you believe he is all of the above?

Emotional - the messages are very personalized. Following the airing of the commercial, the ad agency seeded social networks with an invitation for people to ask questions of Isaiah's character. As the questions started flowing in, they made 87 short personalized video responses and posted them back to YouTube, thus appealing to people's egos. What better way to make the brand memorable?

Stories - each story in the video responses are connection plots, making people care.

Made to Stick - review

In Made to Stick: Why Some Ideas Survive and Others Die, Chip and Dan Heath discuss a template for formulating ideas in such a manner that it is memorable and even spreads spontaneously. The template is SUCCESS - Simple, Unexpected, Concrete, Credible, Emotional and Story.

At the heart of the book is this concept of Curse of Knowledge and how to avoid it. Simply stated, the concept is that one's deep understanding of an idea is also the reason why it is not effectively communicated. The analogy provided is a person hearing a tune in their head who taps to the tune so others can guess the song, then wonders why they struggle to guess (you can try this experiment at home).

Simplicity - find the core of an idea. Weed out not only superfluous and tangential elements but also ideas that are not the most important. However, don't dumb down the idea. Make/find the core mission, then find a compact way to communicate it.

On the battlefield, a commander's intent is a crisp statement that conveys a plan's goal and the desired end state of an operation. It does not specify so much detail that it risks being rendered obsolete by unpredictable events.

Use analogies to communicate instead of defining something in its entirety. "Generative analogies" are those that generate new perceptions, explanations and inventions. The founder of slideshare pitched his company to our Entrepreneurship class at Haas and started off by very succinctly saying that "slideshare is the YouTube of PowerPoint".

Unexpectedness - when we encounter the unexpected, surprise jolts us to attention, generates interest and curiosity. Use an element of surprise to convey insight relevant to the core message. Figure out what is counter-intuitive about the message and communicate it to break audience's guessing machines. To be most effective, surprise must be post-predictable - tying together all the clues to which you've been exposed all along.

"People are tempted to tell you everything, right up front, with perfect accuracy, when they should be giving you just enough info to be useful, then a little more, then a little more". Gap theory is that people are anxious to fill a gap in their knowledge. Our tendency is to tell people the facts. Instead, open a gap in their knowledge, then close them with details.

Concrete ideas are memorable. Concrete messages can be examined with your senses and creates an imagery that can be visualized.

Credible - conveying an idea using real people, particularly authorities, is the most compelling and credible way. Honesty and trustworthiness of our sources, not their status, makes them authorities. Sometimes anti-authorities can be more powerful than authorities. For example, a chain smoker with terminal lung cancer is a more effective anti-authority figure to discuss the harmful effects of smoking, then the surgeon general's statutory warning.

Vivid, concrete details lend credibility to an idea. Statistics should almost always be used to illustrate a relationship. People should remember the relationship more than the number itself. Generate a "human scale" for the statistic that people can relate to and experience.

Emotional - the most basic way to make people care is to draw an association between something they don't yet care about with something they do care about. Incorporate self-interest into the message. Emphasize benefits, not features - "what is in it for me?"

Stories - a credible idea makes people believe. An emotional idea makes people care. Right stories make people act.

Fight the temptation to skip directly to the "tips" and leave out the story. You can re-construct a moral from a story but you can't re-construct a story from a moral.

Stories with a challenge plot inspire us to act by describing a protagonist who overcomes formidable challenge to succeed. Connection plots inspire us through relationships with other people. Creativity plots make us want to do something different and experiment with new approaches.

Monday, June 7, 2010

Will Deepwater Horizon become Ixtoc 2

Current estimates of the amount of oil being spewed from BP's Deepwater Horizon rig blowout, the ruptured oil well in the Gulf of Mexico near Lousiana's coast, range between 12,000 and 19,000 barrels a day. Assuming the low end of that range of 12,000 barrels a day, at 42 US gallons per barrel of oil, over 24 million gallons of oil have already leaked into the Gulf of Mexico. By comparison, the 1989 Exxon Valdez disaster in Alaska's Prince William Sound spilled 11 million gallons of oil and the 1979 Ixtoc 1 disaster, also in the Gulf of Mexico, spilled 173 million gallons of oil [1]. Oil is supposed to be gushing at an incredible pressure of 23,000 lbs/square inch. Combine that with inhospitable depths of over 5000 ft of water and the Deepwater Horizon disaster becomes quite a challenge to counter.

