Fianna Fail's First Election Mistake

The appearance of this ‘pre-election’ poster generated quite a buzz in the newspaper and broadcast media over the weekend as commentators agonised over whether this marked a new direction in Irish politics and a rise in the type of negative campaigning commonplace in the UK and USA. While the jury is still out on that question, any marketer looking at this poster will be taken aback at just how bad it is. In short, Fianna Fail has just paid some good money to promote their great rivals.

Look at the poster again. Now remember that when it comes to perceiving advertising messages, Kahneman’s fast and slow cognitive processes come into play. In other words, like most of what we do, processing advertising is done primarily on autopilot or through System 1 thinking as Kahneman calls it. We know that posters are processed on average in 1.5 seconds. What are we likely to have perceived in that time? We will certainly have seen Enda and after that possibly the Fine Gael logo. The vast majority of brains will conclude that the poster was another Fine Gael message of some sort before being distracted by the next available stimulus. The subtlety of what Fianna Fail was trying to do will have been well and truly lost on everyone except those who would feel strongly enough about the picture of the Taoiseach to cognitively engage System 2 and actually read the full poster. And unfortunately for them, that is likely to have been a very small proportion of those exposed to the poster. One would suspect that when the election proper gets underway, the same mistake will not be made again!

How To Make Freemium Work

As digital start-ups struggle with challenge of how to generate revenue, many of them turn to the ‘freemium’ business model. An amalgam of the words free and premium, freemium as the name suggests, means that customers are offered some goods for free while those with greater functionality or features require payment usually in the form of a monthly subscription fee. The model was initially popular in the software industry but has since spread widely to include music, publishing, newspapers, telcos, education and the vast majority of apps.

But making freemium work is not as easy as it sounds and requires some sound decision making. In particular, there is the challenge of identifying what should be given away for free and balancing that with what should be charged for and how much? Give too much away for free and upgrade rates will be low, give too little away and initial user registrations will be low. Remember freemium is not the same as a free trial period, it is always free. What you are looking for is a compelling free offer to generate as many user registrations as possible. Paradoxically, with this model your traffic rates are more important than your conversions. It is far better to upsell just 5% of two million subscribers than 50% of 100,000.

The second issue then is once they sign up, give them a compelling reason to upgrade. A difference in approach can clearly be seen among two initial freemium pioneers, Dropbox and LinkedIn, both of whom were reported to have 300 million registered users in May of this year. With Dropbox, users get 2 GB of storage for free with the option to upgrade to Dropbox Pro giving 1,000 GB of space for a subscription fee of $9.99/month. Regular Dropbox users will hit their storage limit fairly quickly and the benefits of the subscription option are very clear. Dropbox generated revenues of $200 million in 2013. In contrast, the reasons for upgrading with LinkedIn are not as obvious. Four upgrade options are available ranging from €21.99/month to €89.95/month for business users but subscription income of $88 million in 2013 still represents only 20 per cent of LinkedIn’s overall revenues. Customers need to see clear value before they will subscribe to paid services.

Freemium is very much here to stay. And remember even if you are not using this model today chances are you are competing with it!

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