Viral Loop

by ADAM L PENENBERG

  Journalism might be a public trust, depending on who is doing the journaling, but most reporters and editors don’t work for free. Whether or not they like to admit it, journalism is a business. When a reader plunks down two dollars for a New York Times or 50 cents for the local paper, he barely covers the cost of the paper and ink. Someone else is playing Sugar Daddy or Mommy: advertisers. Indeed, a typical paper generates about 80 percent of its revenue from advertising. Journalists don’t sell news. They attract an audience that publishers can sell to advertisers, and make a few bucks in the process. The news is simply a lure to aggregate eyeballs so that someone with something to sell can try to reach them. The system has persisted for more than a century. Reporters write, readers pay a pittance to read their writings, and someone else gets stuck with the bill.

  In recent years, however, the newspaper industry has come under assault. Circulation is falling—more than 10 percent between 2004 and 2008 alone. The decline is not a recent phenomenon. According to Newspaper Association of America statistics, this has been going on for twenty-five years. The Internet may be hastening the problem, but it didn’t cause it. Still, advertisers have been migrating online, and because readers are but a click away from other news sources, there is intense competition.

  In days past, when you bought a newspaper to read on the train, you were a captive audience. You either read what was in your hand or were stuck talking to the guy sitting next to you. Newspapers held a monopoly over your time, and because of geographic relevance, they acted like local information monopolies. Seventy-five years ago, nearly every community in America had at least one newspaper. They had names like the Tyrone Herald in Pennsylvania, the Milford Mail in Iowa, or the Moberly Monitor-Index in Missouri. Costing pennies each, they ran a few local stories mixed with wire service copy from the Associated Press, United Press International, and the New York Times Syndicate.

  Over the past century, the number of newspapers has declined steadily. Research shows that in 1910, there were 2,600 daily newspapers in the United States, the vast majority independently owned and operated. By 1990, there were 1,600 papers nationwide, largely under corporate control and overseen by fifteen chief executive officers. Consolidation killed numerous local papers, and the New York Times contributed. When it began publishing a national edition, the Times helped push many smaller papers out of business by grabbing lenders and ads. Now, the Internet is doing to the Times what it did to small, local newspapers. Times chairman Arthur Sulzberger thought he had competition with the New York Post, the New York Daily News, and the Washington Post. But today there is a mind-bending number of options for the curious reader online.

  That means the old way of doing business—taking advantage of the monopoly you held over your audience so that advertisers were forced to go through you to reach them—is no longer a viable business strategy. The balance of power has shifted from the monopolies providing access to their audiences to the advertisers who can reach exactly the kind of people most likely to buy their products. As a result, advertisers have been moving online, where they can track their return on investment far better than they can offline. An advertiser who takes out a full-page ad in the Times print edition has no idea how many people actually see it, and knows even less about how many are prompted to action. All it knows is a Times print reader’s average age is forty-two. Several generations of readers are growing up and coming of age on the Web. Meanwhile newspapers also are not just losing advertisers; they are hemorrhaging readers of the print editions, the other side of the monopoly they once held.

  Newspapers have set up shop online, but not all the money has been following. For years, papers cleared 40 percent margins. It made being a newspaper owner a very profitable business. The Times earns hundreds of dollars for each of its approximately 1 million print subscribers, but only a fraction of that on each of its approximately 15 million online readers. Its online audience spends only a few minutes on the site each visit—when they bother to come at all—and about thirty minutes a month, on average. The culprit: as with newspapers, virtually unlimited choice and very low yields for banner advertisements. This embarrassment-of-niches syndrome is beginning to afflict the film studios and TV companies, which are also seeking revenue models online to replace far more profitable real-world sales of DVDs—up until recently, viewed as Hollywood’s savior.

