All posts by jd

Fees as a revenue stream

There are reasons why Comcast is such a terrible company but this week when I called them to complain that our phone and Internet connection was down, before even apologizing for the interruption of service or promising to do anything about it, the agent first threatened that if the technician came to fix their equipment and if the fault was ours (the technician gets to arbitrarily decide whose fault it is — imagine the potential for abuse if someone does not have masters level education in engineering like me?) we would be slapped with a $50 fine (it was not clear if they will fix the problem or expect me to fix it anyway). Alternatively, the cheerful agent suggested that while we were sitting without a phone and Internet because Comcast had problems, we could sign up the Xfinity Service Plan Protection (SPP) for a monthly fee to pay them to service their equipment.

Definitely, Comcast is not alone in figuring out that the easiest way to add to the top line is by charging fees for items that have traditionally been free, for example, to bring your bags alone on a trip if you pay for the ticket. The airline industry has been one of the most remarkable success stories in finding new revenue streams from existing infrastructure. The banks have done so with ATM fees recently (now it costs nearly five bucks to get your own money out from a machine). The credit card industry also relies very heavily on fees.

As disgusting as it sounds for us as consumers, the lesson here is that once you figure out that your customers are helpless and can be bullied, it is easy to add revenue through fees without any significant investment.

Embedded advertising not detected by consumers

When I watched the Academy Awards this year, I noticed that Ellen DeGeneres was goofing around and I did not pay much attention to the selfie but I did notice that she used a Samsung Galaxy Note 3. It was not until a few minutes later that I noticed that Samsung was a sponsor and running commercials promoting its products. So when she challenged the television audience and Twitter followers to make that particular selfie, with several other Hollywood stars, the most retweeted image of all time, the masses who have nothing better to do than to waste time on social media went nuts. Of course, the record was set and some users reported that Twitter crashed (which is occasionally a deliberate act in order to create buzz — you must have noticed that no one cares if a website is performing normally but it becomes news if it crashes). It was only later on that I found out that DeGeneres used an iPhone to tweet backstage. Now we know for sure that these days on the red carpets, most of the big stars are walking billboards for brands, so it makes perfect sense that Samsung as a sponsor insisted that the host could not use a competitor on screen. But, the masses don’t seem to care if something a paid placement or someone was compensated for using a product, and while it might have sounded like a fun, cute thing to do, in reality they all contributed to making an ad for Samsung without being paid anything. An excellent use of embedded advertising.

Image of selfie by ellen degenerest at oscars

The second case study I wanted to discuss is the so-called First Kiss video that went viral on YouTube. It is one of those heart-warming cute films that females and bloggers love. In addition, all those masses on Facebook who too have nothing better to do than to share/like love this sort of stuff. What they did not know that they too were trapped by a business into sharing an advertisement without being paid a penny for doing so. A clothing company Wren made the short video not to showcase people kissing for the first time but to show off their clothing line. In other words, go out there and exploit the masses with plenty of free time who will contribute to advertising your product as long as it is cute, heartwarming, or funny.

Image of couple kissing for first time