Both the Ixtoc and Deepwater Horizon disasters involved a failure of the blowout preventer. The Ixtoc 1 site was located in only 160ft of water (divers were dispatched to implement remedies) but Pemex had no contingency plan set up in case of a blowout [4]. Even after 20 years, BP didn't have a contingency plan. These aren't the only two incidents when blowout preventers failed. Within a few months after the Ixtoc blowout, there were two more such failures - an incident on Funiwa-5 off Nigeria's coast and on Ekofisk Bravo in the Norweigian North Sea [3]. While I don't support BP's utter lack of disaster preparedness, that BP received its drilling permits from Obama government's agency makes the administration's PR offensive campaign against BP hypocritical.

The Macondo Prospect, site of the Deepwater Horizon, has estimated reserves of 50 million barrels of oil, compared with 800 million barrels of reserves [2] at the site of the Ixtoc disaster.

Pemex (PetrĂ³leos Mexicanos), the culprit in the Ixtoc spill, drilled two relief wells to reduce pressure in the main well so it could be capped off. This is the same strategy being attempted at Deepwater Horizon. Drilling relief wells was estimated to take 3 months [5] (same time as is projected in the current disaster) but it actually took over 5 months to complete.

While you may or may not consider BP's actions adequate to combat the disaster, Shell and other major oil companies seemingly have carte blanche to spill in the oil fields of the Niger delta that supplies 40% of US crude oil imports. This is too high a cost to pay for "economic development".

I hope the Deepwater Horizon disaster does become this generation's Three Mile Island. I'd like to see three actions come out of this incident. US government reducing oil subsidy thus raising fuel prices, regulating auto manufacturers to significantly and quickly improving fuel efficiency and investing in and subsidizing public transportation.

[1] Nancy Rabalais, Executive Director and Professor of Louisiana Universities Marine Consortium, on NPR Science Friday, May 7, 2010
[2] Oil & Gas Journal, March 31, 1980, pg. 54
[3] Oil Spills - Summing up the big one, The Economist, June 7, 1980, pg. 81
[4] Mistake by Mexican drilling crew is blamed for world's worst oil spill, The Globe and Mail (Canada), August 1, 1979
[5] Blowout in the Gulf, Newsweek, June 25, 1979, pg. 67

Thursday, May 13, 2010

Goldman Sachs and Abacus

“The role of a market maker is to make sure those they serve are getting the risk exposures they seek”, argued Lloyd Blankfein while testifying before the Senate Permanent Subcommittee on Investigations. According to this argument, Goldman had no fiduciary duty to its customers since it was not offering investment advice. But was Goldman a market maker or an underwriter in this synthetic CDO?


In early 2007, Goldman created a synthetic CDO (collateralized debt obligation) since one of its hedge fund customers, Paulson & Co., wanted to bet against the sub-prime mortgage market. That makes Goldman also an underwriter. Paulson was short on the CDO and Goldman had to take the other half of the trade as a market maker. In order to protect itself, Goldman purchased insurance on its long position from the likes of AIG. As the housing market fell, Goldman profited from insurance payouts while AIG was getting financial protection from the Fed. Investors with a long position in this CDO including IKB, a German bank and ACA, a bond insurance company together lost $1B. ACA’s losses were “backstopped” by the financial bailout.


At the heart of SEC’s case is Goldman’s failure of disclosure. IKB was allegedly told that a neutral portfolio manager selected the securities that went into the synthetic CDO, and not told that Paulson & Co. as well as ACA had a hand in picking securities. Goldman is also alleged to not have informed the markets last year when it received notification of a probe. Whether or not a hedge fund is participating in a trade (there naturally has to be a short side of the trade in a synthetic CDO) or whether they had a role to play in the composition of the CDO shouldn’t be important. Rather, it is important that the underwriter fully disclose the contents of the CDO and their risk tranche in the prospectus so an investor can make an informed investment decision on which side to take. Did ACA and IKB, large institutional investors do their due diligence before investing?