  [ NOT A HAPPY ENDING—NOT EVEN AN ENDING ]

  In the end, of course, Hollywood might respond to the threat posed by Buice, Crumley, and the rest by doing what it did to indie film in the 1990s: co-opting it. The Web could simply become a farm team, a place to scout talent. It seems a safe bet that someone from Hollywood must be watching social networks like Facebook and MySpace for the next breakout star, whether of film, music, or anything else. (Even this scenario should give distributors the shakes, however.)

  Meanwhile, filmmakers Buice and Crumley had to defer their Nora Ephron denouement. Their 450-square-foot loft in a former factory building in Bushwick, Brooklyn, was awash in digital videotapes. An archaic gas stove was set right inside the front door; their bedroom was little more than a mattress stuffed into an alcove, secreted behind a red curtain. A whiteboard was covered in notes, an almost endless to-do list. Two Apple monitors bathed the room in light. Crumley was wearing ripped blue jeans and a faded T-shirt, while the blond-haired, blue-eyed Buice had a style all her own: gray dress, light green leggings, black shawl, and brown leather boots with laces. The pair had racked up $54,000 in credit card debt and were so broke dinner often consisted of almond-butter sandwiches. Still, asked if they would accept a $2 million offer from a distributor for the rights to Four Eyed Monsters, Crumley said, “No.”

  Buice wasn’t so sure.

  “Only if we maintain control,” Crumley insisted.

  What if that wasn’t part of the deal?

  “No.”

  Buice bit her tongue. She and Crumley fought almost every day while they were making their picture. She once got so fed up, she told him she was leaving as soon as they finished the damn thing. But their arguments smacked of truth. Authenticity, even. They made the couple’s story—what’s the word?—cinematic.

  6

  Viral Video as Marketing Strategy (Psst. Pass It On…)

  Letting Go of Your Brand, Joke Cycles, and Not Acting Like Some Guy in His Mid-40s Trying to Be a Hipster

  Mint-maker Mentos was in a rut. A unit of Italian confectioner Per-fetti Van Melle, Mentos spent $20 million a year on marketing, most of it on famously campy “freshmaker” TV commercials that had run for the previous fifteen years. Vice president of marketing Pete Healy believed Mentos needed to, as he put it, “reassess, redefine and reposition its brand.” This prompted him to sit down in 2008 with other executives for a brainstorming session to personify what the product was all about. If Mentos were a car, they wondered, what kind would it be? A sporty convertible. If a recreational activity, rock climbing or beach volleyball. And what celebrity was most like Mentos? Adam Sandler, former Saturday Night Live cast member and star of such cinematic shtick as Happy Gilmore and The Waterboy. Then in April 2006 a Web video of two goofy guys creating a replica of the Bellagio Fountain in Las Vegas out of nothing more than Mentos and bottles of Diet Coke went viral, downloaded by millions, spawning thousands of imitators and attracting intensive media coverage, and it hit Healy. “What could be a better fit than Adam Sandler and Mentos geysers?” he asked himself. “It reflected our personality.”

  What followed was a marketing coup that has become a textbook example of how a company can harness the power of viral video, where the standard thirty-second TV ad, which is waning in influence, is replaced by the audience. Because in this new world of collective curation, they and they alone decide what’s good and what should be watched while the traditional gatekeepers—television networks, movie studios, and the news media—are pushed to the sidelines. As was the case with Four Eyed Monsters, this democratization of content is made possible by the advent of ch
eap video cameras, camcorders, even cell phones that capture user-generated infotainment, aided by powerful, affordable software like Final Cut Pro and iMovie to shape it, and distributed via a massive digital infrastructure with ample bandwidth. The technological zeitgeist is equal parts human, however, as netizens blog about what interests them or disseminate links to everyone in their email and IM address books. Meanwhile, user communities have sprouted up on people portals like MySpace, Flickr, YouTube, and Digg. There, people share everything from blog posts to news articles, pictures, audio podcasts, and videos in a quest for their own Warholian 15 megabytes of fame.

  “It’s all about the combination of next-generation content creation and distribution coupled to instant access to your social network community,” says Adam Lavelle, vice president of strategy for iCrossing, a digital-marketing agency. “Because distribution is so huge and fluid and easy, your community connects to other communities, which fosters this distribution. If I know you, then I know everyone you know.”

  As for companies caught up in a viral storm, they have little choice but to let go of their brand. As Procter & Gamble CEO A. G. Lafley once said in a speech at the Association of National Advertisers, “The more in control we are, the more out of touch we become. But the more willing we are to let go a little, the more we’re finding we get in touch with consumers.” This, of course, frightens executives used to molding their brands to fit their own hackneyed scripts. If consumers start tarnishing their name, and that spreads, it could be disastrous. In the old days, if someone had a problem with customer service, he wrote a nasty letter to a company’s complaint department—if he could find it. Nowadays, the Web enables the fluidity of information where consumers enjoy unprecedented power. Commerce has become a conversation. Businesses either talk to their customers or face their wrath, which can echo through the blogosphere and sites like Digg and Slashdot with their legions of snarky users, who tell others, and so on and so on, until millions are mocking a company. Just ask AOL, Dell, and countless others that have learned the hard way, with scorching blog posts by dissatisfied customers becoming the equivalent of hit songs.

  On the upside, a company willing to let go of its brand can find its way to great, untapped riches as Mentos did. The Bellagio Fountain video was downloaded 20 million times and more than 10,000 copycat mint-soda videos were posted online, which created a multiplier effect: Mentos tallied a staggering 215 million mentions of its product in TV, print, or radio stories over the next nine months, and estimates the free publicity was worth $10 million to the company, half its annual marketing budget. More to the point, Mentos made a mint: sales climbed 20 percent during the first viral tsunami, and even after the commotion died down, they remained 15 percent higher than they had been.

  Coca-Cola also reaped rewards. Before the video, Diet Coke’s sales had been flat, while the company as a whole was losing market share. But Michael Donnelly, the soft-drink maker’s interactive director, reports that after it went viral there was a “significant spike” in sales of 2-liter bottles of Diet Coke, the ones used on camera. He wouldn’t give exact numbers but confirmed it was between 5 and 10 percent. A second video by the original instigators, employing 251 bottles of Diet Coke and 1,500 Mentos in a massive chain reaction, led to a 27 percent increase in traffic to Coke.com.

  All of this was a million miles away from the minds of Fritz Grobe, a professional juggler, and Stephen Voltz, a trial lawyer, who were the ones responsible for all of this. In fall 2005, the two heard from a friend that if you drop Mentos into a bottle of Diet Coke, it would explode. Performers at heart—Grobe and Voltz were members of a Buckfield, Maine, regional theater company—the two went out to the backyard to try it. After the pyrotechnics, their first thought was, How far could they take it?

  Naturally, they weren’t the first. For decades, high school students had mixed vinegar and baking soda to make volcanoes erupt at science fairs, and science educators tossed Wint-O-Green Life Savers into diet soda to demonstrate chemical reactions. (Why diet soda? Cola’s brown color makes it easy to see, and diet cola’s lack of sugar makes it easier to clean up.) Since the early 1990s, Mentos had been aware of the geyser phenomenon, which would come and go in popularity. Then in September 2005, science educator Steve Spangler demonstrated the Mentos–Diet Coke effect on Denver, Colorado’s 9 News, with anchor Kim Christiansen getting soaked in the process. The online video became a minor hit.

  As for Grobe and Voltz, they spent the morning playing around with the idea. After corralling as many bottles of Diet Coke and tubes of Mentos as they could, they constructed a ten-bottle fountain with the aid of some cement blocks and put on a show at the Oddfellows Theater for other members of their troupe. The response urged them to greater heights. They spent about five months experimenting—cutting slits in bottles, drilling holes, adding screens. After settling on the Bellagio Fountain in Las Vegas, the two drafted blueprints, carefully choreographing their effects to match those of their glitzy muse. On April 29, 2006, the two laid out two hundred bottles of Diet Coke in an intricate design and prepped more than five hundred Mentos mints (total cost: $300), then spent eight hours doing walk-throughs. “It felt like blowing up a building,” Grobe says. “We had one chance. We had never done more than twenty bottles at a time before that.”