While the government is going after Goldman, many other banks wrote 2x-3x the amount in similarly risky CDOs. Today WSJ reported that the SEC may be investigating other firms as well.

MOG All Access

On Dec 2, 2009, MOG launched All Access, an on-demand “all you can eat” streaming music service for $5/month. MOG was founded in 2005 by David Hyman, ex-CEO of Gracenote, has 15+ employees and is based in Berkeley, CA. They recently raised $5MM from Menlo Ventures, $1.5MM from Simon Ventures a few months ago and in late April 2008, MOG received $2.8MM from UMG and Sony. Earlier, company raised $3.2MM in two angel rounds.

MOG has struck deals with all 4 major labels, Beggars and Ioda to power this service. Their catalog is supposed to contain over 5M tracks and they report over 10M visitors to their website each month.

MOG’s search feature works like the finder in Mac and auto-completion suggestions on our website – each typed character narrows search results. Suggestions are displayed in categories as you type – artist, album and tracks, along with inline play options for each. You can play songs by artist, tracks in an album, or individual tracks.

MOG’s streaming service is entirely web-based; no client installs are required. You log into their site to access their catalog and your own music library. Their music player is smart enough to detect log in/out state and seamlessly switches between full-length streaming and 30-second samples. From within the player you can buy content, save it to your library (in the cloud) or add it to a playlist. Playlists can be shared with friends on facebook although I did not try this feature.

The play button in the artist category in search (or the artist detail page) kicks off a “slider”-based artist radio feature. On one end of the slider, MOG plays songs only by that artist – all the songs by that artist. This is very cool and interesting they’ve negotiated such an agreement with labels. At the other end, it plays songs by that artist and similar others, much like Pandora. In-between slider settings play various proportions of songs by the artist relative to similar others.

Their artist detail page is quite feature rich. In addition to the artist radio link, they show customers reviews and news (something we don’t support on our store). One can “follow” the artist so they are notified via eMail whenever somebody posts anything about the artist. Artist detail page also shows popular playlists containing tracks by that artist. Finally, the social aspect – you can see users who listen to that artist the most.

MOG’gers or MOG bloggers seem to be their prized value proposition. Apparently there is a huge community of such music bloggers who contribute to reviews and posts on the MOG site. In addition to the social discovery and sharing features mentioned here, one can follow trusted MOG’gers so you see their posts on your home page (a la lala). User profile pages are customizable but I didn’t spend time digging into the specifics.

Playlists are first-class citizens - they are searchable by artist/album/track, sorted, can be public or private, can be shared with social networks (MOG11) and see who is listening to your playlist. Creating playlists is pretty easy and cool with drag’n’drop feature to re-order songs.

MOG is linking to Amazon for the “Buy” buttons. I found links are sprinkled in more places than tracks/albums are available or downloadable. For example, at track level, the buy option is displayed even for album-only tracks. From the player window, the Buy option spawns a keyword search page to amazon that is improperly constructed. There is significant room for improvement if they integrate with the Associates API.

Finally, the lyrics feature that can be invoked through the music player. MOG apparently has 3M lyrics in its database. During my exploration, I couldn’t stumble on any track with lyrics although I played songs by top artists. They did demo the feature in their video. Source of the lyrics is unclear (user contributed vs. vendor provided).

Overall, the $5 price points seems very tempting for the instant gratification of listening to anything that I can think of (in MOG’s fairly sizable catalog), plus the convenience of accessing my music library from any computer. Other competitors (Spotify etc.) are charging more than twice that amount for comparable paid services. MOG doesn’t yet seem to have a similar “portable” experience for devices.

Thursday, May 6, 2010

Top 10 most annoying things on Facebook

#1 - Farm Stories - thank god Facebook has put an end to Farmville auto posts
#2 - Agatha the astrologer
#3 - Treasure Isle
#4 - iHeart

smugmug