  While a friend with a digital video camera recorded the action, the two, dressed in white lab coats, crossed their fingers and let it fly. Amazingly it all went off without a hitch. In fact, it went better than they had imagined because it was an unseasonably warm day, so the effects were even more spectacular, especially at the end when the grand crown shot out in different directions and spun. They got soaked, puddles of Diet Coke gathering in their goggles.

  They entered a Web video contest sponsored by the E-Channel but didn’t win, so the first Saturday in June they posted it to their website, EepyBird.com. Voltz told one person about it: his brother. Within hours, thousands of visitors were viewing “Experiment #137.” By the end of the first day, they counted fourteen thousand downloads. Two days later, The Late Show With David Letterman called. Grobe told producers they had only done the fountain once and would need a chance to rehearse. Over the course of the next few weeks, Grobe and Voltz grew sufficiently confident they could perform the Mentos geyser live.

  Meanwhile the video became a runaway hit. Over nine days, more than 2 million people logged on to their site. There was also downside: enthusiastic viewers kept posting it on YouTube. But Grobe and Voltz had a deal with Revver.com, where they would split ad revenue. Voltz put his legal expertise to work and sent a flurry of letters to YouTube, which automatically stripped the Revver ad from the video, demanding that the site remove their copyrighted material. As soon as one video came down, five would go up. Grobe and Voltz just couldn’t keep up. In the end, they earned $50,000 in advertising revenue and estimate they could have made double that if YouTube and other video-sharing sites had proactively blocked users from posting it.

  [ JOKE CYCLES ]

  Viral video has many analog precursors and the concept of collective curation has been around thousands of years, it just didn’t have as sophisticated a propulsion system as it does today. At first it was verbal, with gossip and information spreading from person to person. Town criers in the Middle Ages called out the news of the day, which was echoed by the townsfolk. Paul Revere spread the message that the British were coming, but it was the patriots who amplified the message and helped save a young nation. Chain letters mailed through the nation’s postal system urged recipients to make copies and send to ten other people, or suffer the consequences. Then came the telephone, the first efficient person-to-person mode of communication, which before the rise of the Internet offered an unprecedented level of virality.

  A little over a minute after liftoff from Cape Canaveral on January 28, 1986, NASA ground control ordered the commander of the space shuttle Challenger to go to full power. Seconds later, the ship exploded, leaving a trail of light and smo
ke and killing all seven astronauts onboard, including Christa McAuliffe, a New Hampshire schoolteacher whose family witnessed the tragedy from the launch site while her students watched on live television. It was a shocking scene, the worst disaster in U.S. space history. The media reacted in hushed, reverent tones, and President Ronald Reagan, in a news conference, called the deceased “heroes.” As the nation mourned, tuning into the “electronic hearth” known as TV, the inevitable cycle of tasteless jokes began.

  Q. What does NASA stand for?

  A. Need Another Seven Astronauts.

  As newscasts replayed the explosion on television in an almost endless loop and newspapers, magazines, and radio covered the inevitable investigation, the joke spread fast and furiously. Almost before the spaceship debris hit the water eighteen miles off the coast of Florida, Wall Street bankers, bond traders, and stockbrokers, plugged into near instant communication were yukking it up, sharing it over the phone with colleagues and clients alike. In Liar’s Poker, Michael Lewis, who sat with four others at a desk with a hundred telephone lines, reported that six people from six points on the globe called with the NASA “need another seven astronauts” line. “If you ever care to see how all the world’s most awful jokes spread, spend a day on a bond trading desk,” he advised. Elizabeth Radin Simons, a researcher at the University of California at Berkeley, tracked it to a nearby school, where the morning after the tragedy students were entertaining one another with the joke. Federal employees shared it over government phone lines. It made for water cooler chatter at accounting firms and conversation fodder at bars and cafés, at parties and in hair salons.